Sitting of 24 June 1986

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

PRIVATE BUSINESS
ABERYSTWYTH HARBOUR BILL
Considered; to be read the Third time.
FELIXSTOWE DOCK AND RAILWAY BILL
Order for consideration read.
To be considered upon Thursday.
HARROGATE BOROUGH COUNCIL BILL [Lords]
Order for consideration read.
Amendments agreed to.
To be read the Third time.
BROMBOROUGH DOCK BILL [Lords]
CLIFTON SUSPENSION BRIDGE BILL [Lords]
Read a Second time, and committed.
BLYTH HARBOUR BILL [Lords]
Order for Second Reading read.
To be read a Second time tomorrow.

Oral Answers to Questions
  EMPLOYMENT

    Clean-up Campaign
    Mr. Bruceasked the Paymaster General how many jobs he estimates the proposed clean-up campaign will create.
    Mr. Terry Lewisasked the Paymaster General if street cleaning is presently included within the framework of the community programme.
    The Parliamentary Under-Secretary of State for Employment (Mr. Ian Lang): My right hon. Friend the Secretary of State for the Environment has recently announced a new environmental improvement initiative which it is estimated will initially provide work for up to 5,000 long-term unemployed people through the community programme together with additional opportunities for volunteers. A very wide range of worthwhile activities can be undertaken through the programme provided they involve work which would not otherwise be done and bring practical benefits to the community.
    Mr. Bruce: I am sure that those who are unemployed will be grateful for the opportunity to take up work. However, does this scheme not show how much out of touch the Prime Minister is with the reality of what is
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    happening in Britain and that the opportunity should have been taken to restore some civic pride in Britain and give local authorities the resources to clean up their own streets?
    Mr. Lang: I think that the scheme as envisaged, details of which will be announced by my right hon. Friend the Secretary of State for the Environment in due course, contemplates a much wider sphere of activities than would be confined within local authority activities.
    Mr. Lewis: Is the Paymaster General aware that 155,000 jobs have been lost in local government in the manual sector, many of them street cleaners and the like? Rather than give youngsters skivvying jobs, would it not be a good thing to give rate support grant back to local government and let it do the job properly?
    Mr. Lang: As I have just explained, the work planned for the initiative does not, to a large extent, fall within the scope of local authorities. The proposals will be wide ranging in their effect and I believe that they will have the wide and strong support of the vast majority of the people of this country.
    Mr. Speller: When my hon. Friend helps to promote this excellent campaign, may we also ask that the resources be directed to the areas where unemployment is at its highest, such as the coastal areas of the west country, and that we look to that as well as to the over-employed south-east?
    Mr. Lang: I thank my hon. Friend for his support. It will be a matter on which potential sponsors of individual projects within the overall programme can approach the board with their proposals. I am sure that they will receive sympathetic consideration.
    Mr. Freud: Is the Minister aware that there are 331,000 people under the age of 25 who have been unemployed for over one year? Will he give precedence to those people when he is looking at applicants for community employment?
    Mr. Lang: The community programme is specifically designed to help the long-term unemployed. Therefore, they will receive favourable treatment in that context.
    Ms. Clare Short: Is the Minister aware that everyone in the country, except it seems the Prime Minister, is aware that our streets have been becoming dirtier and tattier for many years because of the squeeze on local authority expenditure and privatisation, which has reduced the number of people who are cleaning our streets? The answer is not to take on a trendy business man to take on more and more unemployed people at very low rates of pay and then dump them back into unemployment, but to give more money to local authorities to employ people on a permanent basis to do the job properly and reduce the numbers who are unemployed.
    Mr. Lang: The hon. Lady is wrong. Local authority spending needs are fully taken into account in setting the level of expenditure for rate support grant purposes. The intention of the programme is not to replace the activities of local authorities as regards their refuse and litter collection. That remains their duty, and they will continue to have sufficient resources to carry that out. Nor will there be substitution for existing jobs under the community programme, the rules of which are specifically designed to avoid that.
    Mr. Hancock: How long will the schemes last, and how will the clean-up campaign work with local government? Will it be an integral part of local government responsibility to find areas for these people to clean, or will the process be completely separate?
    Mr. Lang: The hon. Gentleman will need to await the full details of the scheme from my right hon. Friend the Secretary of State for the Environment. However, there is no reason why local authorities should not also become involved in the project.

    Trades Union Congress
    Mr. Hoyleasked the Paymaster General if he has any plans to see the Trades Union Congress to discuss industrial relations.
    The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): I have no plans at present to meet the Trades Union Congress to discuss industrial relations.
    Mr. Hoyle: Why is it that neither the Secretary of State for Employment nor the Paymaster General will meet the TUC, yet they will meet any reactionary small employer? Why will they not meet the representatives of employees? Does it mean that the Government's policy is one of confrontation rather than consultation?
    Mr. Clarke: The hon. Gentleman will agree that we have the best industrial relations that we have had for generations. The figures for the past 12 months show that the number of hours lost through industrial disputes is the lowest we have known for 24 years, and that the total number of strikes is the lowest for 50 years.
    Mr. John Townend: If in the distant future my right hon. and learned Friend meets representatives of the TUC, will he discuss with them the adequacy of the safeguards for trade union members who wish to contract out of the political levy? Will he make it clear that if the undertakings given previously are not fulfilled the Government will not hesitate to change the law and move to contracting in rather than contracting out?
    Mr. Clarke: We believe that members of trade unions have an undoubted right not to pay a contribution to a political fund if they do not wish to do so. We trust that the unions, some of whom have been less than frank with their members in their recent campaigns on political funds, will now carry out their obligations and make it clear to members that they do not have to pay for party political activities of which they do not approve.
    Mr. Winnick: What about the right of working people to belong to a trade union? Is the Paymaster General aware that if he met the TUC it would express to him its strong opposition to the way in which people are being penalised at GCHQ for the mere crime of wanting to belong to a trade union? Why have the Government taken that democratic right away from our fellow citizens?
    Mr. Clarke: I think that about 99 per cent. of employees at GCHQ have accepted the new conditions of service. The people who were recently disciplined in accordance with the Civil Service code originally undertook to accept those conditions and to renounce trade union membership, but went back on that undertaking.
    Mr. Stokes: Is my right hon. and learned Friend aware that industrial relations are now generally so good in our
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    factories and that there are so few strikes that industrial workers can often set a good example to other professions with a less good record, such as the National Union of Teachers?
    Mr. Clarke: I agree. Those industrial workers would be well advised to listen to the speeches of the hon. Member for Kingston upon Hull, East (Mr. Prescott), who continues to reiterate the Labour party's determination to repeal all of what he describes as Tory anti-trade union laws.
    Mr. Prescott: Will the Paymaster General accept that more working days have been lost during this Government's period of office than during a comparable period under the Labour Government? I repeat that we shall repeal all that legislation. If the Paymaster General is so concerned about individual rights, why does he not reconsider his decision not to consult the TUC about the right of employees to belong to a trade union, the right of the printers to redundancy payments and the right to return to work when one has been found innocent, as is the case with the miners in the light of the Advisory, Conciliation and Arbitration Service decision?
    Mr. Clarke: It seems that the Labour movement is having difficulty in describing what it is prepared to draw up as the individual rights of trade union members. I shall wait for some further formulation of the Labour party proposals before I comment on what the hon. Gentleman says. He is clear that he will repeal all the legislation and deny people the access to the courts that we have provided when they are aggrieved by union misconduct.
    As to the total number of working days lost, the hon. Gentleman repeats a figure that he knows is entirely inflated by one dispute— the miners' strike, for which the Labour party argued throughout. Were he to repeal all the trades union legislation, the general picture of industrial relations would cease to reflect the improvements about which I have already told the hon. Member for Warrington, North (Mr. Hoyle).

    Two-year YTS
    Dr. Michael Clarkasked the Paymaster General what proportion of the funds allocated to the two year YTS programme will be used to assist young people to obtain skills and qualifications in engineering and science.
    The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier): About one-third of all entrants to YTS in 1985–86 joined schemes covering engineering and science. We are very conscious of the need for sufficient numbers of young people to be trained to secure the future of these vital sectors.
    Dr. Clark: I thank my hon. Friend for that reply. As science and engineering are so vital to the British economy, as there is a shortage of potential employees with these skills, and as there are so many fine young people on the YTS who would benefit from science and engineering training, will he ensure that the expenditure on training in these skills is at least maintained, and possibly enhanced?
    Mr. Trippier: I welcome my hon. Friend's question. It gives me an opportunity to pay a warm tribute to him for the interest that he shows in the YTS in general and in his constituency in particular. He has a valid point. We find the figures that I gave in answer to the substantive question very encouraging.
    Mr. Madden: Have the Government not done immense harm to engineering and science by reducing the moneys available to such institutions as Bradford university and by presiding over the decimation of engineering apprenticeships?
    Mr. Trippier: Perhaps the hon. Gentleman had framed his supplementary question before hearing my answer to the substantive question. The figure that I gave was extremely encouraging, and the trend shown by the figure is strengthening and developing all the time.
    Mr. Rowe: Will my hon. Friend confirm that the experience of many of the admirable experiments that he has been carrying out shows that many young people who did not have formal qualifications from school have shown themselves remarkably adept at learning the skills needed in our modern society? Will he also confirm that worrying skill shortages are developing? Will he assure us that the YTS is being used imaginatively to bridge those two concepts?
    Mr. Trippier: I give my hon. Friend precisely that assurance. It is one of the main aims of industry in 1986 that we should, wherever possible, match the skill shortages to those people coming off the YTS. Having seen the number of places that are available and the take-up, which exceeds 90 per cent., we are very encouraged.
    Mr. Sheerman: If the Minister is genuinely interested in figures, has he seen the estimate by the Engineering Industry Training Board that we shall be short of 4,000 apprenticeships a year in engineering? Has he seen the figures given by Institute of Manpower Studies, which show that there is a lower level of employees in manufacturing industry in training than ever before? In 1967, 5·5 per cent. of employees were in training; in 1982 the figure was 3·2 per cent., and now in 1985, only 2 per cent. That means that there are only 112,000 young people in training in the whole of manufacturing industry. Is this not a condemnation of the Government's policies, and is it not time to have a comprehensive, compulsory training programme to get our country back to the training skills that it needs?
    Mr. Trippier: Why does the hon. Gentleman refer to a training hoard that is compulsory? I cannot understand the connection between it and his question, because the training board that he mentioned is statutory, and is remaining.
    I am sure that the hon. Gentleman would not wish to mislead the House — I know him too well for that. However, the ITBs said that that situation would occur unless more engineering employers invested in training instead of seeing it as cost.
    Mr. Robert B. Jones: Is my right hon. and learned Friend aware that for the latest period for which statistics are available 71 per cent. of the YTS leavers in my constituency have gone into work and that one of the reasons for this great success is the emphasis on technology and science?
    Mr. Trippier: I am grateful for my hon. Friend's question. Obviously we are looking forward to the time when the two-year YTS increases the percentage of people who find full-time employment.

    Manpower Services Commission
    Mr. O'Brienasked the Paymaster General if he will make a statement on the reorganisation of the Manpower Services Commission.
    Mr. Kenneth Clarke: The commission is reorganising in order to improve the management and delivery of our policies and programmes. From 1 July it will have three operating groups. These will be the employment and enterprise group, the vocational education and training group, and the skills training agency. They will be hacked by two support groups providing personnel, finance and management services.
    Mr. O'Brien: Is the Paymaster General aware of the concern that is felt about their future by the skills training agency and the skill training centres, because the guarantee that was given to them terminates this year? Will the Paymaster General assure us that there will be no decrease in the number of skill training centres? May we also be assured that there will be a future for the centres? Furthermore, is the Paymaster General aware of the problems, emanating from his Department, of local members of the Manpower Services Commission because insufficient information is being made available to local organisations, such as Age Concern?
    Mr. Clarke: There are two distinct points in the hon. Gentleman's question. First, skillcentres have been put on a trading account basis, which we believe will give management the incentive that it requires and to which it will respond in order to gear its training to the requirements of the labour market. The total amount of adult training that we are able to give and the number of people who are receiving adult training with Government assistance have been increasing. As to the second part of the hon. Gentleman's question, we are disseminating as much information as we can about all the Government's policies relating to job training and job opportunities. I commend to the hon. Gentleman and to Age Concern "Action for Jobs". That publication sets out very clearly the full range of the Government's measures on enterprise and employment.
    Mr. Beaumont-Dark: Does my right hon. and learned Friend agree that Governments can do only so much? It is amazing that this very morning I received a letter from the wife of a constituent. He is a man with 35 years' experience, but because he is over the age of 52 the firm to which he applied for a job would not take him on, although it had vacancies. It is not just a matter of young people. Firms sometimes need to be encouraged to recognise that older people need job opportunities as well. There is nonsense about all this somewhere.
    Mr. Clarke: I find that case as startling and disappointing as does my hon. Friend. Some of the people who are experiencing the greatest difficulty in our society are those who are above the age of 50 who have suffered redundancy because of industrial change. I am glad to say that our network of job clubs is expanding. It is providing jobs for about two-thirds of the people who join them, because they are motivated to seek work. I am glad to say that job clubs achieve surprising success for many of the older workers who approach them.
    Mr. Wainwright: Will the Paymaster General ensure the appointment to these reorganised manpower quangos of some of those who are currently registered as unemployed,

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    or who have recently become unemployed, so that these committees may learn at first hand about the problems that they are trying to tackle and so that the Conservative party may practise the supremacy of the consumer, which it so frequently preaches?
    Mr. Clarke: I hasten to add that these are not new committees. This is a reorganisation of the Civil Service staff of the Manpower Services Commission to enable the commission to be in an even better position than it is in at the moment to deliver the prgrammes which we have drawn up. Certainly there is a growth of employment within the MSC because of the emphasis that we are placing on its work, but I am glad to say that it is the general economy that is contributing each quarter to the continuing additional growth and additional new jobs that we are now experiencing.
    Sir John Farr: Is my right hon. and learned Friend satisfied that the MSC programme dovetails properly with existing training programmes for skilled employees? I have in mind that in some big cities, such as Leicester, there is a desperate shortage of knitters and overlockers. They need a five-year training course. Will my right hon. and learned Friend satisfy himself that the MSC two-year programme, which is to be welcomed, dovetails effectively with this training?
    Mr. Clarke: I very much hope that the MSC arranges matters in such a way that it does. I know about the particular problem in Leicester, where employers are unable to get the skilled and trained staff that they require. I know, too, that the MSC has been discussing with local employers how the knitting industry in particular can remedy that deficiency.
    Mr. Park: Does the Paymaster General realise that his reply about the skillcentres adjusting themselves to the requirements of the labour market is much too facile? Does he not realise that, in order to change courses, very often one needs to train the trainers in the first place, or to go out and obtain different trainers? New equipment may be needed. The right hon. and learned Gentleman is putting that on a commerical basis. Where will the funds come from to do such gearing as a result of commercial demand? The Minister's hon. Friend has just said that sometimes courses need more time than they are given.
    Mr. Clarke: It is not a commercial objective that one has in mind, except to the extent that training in skills is designed to fit people with the qualifications they require to find jobs that might be vacant in the local industry. If the hon. Gentleman continues to visit skillcentres, as I am sure he does—I visit them from time to time—he will find that they are responding to the challenge of changing the pattern of their employment and are finding exciting new tasks to perform for local industry in providing the skill shortages.
    Mr. Budgen: Is my right hon. and learned Friend aware that many Conservative Members will applaud his new proposals for reverse discrimination in favour of young blacks in inner city areas? When my right hon. and learned Friend next adopts some of the more controversial measures of the Labour party, however, will he give us a little more notice so that we may loyally adapt our rhetoric to support him.
    Mr. Clarke: My hon. Friend is adopting rhetoric which I have never used. If he moves on from his initial
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    indignation to study what I said in Birmingham yesterday, he will find that we were describing a policy of positive action to improve the employment possibilities in the district of Handsworth. The district of Handsworth has a multiracial population. Therefore, any success in our policies will have a multiracial effect. I am sure that my hon. Friend would not disapprove of that.
    Mr. Evans: Will the Paymaster General tell the House whether extra funds will be made available to the MSC to enable it to carry out the various functions outlined in its new corporate plan? For instance, will extra funds be made available to assist the long-term unemployed, hundreds of thousands of whom are aged over 50 years? Specifically, will additional funds be made available for the MSC's programme of training and retraining, which is so essential?
    Mr. Clarke: Since the Conservative party has been in government the MSC has received an enormous increase in the funds available to it for its work in the employment field. The budget of the MSC is continuing to grow. It is being expanded expressly, among other things, for the benefit of the restart programme, which will bring individual help to all the long-term unemployed in this country.

    Alnwick and Amble
    Mr. Beithasked the Paymaster General whether he has any plans to increase the present range of measures available to stimulate the creation of employment in the Alnwick and Amble area.
    Mr. Lang: We have no plans at present to increase the considerable range of measures available to stimulate the creation of employment in the Alnwick and Amble area. We are convinced that the new package of measures announced by my right hon. Friend the Chancellor of the Exchequer in his Budget statement will significantly benefit Alnwick and Amble as well as the rest of country by accelerating the growth of enterprise, boosting employment opportunities for the young and helping the long-term unemployed find work.
    Mr. Beith: As the considerable range of measures to which the hon. Gentleman referred excludes all those available exclusively in development areas, will he use the figures available to his Department to convince the Department of Trade and Industry that, as prophesied, the unemployment rate in the Alnwick and Amble area has remained as high as and often higher than that in development areas and that further measures, including access to European funds, are clearly necessary in that unemployment black spot?
    Mr. Lang: I am sure that the hon. Gentleman understands that a wide range of criteria, including the unemployment rate, industrial and occupational structures and changes in the labour supply, are taken into account in deciding on the designation of assisted areas. I draw to the hon. Gentleman's attention a number of measures that are applicable in his constituency—the YTS, the community programme, the enterprise allowance scheme, the job release scheme and the young workers scheme. All those schemes are detailed in our "Action for Jobs" booklet. The hon. Gentleman may also like to know that the restart programme began in his area yesterday.

    American Tourists
    Mr. Ron Daviesasked the Paymaster General what is the latest estimate of the number of tourists from the United States of America in the current year; and how this figure compares with 1985.
    Mr. Trippier: Figures for the international passenger survey are available only for the first quarter of 1986 and show an increase in the number of visitors from North America of 15 per cent. We have no precise details as to the levels of American tourism subsequently. The British Tourist Authority, from its contacts with the industry, has advised that, if present levels continue throughout the year, there may be a reduction of up to 15 per cent., but there are signs of an early upturn in business and the BTA is hopeful that over the year as a whole last year's record level of American visitors may be maintained.
    Mr. Davies: If the figure of 15 per cent. is correct, will the hon. Gentleman confirm that it will mean that this year the British tourist industry will lose about £150 million? Was it not clear in retrospect that the Government's involvement in the American bombing of Libya would inevitably lead to retaliation and to a loss of trade and jobs in this country? If the hon. Gentleman finds that loss acceptable, will he explain why the Government reject economic measures against South Africa, precisely because jobs will he lost in this country?
    Mr. Trippier: The hon. Gentleman may have framed his supplementary question before he heard my answer. I made it clear in the latter part of my answer to the substantive question that we hope—British Airways has made this point—that by the end of the year there will be a recovery in the number of American visitors. To put the whole matter into perspective, it is important for the hon. Gentleman to accept that even if the 15 per cent. decrease in the number of visitors coming to the United Kingdom were to he the worst case, it would mean a drop of only 3 per cent. in real spending in the tourism sector.
    Sir Kenneth Lewis: Does my hon. Friend agree that the shortage of American visitors to this country has little to do with the tear of terrorism but might have something to do with the not very satisfactory weather which we have from time to time? Does he agree that, above all, it is to do with the high value of the pound compared with the dollar? Will my hon. Friend make representations to hotels in London and other places to bring down their prices, because they are outrageously high?
    Mr. Trippier: My hon. Friend makes a number of points. First, I should have thought that no American ever came to this country because of our climate. I think that we can dispense quickly with that reason. [Interruption.] There may have been an exception or two this year, but in normal circumstances the Americans certainly do not come because of our climate. Secondly, I think that the exchange rate is a factor. Thirdly, I believe that many people who have studied this subject in the past few weeks have got it wrong, in that they have assumed that the problem lies with the fact that a number of Americans are worried about whether the destination is safe. I suggest that they are more concerned about travelling on the aeroplanes than about safe destinations.
    Mrs. Clwyd: If the hon. Gentleman is so confident about the recovery from the reduction in the number of
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    American tourists, will he explain why the Prime Minister grovelled on American television, begging American tourists to come here?
    Mr. Trippier: I must apologise to the hon. Lady because I do not think that I heard correctly the last part of her question. She may have been saying that my right hon. Friend the Prime Minister made a statement on her way to the Tokyo summit to the effect that Britain was a safe destination. I should have thought that the hon. Lady and her right hon. and hon. Friends would support that. Certainly my right hon. Friend's statement helped to dispel the fears in the minds of some people who were concerned about coming to the United Kingdom.
    Mr. Terlezki: Does my hon. Friend agree that the reduced figure for tourists is due to Labour propaganda, which plays into the Libyans' hands? Nationally and internationally, Labour supporters are the main contributors in stopping American tourists from coming to this country. They are as much at fault as the Libyans.
    Mr. Trippier: Certainly some of the statements by Labour party spokesmen on this matter have not helped one iota. In addition, they have done nothing to assist our campaign with the British Tourist Authority in the United States and they take every opportunity they can to rubbish tourism generally.
    Mr. Soames: Does my hon. Friend agree that we should do everything we can to persuade the Americans that we are serious about tourism in this country? Does my hon. Friend agree that, to that end, the decision of my right hon. Friend the Secretary of State for Transport to cancel the heli-link between Gatwick and Heathrow does nothing to promote the interests of tourism?
    Mr. Trippier: I must apologise to my hon. Friend about that. It is not a matter for me, but I shall certainly draw those remarks to my right hon. Friend's attention.

    Long-term Unemployment
    Mr. Michael Forsythasked the Paymaster General what proportion of those registered as unemployed find work within the first six months; and if he will give details of the assistance being given by his Department to the long-term unemployed.
    Mr. Lang: In 1985 around two thirds of those becoming unemployed left the unemployment count within six months. Under our restart programme everyone who has been unemployed for more than a year will now be contacted with an offer of positive help towards employment.
    Mr. Forsyth: Will my hon. Friend confirm that, while we may tend to think of the unemployed as a static and unchanging group, 25 per cent. find jobs within four weeks, and 36 per cent. within six weeks, while half of them do so within three months and 82 per cent. find jobs within a year? Are we not therefore forced to the conclusion that among the long-term unemployed there must be at least an element that constitutes the black economy? Will my hon. Friend tell us the result of the pilot scheme that was carried out on the long-term unemployed in selected areas?
    Mr. Lang: My hon. Friend is right in the facts that he gave to the House. With regard to restart pilot schemes, the fact that we have decided to extend them nationally

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    speaks for itself. The House might also be interested to know that as a result of the trends to which my hon. Friend has referred about 30,000 people in this country get a job every working day.
    Mr. Ashley: Is the Minister aware that the assistance given to the long-term unemployed is hopelessly inadequate and that this probably reflects the Government's real attitude toward them, as distinct from the rhetoric of the Secretary of State? Although this assistance should be increased, is he aware that the real hope to be given to them is to provide them with the prospects of jobs? What is the Minister doing about that?
    Mr. Lang: The right hon. Gentleman is wrong. May I refer him to our community programme, which is our main programme for the unemployed. It is being doubled in size. With regard to our restart programme, it is extending nationally and more than 90 per cent. of those interviewed have been given a positive offer towards employment. That demonstrates our commitment to the long-term unemployed.
    Mr. Lord: I congratulate my hon. Friend on the restart programme, which will do everything possible to help the long-term unemployed. Because of the great interest that it has aroused, may I ask the Minister to publish the results of the scheme as quickly and as widely as possible?
    Mr. Lang: I will do what I can to assist my hon. Friend. It is probably too soon to give a complete summary of the effect of the scheme so far. Suffice it to say that it is the most substantial effort that has ever been made in this country to help long-term unemployed people, who will benefit considerably from the schemes.
    Mr. Prescott: Can the Minister help the House in the confusion over some of his replies? In an earlier answer he said that about 16 per cent. of those on job restart schemes had been offered something. The Minister has also mentioned the figure of 90 per cent. The Paymaster General, in a speech to the Institute of Directors, said that of all those on restart programmes, 90 per cent. are offered jobs. This does not seem to be borne out by the facts. Is this not another example of rhetoric racing ahead of the facts?
    Mr. Lang: I must repeat to the hon. Gentleman that more than 90 per cent. of those who have been interviewed so far have been given some sort of offer under the restart programme. This can cover a wide range of activities, including a place on the community programme, or a training programme. In Crawley, which was one of the pilot areas, the hon. Gentleman might like to know that a third of those who were interviewed were offered a job vacancy.

    YTS Leavers
    Mr. Jim Callaghanasked the Paymaster General what is his estimate of the number of the current year's YTS leavers who will not find full-time employment.
    Mr. Trippier: We do not predict or estimate results in advance and it would be wrong to do so, but survey results covering those who left YTS between April and December 1985 show that around 60 per cent. had found employment and some two thirds had entered work, further education or further training.
    Mr. Jim Callaghan: Is the Minister aware of the depth of real concern among parents, the youth of the country and the careers service about the lack of jobs for those youngsters who complete the YTS scheme? Will he tell the House exactly what the Government intend to do in the immediate future to provide real jobs for all our youngsters?
    Mr. Trippier: I am sure that the hon. Gentleman would accept that no one, or no party, has a monopoly of concern about these youngsters who cannot find jobs immediately. That is precisely why we have introduced the new workers scheme. As part of the restart scheme under the action for jobs programme, we are of course very anxious to help these people.
    Mr. Lyell: Is my hon. Friend aware that not all of us read the Paymaster General's Birmingham speech yesterday with liver-tinted spectacles and that some of us see much good sense in enabling those who have learnt skills on Government training schemes to put them into effect in a practical and commercial setting?
    Mr. Trippier: I am sorry that my hon. and learned Friend did not have the opportunity to read the newspaper reports of the speech made yesterday by my right hon. and learned Friend the Paymaster General. However, if he had read them, he would no doubt have been impressed, as a whole new world would have been opened up to him.

    Long-term Unemployment
    Mr. John Evansasked the Paymaster General what is the total number of unemployed in the United Kingdom; and how many of them have been unemployed for more than 12 months, two years and three years, respectively.
    Mr. Kenneth Clarke: On 10 April 1986, the latest date for which figures are available, there were 3,325,000 unemployed claimants in the United Kingdom. Of these, 1,357,000 had been unemployed for over one year, 845,000 for over two years and 567,000 for over three years.
    Mr. Evans: Will the Paymaster General acknowledge that the appalling unemployment figures, which have grown remorselessly since the Conservative party took office, are a disgrace to a civilised society? Does the right hon. and learned Gentleman accept the suggestion of the Employment Committee that those who have been out of work for more than three years should be offered a job for 12 months? The chairman of the Manpower Services Commission has accepted that as a feasible proposition. Will the Paymaster General give some concrete help to those 560,000 people who have been out of work for more than three years?
    Mr. Clarke: I accept that the figures show that we must continue the pace of new job creation, if possible at an accelerated rate, in order to get on top of the demographic pressures, which mean that all the time more young people and women are entering the labour market. The hon. Gentleman will know that there has been an increase in the total number of jobs in every quarter since 1983. We expect that to continue, and we also expect our record to continue to be better than that for the rest of the EEC. That is obviously the Government's main effort at present.
    We are about to have a debate on the Select Committee's proposals, which have been modified in the

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    light of the Government's initial response to them. I shall be explaining to the House that our restart programme and our expanded community programme already offer very tangible help to the long-term unemployed at a very considerable cost to the taxpayer.
    Mr. Ralph Howell: Is my right hon. and learned Friend aware that in my constituency, which has above average unemployment at almost 15 per cent., one of our biggest problems is the recruitment of labour? Is it not ironic that that should be the case when 3·3 million people are classified as claiming unemployment benefit, even though we know that many of them are not genuinely unemployed? Has my right hon. and learned Friend experienced similar labour shortages in his constituency?
    Mr. Clarke: I suspect that the situation in my constituency is rather similar to that in the constituency of my hon. Friend. However, under our restart programme, we shall be approaching each of the 1·4 million people who are registered with us as being long-term unemployed. We shall be able to steer them towards the growing number of job vacancies that are notified to us, as well as towards training and a whole variety of other measures designed to get them back into work. Of course, if someone is not genuinely available for work, he should not be receiving benefit and he should not he registered as unemployed. We shall seek to ensure that that is so.
    Mr. Lofthouse: Will the Paymaster General now revise the travel-to-work area boundaries in mining communities such as mine, where there has been a rapid growth in unemployment as a result of the savage pit closure programme?
    Mr. Clarke: The south Yorkshire area — [Interruption.] The west Yorkshire has been very badly affected by the recent inevitable changes in the coal industry. Obviously that area will benefit in particular from the programme of help that we set out in "Action for Jobs", and from the sort of support that we are about to offer through the restart programme.

    Enterprise Agencies Scheme
    Mr. Kenneth Carlisleasked the Paymaster General how many new businesses have been started under the auspices of the enterprise agencies scheme.
    Mr. Trippier: As regards the number of businesses assisted by local enterprise agencies, survey information collected on behalf of Business in the Community in May 1985 indicated that 83 agencies replying to a question on this had helped 8,269 new businesses. That survey is being repeated this year, funded by my Department, and it is hoped that more comprehensive information may become available.
    Mr. Carlisle: May I thank my hon. Friend for his recent visit to Lincoln and for his great encouragement of our enterprise agency? Does he accept that the figures that he has given show that enterprise agencies encourage jobs? During my hon. Friend's visit to Lincoln, he saw how a derelict building had been converted by the enterprise agency, using the community programme, in order to provide start-up units for new businesses. As there are thousands of derelict buildings around the country, could not that idea be developed further for the creation of new businesses and jobs?
    Mr. Trippier: I was very impressed when I had the opportunity to visit my hon. Friend's constituency and see what his local enterprise agency was doing, particularly with the innovation centre that I had the privilege to open. I think that he is absolutely right. We have perhaps learnt our lesson in the last few years in that it is a little silly to look for purpose-built premises of a certain size. We should rather be trying to look for space that is, say, little more than a garage space, often in a derelict building, to convert to the appropriate use so as to give the people whom we are seeking to encourage the first foot on the rung of the ladder of enterprise.

  PRIME MINISTER

    Engagements
    Mr. Hirstasked the Prime Minister if she will list her official engagements for Tuesday 24 June.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.
    Mr. Hirst: Has my right hon. Friend had time today to read the article in the Daily Telegraph by Norman Stone, Professor of Modern History at Oxford, pointing out that sanctions have never yet succeeded in altering the domestic policies of any country? Will she reaffirm her Government's commitment to an early ending to apartheid and to the economic and political advancement of all races in South Africa, and will she resist any measures that destroy the jobs and living standards of black people in that country and the jobs of thousands of people in this country?
    The Prime Minister: I gladly confirm what my hon. Friend has said. We seek an early end to apartheid and the advancement of all races in the political government of South Africa, and we seek, further, the suspension of violence on all sides in return for negotiations to achieve the end defined by my hon. Friend.
    Mr. Hattersley: May I first congratulate the Prime Minister on wisely changing course and agreeing to the meeting between the Minister of State, Foreign and Commonwealth Office, and Mr. Oliver Tambo. May I go on to assure her that, if she follows the logic of that decision and decides to stand out against the extreme Right-wing pressure on her Back Benches, the Opposition will support that change of course. If she continues either to prevaricate about sanctions or to pretend, as she did a moment ago, that they will not change the policy of the regime in Pretoria, how does she propose to bring about a change in South Africa?
    The Prime Minister: May I point out that my hon. Friend's purpose in seeing Mr. Tambo will be to tell him that suspension of violence on all sides is essential to peaceful change in South Africa. The right hon. Gentleman talks about change of course. He has changed course perhaps more than anyone else. As a Minister of State at the Foreign Office, he said:
    "I do not believe that a policy of general economic sanctions would be in the interests either of the British people or of South Africa."—[Official Report, 7 July 1976; Vol. 914, c. 1354.]
    Mr. Hattersley: I am grateful and flattered by the Prime Minister's interest. On that exact point, does she understand that the sanctions that will be most effective are not general economic sanctions but financial sanctions? Let me therefore ask a specific question. If the international community loses faith in the South African economy and withdraws capital from South Africa, will she and the Chancellor bolster up the Pretoria regime by rescheduling South African debts?
    The Prime Minister: I gather from the right hon. Gentleman that he is against general economic sanctions against South Africa. I am grateful to him for making his position clear. We, too, are against general economic sanctions, as I have made clear on many occasions. We have carried out the measures that I indicated last time. We shall now consider the position with our EEC and Commonwealth partners.
    Mr. Hattersley: We are all used to the combination of prevarication and bluster that—[Interruption.]
    Mr. Speaker: Order.
    Mr. Hattersley: On this occasion—[Interruption.]
    Mr. Speaker: Order. These interruptions take up time.
    Mr. Hattersley: On this occasion, the Prime Minister's technique does more than its usual damage to her electoral prospects. Does she not realise that by prevaricating about the racist regime in South Africa she is giving it comfort and support and encouraging its continuation?
    The Prime Minister: The right hon. Gentleman is talking nonsense in his usual blustering fashion. Moreover, he knows that the debts are not Government to Government, but commercial.
    Mrs. Ann Winterton: Bearing in mind the old saying that those who live in glass houses should not throw stones, will my right hon. Friend tell those members of the Commonwealth, such as Zimbabwe, to put their own houses in order before calling for sanctions against South Africa?
    The Prime Minister: The system of apartheid must end, and I do not believe that general economic sanctions would help it to end. They would he highly damaging, both to black interests in South Africa and to employment in this country. In the end, there will have to be negotiations between the South African Government and black South Africans, and we should keep our eye on that purpose and do everything possible to achieve it.
    Mr. Steel: Does the right hon. Lady agree that the advantage of the suggestion in the report of the Commonwealth Eminent Persons Group that intercontinental air links with South Africa should cease is that that is specific and easily policed? Is she further aware that gesture politics, which the right hon. Lady so despises, also include the gesture of doing nothing or being seen to he dragging one's feet—the most impossible posture of all for any Government?
    The Prime Minister: To do anything about air links would be very damaging, not least to some 800,000 people in South Africa who have the right to come to this country. I note that the right hon. Gentleman does not share the views of his right hon. Friend the Member for Plymouth, Devonport (Dr. Owen), who in an article on 24 March 1985 said:
    "Total or even selective trade sanctions will not succeed."
    Mr. George Gardiner: While none of us expects my right hon. Friend to reveal in advance the proposals that she will put to her colleagues in The Hague this week, can she assure us that nothing that she does there will be at variance with the policies and the principles that she has described and hitherto defended resolutely in this House?
    The Prime Minister: I shall do my level best at the European economic summit, as at the Commonwealth conference, to bring about change in South Africa through a process of negotiation between the Government of South Africa and full representation of the black population, in the absence and suspension of violence.
    Mr. Hardyasked the Prime Minister if she will list her official engagements for Tuesday 24 June.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hardy: As NACODs is holding its annual conference this week, may I remind the right hon. Lady that at last year's conference members of the association still believed that she knew what she meant by the use of the word "sacrosanct"? In order to keep the record straight and to maintain the international regard for the integrity of her office, does she now accept that she, her Government and their new knight seriously misled both the House and my association?
    The Prime Minister: No, and the hon. Gentleman knows that.
    Mr. Nicholls: Does my right hon. Friend agree that one of the many false assumptions about South Africa is that Bishop Tutu speaks exclusively for black Christians, or even the majority of them? Is she aware that while Bishop Tutu has a congregation of less than 150,000, Bishop Makoena of the Independent Reformed Church has a following of more than 4·5 million? Is it not essential that any steps that we take against South Africa have the effect of supporting moderate black leaders such as Bishop Makoena — who is vehemently opposed to sanctions—and not undermining their position?
    The Prime Minister: It is absolutely vital to support moderate leaders in South Africa. It is also vital to support those many industries that have been in the forefront in trying to break down apartheid. To introduce sanctions against them would be to defeat the very people who have been trying to bring about the required change in South Africa.
    It would be utterly callous to put large numbers of black South Africans out of work, to create unemployment in their country, and then to create additional unemployment in this country.
    Mr. Strawasked the Prime Minister if she will list her official engagements for Tuesday 24 June 1986.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Straw: As the Prime Minister has claimed in the House today that sanctions would be highly damaging to British employment levels and has suggested that up to 150,000 jobs in this country might be at risk, how does she square those claims with the fact that when I asked for details of the likely effects on jobs and output in the United Kingdom of different levels of economic measures,

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    sanctions and of the non-imposition of sanctions on South Africa, I was told late last night in a parliamentary answer by the Minister for Trade that
    "the information was not available"?
    Does that answer not show that the Prime Minister's own claims about the effects on unemployment are simply scare tactics?
    The Prime Minister: If the hon. Gentleman looks back he will find answers from me about how the figures are calculated. They are calculated by the general value of exports from this country to South Africa and the number of jobs that that would normally be equivalent to.
    Sir John Biggs-Davison: Have Her Majesty's Government, with other Commonwealth Governments, any contingency plans to deal with the collapse of the economy of Zimbabwe and other neighbours of South Africa in the event of the intensification of sanctions against the Republic of South Africa?
    The Prime Minister: No, Sir. As my hon. Friend is aware, that is a matter that could concern us a great deal, because so much of the imports of Zimbabwe and the other front-line states, and the exports from these countries, have to go by the roads or the rail bridge at Beitbridge between Zimbabwe and South Africa. Any major sanctions would have devastating effects on the future of those countries.
    Mr. Easthamasked the Prime Minister if she will list her official engagements for Tuesday 24 June 1986.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Eastham: As the Prime Minister is a leading voice in the Commonwealth, may I draw her attention to the recent terror bombing incident by the South African Government against three independent African countries, which are also members of the Commonwealth? Other than making a protest, will the Prime Minister tell the House what representations she is making to South Africa regarding compensation? Will there be any retaliatory action against South Africa?
    The Prime Minister: The hon. Gentleman has heard me say in the House before that we replied very sharply indeed to South Africa — [Interruption.]—about those terrible bombing incidents, which were responsible for bringing to an end the effective operation of the Eminent Persons Group. Without those incidents, that group had a chance of getting through to negotiations, with a suspension of violence on all sides.
    Mr. Favell: Does my right hon. Friend agree with Mr. Russell Hopkins, a consultant surgeon recently appointed
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    as the general manager of a hospital in Cardiff, that doctors cannot demand with total honesty more cash for the Health Service until waste has been eliminated?
    The Prime Minister: As my hon. Friend is aware, we are doing our level best to secure the more effective use of resources in the Health Service. Resources have increased enormously under this Government, from £7·75 billion in 1979 to £18·75 billion this year. Last year the efficiency savings amounted to £150 million. Those savings were ploughed hack into the Health Service to secure more treatment for patients.
    Mr. Strangasked the Prime Minister if she will list her official engagements for Tuesday 24 June 1986.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Strang: Will the Prime Minister accept that the ultimate responsibility for nuclear safety must lie with the elected Government? Is she aware that the two-month delay in the commissioning of Torness announced by the Nuclear Installations Inspectorate is quite inadequate? After Chernobyl, is it not clear that we need a national plan—if not a national emergency force—to cope with such an accident? Would it not be the height of irresponsibility to go ahead with the commissioning of a new power station before the Nuclear Installations Inspectorate, the Health and Safety Executive and Government Departments have had the chance to complete their post-Chernobyl reviews?
    The Prime Minister: I was asked an identical question last week. Our Nuclear Installations Inspectorate is one of the best in the world. It has a superlative record. Not long ago some of the hon. Gentleman's colleagues were preferring the AGR to any other type of reactor.
    Mr. Dykes: Does my right hon. Friend entertain the hope that the first ministerial contact with Mr. Tambo of the African National Congress will be the precursor to further contact with what is essentially a moderate nationalist movement and its domestic equivalent, the United Democratic Front? Will she and others bear in mind, in their proper exhortations to both sides to renounce violence, the fact that the majority of the violence emanates from the South African security forces?
    The Prime Minister: I have already said that my hon. Friend's main task, when seeing Mr. Tambo tonight, will be to say that there must be a suspension of violence on all sides. That is essential to peaceful change in South Africa, and she will reiterate that most strongly.

Sheepmeat (Caesium Levels)
3.30 pm
The Secretary of State for Scotland (Mr. Malcolm Rifkind): With permission, Mr. Speaker, I should like to make a statement on the control on the movement and slaughter of sheep in Scotland.
The results of tests on sheep in slaughterhouses in Scotland, the latest findings from which were published yesterday, give no cause for concern. We now have results of tests on young lambs in Scotland. These results are being published today. Generally, they are satisfactory. No readings have been obtained comparable to the highest in north Wales and Cumbria, but there are five readings over 1,000 bq/kg for caesium-134 and caesium-137 together, which is the limit at which, by international recommendation, action should be considered. One of these readings, the lowest of the five, comes from Easter Ross and, at 1,017 bq/kg, is within the margin of sampling error. Three of the other readings were found in Dumfries and Galloway, including the highest at 1,272 bq/kg, and the remaining reading is from Arran.
The animals tested were only two to three months old and will not be ready for market for some weeks yet, by which time the level of radioactivity may be expected to have declined well below the 1,000 bq/kg level. I can say categorically therefore that there is no danger to public health and no reason for consumers to refrain from purchasing and eating lamb.
It is Government policy to insist on the highest levels of safety and, to keep under supervision lambs in those areas of Scotland where relatively high levels of radioactivity have been identified, I have made an order, which will be laid before Parliament, to come into effect today, to prohibit for the next 21 days the movement and slaughter of sheep in Dumfries and Galloway, Arran and Easter Ross.
Monitoring in these and other areas will continue and the restrictions will be reduced or removed as soon as testing confirms the expected fall in levels.
I recognise that these measures may cause some interference with the marketing plans of some farmers in the areas concerned. I am sure that they will understand why this action is being taken. In this connection, I must pay tribute to the responsible and co-operative attitude shown by the National Farmers Union of Scotland. If it should prove necessary, the Government will be prepared to discuss cases of compensation for severe loss in particular circumstances to specific farmers.
Mr. John Home Robertson: I fear that the right hon. and learned Gentleman's assertion that there is no danger is likely to be about as reassuring as Corporal Jones telling Dad's Army not to panic.
May I thank the right hon. and learned Gentleman for not following the Minister for Agriculture, Fisheries and Food, who tried to smuggle his statement through an empty House on a Friday? What percentage of the samples analysed showed excessive levels of caesium, and how many farms and how many sheep are affected by the new restrictions? It must be said that there is no way in which farmers can he held to blame, so Will the right hon. and learned Gentleman say more about compensation?
We should stress that the summer lamb sales are virtually the only source of income for many farmers in
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Dumfries and Galloway, Arran and Easter Ross. These restrictions could have disastrous effects. During the course of the restrictions lambs could become unsaleable, and the House should insist that the Government accept responsibility for compensating farmers affected by the restrictions—and that should apply not only to farmers whose loss has been assessed as severe in terms of the Minister's statement.
What is being done to cover the effect on the sheep variable premium system of the 25 per cent. collapse in market prices which has already followed the announcement made by the Minister of Agriculture on Friday? May I press the Minister further about contamination of land and farm produce, and remind him that, on 6 May, the Secretary of State for the Environment promised the House that the Government would be explicit, frank and open about that matter?
For several weeks there has been much press comment about hot spots of caesium contamination. How long has the Secretary of State known about those hot spots and how much farm produce — that means milk and vegetables as well as lamb—has been moved from those areas in recent weeks? What does he say to the people who have bought and eaten that food? Can we now have a full public report on all aspects of this monitoring exercise?
Mr. Rifkind: The degree of public alarm will be significantly influenced by whether the Opposition take as responsible an attitude towards this matter as the Government have taken. The hon. Member for East Lothian (Mr. Home Robertson) should pay careful attention to the responsible attitude taken by the National Farmers' Union of Scotland. The hon. Gentleman sought to cast aspersions on my right hon. Friend the Minister of Agriculture for making his statement on Friday. The hon. Gentleman knows perfectly well that my right hon. Friend introduced the statement at the first available opportunity, and the hon. Gentleman and his hon. Friends would have been the first to criticise my right hon. Friend if he had not done so.
In reply to the hon. Gentleman's detailed questions, I can tell him that 100 samples were taken from 50 sheep. Some five were shown to be over the level of 1,000 bq/kg. Although in all cases the amount over 1,000 has been relatively marginal, some 17 per cent. of the total number of sheep in Scotland will be affected by the order. The hon. Gentleman asked about compensation. I can only draw his attention to what my right hon. Friend the Minister of Agriculture said on Friday about the matter, which I have repeated in my statement. The hon. Gentleman asked how long I have known about the specific results from the monitoring. The figures started coming in yesterday, when I was first informed, and this morning the decision was taken to make the statement that I have made to the House.
Mr. John Corrie: Is my right hon. and learned Friend aware of the dismay that this will cause to my farmers on the island of Arran? Can the Minister give us some information about beef? Is the same sort of monitoring being done for beef animals as for sheep? What is the situation about private slaughter? Does the Order totally cover the slaughter of all sheep in these areas? Do we use the same scale of monitoring as is used in other European countries?
Mr. Rifkind: The level of 1,000 bq/kg is the internationally recognised standard; that is why the Government think it right to take the action that we have described. I share with my hon. Friend the Member for Cunninghame, North (Mr. Corrie) the dismay that will be felt by farmers who are affected. However, they were the first to say that they understand entirely the reasons why steps of this kind might be necessary and they are fully prepared to co-operate with the Government in the action that we are taking. I can assure my hon. Friend that all the beef sampling suggests that there is no comparable difficulty. I can confirm that the ban on slaughter will apply to all sheep in the areas designated.
Sir Russell Johnston: The Minister must not be touchy about this matter, as he was with the hon. Member for East Lothian (Mr. Home Robertson). If a member of the public is told that there is no problem at all and no danger whatever, and then told in the next breath that there will be a ban on slaughter, he is puzzled, and that is perfectly understandable. I am not asking the Minister to deliver a lecture in simple science, but would it not be helpful to everybody if he made some attempt to explain clearly what caesium is, what effects it has, how its radiation compares with the radiation from other known sources, and why it is that we are concerned only about sheep and not apparently about cattle, or for that matter about fish?
The hon. Member for East Lothian asked about compensation. Would it not be fair to ensure that farmers receive the guaranteed price for lamb and will the Minister do anything about those in abattoirs and the hauliers?
Mr. Rifkind: The hon. Gentleman has asked a perfectly reasonable series of questions in a perfectly constructive way. The three areas have been designated not because there is any immediate danger to the health of the public but because, by designating those areas and preventing the movement of sheep outwith those areas for 21 days, it will be easier for us to monitor the sheep in those areas where lambs have been found with a level of radiation which is not at a dangerous level but which is slightly above the level at which we would normally begin to consider action.
Let me put the matter properly in perspective by saying that if we look at the most potentially vulnerable members of the community—young children—a 10-year-old child could consume more than 12 oz of lamb, much higher than most would wish to consume, with 1,000 bq/kg, every week for a year and would still receive less that one eighth of the body dose level at which, by international recommendation, action should be considered.
We have had to take into account the fact that there is no risk to the public at the moment, nor in the foreseeable future, but because the public quite properly expect the Government to apply the highest standards of safety it is right and proper to take this opportunity to monitor carefully lambs in the designated areas which, although at the moment not due to go to the slaughterhouses, will be due to go in several weeks time. Therefore, it is right and proper that we should be able to give total reassurance not only now but in the weeks to come.
Mr. Nicholas Fairbairn: Will my right hon. and learned Friend reassure the public that, in applying these safety measures, the public are not at risk and that they are at greater risk from walking along the streets of Aberdeen because of the radioactivity of Union
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street, from having an X-ray or from looking at an alarm clock? Will he also take into account that, as the public will not know from where their lamb comes, it will do harm to farmers in areas such as Perthshire who are not nominated? Will he take this opportunity to condemn the Socialist Republics of Russia for the assault on humanity which it tried to keep secret?
Mr. Rifkind: My hon. and learned Friend is right to draw attention to the absolute safety for the public. The average member of the public absorbs a dose of radiation from natural sources of 2mSv a year and the total dose for a year for the average consumer, assuming that he eats meat at the average consumption rate throughout the year of 5 kg, would be 0·15 mSv. That again illustrates that it is perfectly safe for the housewife to continue buying lamb and I recommend that hon. Members and the public as a whole continue to eat it.
Mr. Donald Stewart: Is the right hon. and learned Gentleman aware that his statement will give rise to great concern and indeed anger in Scotland in the light of the lapse of time between this announcement and the accident taking place in Russia? Did the monitoring take place before or after the discovery of radioactivity in sheep in Wales? Will he guarantee to the Scottish people that there will be total monitoring of animals for slaughter, and of root crops, grass and water in Scotland?
Mr. Rifkind: Of course we are doing general monitoring. For some considerable time now we have been monitoring sheep at the slaughterhouses because it is at that stage that sheepmeat would normally enter the food chain. It was only with evidence that young lambs with several weeks to go before they were likely to reach market had abnormally high levels of caesium that it seemed sensible to have similar monitoring in Scotland. Because the figures show that in some areas levels are slightly higher than the level at which we would usually consider taking action, it seems right and proper to make the order that I have described today.
Mr. Barry Henderson: Can my right hon. and learned Friend confirm that the worst fall-out in Scotland from Chernobyl has not amounted to as big a close as someone would get from an X-ray in hospital? Would my right hon. and learned Friend agree that the reason why there should be no anxiety on the part of the public is that the Government have been extremely cautious in making such arrangements, which allow the public at large to buy meat in the shops with confidence knowing that it will do no harm to them or their families?
Mr. Rifkind: The average exposure from X-rays during the course of the year is almost exactly the same as would be the total dose in a year to the average consumer of 5 kg of lamb at 1,000 bq/kg level of radiation. That puts the matter in its proper perspective.
Mr. Ron Brown: To stop those anxious to make a fast buck irrespective of safety standards, will the Secretary of State ensure that all meat — all beef and lamb products in butchers' shops and supermarkets— is checked, bearing in mind that we do not always know the source of those products? Not all of them come from Scotland.
Mr. Rifkind: Lamb or other products which enter the United Kingdom can be monitored. Various steps are

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taken to ensure compliance with international recommended actions. It is only with regard to young lambs several weeks before they are due to go to market that the problem appears to have arisen. Therefore, it is in that area——
Mr. Ron Brown: Appears?
Mr. Rifkind: Of course, we can only go on the basis of the evidence that we have. The hon. Gentleman would not wish to be so irresponsible as to suggest anything beyond that.
Mr. Michael Forsyth: Would my right hon. and learned Friend confirm that caesium is a short-lived isotope, that becquerels are a measure of disintegration rather then the energy of radiation and that the risk to public health is minimal? Will he take this opportunity to repudiate the remarks of the hon. Member for East Lothian (Mr. Home Robertson) and other Opposition Members who, as part of their campaign against nuclear power, are deliberately whipping up public hysteria on this matter and adding to the burden of hard-pressed farmers in Scotland?
Mr. Rifkind: The biological half-life of caesium is about 20 to 30 days. Therefore, there will clearly be continuing reductions as the days go by in the level of radiation to levels which are very small. I have already shown that I believe that there is a duty on the Opposition, as much as on the Government, to try not to cause needless alarm in areas where there is no danger to the health of the public.
Mr. George Foulkes: If the Secretary of State is claiming openness and honesty in this matter, can he tell the House why Ministers overruled the advice of Government scientists that milk should not be drunk in Scotland for two weeks after the events at Chernobyl? Will he also say why the information in relation to the regular monitoring of sheep thyroids in Caithness being transmitted to MAFF laboratories in Weybridge is classified? Will he arrange for that information to be declassified? Otherwise, in this and other matters, he will be continuing the attitude of the Government towards this whole issue, which is one of secrecy and complacency.
Mr. Rifkind: The hon. Gentleman is being utterly absurd. First, he should address any questions on MAFF to my right hon. Friend the Minister of Agriculture. Secondly, with regard to the question of overruling advice from my officials on the banning of milk, I have to say that at no time did I receive any advice from any of my officials to ban the consumption of milk. Therefore, there was no advice for me to even consider, much less reject. The hon. Gentleman should check his facts before he makes foolish allegations.
Mr. Teddy Taylor: As these events and the Opposition's irresponsible reaction to them have caused a sharp fall in the price of lamb, would the Secretary of State explain whether that loss is paid for by the farmer or by the taxpayer through the deficiency payments system? Could he give us some indication of the extra cost to the taxpayer of the fall in lamb prices?
Mr. Rifkind: It is not possible at this stage to give any indication of what the implications for lamb prices will be over an extended period. However, we have said that if any
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individual farmer suffers from severe economic loss, we shall be prepared to consider compensation. I cannot usefully go beyond that at this stage.
Mr. Robert MacLennan: Has the monitoring of food products now been sufficiently extensive to enable the Secretary of State to say that he is satisfied that there is no risk of consumption of irradiated or contaminated products in Scotland, outside the matters of his statement today? While I fully accept the necessity of what he has done, does he realise that it will have a damaging effect, not only on the individuals in the areas where the movement has been restricted, but on the market generally, despite his undoubtedly justifiable reassurances? Experience in Wales and Cumbria suggests that a compensation scheme will be necessary for individuals, and that the income of sheep farmers generally will take a severe knock. The Government must bear that in mind.
Mr. Rifkind: If anything, the Government could be criticised for being over-cautious and for imposing safeguards which may be beyond what is absolutely necessary for public health. The public would expect us to err, if we were to err, on that side rather than in the opposite direction. One appreciates that in such circumstances there is some uncertainty, which can have implications for the farming community. For that reason, I paid tribute to both the National Farmers Union of England and Wales and the National Farmers Union of Scotland for their constructive response at this difficult time for their members.
Several Hon. Members rose——
Mr. Speaker: Order. I remind hon. Members who represent English constituencies and who seek to catch my eye that the matter refers to Scotland.
Sir John Farr: I congratulate my right hon. and learned Friend on the sensible precautionary step that he is taking. In the long term, will he look at the Food and Environment Protection Act 1985 in which we endeavoured to set out a framework for the role of proper consultation and compensation to deal with natural and man-made disasters of this nature? I mention that to my right hon. and learned Friend because the relevant orders from that Act will shortly be coming before the House. Could we not include an order to cover this sort of eventuality in future, as some of us wanted to do at the time?
Mr. Rifkind: I am grateful for my hon. Friend's suggestion, which I shall certainly consider.
Mr. Tam Dalyell: For 19 years successive editors of New Scientist have thought me sufficiently responsible about nuclear and other industries to write a weekly column. I do not take it easily or kindly to be told that I am irresponsible about these matters. Can I press the Secretary of State on his answer to my hon. Friend the Member for East Lothian (Mr. Home Robertson) that he was first informed yesterday? The heavy rain fell on 3 and 4 May. I am informed that MAFF in England was told of the problem of caesium-134 and 137 in mid-May. Are we being told that the Scottish Office was not informed by MAFF, and that the responsible journalism about when MAFF was first told, which we have all read, is completely wrong? I believe that the Secretary of State may not have been informed, but what about his officials and the Under-

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Secretary of State for Scotland, the hon. Member for Argyll and Bute (Mr. MacKay)? When was the Scottish Office first told? It is incredible to many of us that the Secretary of State should give the impression that he was first informed yesterday, although a good deal of information was available in mid-May.
Mr. Rifkind: The hon. Gentleman is suffering from a considerable misunderstanding. He should know, and if he does not he can read it in the Official Report tomorrow, that I was referring to the specific monitoring done on young lambs in Scotland during the past few days. He should also be aware that the Ministry of Agriculture, Fisheries and Food first received its figures for young lambs last week, and that, as a consequence of that, a statement was made by my right hon. Friend the Minister of Agriculture, Fisheries and Food last Friday. We initiated our monitoring in the light of the figures that were emerging on young lambs in England and Wales, and as a consequence we have decided to take the action that I have announced today.
Mr. Michael Lord: I acknowledge the reasonableness of my right hon. and learned Friend's answers. Nevertheless, I ask him to consider that the general public are still extremely confused. I have seen reports that suggest that one can eat lamb every day of the year without getting any more radiation than one gets from a visit to the dentist. I am not sure whether that is a recommendation to carry on eating lamb or one to stop going to the dentist. Will my right hon. and learned Friend accept this at least? Unless we can establish a scientifically correct yardstick that is more easily understood by the general public, we shall have more problems both with the Chernobyl-type incidents and, more particularly, with our continued nuclear programme.
Mr. Rifkind: My hon. Friend makes a reasonable point. The difficulty under which we all labour is that certain figures have been adopted for international purposes, but many experts think that these figures are far too low and that higher figures would be consistent with the safety of the public. Nevertheless, these are the present figures available for the international community. Therefore, it is right and proper that, if these are the figures that it is recommended that one should consider, it is only reasonable to respond in that way.
Dr. Norman A. Godman: Is the Secretary of State satisfied with the sampling methods employed in this monitoring process? Has a similar monitoring process been carried out on recent imports of fish from north-east Atlantic countries?
Mr. Rifkind: I cannot speak in detail about the products of other countries, but I have no reason to doubt the reliability of the sampling that has been carried out in Scotland.
Mr. Richard Alexander: In conjunction with my right hon. Friend the Minister of Agriculture, Fisheries and Food, will my right hon. and learned Friend reconsider restricting compensation to cases of severe loss? If someone suffers loss as a result of a Government decision, for whatever reason, is he not entitled to compensation? What action are my right hon. and learned Friend and the Government taking to get this loss back from the perpetrators of the incident, the Soviet Union?
Mr. Rifkind: My hon. Friend will appreciate the difficulties that would be inherent in any such attempt, but compensation is a delicate and difficult problem. We hope that, for the vast majority of farmers, the lambs in question will in due course be safe and will go to market, so any loss sustained will be minimal, if it exists at all. This will be more apparent as the days go by.
Mr. Gavin Strang: When the Secretary of State uses phrases such as "no risk to the public", will he acknowledge that any increase in the exposure of the population to radiation leads to an increase in radiation-linked diseases, albeit a small increase? In that context, will the Secretary of State give us some further information as to the level at which the radio-caesium content of the lambs will have to fall before the meat is deemed suitable for human consumption? Can we be assured that it will be below half the level of 1,000 bq/kg?
Mr. Rifkind: The internationally recommended level is 1,000 bq/kg. The highest figure in Scotland of which we are so far aware is only 1,200 bq/kg. There is a biological half-life for caesium of 20 to 30 days. Therefore, it is reasonable to assume that, in the vast majority of cases, in those lambs that at the moment have contamination above the level of 1,000, the level will fall well below the internationally recommended level during the period of this order.
Mr. Keith Raffan: Will the announcement that my right hon. and learned Friend has made affect the movement of sheep from unrestricted areas to abattoirs within the restricted areas that he has designated?
Mr. Rifkind: If it were desired to move sheep from unrestricted areas to abattoirs in restricted areas, that would be permissible, as long as the sheep did not stop in transit. If they stopped for any length of time, they would become subject to the requirements of the order.
Ms. Clare Short: I am not trying to spread panic, but I find the situation increasingly frightening. I do not think that the Government's position adds up. If it is necessary to stop selling lamb now, it is not good enough for the Secretary of State to say that there is no danger. He would not be making this statement if there were no danger. If this is necessary now, what about the vegetables, crops and milk that have already been consumed? I am not satisfied. The Government are not protecting the public properly. I think that I am typical of many people in finding, in the Welsh ban on sales and now this, great cause for fear and a great sense that the Government are not protecting our interests properly.
Mr. Rifkind: I suspect that the hon. Lady would not be capable of being satisfied by any announcement that the Government made on this issue. All the lamb in the shops at present is absolutely safe, and on all the information that we have, the lambs that are at the slaughter houses at the moment are safe. The reason for the order is that a number of lambs have been identified —for the most part young lambs, and several weeks will elapse before they are ready to go to market — and it is therefore sensible to continue to monitor in those areas where findings have been taken that are above the internationally recommended level. However, the level to which I have referred is not a level above which it is unsafe to eat lamb.

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The level for that is much, much higher. In fact, 1,000 bq/kg is the level at which Governments are recommended to consider taking action. In other words, that is quite different from the implications of the hon. Lady's remarks.
Mr. James Wallace: The Secretary of State said that the Department of Agriculture and Fisheries for Scotland was not monitoring young lambs at the time that the Ministry of Agriculture, Fisheries and Food was doing so. Why was that?
Mr. Rifkind: We were concentrating upon those lambs that were at the slaughterhouse, because lambs at the slaughterhouse were to go immediately to the shops and to be eaten by the public. That seemed to us to be a clear priority, and that view was taken throughout the United Kingdom. There was additional monitoring in England and Wales of young lambs some weeks before they were due to go to the slaughterhouse. In the light of those findings, it seemed reasonable that we should take similar samplings.
Mr. Home Robertson: The Secretary of State said that he received the results of these tests only yesterday. If he really wants to allay public fear, will he answer my question? What information did he have during the month of May about the concentration of caesium contamination on pasture, or in animals, or elsewhere? There are many more questions that need to be answered. In the presence of the Leader of the House, I suggest to the Secretary of State for Scotland that there is an urgent need for a debate in this House on the whole issue.
Mr. Rifkind: We are perfectly happy to make available to the public all the results of the sampling that we have done. It is precisely that decision that I have announced today and that we have put into practice during the last few weeks. This is the first time that we have had figures relating to young lambs that imply levels above 1,000 bq/kg. Therefore, the House and the country would expect us to take action of the kind that I have described, and that is what we have done.
Later—
Mrs. Ann Clwyd: On a point of order, Mr. Speaker. As you so clearly ruled, in reference to the statement on Scotland, that it was Scottish business, are you in a position to tell us whether a similar statement will be made on Wales? Are we to have a statement from the Secretary of State for Wales? Many hon. Members would like to put questions to him. The concern in Wales is just as extreme as it is in Scotland. I believe that a statement should be made in this House along exactly the same lines.
Mr. Speaker: I do not know whether the hon. Lady was present on Friday, but Wales was covered then.
Mrs. Clwyd: But not by the Secretary of State for Wales.
Mr. Alex Carlile: Further to that point of order, Mr. Speaker. The Secretary of State for Wales is the Agriculture Minister for Wales, not the Minister of Agriculture, Fisheries and Food. The Minister of Agriculture for England has made a statement and the Secretary of State for Scotland has made a statement, but all that we have seen the Secretary of State for Wales do is slink in and out of the House with a guilty expression whenever somebody else wants to make a statement.
You have told the House frequently that you protect the position of Back-Benchers—as you do, Sir. We ask you to ensure that the Secretary of State for Wales comes to the House and makes a statement on the caesium levels in sheep in Wales. Half of Wales is now affected by restrictions, including much of my constituency. Welsh Back-Benchers should be given the opportunity to question the Secretary of State on this matter.
Sir Geoffrey Finsberg: Further to that point of order, Mr. Speaker. Is it not correct that all Secretaries of State are interchangeable and that the statement could have been made by the Secretary of State for Employment?
Mr. Speaker: It is not for me to call upon the Secretary of State for Wales to make a statement. I do not possess that authority. A number of Welsh Members were called on Friday when the Minister of Agriculture, Fisheries and Food made his original statement.

Social Security Bill
Hon. Members: On a point of order——
Mr. Speaker: Order. I shall take first the point of order of the hon. Member for Oldham, West (Mr. Meacher).
Mr. Michael Meacher: On a point of order, Mr. Speaker. I rise to ask you to use your good offices to request the Secretary of State for Social Services to make a statement. Following the Government's humiliating defeats on the Social Security Bill yesterday in another place, his proposals for the so-called reform of social security have now degenerated into a ragbag medley of disconnected cuts without any logic or structure. Since the package is now in total disarray, and since in every single policy area his original proposals have now been mauled out of all recognition, the only decent thing for him to do would be to withdraw the whole package. But even if he does not do so, since there is no electoral mandate for this package, since the proposals were almost universally condemned in the consultation exercise and since they have now been decisively thrown out in another place, it would he a constitutional affront to use the whipped majority in this House to reverse these votes. We want an unequivocal assurance to that effect.
The Bill represents the most unpopular set of proposals in this area for 50 years. On every test of public approval, they have failed. The Secretary of State must now recognise that fact and withdraw his package.
Mr. Speaker: I know about the changes that have been made in the other place, but there will be an opportunity here to consider Lords amendments. Whether or not a statement is made is not a matter for me, but no doubt we shall deal with the matter when the Bill comes back here.
Later—
Mr. Bill Michie: On a point of order, Mr. Speaker. I refer to your answer to my hon. Friend the Member for Oldham, West on the Social Security Bill.
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May I, through you, ask the Leader of the House, who is present, when a statement is likely to be made rather than that we should allow the House of Lords to do further damage to the Bill, which has already lost credibility?
Mr. Speaker: I did not say that there will be a statement. That is not a matter for me. I said that the Bill will undoubtedly come back here for consideration of Lords amendments.
Mr. Ernie Ross: Further to the point of order raised by my hon. Friend the Member for Oldham, West (Mr. Meacher), Mr. Speaker. It is very important that the Secretary of State for Social Services should say whether he intends to proceed in another place with the Bill. It would be a waste of the time of the House if the Bill wee to be brought back here, where it s likely to suffer further defeats.
Mr. Terry Lewis rose——
Mr. Speaker: Is it the same point of order?
Mr. Lewis: Yes, Sir.
Several Hon. Members rose——
Mr. Speaker: Order. We have an important debate today. I shall take one more point of order, if it is on the same point.
Mr. Lewis: Further to the same point of order, Mr. Speaker. Not only were two amendments to the Social Security Bill severely defeated in the other place last evening, but a few others very narrowly scraped through. A coach and horses has been driven through the whole measure and it is now in complete disarray. Surely it is necessary that a statement should be made either today of tomorrow, but preferably today, to satisfy Back Benchers who have worked very hard to explode the very matters that the other place has exploded.
Mr. Speaker: I am sure that those comments will have been heard, but they are not matters for me.

Famine Relief in Africa
4.8 pm
Mr. Archy Kirkwood: I beg to move,
That leave be given to bring in a Bill to place a duty on the Overseas Development Administration to publish an annual Report to Parliament on famine relief in Africa to include individual reports on each project in Africa financed directly or indirectly from public funds; to establish a timetable during which overall official United Nations aid targets for overseas aid may be reached; to establish a timetable during which the proportion of aid spent on development of subsistence agriculture in the poorest countries would constitute 50 per cent. of the total aid budget; to encourage long term development of African agriculture; and for connected purposes.
Hon. Members will have noticed that only today the United Nations has again renewed its warnings about the drought in six African countries. Of course, droughts are endemic to Africa. They are predictable events that build up over a period of time. They continue, and they will almost certainly get worse in future. That represents only one of many contributory factors to the difficulties experienced in Africa today.
The stark fact is that Africa's ability to feed itself has been steadily diminishing for more than 20 years. Food self-sufficiency decreased by about 12 per cent. from 1960 to 1980. Food imports increased by about 9 per cent. over the same period. [HON. MEMBERS: "Why?"] Conservative Members, from a sedentary position, are asking, sotto voce, "Why?". One of the reasons is the destruction of the environment which has led to increased incidence of drought and desertification. There has been a change from food production to cash crop production. The cash crops are purchased on the world commodity market, sometimes at extremely low and unpredictable rates.
There has been an appropriation of the best agricultural land by settlers, plantation owners and multinational companies. I submit that one of the other main reasons is the incidence—it is an uncomfortable fact—of war and civil strife which has destroyed crops and disrupted agriculture. Currently, some 40 per cent. of Government resources in Africa are spent on arms. Against that background, it is true to say that fund raising is dealing only with symptoms. The real causes of the problems are political in nature, and political action is required to deal with them.
My Bill requests the Overseas Development Administration to produce an annual review and to include in that review an individual project report. That provision is important, because the impact of the deployment of British taxpayers' money must, in my view, be directed primarily to the alleviation of poverty. Hon. Members will have noted that the World Bank report "Poverty and Hunger", published in March this year, found that the basic cause of hunger or food insecurity was poverty or lack of purchasing power. I quote two sentences of the report:
"Hunger persists even in countries that have reached self-sufficiency in food. Food insecurity cannot be eliminated without alleviating the poverty of countries and people."
It is not always clear how effective the United Kingdom's contribution is in combating that poverty and famine directly at source. An annual review and project report would make it more apparent to the press, the public, the charities and agencies involved, and everyone outside the Overseas Development Administration.
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The Bill contains an important provision that a timetable be set during which overall UN aid targets for overseas aid may be reached. Hon. Members will know that most countries in the West have made steady progress towards the official UN target of 0·7 per cent. of gross national product devoted to aid. Scandinavia and the Netherlands have passed that target. Successive Governments have accepted the target without having set a timetable for its achievement. In 1979, the Labour Administration reached a figure of 0·52 per cent. of GNP. That figure has subsequently fallen to a disgraceful 0·33 per cent., making the present Government's so-called commitment somewhat suspect.
I submit—I am sure that this view is held across the Floor of the House— that it must be possible to reach the UN target. Even if it takes up to four years to do so, we should set out in that direction forthwith.
If one looks at the way the three broad measures used to record United Kingdom aid have been changing, one sees that all have fallen in real terms since 1979. Using figures compiled for the years 1979 to 1984, public expenditure on aid has fallen by 19 per cent. The aid programme that is technically administered by the ODA has fallen by 21 per cent. Official development assistance, which excludes floors and market terms—what is known as concessional aid—has fallen by some 33 per cent.
The Bill also sets a timetable during which the proportion of aid spent in the development of subsistence agriculture in the poorest countries constitutes some 50 per cent. of the total aid budget. It is notable that, in 1984, only 15 per cent. of United Kingdom bilateral aid was allocated to agriculture and related economic sectors—renewable natural resources. By comparison, mining and energy took some 55 per cent. of United Kingdom bilateral aid.
Infrastructure is obviously important, especially in health, education and communications. By and large, the infrastructure developed by United Kingdom aid at the moment does not primarily assist the work of people producing food on the land.
There have been changes and reductions in aid for research and development in United Kingdom institutes and in the renewable natural resources sector. At the same time, there has been a significant increase in the proportion of the aid budget devoted to aid and trade. I submit that funds under that heading should be more appropriately found from the trade and industry budget.
Last year, the report of the Select Committee on Foreign Affairs entitled "Famine in Africa" argued that
"to help in the prevention of recurrence of the present crisis, assistance by the donor community is required in various ways for the food producing sector"—
which the Committee defines as
"principally smallholder, agricultural and horticultural production".
Last year, the all-party parliamentary group on overseas development showed that there was a considerable mismatch between the robust policy statements in favour of aiding the renewable natural resources sector in Africa and the relatively modest level of financial allocations made available.
On 1 June this year, the United Nations special session on Africa completed a review of the initiative of African countries. The British Foreign Secretary, speaking for the United Kingdom in the plenary session, said that, important as Sports Aid had been, it was now the turn of

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Governments to act. The House knows that the Organisation of African Unity has adopted a far-reaching and fundamental programme called Africa's priority programme for economic recovery. The organisation adopted that in 1985 and set out a financial target of $128 billion which it needed in the four years from 1986 to 1990. Sixty four per cent. of the funding for that programme is to be found from within African domestic budgets. The rest is to be found from external resources. The United Nations special session did not formally endorse or adopt the OAU report, but it reaffirmed a commitment to provide resources to support and complement the efforts of the African countries.
It is now the season when Government Departments are preparing bids to the Treasury for expenditure targets to be announced in the autumn statements. If the House permits me to introduce the Bill — the Bill has all-party support—it will be a strong signal that we all accept that long-term development in African agriculture must be afforded a higher budgetary priority if we are to have any real and long-term hope of banishing poverty and famine and its horrendous cost in human life and misery.
Question put and agreed to.
Bill ordered to be brought in by Mr. Archy Kirkwood, Mr. Jim Lester, Mr. Mark Fisher, Mr. John Cartwright, Mr. Donald Stewart, Mr. David Alton, Mr. A. J. Beith and Mr. Geraint Howells.

Famine Relief in Africa
  FAMINE RELIEF IN AFRICA
  Mr. Archy Kirkwood accordingly presented a Bill to place a duty on the Overseas Development Administration to publish an annual Report to Parliament on famine relief in Africa to include individual reports on each project in Africa financed directly or indirectly from public funds; to establish a timetable during which overall official United Nations aid targets for overseas aid may be reached; to establish a timetable during which the proportion of aid spent on development of subsistence agriculture in the poorest countries would constitute 50 per cent. of the total aid budget; to encourage long term development of African agriculture; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 4 July and to be printed. [Bill 187.]
  ESTIMATES DAY
  [2ND ALLOTTED DAY]
  ESTIMATES 1986–87
  Class VIII, vote 3, Administration.

  Employment
  [Relevant documents: First, second and third reports of the Employment Committee, House of Commons Papers 199 (1985–86), 265 (1985–86) and 435 (1985–86).]
  Motion made, and Question proposed,
  That a further sum, not exceeding £27,735.000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of Employment on the administration of benefit services and on central and miscellaneous services.—[Mr. Kenneth Clarke.]
  4.18 pm
  Mr. Ron Leighton: I commend to the House the two reports of the Select Committee on Employment, on special employment measures and the corporate plan of the Manpower Services Commission. The MSC has a budget of some £3 billion and the House should give it more detailed attention. We compliment the MSC upon the comprehensiveness of its corporate plan, which sets something of a standard to other public bodies in that regard. We were impressed by the enthusiasm of the MSC staff for the necessary work they do. I want to concentrate on our reports on special employment measures. The opening words of our first report were:
  "We seek to attack a vicious paradox. Admitted needs in both the public and private sectors have increased, while the stock of unused resources, both human and material, has increased likewise. Why not bring the unmet needs and unused resources together more quickly? We believe that unemployment is increasingly becoming the main social, moral and economic problem facing the country."
  The cost of the dole queue to the Exchequer is about £20 billion. That must be bad economics. If those people were at work, they would produce some £35 billion worth of wealth. It is a failure of imagination to allow that to continue. The Committee's report stated:
  "The costs of unemployment, including long-term unemployment, are not to be measured only in terms of benefit paid, taxes forgone and output lost. The associated increase of family breakdown, drug abuse, sickness, suicide and crime have a high economic and social cost."
  Mr. Eric Forth: Will the hon. Gentleman give way?
  Mr. Leighton: I hope that the hon. Gentleman will forgive me for not giving way.
  Let the House consider the nature and scale of this tragedy and what has happened. In the year to October 1978 unemployment fell by 91,700. In the year to October 1979 it fell by a further 62,100. Then there was a change of Government and, with it, a change of policy. I do not want to be too partisan but perhaps it is as well to remind ourselves that the Conservative election manifesto in 1979 promised what was termed "more genuine new jobs". On 15 May 1979, the Gracious Speech stated:
  "My Government will give priority in economic policy … and create a climate in which commerce and industry can flourish"—
  and lay the basis for

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  "increased employment in all parts of the United Kingdom." —[0fficial Report, 15 May 1979; Vol. 967, c. 48.]
  That was the promise and the prospectus. What happened? I want to give the facts. Anyone can have opinions; it is the facts that count.
  By the next year, 1980, unemployment had rocketed by 670,200. By the following year, 1981, it had increased disastrously, by no less than 903,400—almost 1 million in one year. In contrast to the 1979 promise, unemployment has continued to increase every year since.
  The Select Committee and, I am sure, the House are concerned about the dramatic increases, within those totals, of the numbers of the long-term unemployed—now more than 40 per cent. of the jobless, numbering 1 million. If we included those taken out by the Budget changes of 1983 for a real comparison, we get a true figure of some 1,430,000 unemployed for more than a year, compared with only a third of a million in 1979. There are now more long-term unemployed than the total out of work in 1979. Well over 500,000 have been out of work for more than three years — many for four or five years. This reflects the marked increase in the numbers of people thrown out of work in 1980, 1981 and 1982 and denied work ever since.
  I put it to the House that the Government have a special responsibility to those of our people, because they are the victims of the Government's policies. Many of the younger generation have never known what it is to have a job. They have been brought up, and are now marrying and starting families, in an out-of-work society. It is impossible to overestimate the damage it is doing to our society and its cohesion. We are fashioning a time bomb for the future. It is not an adequate response to equip the police with CS gas and plastic bullets.
  This is not just an economic problem; it is a moral problem. Recently, the Secretary of State for Employment, Lord Young, made a speech suggesting that 87 per cent. of our people had never had it so good. Does that mean that the millions of unemployed do not matter? That speech does not stand up to close scrutiny because the lower paid have seen their incomes decline in absolute terms. Those in receipt of state benefits, such as pensioners, have not shared in the increased standards of living.
  But to the extent that that statement is true, if nationhood and common citizenship mean anything, do not those who have done well out of the past seven years owe a duty to those who have not—to those who have been shut out and allowed to rot on the dole? Are we to widen the gulfs and divisions in our country even more by spending what resources we have on tax cuts for the better off?
  We all lose and are impoverished by mass unemployment. There is the monumental waste of £20 billion every year to finance the dole queue. There is the lost output. We all know of the things that our constituents lack, yet idle people are not allowed to produce them. Much of the country is crumbling to bits and becoming a slum and, in areas where almost half the population are idle, we see dramatic increases in crime and disturbances in our cities. We all lose by mass unemployment, in the quality of society and of our own lives.
  Mr. Forth rose——
  Mr. Leighton: Ought the Government do something about it? Yes. Can they do something about it? Yes, of course. It would be a betrayal, a form of treason to democratic politics, to say that we can do nothing. If hon. Members say that we can do nothing, we should not be here. Yet the Government have virtually given up. We know that because their assumptions are fed into public expenditure plans which show an assumption of, and provision for, mass unemployment as far ahead as can be seen.
  The Government's main policy is seeking to lower wages and, fancifully, to price people into jobs. Even here they have succeeded only in reducing the wages of the lower paid, yet their unemployment is already higher, and is increasing—disproving the notion that unemployment is caused by high wages. For the rest, there is just chatter about deregulation, jargon about improving the functioning of the labour market and the three Trade Union Acts —all aimed at lower wages.
  Mr. Peter Thurnham rose——
  Mr. Leighton: However, it must be noted that, for the most part, real wages are not directly under Government control, nor are the long-term unemployed now any longer part of the labour market. As someone recently said, they might as well be in Australia for the effect they have on the level of wages. This failure has led the Government to a deafeatist, almost passive acceptance of continuing mass unemployment. We cannot endure this indefinitely, so what is to be done?
  Even with the Government's tight overall fiscal-monetary stance, the Chancellor said in the 1985 Red Book that there was a £9·5 billion "fiscal adjustment" from 1986–87 to 1988–89. Therefore, that £9·5 billion of tax cuts or public expenditure increases would be consistent with the Government's public sector borrowing requirement objectives. Here we all have to make a choice of objectives. Here we all have to decide on what we should like this money to be spent. Surely this scope should be used, as far as possible, to create jobs quickly. That should be the priority. The Select Committee took evidence on the best and most cost-effective ways of doing that.
  Of course, other things being equal, we should all like to see tax cuts. However, if we are interested in jobs, the evidence shows that tax cuts are the least effective, and most expensive, way of creating jobs, costing some £50,000 net for each person removed from the unemployment count. Some people would allege that income tax cuts unleash a surge of productive enterprise and incentives to work effort. The best that can be said for that is that it is completely unproven. The 1979 Budget, introduced by the former Chancellor, the present Foreign and Commonwealth Secretary, was based on that concept. It had the opposite effect and preceded a surge of unemployment.
  Much of the proceeds of tax cuts goes into savings or is spent on imports, not domestic employment. It might be more honest to admit that income tax cuts are a straightforward bribe for electoral reasons than to pretend that they are for the good of the economy. Better and cheaper for job creation, although still relatively expensive, are increases in public expenditure, notably in public investment. They are considerably more cost-effective than income tax reductions. Here we should note that the direct and indirect job content of each unit of

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  public expenditure differs considerably programme by programme and according to whether it is current or capital expenditure. This would have to be taken into account when designing the mix to create employment.
  The third method of job creation——
  Mr. Nigel Forman: I am sorry to interrupt the hon. Gentleman in the flow of his long speech, but does he not accept that any variable analysis of the impact of different forms of fiscal adjustment upon employment is bound to be suspect? About the only confident statement that one can make is that tax cuts may have a greater or lesser effect on unemployment than the other things he is discussing, such as public expenditure or national insurance. It is clear that it does not have a quick effect. Is it not a question of time scale?
  Mr. Leighton: The hon. Gentleman is known in the House for his attention to these matters. He is right that the estimate cannot be exact. What he says about the speed at which the measures can be introduced is also right.
  We are not suggesting that these are the main measures for the future of the whole economy. They are measures to be taken alongside an orthodox expansion of the economy. Whatever mix of measures that we have, the Select Committee proposes selective employment measures because they are targeted and quick acting, with an effect in the short term within the next two or three years. That is why we recommend them.
  Therefore, I come to the third method — special employment measures. The evidence here is striking and very clear. It shows that they are far and away the most effective measures of all. They boost employment or cut unemployment far more than any other use of money.
  The Government already have a range of special employment measures such as the community programme, the enterprise allowance scheme and the job release scheme. If we include the youth training scheme, although it is not strictly speaking a special employment measure, more than 600,000 people take part, taking over half a million out of the unemployment count. That is not at £50,000 a head, as with tax cuts, but at about £2,000 a head. That is spectacularly good value.
  What the country needs now—I take the point of the hon. Member for Carshalton and Wallington (Mr. Forman) in relation to the short term—is a new deal. Alongside an orthodox revival of the economy we need, especially in the short term, a major expansion and upgrading of special employment measures to take up and reduce unemployment.
  Of course, there are some criticisms of the measures. Some spending is on dead weight, that is, in financing jobs that would have existed anyway. Also there is displacement, displacing employment or output elsewhere. There is nothing new or unique in that. For example, regional development grants often go to firms that would have made the investment regardless of the availability of grants. There is already heavy dead weight on some of the Government's schemes. On the young workers scheme, which has been revamped into the new workers scheme, the dead weight is well over 75 per cent.
  On the enterprise allowance scheme, of which the Government are so proud, the dead weight is about 50 per cent. But, even allowing for the dead weight and displacement, the expenditure on special employment
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  measures is some 20 times more effective than tax cuts. It is certainly far quicker in removing people from unemployment.
  On the inflation criterion, special employment measures are superior to other uses of money because they are targeted towards individuals, firms and areas where labour is in excess supply, and so they do not lead to inflation. Spending on the long-term unemployed is not inflationary. It is an investment in their future employability.
  At present, 0·6 million people are on special employment measures. What is the optimum number? What is the optimum number with unemployment at over 4 million? Why is the figure 0·6 million rather than, say, 1·6 million? We had better realise that the measures will be a permanent feature of the labour market as far ahead as we can see, so let there be longer-term planning and evaluation.
  Here I come to the details of our proposals. We concentrated on the long-term unemployed as a priority category. For them, privation and hardship is greatest. They are discriminated against as the only long-term claimants who cannot claim long-term benefit, however many years they have been out of work.
  After a family has been without wages for a year or more, clothing, footwear and household goods wear out and cannot be replaced. Their children suffer, and in turn their life chances are affected. The longer that someone is without a job, the less likely he or she is to get a job. Unemployment is not an orderly queue, where those who have waited the longest come off first. The reverse is true. Successful applicants tend to be those who have recently joined the queue. The great advantage of special employment measures is that they can be targeted at specific groups.
  Our original proposals recommended that, over three years, a job guarantee should be offered to all long-term unemployed who wanted one We wanted the new special measures to create additional jobs at the lowest feasible cost to the Exchequer. That would lead to regular jobs with regular employers, paying the rate for the job for a full week if required. We felt that 750,000 extra places, in addition to the 230,000 on the community programme at the peak of the scheme, would be sufficient to provide the guarantee. Clearly, it would not be possible to provide these jobs at once. We envisaged a build-up of the scheme over three years, with pilot schemes to test out the ideas in practice and learn from them. Where would the extra jobs be found? The first area was an urban rehabilitation and building improvement programme. Despite the enormous backlog in maintenance work, the construction industry is employing 500,000 fewer workers than a decade ago. We envisage 300,000 extra jobs at a net cost of £1·5 billion when the scheme is in full operation.
  The second area is in health and personal social services. Both are highly labour-intensive. We suggested that 50,000 people should be employed in the personal social services and 50,000 people in the National Health Service.
  Mr. Thurnham: I apologise to the hon. Gentleman for arriving a few moments after he started his speech. Could the hon. Gentleman say whether trade unions have suggested they would be able to support the initiative from

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  the Select Committee? I have not heard of any response from the Trades Union Congress on the suggestions that the Committee has put forward.
  Mr. Leighton: I have no knowledge of the trade union view of the schemes. Perhaps, if I may be allowed to call him my hon. Friend, the hon. Member for Bolton, North-East (Mr. Thurnham) and I might together seek evidence on this from the TUC.
  I am putting this forward not as the view of the TUC, but as the view of the Select Committee. Indeed, I offer these views to the Government and the country, and that includes the TUC. I am as prepared to argue this case with the TUC as I am with anyone.
  Mr. John Evans: Would my hon. Friend accept from me, as someone who regularly meets senior members of the trade union movement, including members of the TUC general council, that they would accept any measures that would help to get the long-term unemployed back to work? The problem is in trying to get the Government to accept the measures.
  Mr. Leighton: I hoped that that would be the view of the TUC. I certainly thought it might be. We need sensible and feasible ideas to tackle and remedy the problem of long-term unemployment. That is why we are putting them forward.
  I hope that the House will come up with sensible, reasonable and practicable ideas and I am certain that we could discuss them with the TUC. I have no reason to suppose that the TUC would be anything other than co-operative in any measure that would increase employment.
  I understand that it is public policy to move from institutional care to care in the community. We need more carers, and that is the area of our second proposal. The net cost would be about £0·4 billion.
  The third area of our proposals involves a wage subsidy of £40 a week, which is the average benefit that a long-term unemployed person may expect to receive, and would be paid to the employers in the private sector who took on additional long-term unemployed people. Allowing for the maximum possible dead weight, we estimate that some 350,000 jobs could be created by that means at a cost of £1·4 billion. At the end of a three-year period, that would give us the additional jobs needed to constitute the guarantee to the long-term unemployed, at an eventual cost of £3·3 billion.
  We studied the figures carefully, and we had our calculations double checked by the London Business School. Such a programme would transform the situation in this country. Everyone would know that a year would be the maximum period that he was idle and out of work. It would lift morale, and restore hope to our people. The report received a very good response in the country and in the press. The Government's reply was a long time in gestation. When it came, they did not fall over themselves in their eagerness to spend £3·3 billion in that way.
  The Government claimed that we had underestimated the cost, which they said would be £4·3 billion at its peak —which is £1 billion more than our estimate. They also thought that it would produce fewer jobs. We do not accept the arithmetic of their calculations, and we would be pleased to discuss that. But even on their figures, we say that the proposal is well worth while and should be
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  adopted. The main argument against seemed to be the cost, which the Government's reply said was "formidable". In the fifth paragraph, the Government said:
  "The cost of attempting to implement the Committee's proposal would be prohibitive".
  In their very last paragraph, the Government said of the £3·3 billion cost:
  "Additional spending on this scale would pre-empt the scope for tax reductions."
  So there is the choice. It is a question of priorities, and of what value one puts on dealing with unemployment. When considering the Government's reply, we were somewhat heartened that, although the Government did not agree with our figures, we were not all that far apart. We said £3·3 billion: they said £4·3 billion. At least we are in the same parish. We take the Government's reply as being in no way a rejection of the Committee's view that the long-term unemployed are a priority category.
  We did not leave things there. The debate must continue. Consequently we have come back with a scaled-down version of our programme, and have suggested that our proposal for the job guarantee should be offered to the over 500,000 people who have been out of work for three years or more, at a cost of £1 billion, and that pilot projects should be used to test the feasibility of our original, more ambitious proposals. This much more modest proposal that we now put forward would involve less than one third of the original cost. We offer it in a constructive and helpful spirit. It is something that we can afford. The House will remember the billions found to defeat the miners' strike, and the billions spent in the Falklands. We can certainly spend £1 billion on fighting unemployment among our own people if the will and the desire are there. If we do not embark on that programme, or on one of a similar nature, we shall write off those fellow citizens.
  Despite being told of the new jobs that have been created since 1983, the number of long-term unemployed has grown dramatically during that period, and the duration of their unemployment has likewise grown. Any general economic growth would help only the short-term jobless. Unless there are specific and targeted measures, those people will never work again. That would be unforgivable and a betrayal. If the Government want to help, it is perfectly possible for them to do so. We have pointed the way.
  I am pleased to see that the Paymaster General is listening intently, although I am now drawing my speech to an end. I imagine that he will refer to the extra places on the community programme. We have included that in our calculations. I imagine that he will also refer to the restart programme as being the Government's way of tackling the problem. I should make it clear that the Select Committee fully supports the restart programme. However, it would be futile to suggest that it is a solution to the problem. As the Paymaster General knows very well, it has nothing to do with job creation. It does not create one single new job. The most that it can do is to seek to ensure that the long-term unemployed get a better share of the existing vacancies. But what if there are no vacancies, or too few? The six-month restart pilot projects started on 6 January. My researches show that on 9 May, five months later and five sixths of the way through the period of the project, 3,919 letters went out in Dundee, and, after five months, just 11 people got jobs.
  Mr. John Prescott: I think that my hon. Friend must have heard the exchanges during

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  Question Time, which showed that the Government are concerned not about how many people obtain jobs, but about how many are offered jobs. Presumably, many people are offered the same job so that the Government can say that so many offers have been made, and do not have to state the number of real jobs available.
  Mr. Leighton: It is not quite like that. People are offered a menu of opportunities. One offer may be to go to a job club, another may be to train, and yet another may be to join the community programme. There is no question of 90 per cent. being offered jobs. The Select Committee will try to monitor the restart programme, and lay the facts before the House. Indeed, such monitoring is a justification of the whole Select Committee system.
  It could also be said that the task of the restart programme is not just to put people into jobs. I have travelled round the country with the MSC, and it is said that the main purpose is not to offer people jobs but to remotivate them, to train them, and so on. The Paymaster General must be careful about the language that he uses. The restart programme will not solve the problem. It will not create a single new job. It is not in the business of job creation.
  Once I have given a few more figures for the restart programme, I shall outline how our proposals could help it. After all, we are in favour of the restart programme. In Billingham 941 letters were sent out, yet by 9 May only four people had got jobs. In Preston, 3,130 letters went out and nine people obtained jobs. In Huddersfield, 2,544 letters were sent out, but by 9 May—five months after the beginning of the six-month pilot project—15 people had been placed in jobs. In Stoke, 4,140 letters were sent out, and 23 people obtained jobs. In Port Talbot, 2,615 letters were sent out, and 53 people found jobs. In Plymouth, 2,537 letters were sent out, and seven obtained jobs. In Crawley — this looks as though it is the best result, and I know Crawley quite well—643 letters were sent out, and 53 were placed in jobs by 9 May. Lastly, in Ealing, 2,260 letters were sent out, and 38 were placed in jobs.
  The pilot projects have another month to go. We shall then get a final assessment, and the effect of all this will continue. To use language such as the Paymaster General used at Question Time today misleads my hon. Friends into thinking 90 per cent. when it is a fraction of 1 per cent. ——
  The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): I am sure that the hon. Gentleman would not wish unintentionally to mislead the House in the use that he makes of the figures. He is talking about the number placed directly, on coming to interviews, in available jobs. He knows that he is leaving out all the figures for those placed in jobs on the community programme, all the figures of those referred to job clubs, where about two thirds will get jobs, and all those who will benefit from the restart courses, which will undoubtedly have an effect on people's ability to go into jobs. He is making a narrow and most misleading use of all the information that we are producing about the pilot schemes just as, a few moments ago, he completely misrepresented the Government's response to the report of the Select Committee by suggesting that we turned it down on cost alone. He knows perfectly well that it was the impracticability of what was proposed that led us reluctantly to reject it.
  Mr. Leighton: I am pleased that I have flushed out the Paymaster General and got him to come and account for himself. Now we are beginning to get down to some of the nitty-gritty. It is frustrating at Question Time, when the Paymaster General comes back with his strange language giving everybody the impression that 90 per cent. are satisfied and happy. When we start probing, which is what a Select Committee can do—we can ask not just one question but 12 questions, and we can visit places and get to the facts—we find a different situation. Let us get to an area of agreement here.
  Mr. Clarke: The hon. Gentleman, when he remembered that he was Chairman of the Select Committee, conceded that the report of the Select Committee was in favour of restart. He then launched into a great attack upon it. We have used consistent language throughout to the effect that 90 per cent. of those interviewed are made some sort of offer. The confusion is caused by the completely inaccurate quotation of what we are meant to have said by various right hon. and hon. Members of the Opposition.
  Mr. Leighton: The right hon. and learned Gentleman must learn to relax and not get too excited about this. There is no need to worry because there is a lot of common ground here. We are in favour of the restart programme, make no mistake about that. We are putting forward proposals to make the restart programme more effective. I say again—I will give way if the Paymaster General thinks that I have this wrong — that the restart programme is not an exercise in job creation. It does not create one new job. It seeks to ensure that the long-term unemployed get a better share of the existing vacancies.
  Mr. Clarke: As the hon. Gentleman knows, the community programme is a job creation programme, which is why we are doubling it at huge expense. It will provide jobs for over 300,000 in a year. When giving his figures, the hon. Gentleman leaves out all the community programme jobs, although earlier in his speech he was saying how cost effective the job creation measures were and that he supported them.
  Mr. Leighton: There is hope for the Paymaster General after all—he is coming along.
  The Select Committee recommended two years ago, before the right hon. and learned Gentleman's time, that the community programme should be doubled, and at long last we are managing to drag this out of the Government. I am certain that he will be obliged to carry out many of the ideas that we are putting forward, although he is not jumping at them now. We are the cutting edge—he will come along eventually.
  We have included in our figure of 1 million the expansion of the community programme. We want the community programme to be upgraded. Even the Paymaster General has not read the report properly. He; rubbishes a report that he has not read. To constitute the job guarantee of 1 million, we proposed the 750,000, with the other 250,000 to come from the community programme. The Government do not even understand what we propose, yet they jump up and down trying to criticise us. Of course, if the Paymaster General likes to come back, I am always generous in giving way, as hon. Members know. Perhaps he will have a little read, I will continue for a few moments, and I am certain that eventually he will come back on this matter.

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  I want the community programme to be upgraded. I want the wage, which is a miserly £67, increased so that we can get a better community programme. The Government must pay a little more attention to the documents that we produce and the speeches that we make. It would he nice to have a competent Treasury Front Bench dealing with unemployment.
  I repeat for the fourth time, so that the Paymaster General should not misunderstand, that we support the restart programme, and we support and congratulate the dedicated Manpower Services Commission staff operating it. However, as we say in the report,
  "In fact, the programme is already beginning to reveal a desperate shortage of such jobs".
  What the restart programme needs, what it is crying out for, is some jobs for its participants who have been motivated to take them. If their hopes are raised and then dashed, it would be a scandal. I urge the Government to adopt our proposals to work in tandem, to complement and ensure the success of the restart programme, to provide the jobs that the participants of the restart programme, having had their training and their motivation, can take.
  I conclude by emphasising that this is a moral, social and economic issue. There must be a response commensurate with the scale of the problem. It is our overwhelming duty to come up with a remedy to this tragedy, which is impoverishing and undermining our whole nation. The Select Committee will strive for it, and I urge the Government to do the same.
  4.57 pm
  Mr. David Howell: I think that the whole House admires the zeal and application with which the Select Committee on Employment looks at the question of job creation and the plight of the long-term unemployed, even if the whole House will not necessarily agree with every nuance of the speech that the Chairman of the Committee has just delivered, giving his own rather personal interpretation of the problem. While there was much in the early part of his speech with which I agreed, it is a pity that he got into a sort of rhythm of accusations about the Government virtually giving up and pushed aside the beginnings of a serious analysis and understanding of this highly emotive and central social problem. About that I was sorry. Nevertheless, I recognise that he feels strongly on these matters, and has done much work upon them.
  I hope that, although I am not a member of the Select Committee, I will he forgiven for intruding on a debate and on an issue that obviously affects all of us. In particular, I will concentrate on the Manpower Services Commission's four-year forward corporate plan and report, 1986 to 1990. With that I associate another recently published report that is very germane to the issues under discussion today. That is a survey by the Institute of Manpower Studies which it undertook for the occupations study group on the pattern of employment as the institute sees it evolving over the same period, 1986 to 1990.
  The MSC report, some of the comments of the hon. Member for Newham, North-East and the study by the Institute of Manpower Studies all have one central and very obvious message — that the employment and unemployment landscapes have totally changed; they have
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  altered in their structure and shape and in the problems that they throw up. This is not futurology; it is not something that will happen in 10 years time — it has happened already. We are dealing with a new employment landscape and the MSC report is obviously attuned to that fact as it looks forward to 1990, as does the IMS report.
  As the MSC report reminds us, we are now in the fifth year of uninterrupted growth in the United Kingdom economy, yet the prospects for employment are not good. The MSC chairman, Mr. Nicholson, said in the foreword to the report:
  "Over the planning period unemployment, especially long-term unemployment, is likely to remain at historically high levels, though the rises of recent years are expected to cease."
  Elsewhere in the report is the marker that the most sensible and safe planning basis for the long-term unemployed is to assume that the problem will remain at roughly the same level—perhaps not very much worse, but not very much better either.
  The IMS tried its hand at rather more precise forecasting and came up with a rather more depressing assessment. It suggests that 640,000 jobs will disappear from the production industries by 1990, with only 520,000 jobs appearing in other industries, notably in the service sector. We must add to that the increase in numbers entering the labour market, which on IMS figures gives an actual rise in the level of unemployment, especially long-term unemployment. As the hon. Member for Newham, North-East said, they are the ones who stay at the hack of the queue.
  The beginning of wisdom in addressing this problem is to recognise something that, to be fair to the hon. Member for Newham, North-East, he, his party and the critics of the present position do not fully accept, which is that manufacturing employment—if we define that in the old form—will continue to shrink at a great rate. That is happening all over the world, and in British industry it is happening rather faster than in the past. There is a most basic technological reason for that—manufacturers find that their processes are better organised on very skilled manpower only and on a capital-intensive basis.
  As the IMS reminds us, that is a process in which manufacturing is actually divesting itself of large numbers of people, not merely because they are not wanted but because the whole process with which they are associated is now subcontracted outside manufacturing. Therefore, when the pessimist sees that manufacturing employment is shrinking fast, he is actually looking at a process by which the very category of manufacturing is shrinking as more and more of the processes are sub-contracted out. Some of those processes are very close to the main stream of manufacturing production, but include accountancy, transportation, catering, all sorts of services and support to the processes within production. That sub-contracting is to industries and firms that may be classified as services. Thus, the whole pattern is bound to be one of shrinking manufacturing employment; that cannot be stopped. Indeed, if we are to have a flexible, competitive economy in the 1990s, it should not be stopped.
  One of our difficulties is that, for emotive, noble but wrong-headed reasons, in the past we have stood in the way of the rapid shrinkage that was required in blue collar and traditional manufacturing jobs, a process that should have meant people becoming reskilled, re-educated and diverted into new activities that probably would not clearly fit the label of manufacturing or services.
  Mr. Jim Craigen: What does the right hon. Gentleman say to the pessimists who look for greater buoyancy in the growth of the service sector, but do not see it?
  Mr. Howell: That will be dealt with in the remainder of my speech. I accept that the proposition that I have put so far, if left by itself, is gloomy and implies that a great many people will not find jobs in manufacturing. That applies throughout the world, not merely in the United Kingdom. Indeed, I was about to add a little more gloom before coming to a more optimistic line of thought.
  It is not the slightest use saying that that process can be stopped by artificially resisting capital-intensive methods. I take strong exception to the line of thought, which has come even from some of my right hon. Friends on the Front Bench, that we should maintain a low-tech or no-tech world to ensure that a great many people continue to do jobs that both they and we know perfectly well can now be done by sophisticated machinery. It is a perfectly human reaction that people should object to being kept in production jobs — perhaps dull and diminishing work — even though it is known perfectly well that machines and capital equipment exist that can do the job far more accurately and quickly.
  Keeping people employed by resisting capital-intensive methods and retaining labour-intensive methods is not the right way forward.
  Dr. Norman A. Godman: Even the newer industries are not immune to unemployment. For example, the offshore oil industry and its ancillary industries are suffering unemployment because of the very low price of oil. Similarly, in Scotland the electronics and information technology industries have not been immune to unemployment. Therefore, it is not simply the traditional manufacturing industries that have suffered.
  Mr. Howell: I take the hon. Gentleman's point. Nor is it true that service industries have shown, are showing or will show growth in employment. A great many of the traditional service industries such as banking and insurance are due for, and are now experiencing, a gigantic diminution in labour needs and a huge increase in automation and computerisation.
  So far I have struck a very pessimistic note by reminding the House that the position will become more difficult and that there is little chance of resisting that by maintaining labour-intensive industries or putting up a no-tech flag. That would be as absurd as the red flag that used to go before motor cars to keep them at four miles an hour, and will be about as effective in slowing down the trend in manufacturing world wide to grow without creating jobs—in other words, jobless growth.
  I know that my right hon. Friends are greatly concerned about the very sharp wage increases for those in work. Whitehall has got itself into quite a state about high wage increases and rising unit labour costs. I suspect that at least part of that process reflects precisely what I am saying—that manufacturers are no longer interested in expanding employment and taking on new recruits, but want to concentrate on a core of highly skilled workers whom they know well, want to reward generously and are content to allow to work additional overtime and pay high rates. There is evidence that some of the large wage increases are a reflection of that—it is a technological
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  change rather than an employer waking up one morning with a sudden surge of expansive generosity and deciding to give everyone huge increases for no reason.
  Mr. Prescott: This is a serious point. Can the right hon. Member tell the House what kind of large wage increases he is talking about?
  Mr. Howell: I am referring to the official statistics, which show that unit labour costs have been rising in engineering and manufacturing generally. A survey measured that at 7·2 per cent. According to the statistics, which I would advise the hon. Member for Kingston-upon-Hull, East (Mr. Prescott) to treat with great caution, in Japan the unit labour costs are zero or falling. That disparity must be worrying my right hon. Friends.
  Mr. Prescott: How much money is the right hon. Gentleman talking about? Is he talking about £5,000 or £6,000 a year or the £30,000 or £100,000 being made in the City? What does he consider are the huge wage rates currently being paid?
  Mr. Howell: I do not think that the hon. Gentleman can have followed my remarks. I have reflected a view which is heard in Whitehall and which has concerned some of my right hon. Friends. Unit labour cost increases of 8·2 per cent. in a nation which is competitive and which must sell to survive and create new employment are not terribly welcome if unit labour costs are zero or falling in Japan. If the hon. Gentleman finds that point difficult to understand, I am sorry; I should have thought that it was a simple point.
  Having struck a note of gloom about the present position of manufacturing employment and long-term employment — a note of gloom that reflects what is stated in the Manpower Services Commission report and the Institute of Manpower Studies report — we trust build on that basis. The policies that are required to meet the social misery, ugliness and fear of being unemployed —and especially of being unemployed for a long tine and being unable to get back to the front of the queue —must relate to the new employment landscape that I have described.
  Hon. Members — this view is expressed by hon. Members in all parties—who continue to argue that we can somehow return to the patterns of employment that existed in the 1960s and 1970s and that that can be done by pressing buttons and through deflationary programmes are perpetrating a cruel hoax. We will not return to that employment landscape. We need new policy responses to meet a new employment landscape.
  A number of these policies have been developed by my right hon. Friends and many of them are set out in the enormous list of initiatives and programmes listed in the Manpower Services Commission report. There are so many initiatives that it might be a little hard for some people looking for work to find their way through that great variety of different programmes and initiatives, but certain major points can be extracted from the proposals.
  The first point is obvious, but the IMS report makes it even more obvious. There will be very little place in the new employment landscape, whether we like it or not, for the unskilled. Everyone who wishes to participate in this new employment pattern in society will have to get a skill. In the rather brutal words of the IMS report, summed up in The Times:
  "If you are an unskilled worker, get skilled."

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  That is not a very warm and friendly message but it is filled with realism.
  The second point revealed in the proposals is that self-employment, part-time work and work in small businesses will play a much bigger part in the work pattern. Indeed, they are already doing so. Many hon. Members, especially Opposition Members, have referred to part-time employment and have said that part-time employment does not represent "proper jobs." They have asked why we do not return to full-time employment. They have also asked what is wrong with full-time employment and why there must be a growth in part-time employment.
  The MSC and IMS studies—which are objective—show that, whether it is thought to be good or bad, there will be more part-time work. The labour supply has been vastly increased by millions more married women coming into the labour market seeking part-time work. The numbers have increased from some 3·5 million married women participating in the labour market in 1960 to about 8·5 million or 9 million today. There are probably another 2 million who are not registered for work but who would like to work. The labour supply is therefore completely different. On the demand side, the pattern of business is such that people want part-time workers. Businesses want the kind of worker who can work flexible hours rather than someone who wishes to work a full-time, fixed-week year with a fixed career.
  That is clearly a feature of the employment scene today. I am not indulging in futurology. The public policies that are required must facilitate and encourage that pattern rather than resist it, pretend that it does not exist or that it is a temporary aberration.
  My next point is related to the language and presentation which my right hon. and hon. Friends sometimes use when addressing these problems. I know that one of the phrases that we hear from the policy makers is that people faced with the new conditions should "price themselves into jobs." I beg my right hon. and hon. Friends not to use that economic logician's phraseology. It is technically true that people are accepting lower wages in the form of part-time wages and are taking jobs. Hundreds of thousands of new jobs are emerging which are part-time jobs on part-time wages.
  But pricing people into jobs sounds as if a lecture is being given and that people should accept a wage cut. That is a poor basis on which to persuade people that a new employment landscape exists under which different patterns of work will be required, and that people will have to look for their incomes and family living standards from different means rather than from one wage or salary from one job.
  I also hope that we can move away from talk of work-sharing. That is a feeble and defeatist concept. There was talk about that, but it tends not to have found much of a place in policy thinking at present and I am glad about this. There is, of course, a kind of work sharing now, not as a result of Government policy but as a result of changing social patterns and attitudes. Women are rightly saying that they want to work outside the home for pay and that they are fed up with doing the hard work at home for no pay. The other partner in the marriage has to adjust. Some kind of work-sharing automatically exists in millions of homes as women take on paid work and the duties in the home are shared as are the duties outside the home.
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  That is an inevitable and healthy development. That form of work-sharing is creating a new pattern of employment and new attitudes in the labour market.
  The MSC and the IMS reports emphasised that that leaves the problem of the unskilled. There is a segmented labour market, with an increasing demand for skilled people. Skill shortages are already springing up while the long-term unemployed and unskilled remain left out. The bizarre position exists in some areas— for example, in my constituency — where there are real and urgent shortages of certain skills. We hear again the dismal talk from the past about skill bottlenecks. At the same time, we are left with appalling unemployment figures and high levels of unemployment among the unskilled.
  The Government are responding to the new landscape. They are moving slightly patchily and haphazardly towards new policies to adjust to it, but more open recognition is required of where we are and of the real employment situation.
  If more people are self-employed or employed part time, school leavers must be educated and prepared for such a pattern. They must be prepared to change their skills three, four or even five times during their working life. That suggests a rather different type of education from that which many children have received hitherto. It is quite different from the proposition that everybody must expect a full-time job which will come from somewhere and, if it does not—that is tragically common—that person is on the scrapheap. That is a hopeless and destructive line of thought which starts in school and it must be cut off by new patterns of education.
  Tax policies are becoming more favourable to self-employment and people who start their own enterprises, but we still have a long way to go. I wonder whether we have reached the point at which we should take seriously the idea of the Institute of Directors, which is that almost anybody who wants to should be able to aquire self-employed or subcontract status. I am aware that that sounds radical and will arouse cries of horror in the Inland Revenue, but I wager that, 10 years from now, that is the type of pattern to which our tax system will have shaped itself.
  We must have more of the deregulation policies which my right hon. and noble Friend the Secretary of State for Employment has put out in his two excellent White Papers to allow the development of a world in which own or home-based work and self-employed activity can prosper rather than be regulated or planned out of existence.
  As for the social security reforms which my right hon. Friend the Secretary of State for Social Services is trying to put through, the Government must build more on the concept embodied in the enterprise allowance scheme. I refer to insulated benefit. It is based on the idea, which may be anathema to some, that benefits should be insulated up to a certain point, regardless of what work activity or other income the recipient gains. Followed through entirely, the idea flowers into the proposal for a guaranteed basic income, which is a nice idea but is ruled out because it is hopelessly expensive. With insulated benefits, people who want to earn more can, and do not get into one of the various poverty traps or find themselves unwillingly joining the illegal classes by being in the work and draw category.
  A little more money will have to be spent on Government capital spending in inner cities, which my right hon. Friend the Member for Henley (Mr. Heseltine)

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  has recommended with great vigour and panache. He speaks a great deal about seed money and pump priming. As I have said before, more should be done in that regard. I do not believe that the effects on employment will be dazzling or that jobs in the numbers that the hon. Member for Newham, North-East would like — he spoke of 50,000 jobs in health, for example — will appear, but such expenditure would help and would have the additional benefit of helping to clean up the country and improve our cities.
  We must create a far more favourable climate for spreading capital and wider capital ownership as well as income. If Governments are honest enough to reckon that they cannot deliver a decent living standard to everybody through guaranteed full-time employment through income redistribution, it is through capital redistribution that some additional support at the edges—not a significant amount in the early years—can be developed. That is why I greatly welcome some of the Government's initiatives to encourage wider ownership among all income groups, including those on the lowest incomes.
  We should examine more closely the bonus system of pay. Almost every job in Japan has an attached bonus arrangement. When people are taken on, they are taken on at the basic rate of pay without a bonus. The result is that there is far more encouragement for employers to hire more people than it' the newcomer had to be paid the same as everyone else. That system is one of the reasons why Japan has an unemployment rate of 2·8 per cent. and why it successfully absorbs would-be long-term unemployed people, giving them a continuing function, if not a full-time job.
  I have outlined the changes of emphasis that we need and how existing policies must he pulled together to make a real push at the burning and unpleasant social problem of persistent long-term unemployment. They are somewhat different from the responses about which we have argued previously. They take us away from the idea that there is a general reflationary package which will miraculously reduce unemployment permanently. That cannot be done, and the suggestion that it can is a cruel hoax. We should concentrate instead on the policies that are outlined in the MSC report and which my right hon. and hon. Friends are beginning to gather from different Departments. They could take us not back to a fully employed society in the old sense but forward to a fully occupied society which will be both more satisfying and prosperous.
  5.27 pm
  Mr. Michael Hancock: Most hon. Members look beyond the unemployment statistics to the depressing and hideous statistic concerning the long-term unemployed. They present a bigger challenge than almost any other group. Although many could fall into a job tomorrow if one were available, there are some who have suffered from enforced unemployment who need the extra help which I hope will be forthcoming.
  I support the proposal to start job clubs, but remain suspicious about what they will achieve. The Government seem to bring out at least one new scheme each year in an attempt to show that they are doing something about unemployment and the mess that the economy is in. It seems that job clubs are in front of the Government's shop window this year.
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  It is interesting to note that, in the section on the restart programme in the Government's glossy booklet "Action for Jobs", the first step is an offer of a suitable job. The next six steps merely represent what is already available — places on the community programme and training courses, for example. The final step is the Government's let-out. It is a new one or two-week restart course to help people assess what they are good at and to show them how to look for jobs more efficiently.
  I do not deny that courses would be useful to many people, but if no more than that is offered to unemployed people they will feel cheated and let down once again. When the Minister replies to the debate, I hope that he will give an estimate of the number of people in the various categories described in the booklet. Regrettably, I suspect that many will end up in the final category.
  I understand that the initial pilot schemes for job clubs has been successful in getting jobs for the participants. However, the Government's restart programme with its job clubs lacks sincerity and will not create a single job. As the Chairman of the Select Committee on Employment said, it simply shuffles the vacancies around and redistributes them to different categories of people who are unfortunate enough to be unemployed.
  This scheme will lack credibility in the eyes of the unemployed because the Government have not created the incentive of jobs that the restart courses will show people they are good at and for which they will be qualified. Alternatives are suggested and, undoubtedly, the community programme is important. If the jobstart scheme is to be as successful as the Government predict, there will not be sufficient places on the community programme to cater for it.
  In the alliance budget statement earlier this year, we said that the community programme should be brought up to at least 460,000 places. The latest unemployment figures show that 1,356,000 people have been unemployed for more than a year, and clearly the Government have considerably understated the requirements for their own programme.
  The other avenue is training and, as has been said in debates over the last two years, in that we lag far behind our competitors. One of the most telling paragraphs in the MSC's corporate plan reads:
  "Britain's performance on training is poor in comparison with that of our main competitors".
  The right hon. Member for Guildford (Mr. Howell) spoke about Japan and its ability to cope. We lag hopelessly behind Japan in the sort of initiatives that have been taken there. I doubt the ability even of the Japanese to absorb for much longer the continuing progress of new technology and I doubt their ability to continue to find jobs for everyone. The right hon. Gentleman will find that his predictions for the future of Japan will somewhat reflect our own situation in relation to the effects of new technology.
  There are still not enough training opportunities. Training and education should be restructured. I hope to develop that point later. An important component of training facilities is the skillcentre. The one in my city has been badly hit by cuts. I shall demonstrate later to the Minister how it has been neglected. Schemes for training exist, but they are insufficient and insufficient resources are devoted to their valuable tasks. The current

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  programmes are seriously underfunded and corners have been cut so that unemployed people can be taken off the dole list for as little money as the Treasury will allocate.
  I hope that the Minister will develop the proposals about the MSC's corporate plan because the chairman's foreword predicts a chilly future. He says:
  "Over the planning period unemployment, especially long term unemployment, is likely to remain at historically high levels."
  Clearly, the report was written within the constraints of the Government's straitjacket, but one can discern where the MSC would like to expand its activities. That is obviously in the training component of its work, and many of us have argued that this part of the MSC should come under the control of a Ministry of Education enlarged to cover training. It is a great pity that at one moment the Government appeared to be considering this option but then backed away from it.
  Time after time the MSC document talks about close co-operation with the Department of Education and Science. Why do the Government not finally take the initiative and make the logical move to bring the two together? I know from experience in the city from which I come that many facilities are wasted. There is duplication of courses and insufficient flexibility. The skillcentre in Portsmouth illustrates the point that I am trying to make. Some of the courses there are under-subscribed but the machinery and the skilled teaching staff exist for those courses. Many schools in the area could benefit from using the skillcentre, with its modern equipment, to train youngsters at an earlier age. Regrettably, that cannot he done because of the constraints that are placed on the skillcentre.
  The current structure of the MSC does not allow the person in charge of a skillcentre enough autonomy. He or she has to go through a long-winded process to get new courses off the ground, yet such people know from their experience of the areas in which they are operating that such courses are needed by the many employers who time and again try to negotiate with them for courses. We need a change in policy which will allow that autonomy to be given to the heads of skillcentres so that they can negotiate and immediately offer alternative courses for which there is a need.
  There is almost a complete lack of market research and the staff at the centre do not always know the best courses to promote. That is because the placings for such things as job training schemes come through the jobcentre and the staff have no idea of what the public demands from job training schemes. The corporate plan recognises this, but insufficient emphasis is placed on that and existing projects are biased too much to the centre.
  The local collaborative and responsive college projects must be expanded quickly. This is one area of the commission's work where the overall structure needs to be reviewed to improve training opportunities. The Government have used the poor structure as an excuse to cut back on the skillcentres. They are golden reservoirs and they are under-utilised. Schools should have better access than they have at present. I hope that the Minister will look at that and deal with it.
  There is a great deal of complacency about the training undertaken by private companies. I see that in my constituency and I regret it. There is not enough in the plan
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  to encourage private enterprise to take advantage of the various schemes that exist. Some employers are not aware of the benefits and, unfortunately, some are not interested in any of the schemes. We need to find ways of making the schemes more attractive and of keeping employers better informed, and making them more willing to take on their obligation to try to retrain the people whom they constantly say that they need.
  The report also deals with the recent review of vocational qualifications. The need for a flexible qualification system is essential and it must be based on achievement, not on time served. Qualifications need to be designed to bridge the gap between academic and vocational awards. More modular courses should be offered to allow the individual and the employer to obtain exactly what they need. In addition, the courses should allow people the chance to interchange between subjects not traditionally related.
  It would be impossible to cover all aspects of the report and in the time that I have available I shall not attempt to do so. However, I should like to speak about another measure specifically related to the long-term unemployed. The corporate plan mentions the jobstart scheme and the pilot schemes that have taken place, but it does not tell us how successful they have been. Perhaps the Government could enlighten the House about that, because I doubt whether the schemes will achieve much. I doubt whether six months is long enough. I phoned my local jobcentre this morning to discover whether anybody had shown any interest in them, and I was told that nobody had and that there was not one response, despite the fact that the schemes had received fairly widespread publicity.
  The challenge for the MSC is clear but it remains to be seen whether the Government have the will power to provide the necessary resources. At this time of record unemployment there is a widespread shortage of skilled labour, and low skill levels may well explain why. Even in factories where the equipment is the same as that in similar factories abroad, productivity is lower than abroad. In order to encourage companies to use existing MSC training courses, tax incentives are desperately needed. The YTS and especially the qualification systems need to he strengthened.
  I urge the Minister to read two quotations, one of which is from the Government's own report "Action for Jobs". On page 35 it says:
  "Decisions about jobs, training and business are among the most important you're ever likely to take. But first you want to make sure you've got all the facts and are aware of all the opportunities."
  The Minister needs to know all the facts and to be aware of all the opportunities that he has at his disposal before he invites the unemployed to take seriously his comments in that document.
  The second quotation comes from the chairman's foreword to the MSC report. He says:
  "The Plan sets out challenging objectives which can only be attained with the support and co-operation of others."
  Surely, if unemployment is ever to be stopped, we must find that co-operation. I am sure that in his endeavours the Minister is, like every other hon. Member, trying to achieve something better. But that will be achieved only if there is a willingness to put in the sort of resources that are needed to make retraining programmes relate to the needs of industry.
  We should not take the over-pessimistic view adopted by the right hon. Member for Guildford about our

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  declining industrial base. We must find a way of using what we are good at. The one thing that British people have traditionally been good at is inventing and making things. We must find a way of bringing that expertise hack on the world stage and making ourselves once again attractive to the world as an industrial power.
  When I recently visited Japan with other hon. Members I was not too impressed with its prospects. It will experience enormous problems over the commitment in various industries to provide jobs for life and the belief that jobs can be revamped. I saw golden opportunities for British industrialists to sell our products in Japan, but there was a great reluctance on the part of the embassy staff in Japan, and others representing Great Britain there, to sell Britain. It is depressing that in our major competitor in the far east no one is pushing hard for Britain and the people whom we represent.
  I hope that when the Minister replies he will give the hope that is so desperately needed to so many of the millions of people in Britain who look for a lead and for help from the Government.
  5.41 pm
  Sir Philip Goodhart: My right hon. Friend the Member for Guildford (Mr. Howell) delivered a masterly analysis of current employment prospects nationally and internationally. I agree with a great deal of what he said and I should like to discuss that with him. However, I am upset that he seems to have resigned from his earlier philosophical flirtation with work-sharing, and I was astonished to hear his proposals for work-sharing within the home. I can only hope that our wives never read today's Hansard. I am certain that they will not.
  I see my brief role in the debate as rather more limited, and that is to urge my right hon. and learned Friend the Minister to look more favourably than he has in the past at two aspects of the report of the Select Committee on Employment. First, we made proposals for the creation of a substantial number of jobs on building schemes and environmental improvement projects in our inner cities. We have suggested that the way forward is to set up employment schemes.
  I am happy to note that after the publicaton of that report the Government quickly announced that they would go ahead with environmental improvement programmes in selected target areas in our inner cities. They did not, as we suggested, go on to say that those jobs should be largely occupied by the long-term unemployed. But, as my right hon. and learned Friend the Minister has said on a number of occasions that many such jobs should be filled by local residents, that amounts to much the same thing. I am delighted that, at least in that respect, the Government are beginning to move down the road that we have signposted.
  We also recommended that more money should be made available to promote employment opportunities in the social services and the NHS. We pointed out that the Government's policy of moving from institutional to community care inevitably means that there will be scope for more jobs. There is scope here for the development of a great many small local schemes.
  Last week that admirable organisation, the Invalid Children's Aid Association, wrote to me as the Member for Beckenham saying that it would like to start a new scheme in Bromley to help families who are caring for severely disabled children. The scheme involves a person
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  called a care attendant going into the home to help parents with tasks such as bathing, feeding, dressing and changing. That gives the parents some relief from the physical strain of looking after a severely disabled youngster. The Invalid Children's Aid association says:
  "In our experience, several young people aged 16 to 19 have had to go into a residential establishment after leaving school, because there was inadequate community support to enable them to stay at home."
  The association has picked out the names of 15 adolescents whose families would benefit from such a scheme locally. They suffer from conditions such as muscular dystrophy, spina bifida and cerebral palsy. Now that the children are older they are hard to move and the association knows that there is often a high incidence of back problems among the mothers of such children.
  If the provision of one or two paid carers recruited from the long-term unemployed delayed the institutionalisation of five or six of those 15 children, the taxpayer would save a lot of money and a dozen or more parents would receive a lot of help.
  In response to our proposals, my right hon. and learned Friend the Minister suggested that the administrative costs of supporting that sort of scheme would be high. He has estimated them at about £2,000 per job. However, in this sort of project the administrative costs would be minimal and could often be carried by the voluntary agency concerned. There is substantial scope here for increased employment which would, in some instances, save the taxpayer money.
  Finally, I note that almost all commentators agree with our comments in paragraph 7 of the report when we say:
  "All the evidence is that, whereas a major fall in short-term unemployment would generate considerable upwards pressure on wages, a fall in long-term unemployment would not. Thus the Government's objective of growth without inflation would be well served by further measures directly aimed at the long-term unemployed."
  Indeed, some economists would go further than that and suggest that the rehabilitation of the long-term unemployed would, in certain instances, actually reduce the pressure on wages.
  I do not expect the Government, during the course of the debate or in the next few weeks or months, to say that they will adopt all our proposals. However, common sense suggests that in the near future they should take some further steps down the path we have outlined.
  5.50 pm
  Mr. Ken Eastham: We are all grateful to the House for the fact that at least we have been afforded some time to debate this important report. Very often, the Select Committee on Employment has been involved in long inquiries in great depth and, unfortunately, the Government have not found time to allow us to air these issues in public. Nevertheless, I am grateful that at least we can hang on to a peg in the Estimates to have our way today and indulge in this short debate.
  I was rather encouraged when I read a report in one of the national newspapers about the pending debate. I felt that it gave credit to all members of the Select Committee, except one. It said that only one Member disagreed after the inquiry. Unfortunately, that Member is not present today. I would have liked to say one or two things to his face if it had been possible. He voted against every recommendation from the Committee. It is worth going on

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  record to say that he had not really served to listen to the evidence which the rest of the Members had so meticulously investigated.
  Mr. Don Dixon: In fact, the person involved voted against our response to the Government's attitude to our original report. I do not think that the hon. Gentleman was on the Select Committee when it made the report and recommendations.
  Mr. Eastham: I would not argue with my hon. Friend and I do not want to over-indulge and use my valuable time talking about the hon. Gentleman's reasons for voting against all the recommendations. I got the distinct feeling throughout our inquiries that there was a genuine desire to look at the problem in depth and at least try to persuade the Government to make some positive recommendations.
  I believe that when we commenced the inquiry and asked the various people to give us evidence we were thinking, along with other factors, about the human cost. We are talking about the sheer desperation of so many people nowadays. The social and moral consequences of workless people and their families being decimated is of greater importance than any of the other evidence that came before us.
  I am sure that we all recognise—I certainly do—that unemployment is destroying family life. It is dividing husbands and wives and there is family breakdown of a dimension and scale that has never been seen before in this country. We are seeing an excessively high divorce rate and, consequently, increasing burdens being placed on social services and on local education authorities, which have to provide children from workless homes with school meals and the necessary clothing because some children are not even dressed sufficiently to be able to attend their lessons.
  We are seeing massive rent arrears and heavy debts being accumulated and we are also seeing complete mental breakdowns, wholesale suicides, drug abuse on a scale that has never been recognised before and abnormal sickness levels. That more or less sets the scene for some of the comments I should like to make. It is because of those factors that the Select Committee was making a special plea—more than a special plea, a just demand — that there should be changes in the Government's attitude to the problem.
  Additionally, there is the cost to the taxpayer. The cost of unemployment is £5,000 per head per year on average. When we consider that there are about 3·25 million unemployed, we know that the cost is well in excess of £16 billion per year and some people say that it can be as much as £20 billion. That is without mentioning some of the additional burdens being faced by the Health Service because of additional hospitalisation, drugs being prescribed by general practitioners and many other spin-off consequences of the sheer human misery and desperation that people face. They feel that nobody cares and that the Government and politicians could not care less. That is not the case. The Opposition are saying quite clearly that it would be our highest priority at least to give people hope and the chance of a job.
  As people become long-term unemployed, so the problem becomes greater. We should consistently remind ourselves of the scale of the workless figures today. People
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  now become rather blasé when they say there are 3·25 million unemployed. We should also remind ourselves that of that number over 1·3 million are long-term unemployed — over a year without a job — plus another 200,000 under the age of 25 who have been workless for six to 12 months. Still more desperate, over 500,000 workless have not had a job for over three years.
  However, the Government keep on telling us how successful they are. One Conservative Member went to great lengths to say that things will never change, that technology is here, we cannot provide jobs and nothing can be done. I contest that point of view. We are not Luddites. We are not saying that we resist change. We welcome change. However, if Conservative Members go to their local hospitals or social services departments to ask whether they could use additional people to help alleviate their burden, every area could tell the Government that that is the case.
  Only last week I received a letter from a constitutent complaining about the care her husband was receiving in hospital. I made inquiries and the secretary at the hospital said that the complaint was true and apologised, saying that the hospital was undermanned. These are the areas where we contend that there are worthwhile jobs. Never mind the implication that we are talking about a periphery of worthless work: there are plenty of worthwhile jobs that could be done.
  Not all the Government job schemes have been successful. I would also add — the Minister should recognise this when he replies — that we are strongly critical of the unrealistic rates of pay being offered in some of the Government schemes. Without doubt people are, rightly, refusing to accept poverty wages. We believe that realistic rates of pay could be offered. When one considers that it costs more than £5,000 a year to support a person without a job, it seems sensible to conclude that realistic rates of pay should be offered and should meet with the Government's approval.
  The Select Committee in its recommendations seeks job guarantees for the long-term unemployed. If the Minister studies the report, he will see the type of worthwhile jobs that we consider could be tackled. It is ironic that the areas with the highest unemployment have the worst dereliction and the highest incidence of slums, inadequate housing, overcrowding and homelessness. Probably 1 million homes need modernisation and improvement, and at least 500,000 families are homeless. We have an enormous backlog of work which could be tackled through the creation of worthwhile jobs. The report also mentions maintenance, renovation and other useful jobs. I hope that the Minister will note in particular that we are seeking at least an average wage to enable a man to support his wife and family.
  Several references have been made to social services. We suggested that 50,000 additional jobs should be created in the National Health Service. I am sure that they would he warmly welcomed, if the Government agreed to that modest proposal. We are not being unrealistic. The proposals could be phased in, and the chief officers of the Manpower Services Commission in their evidence gave us to understand that they could adopt some of our recommendations and employ the numbers we have in mind. Therefore, it is not good enough for Conservative Members to say, "We could never do this. It is too much and there are problems." We have already tested our

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  recommendations and we have seen the people involved, who have assured us that our target of 750,000 extra jobs could be met.
  I sincerely believe that the figure of £3·3 billion as the overall cost for the implementation of these proposals is justifiable. We make no apology for our recommendations. People are no longer giving greater priority to tax relief than to job opportunities, and it is about time that the Government took that on hoard. Wealthy, selfish people may always be interested in more money, but if the Government canvassed the nation for its choice between providing more jobs and giving some people 6p in the pound tax relief, the overwhelming mass would support more jobs.
  I commend to the House the report which the Select Committee has worked so conscientiously to produce, and I hope that the Minister will yield, reconsider the position and implement all our recommendations, particularly those on behalf of the long-term unemployed.
  6.4 pm
  Mrs. Elizabeth Peacock: Unemployment is a disease of society throughout the world, and that disease in this country was highlighted when my right hon. and learned Friend the Paymaster General gave us the present figures. Perhaps it would do no harm to repeat them. There are 3,325,000 people unemployed. 1,357,000 people have been unemployed for more than a year, 845,000 for more than two years, and 567,000 for more than three years. Long-term unemployment is becoming the cancer of our society, and we must spend some money to cure it.
  Today's debate is about not whether we should cure the problem, but how to cure it. My right hon. and learned Friend and my hon. Friend the Minister have already talked about work sharing. Perhaps I should quietly send copies of the Official Report of our debate to their wives who can then see what they said. The debate is not about costs, although they must come into our discussions. We are talking about the principles that must be established and about the actions that need to be taken.
  As a member of the Select Committee on Employment, I supported the report that we produced in April, not so much because of the detail, but because of the principle. Unemployment is a problem and long-term unemployment is a disaster. The percentage of those unemployed are irrelevant to those who are unemployed. To the person who is unemployed, unemployment is 100 per cent., whether he be a man or a woman.
  The problem of the long-term unemployed is that the longer they are unemployed, the greater is their difficulty of ever finding a job. I recognise that some of the schemes which my right hon. and learned Friend has already introduced are helping that difficult position. It is a clearly established fact that at interviews employers prefer those who have been out of work for a short time to those who have been unemployed for a long time. All hon. Members know that from talking to employers in their constituency. Some people have the impression, wrongly, that if someone has been without work for months or years, he will probably not want to work or he will be incapable of adjusting to the disciplines of the workplace. That is nonsense.
  We must take steps to aid the long-term unemployed, and I still believe that the proposals in our original report
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  and our proposals in response to the Government's reply are basically along the right lines. Our three-part proposals remain relevant.
  First, a new building projects programme, supported by local authorities, private agencies and private firms, agreed by the MSC and tendered for by private contractors, to provide 300,000 additional year-long jobs has merits still well worth discussing. The programme would be targeted specifically on housing renovation—many of us know from our constituencies how desperately we need that—and the renovation of schools and hospitals. Although much renovation is already taking place, more can be done. At present all those areas are demanding extra help.
  I realise that we must consider the question of substitution of the community programme, but I have seen little evidence to date of the community programme targeting in on these specific areas. It is not proven that specific targeting as we propose would cause substitution of those at present employed in such work.
  The question of cost is always at the back of everyone's mind, and we have been accused of underestimating the costs, especially those of management overheads and of sponsors for the MSC. Originally we proposed proceeding via a private tendering system which would have brought straightforward commercial pressures to hear and would have imposed the downward pressures of the market place. That is not such a bad idea. In this instance, the costs per job are somewhat higher than the £4,000 to £5,000 that we originally suggested, but not as high as the £9,500 suggested in the Government's reply.
  Sometimes, we in the House underestimate the pressure of the market place, and we should not. I can give a simple example. We can think back to our arguments about the price of petrol after my right hon. Friend the Chancellor of the Exchequer made his Budget speech, and to the demands for action against the oil companies which wanted to recoup the increased tax. The market place sorted out that problem quite satisfactorily and quickly.
  Our second proposal involved the social service; and the Health Service. We were looking for some 100,000 jobs, at an average maximum wage of £120, to be paid by the MSC for one year. In their reply, the Government have rightly pointed out the difficulties, particularly within hospitals, and we recognise them. There is always a danger of substitution in hospital jobs such as cleaning, laundry and catering.
  However, one sector has not been adequately looked at by the Government, or if it has, that was not apparent in the Government's reply. I refer to community care. We have problems of inner city decay and of an increasingly elderly population. We have within our Health Service a policy to treat within our communities people with mental and medical problems. The Green Paper on the subject was called "Care in the Community". There is a demand within our society for special steps to help in these increasingly important sectors.
  We might be criticised, and it might be suggested that this problem should be tackled by professional people and not by the long-term unemployed, but many among the long-term unemployed would be capable, with the correct amount of management and supervision, of helping in these critical sectors of community care. The Government and, if appropriate, the Select Committee should give further consideration to special action in the community care sector to provide some short-term employment

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  Thirdly, the Select Committee's proposal of a wage subsidy to employers in the private sector who take on long-term unemployed people is a suggestion that has a part to play in the overall strategy. Again, subsidisation of those currently employed, or the short-term unemployed, has to be considered. The proposed subsidy of around £40 a week for a year would have significant attractions for a small employer.
  We always want to encourage and develop the small businesses, as we rightly believe that new jobs are created in this sector. We offer encouragement to the small business man to employ more labour. The merit of the Select Committee's original proposal was that it targeted particularly the small business man, encouraging him to take on a long-term unemployed person who has much to offer.
  In our latest report, we are calling on the Government to initiate pilot projects along these lines, to be applied to those who have been unemployed for over three years. We do this on a simple and logical basis. While we costed our original proposals at £3·3 billion, the Government replied by saying quite plainly that our proposals would cost £4·3 billion. We do not know that we are right, but equally the Government do not know that they are.
  As the chairman of the MSC has already said that he is confident that he could provide a guarantee about the practicality and viability of such schemes, we must put them to the test. We have to ask ourselves what happens if we do nothing. We shall never overcome unemployment — short-term or long-term—no matter what the colour of the Government. We have to innovate, experiment, and manage change. Therefore, I implore the Government, and especially my right hon. and learned Friend the Paymaster General, to look favourably at some of these proposals and start measuring them by practical experience, not just by theory.
  6.14 pm
  Mr. Don Dixon: I pay tribute to my hon. Friend the Member for Newham, North-East (Mr. Leighton), the Chairman of the Select Committee, who opened the debate and explained the proposals and the work of the Select Committee very well. It is a disgrace that, after the many months of taking evidence and interviewing people and the many hours of work that the Select Committee put into its report, the Paymaster General tried to rubbish the report even before it was published. We know that he claims to have been an industrial worker. He told us on the Second Reading of the Sex Discrimination Bill how he had worked in the bakery industry to raise a few pounds between leaving school and going to university. We do not want lessons on industry or unemployment from someone with such experience.
  One of the dangers about debates such as this is that they seem to be an academic lecture to the people outside. We talk about "the long-term unemployed", but this sounds like some of the terminology that we get from the parliamentary word factory. We are talking about an individual who has been out of work for a year, or two or three years. Often, that individual is the wage earner, and a person who wants work and has been denied it. Thousands have been denied work because of the Government's policies.
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  There is an uncanny resemblance between the present day and the 1930s in my constituency. I was born in Jarrow in the 1930s, I was bred there and have lived there all my life. In 1930, the steelworks closed, throwing 3,000 men out of work in an area that already had high unemployment. In 1934, the shipyard was closed by an organisation called Shipbuilding Securities Ltd. It was made up of a combination of merchant bankers, shipowners and shipbuilders, who decided to rationalise the shipbuilding industry. The same sort of policy was carried out under Graham Day as chairman of British Shipbuilders.
  The company closed the shipyard, and Jarrow was murdered. My father and grandfather were thrown on the streets. My grandfather was not required again, and my father did not work until the war started in 1939. My father was taken back into the shipyard and was told that if he did not work overtime to build and repair the ships that were required for war he would be fined, after he had been thrown on the scrapheap in 1934 with another 5,000 Jarrow people.
  This is the 50th anniversary of the Jarrow march, when 200 men walked from Jarrow to the central Government to let them know what was happening in the region. It is somewhat ironic that the Government are cutting regional aid and development. At that time, a scheme called the Jarvis Fund was set up. In 1937–38, my father had one month's work—making a park—under the Jarvis Fund, which was the charity given to Jarrow because we were sorely pressed. To get work from the fund, one had to be unemployed for three years. We were over the moon because my father had got a job making a park in Jarrow. We have the same system now, with the community schemes, with the same requirement that one has to be out of work for a number of months before getting a bit of work. That is a resemblance to the days of 1930.
  Since the Government were elected, the last pit in my constituency has been closed and the last part of our shipbuilding capacity. Palmer's at Hebburn, is now doing only care and maintenance. The last steel plant in my constituency, the Jarrow mill, will close next month. That is an uncanny resemblance to what happened in the 1930s, and it took a world war to get out of that mess.
  The Government say that the Select Committee's recommendations will cost money. Of course they will. We were aware, when we went into the debate and the many hours of evidence, that, at the end of the day, the recommendations would cost money. However, we were concerned about human beings being put on the scrapheap. People in their fifties are being thrown out of work in the north of England and in Scotland and Wales. In the present economic climate they have no chance of working again.
  In paragraph 28 of their reply to the Select Committee's report, the Government say:
  "First, the Government's specific measures to assist long-term unemployed people are part of a wider economic strategy for encouraging enterprise and employment."
  They should have said that the reason for long-term unemployment is the Government's wider economic strategy of not encouraging enterprise and employment.
  The Paymaster General said a great deal about the restart programme. Indeed, in paragraph 31 of their observations, the Government say:

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  "The aim will be to improve the skills, work experience and motivation of long-term unemployed people and help them get hack into jobs. Everyone who is interviewed will have the chance of one of eight ways towards finding work."
  But the Government do not say where those jobs are. They intend to send out thousands of letters to the long-term unemployed saying, "Come to the jobcentre and we will have a talk with you." But there are thousands of unemployed people and no job vacancies in my area, so what help will the restart programme be? What help will the job clubs be able to provide? These measures may pacify some of the long-term unemployed, but they will not provide jobs. The restart programme will create not one job. All that is happening is that very many letters are being sent out.
  The Government say that they have increased the community programme. However, all that they have done is spread the margarine even more thinly. A few years ago, the Government said that jobs under the community programme must not pay over £60 a week. That resulted in the creation of part-time rather than full-time jobs under the community programme.
  I pay tribute to both sides of the Select Committee. It contains a majority of Conservative Members of Parliament. They worked every bit as hard as Opposition Members. The Select Committee's recommendations are realistic_ constructive and necessary because of the length of time that people have been unemployed. It will be a disgrace if the Government do not accept the recommendations and try to get the long-term unemployed back to work and providing for their families.
  The Prime Minister says that she is a family person. Therefore, she should say that the Government intend to provide finance to create jobs so that family people can provide for their families. I hope that the Government will accept the Select Committee's recommendations.
  6.23 pm
  Mr. John Maples: The hon. Member for Jarrow (Mr. Dixon) speaks with great passion and personal experience of unemployment. I hope that he will forgive me if I do not follow him down that road. Instead, I want to make two specific points to the Under-Secretary of State, my hon. Friend the Member for Rossendale and Darwen (Mr. Trippier).
  The underlying need is to create sufficient jobs to absorb unemployment, but all reasonable analyses show that this will take a considerable time. In the meantime, the range of schemes and alternatives that have been produced by the Manpower Services Commission is imaginative and extensive. The Government deserve to be congratulated. Those who have spent any time upon examining the problem of unemployment know that training a more highly skilled work force and encouraging new businesses and self-employment through the kind of enterprise schemes that are sponsored by the MSC are two of the ingredients in the long-term cure of the problem.
  I want to deal briefly with one element of the third part of the MSC's package—the employment programmes. I refer to the restart programme, which has been unfairly derided by the Labour party. It attempts to bring back into touch with the world of employment those who have been out of work for so long that they have lost touch with it. In many cases these people were made unemployed by the recession and they have not got back into employment in the way in which people tend to do so now. If people are
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  made redundant now, the odds are that in about 50 per cent. of cases they will have found a job within three months and that in about 80 per cent. of cases they will have found a job within a year.
  Those people do not have a long-term unemployment problem. The problem affects those who have been unemployed for some time, and their problem regrettably grows worse. When an employer looks for a new employee, he is inclined to take somebody from the front of the shop, so to speak — that is, somebody who has been unemployed for a relatively short time. This puts the long-term unemployed out of touch. They give up. They lose contact with the world of work and even lose confidence in their ability to get a job.
  The restart programme performs the very important function of bringing them back in to touch with the world of work and with the available options and opportunities. The restart programme does not necessarily guarantee a job, but it considerably improves one's chance of obtaining one.
  One interesting aspect of the restart programme is that it was tried out in about eight localities before it went national. That is an excellent precedent. The concept of trying out ideas locally before they are brought into operation nationally is one that the Department of Employment—and the Treasury, for that matter—could extend. Frequently the reason for not putting programmes into operation nationally is that the Government do not know whether they will work and how much they will cost. If a programme is tried out first on a local basis and is found not to work, or not to be cost effective, or not to produce results, it can be dropped. However, if it works, it can be tried nationally. That concept should be exploited. It should be applied to many of the ideas that are being explored in an effort to do something about the problem.
  My hon. Friend might care to try out more ambitiously, on a local scale, the concept of job subsidies. This principle has been accepted by the Government and the MSC through the enterprise allowance, the job start scheme and the new workers scheme. I suspect that one of the reasons for the job start and new workers schemes not doing better is that the subsidies are not large enough. However, with greater subsidies, the cost would he greater if the schemes were not successful. Therefore, it would be worth trying out a more generous scheme on a local basis—in, say, four or five areas.
  The difference in cost to the Treasury of somebody being unemployed and somebody being employed is enormous. If somebody is employed and takes home an average wage, he pays about £4,000 a year in tax. If he becomes unemployed, he collects about £4,000 a year in benefits. This represents a difference of £8,000 to the Treasury between somebody being employed in the private sector—it is important that the employment should be in the private sector—and somebody being unemployed.
  Not everybody, of course, is an average earner. However, even in the case of an unemployed 17-year-old who has never worked and who lives at home, that figure is £50 a week, or £2,500 a year. There is a large amount of money with which the Government can play and which they can use as a catalyst in the job creation process. It would be worth trying out a more generous job subsidy scheme in a few specific areas to discover whether it works. If it works and if it is cost effective in the way that I and a few other people think that it might be, it could be

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  extended nationally. If, however, it did not work, it could be dropped. At least it would not have to be tried out on a national basis first, which would be very expensive and risky.
  That leads me to the second point that I want to make to my hon. Friend the Minister. There should be a regional approach to the unemployment problem. Unemployment varies enormously from region to region. Unemployment in the south-east and London cannot be compared with the problem that is experienced in constituencies such as that of the hon. Member for Jarrow. Therefore, it is foolish to implement national schemes, which have a huge deadweight cost in the south-east, in order to try to create jobs in the north-east and in the midlands. Therefore, a more regional approach to the problem ought to be adopted.
  I suggest three areas where that kind of approach might be adopted. First, we should target some of the specific measures that we know help to create jobs on a regional basis, instead of trying to implement them nationally. If there are to be national insurance reductions on employers' contributions, job subsidies and extended home improvement grants, there is a great deal to be said for targeting those subsidies in regions where there is high unemployment instead of spreading them over the whole country.
  The second area where a regional approach might be adopted relates to public sector employment. The public sector employs a very large number of people. One of the main computer installations of the Department of Health and Social Security is in Reading. In the context of the Government trying to help to reduce unemployment in the regions, that does not seem to me to make very much sense. It would make much more sense to move that installation to the north-east where the Department's other main computer installation is sited. The Government employ a large number of people. For instance, many people are employed in the Ministry of Defence and the armed services. Whether or not we should deliberately adopt a policy of moving public sector employment away from the south-east and towards the north seems to bear serious examination.
  My third point is that London has become an incredibly powerful magnet in the British economy. One could make speeches and write books on that, but I shall only touch on it now. London's influence as a magnet for industrial and political power, money, jobs, and industrial expansion is too powerful for the good of the country. It sucks in the nation's savings from all over the country. There is a concentration of industrial power and industrial decision-making in London in a way which operates beneficially for the south-east but not for the rest of the country.
  It seems to me that an element of our regional policy should be not only to encourage the move towards and development of industry and commerce and economic activity generally in the non-south-east regions, but actively to discourage from locating there enterprise which does not need to be in the south-east. The French have such a scheme and I believe that it works quite well. The scheme involves setting up specific regional centres to attract industrial and commercial development to them, and giving them the infrastructure, communications, and
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  so on, to do so. We should attempt to reverse the rather pernicious magnetic effect that London has on the nation's resources.
  We should and can build on the excellent work that the MSC is doing. In doing that, we might look seriously at trying out some of the schemes on a local basis, so that we can test their effectiveness before they go national, and adopting a more regional approach to solving what is essentially a regional problem. Such policy initiatives might help to form part of the package which we are developing and are trying to continue to develop to help cure the awful problem of mass unemployment.
  6.31 pm
  Dr. Norman A. Godman: It is a depressing exercise to compare and contrast the reports of the Select Committee on Employment with the Government's response. I wholeheartedly welcome what the Committee said in paragraph 25 of its report on the Manpower Services Commission's corporate plan:
  "With the Committee's recent Report on special employment measures in mind, we asked whether, if a political decision were taken to guarantee, for everyone out of work for three years, an occupation more profitable in cash terms than being on the dole, the MSC could deliver. The reply was a firm, 'absolutely'."
  I shall refer to the MSC's role, the community programme, training, and the massive problem of unemployment. Some people talk readily of the unemployment rate in Great Britain, but they choose to ignore the geography of unemployment. The unemployment rate in Great Britain as a whole is about 13·3 per cent. In Scotland, the figure is 15·6 per cent. In the Strathclyde regional authority area, the figure is about 18·5 per cent. In the Greenock travel-to-work area, the figure is 21·4 per cent. In Greenock and Port Glasgow, the male unemployment rate is a scandalously high 26 per cent. Those are the official statistics. According to the official statistics, there are approximately 359,000 people out of work in Scotland. In my constituency about 6,500 men and about 2,400 women are without work.
  Given the extent in Scotland of what the right hon. Member for Guildford (Mr. Howell) called the ugly and nasty problem of unemployment, I welcome the Select Committee's reports on that vicious and nasty problem. In the few minutes remaining to me, I shall speak of my concern, naturally enough, about unemploment in Scotland. I shall refer to the measures needed to reduce the appallingly high Scottish unemployment figures. Much of that unemployment has been brought about by structural decline in Scottish manufacturing — for example, shipbuilding, steelmaking, textiles, and engineering. In addition, there has been a massive decline elsewhere. The coal mining industry is a sad case in point.
  The west of Scotland is in a dreadful economic condition. As I mentioned earlier in an intervention in the speech of the right hon. Member for Guildford, the newer industries are not immune from the process of shedding labour. Already, the results of lower oil prices are coming through in employment prospects, especially in Scotland. Many of the onshore oil fabrication yards are running out of orders as new developments are being postponed. The British Indigenous Technology Group, which represents indigenous British companies working in that important industry, reports that its members expect to have lost some 15,000 jobs between February and the middle of this year. When we talk about the need to combat those problems,

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  I suggest that in that industry there needs to be a modification to the petroleum revenue tax allowances and the payments schedules. In addition, I urge on the Government the need to offset expenditure on new field developments against income from producing fields. I think that there should be some kind of allowance for corporation tax to minimise the problems of unemployment in the industry.
  Jobs are badly needed throughout Scotland. The Manpower Services Commission has an important role to play regarding training and the community programme. I have complained about the MSC in Scotland before, and I shall do so again tonight. The commission's officials must, at all times, react in a sympathetic and helpful way when dealing with applications for assistance from community groups. A number of complaints have been brought to me concerning the unhelpful attitude of the MSC. I believe that the MSC should be more sympathetic to individuals seeking assistance to enhance their job prospects.
  I give an example that I come across in my constituency. It relates to unemployed welders in particular. Unemployed men seeking to find work offshore — God knows that it is difficult enough as it is — are frequently barred from employment because they lack a survival training certificate. The oil companies demand that any job applicant must have such a certificate before he is taken offshore. Many of those concerned work for contractors under a short-term period of employment. The contractors are not concerned with such training. Given that such a course of training lasts three or four days and costs about £300 to £400, in my view the MSC should help — the state should help such people who actively seek work in the offshore oil and gas industries. The MSC is failing those who seek help.
  I refer to the growing trend of periods of short-term employment in many industries. I believe that Parliament must pay close attention to that growing phenomenon. It affects many skills. I know that the trend is found throughout the European Community, but I should like to know the Government's position on short-term employment.
  Given the remorseless decline in recent years of the Scottish manufacturing base, it seems to me that people are not being trained or retrained to adapt to changing industrial needs. On the contrary, they are educated to accept unemployment. That unemployment has its own distinctive geography. The Government tinker with a massive problem—a problem which always generates poverty, misery, and deep distress. That is one of the reasons why the Conservative Administration are so thoroughly unpopular in Scotland.
  6.39 pm
  Mr. Peter Thurnham: The whole country is yearning for an end to unemployment. The Employment Committee did an excellent job in setting out the problem. It attempted a solution, and we all look to the Government to discover additional solutions if the Committee's report is not acceptable.
  The figures in table 2 in the annex to the first report tell the story. For the past four years, the numbers of males unemployed for less than three years have decreased, but the numbers unemployed for more than three years have
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  increased from 145,000 to 427,000. According to the latest figures for male and female unemployment, 560,000 have been unemployed for more than three years.
  Beveridge said:
  "The danger of providing benefits which are both adequate in amount and indefinite in duration is that men, as creatures who adapt themselves to circumstances, may settle down to them … Men and women in receipt of unemployment benefit cannot be allowed to hold out indefinitely for work of the type to which they are used or in their present places of residence, if there is work which they could do available at the standard wage for that work. Men and women who have been unemployed for a certain period should he required as a condition of continued benefit to attend a work or training centre … The period after which attendance should be required need not be the same at all or for all persons. It might be extended in times of high unemployment and reduced in times of good employment; six months for adults would perhaps be a reasonable average period of benefit without conditions."
  We have seen dole queues lengthen for six years and more.
  If my right hon. and learned Friend the Paymaster General and Minister for Employment does not feel able to accept the proposition of a guarantee which is put forward in the Committee's report, I ask whether he can find a form of words which is almost tantamount to it to the effect that, in the work and training schemes which are available, increased priority will be given in proportion to the period of unemployment. If sufficient funds were available, he would come to almost the same answers as the Committee.
  I remind my right hon. and learned Friend the Paymaster General of the schemes in Bolton. He has seen one of our schemes, and two others are coming forward. I ask my right hon. and learned Friend to reorient the priorities in that way on 1 July and to hire, in addition to the 2,000 magicians he already has, a sufficient number to ensure that we meet those priorities.
  The community programme should be not just for the worthwhile jobs which would otherwise be done but for the worthwhile people who would not otherwise be employed. We are concerned about people. All people are worth while, and that is why we have to set certain priorities.
  6.42 pm
  Mr. John Prescott: I should like to add my congratulations to the Select Committee on Employment which has done considerable work and analysed the problems of unemployment. I am especially pleased that most Committee members reached the same conclusions and came together to analyse a number of the Government's proposals and be critical of them.
  I think that all hon. Members would congratulate those Select Committee members who can come together in a critical analysis. Presumably, the effectiveness of their analyses will be judged during the period of the next Administration. I hope that the Select Committees will continue their critical approach to the policies of the Government, whether Labour or Tory.
  I especially congratulate my hon. Friend the Member for Newham, North-East (Mr. Leighton), the Chairman of the Employment Committee, and the other Committee members who have spoken in this debate. My hon. Friend analysed the problem well and made it clear that he was not challenging the Government on the basis of whether we could return to full employment. That would be a debate between both sides of the House. We believe that

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  the Government can be challenged on that basis. Admittedly, the issue is not whether everyone can have a 40-hour-week job. Clearly, major changes are taking place in the employed labour force. There is no doubt that, to achieve full employment, we must deal with the radical changes in the distribution of wealth.
  The issue is whether the Government can do more than they are doing, especially with employment schemes. The Committee made the sensible point that more can be done in the provision of jobs and training. That is similar to the Labour party's claim that we can get 1 million jobs in two years — from public expenditure programmes, schemes and the mixture of suggestions made in the report. We must, however, recognise the realities. Even when those 1 million jobs were being created, 3 million people would still be unemployed. We certainly have a long way to go to achieve full employment.
  My hon. Friend the Member for Newham, North-East, and the Committee, in noting the Government's response — in which they churlishly rejected much of the Committee's analysis and suggested that it would cost more than the Committee thought to create new jobs — have said, "Fine, if the Government think that jobs will cost more than we have said, we are prepared to accept 500,000 jobs, instead of the 750,000 mentioned and the menu of proposed schemes." Can we create more training places and schemes in the way suggested in the report by extra expenditure? That is the real question. I shall not quibble about whether it is £3 billion or £4 billion. The question is whether the House is prepared to endorse such an approach.
  The Government have made it clear that they dispute the amounts of money involved and the scale of jobs or placements which can be provided and are not prepared to accept the general argument to go further along the road in building upon existing schemes. That is an important decision which reflects the Government's total indifference to doing anything about long-term unemployment. I must justify that comment. It is argued that the Government are not doing enough. Since 1979, youth training schemes have trebled. Of course, this reflects what has happened to unemployment, which has trebled as well. I shall not argue about the various fiddled figures we have been given — 3 million unemployed is a very large number.
  In earlier debates, we have laid the charge that much of the unemployment is brought about directly by the Government's policies. I should like to refer to the provision of "real" jobs. I do not like using that term, because, with the changes coming about in the labour market, we must recognise all the different descriptions of gainful occupations, whether part-time, full-time or any other employment. We readily recognise that.
  The sole purpose of the Government's policy is to create part-time, low-paid, cheapie schemes. All the present schemes are geared to achieve that end. That is one of the criticisms of the Government. In looking at the way in which the Government have created unemployment, one begins to understand how some of their policies can be reversed. At the heart of the argument is the Government's response to the Select Committee's report on long-term unemployment. Paragraph 18 says:
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  "Additional spending on this scale would pre-empt the scope for tax reductions necessary to stimulate enterprise and employment."
  The Government choose to keep their money for tax reductions. Apparently, according to surveys in yesterday's newspapers and last night's "Panorama" programme, even the Tory party and Tory voters are asking whether the best priority is to give more money to those who have a lot while the low-paid and the unemployed pay the price. That is a central choice for the Government to make. We are challenging them, as did the Committee.
  It is argued also that it costs far too much to create jobs. The Minister for Employment has talked about a cost of £8,000 or £9,000 per job. We have seen, in justification for proposals on enterprise zones, a cost of £70,000 to create each job. In defence, the cost is £45,000 or £50,000 a job. Even tax cuts create jobs only at a cost of about £46,000 a job.
  In view of the present level of public expenditure, if the Government are subjected to a type of jobs audit, they may be able to screw an awful lot more jobs from public expenditure than they do under the present order of public expenditure priorities. If more is spent on education, defence and certain other services, more jobs can be created because of the nature of the activities involved.
  The crucial question which we should begin to consider is not how many jobs are created by extra expenditure — although we argue that case — but the increased number of jobs that can be provided with a different order of priorities and different levels of expenditure. That is one of the significant differences between Britain and its competitors in the Organisation for Economic Cooperation and Development. Comparisons have been made between the way in which we use our public expenditure and the methods used in some OECD competitors. I was recently looking at Swedish public expenditure in local authorities. In Sweden the number of people employed in local authorities has doubled in the period from 1970 to 1984. That has happened under different administrations, but largely Labour authorities. In this country, from 1970 to 1984 there has been an increase of 10 per cent. But since 1979 there has been a reduction of more than 100,000 jobs in local authorities, because the Government have decided to reduce public expenditure.
  When we consider the sort of jobs that have been thrown out, we begin to see some of the thinking behind the Government's strategy. For example, the recently-announced cleaners scheme with Virgin Airlines or Branston, or whoever he is, is apparently going to clean up our streets with 5,000 people on community programme schemes. Mind you, a lot of CP schemes are unfilled and no doubt 5,000 cleaners will be given £65 a week on this scheme. In reality, more than 5,000 cleaners from public health authorities have been sacked because of the squeeze on public expenditure.
  There is an essential difference, quite apart from the privatisation point, in that the cleaner before probably cost £116 but now the cleaner will cost £65. That is part of the Government's strategy to force down wage rates and get it done more cheaply. We are paying people on the dole to do it, although in these circumstances the cleaner may have been employed by the local authority at £120 a week but may now be offered a job with Virgin Airlines,

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  Branston, or whoever is running the system at £65 for doing the same job. They will feel aggrieved. They might not even accept the job.
  The Government are waiting for them there. They have just moved an amendment to the Social Security Bill. If someone refuses one of these schemes, he is likely to face a 13-week suspension of benefit. That, of course, will not force anybody into a job on half pay. The suspension comes into operation when someone refuses to take work when it is offered. The Paymaster General derives great glee from the fact that people who do not accept a job at about half the rate of pay will be taken off the dole and taken off benefit. He wins all round and makes a profit out of it. It seems that the Paymaster General has learned a great deal from Murdoch and what he did to the printers.
  Housing is another area of public expenditure that we should look at. We produce houses at a rate of 2,000 a week less than in a comparable period of the previous Labour Administration. There are half a million building workers on the dole, and it is costing £3 billion to keep them there, but that does not seem to worry the Government at all.
  I have heard all this jargon about dead weight. It is not dead weight to pay people to do nothing when there are people desperate for houses and we are producing 2,000 fewer houses a week than under a Labour Administration. It seems crazy, particularly when some of the schemes talked about by the Select Committee are basically in the construction sector of the community programme. In those areas, the industry and the trade unions are becoming increasingly apprehensive as they watch the Government switching from proper construction programmes to these cheapie labour gang schemes that the Minister talks about. He will not he surprised that people become more apprehensive.
  In transport, there was expansion in all the areas I was talking about in Sweden. Here, with the deregulation of transport services—the Minister was much involved in that —a further 9,000 bus men will be thrown on the dole by October. I assume that the Ryedale by-election has made no difference to that, but I expect that the news will shake up a few rural areas when they realise what is going to happen to their transport system.
  There will he 9,000 people paid for on the dole, and they will be offered jobs on Branston's cleaning-the-streets schemes, for considerably less cash. The public expenditure profiles of our competitors show that they have done far better than us in growth and economy, with lower inflation rates, and done it very successfully. Those are not only Labour or Socialist Governments. Governments of the Right have been able to achieve more effective records than us.
  A significant factor is the way in which other Governments use public expenditure as a means of creating jobs. That is the realistic difference. The Government believe that their arch policy is to reduce public expenditure in that sphere. Whatever the debate has been today on the provision of long-term employment schemes and the role of Government, that has not been at the heart of the debate.
  At the heart of our debate are the schemes and the roles they play. In passing, it might be well said by some people — we have said it before in debate—that Labour will produce 1 million jobs in two years. Various schemes have been put forward by the CBI, the churches or the wets of the Tory party — all the various mixtures that can
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  produce more jobs. I was interested to read in the Financial Times of 19 June 1986 a report headed "Labour's Plan for Jobs". A report by the City university business school says of Labour's proposals that
  "they will need to he taken very seriously as a genuine alternative to the present Government's approach".
  The man who came to the conclusion that Labour's policy can actually produce 1 million jobs in two years is Professor Brian Griffiths, now the head of the Prime Minister's personal policy unit at 10 Downing street. Having fed Labour's plan into his employment models, and despite a fervent belief in the Government's policies, Professor Griffiths is now saying to everybody that it is possible to get 1 million jobs in two years. He says that a Labour Government could reduce unemployment by half according to their policies. That seems to be such an authoritative source that even the Paymaster General might accept it. I recommend that people read the Financial Times of 19 June 1986, instead of just slating the idea that Labour can produce its plans.
  The debate in the Chamber has been largely about the provision of schemes through the delivery system of the Manpower Services Commission. In some of those schemes, the wage rates and productivity are considerations without a doubt. But the level of investment is also crucial to productivity, and the effeciency of our economic machinery. When one considers that we have totally failed to achieve a level of investment in our economy that is comparable to our competitors, we should ask ourselves whether the Government's policy of wholesale tax cuts for companies has been effective. They are making mass investment and profit, but they are not putting it into investment.
  More important is the fact that the Government are making no input into training. Here I want to say something about training aspects of the programmes. The community programme schemes that have been talked about today have a role to play. Let me be clear about both youth training and community programme schemes. There is a role for them; I have always said that. But there is a place for great improvement. For example, I have seen some very good YTS schemes, which basically work with the industrial training boards that remained after the Government had abolished 16 out of 23 of them, the ones that even the Government claim, usually in construction and engineering, maintain some form of industrial training, but in reality we do not invest in training at anywhere near the level that we should.
  Indeed, the report "Competition and Competence" shows that the level of investment in training in this country is equivalent to about 0·15 per cent. of turnover, whereas it says that our competitors are spending about 1 to 2 per cent. That is about £5 billion to £6 billion.
  The Government are spending about £2 billion on the community programmes and YTS, but the trouble is that industry is offloading even the limited amount of investment in training and apprenticeships that it used to have. In fact, industry is now using YTS as the first part of apprenticeship schemes. It is making a profit out of it. Even in areas where industry should be training apprentices, it is even offloading it to YTS. It is a scandal that industry in this country ducks its responsibility and does not pay its fair share for training. Let me make it absolutely clear that if a Labour Government comes in industry will pay its fair share on the scale necessary to include adult training, not just training for our youngsters.

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  Even the resources that have been available under the MSC since 1979 are reducing. They are a quarter of the amount that goes to YTS schemes, when three times as many people are involved in adult training than in YTS. We have got it out of order, primarily because the Government are not prepared to force industry to pay its fair share towards training.
  Even the CBI, in its evidence to the Employment Select Committee, said that it was all for training, but industry must not have any more of the cost of it. What a deplorable reply from industry, which does not invest in training and then tells Government how much they should put into programmes. Quite clearly, we need community training, but I have it firmly impressed on my mind that if we get money for training the delivery is important. No doubt the Manpower Services Commission will play a part.
  Certain bodies such as British Rail Engineering Limited, York and Brough Aerospace could do considerably more. Indeed, I visited Brough Aerospace this week-end and looked at its schemes. Its training is very good, and is part of a modular system. We should consider such bodies as training agencies that can provide proper and adequate training. Perhaps we should even pay them out of those funds.
  We must address ourselves to the problems that are outlined in the report. In view of the time, I shall conclude. The Minister seems to be moaning, but he should talk to his Back Benchers who sought to speak. I shall conclude by referring to the MSC. It was a good body, and was set up to do a good job. It is doing a difficult job, and has been sullied by doing much of the Government's dirty washing. I do not think that the MSC can continue to play that role. We are radically rethinking what the role of the MSC should be. I give those involved notice that we see a different role for it. Sweden has a similar body, but it plays a much more effective part in that economy's growth and in the quality of training.
  In view of the time, and the few minutes left to the Minister, I shall end by saying that there is an alternative. But frankly this Government do not care a damn about that alternative. They are only playing around with community schemes, and tea and sympathy. They could do more, as the Committee has said. I should like to hear the Minister's reasons for rejecting that approach.
  7.2 pm
  The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): I had thought that the hon. Member for Kingston upon Hull, East (Mr. Prescott) was about to conclude with some remarks on training. I agreed with part of his diagnosis of the problem, but not with his solutions. Indeed, my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) slipped over to tell me that he intended to raise the same subject. I apologise to both hon. Members because time is pressing, but I certainly hope that we have an opportunity to discuss training policies on some future occasion.
  I also apologise to my right hon. Friend the Member for Guildford (Mr. Howell), who produced a masterful analysis of the employment scene. He touched on several issues with which I have much sympathy, and I should have liked to debate them. I am very interested in one of the ideas, although he gave it a name that I have never
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  heard of—insulated benefit—which sought to encourage the unemployed back into work. I hope that I shall have an opportunity to do justice to his speech on another occasion.
  Obviously, the subject of the debate is the Estimate and, in particular, the Select Committee's reports. The hon. Member for Newham, North-East (Mr. Leighton) gave a somewhat partisan presentation of the Committee's report, although he retreated into agreement when I pressed him. But it was obvious from his speech and from the speeches of my hon. Friends the Members for Beckenham (Sir P. Goodhart) and for Batley and Spen (Mrs. Peacock) that there is a measure of agreement between the Government and the Select Committee, at least in our aims. We are undoubtedly coming closer to an agreement on measures, as the Select Committee modifies its proposals in the light of the Government's response.
  There is no disagreement between us about the plight of long-term unemployed people — about the difficulties that they face in breaking back into the job market and how those difficulties increase, as my hon. Friend the Member for Batley and Spen underlined, as the period of unemployment lengthens.
  There is no disagreement between us either about the need to focus urgent and specific help on long-term unemployed people. The Government have steadily increased the resources available for measures to help the long-term unemployed. This year we shall be spending £1·2 billion — an increase of 20 per cent. over the previous year—on programmes specifically for the long-term unemployed. We agree, too, that there must be some direct Government intervention to provide temporary jobs for long-term unemployed people. If we thought otherwise, we should not be providing jobs for more than 300,000 long-term unemployed people in a year on the community programme. At a later date, I shall take up the assertion of the hon. Member for Newham, North-East that the report calls for a further doubling. As far as I can see, it calls for no increase on the Government's present plans.
  Mr. Leighton: Will the right hon. and learned Gentleman give way?
  Mr. Clarke: I shall not give way as I have only half the time to speak that the hon. Gentleman had.
  Our disagreement with the Select Committee, therefore, centres principally on what constitutes the most cost-effective and practical package of measures to provide the assistance that long-term unemployed people undoubtedly need. The Select Committee's approach, set out in its first report, involves an attempt at job creation measures on a truly gigantic scale — 350,000 extra temporary jobs in building and construction; 100,000 temporary jobs shared between the social services and the Health Service; and 350,000 additional jobs in normal employment achieved through a subsidy to employers.
  I do not quarrel just with ambition; there are considerable financial and, more importantly, practical difficulties. On our calculations, the Select Committee's original package would require nearly £6 billion in gross expenditure and more than £4 billion net. That would be additional to the £3 billion that the Government are already spending on their employment and training measures. In addition, the cost of the individual proposals would be between £7,000 and £9,000 for each extra job

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  created, or four to five times the average cost per job of the measures that we currently run. By any standards, this is a massive programme of expenditure, and it is incumbent on those who propose and support it to tell us where the extra money is to be found. That is obviously an important matter which goes beyond the remit of the Select Committee.
  But we did not reject the plan on the ground of cost alone. There is an even more serious objection to what the Committee proposed, and it is one of practicality. Our view, based on our great and growing experience of both temporary employment programmes and employment subsidies, is that the Committee's proposals simply could not be achieved. It is with genuine reluctance that we have come to the conclusion that they would not work.
  We are already supporting 300,000 long-term unemployed people this year in jobs under the community programme. Nearly 20 per cent. of the programme involves some building, construction or refurbishment work, and 30 per cent. involves jobs in personal and social services. I commend to the House and the Select Committee our recent efficiency scrutiny of the programme, which was designed to take stock of the situation and to discover how we can manage the programme most effectively for the benefit of the long-term unemployed. That scrutiny showed clearly that there are limits to how far and fast the programme could be expanded.
  The danger of rapid expansion is that the quality of the work experience offered to long-term unemployed people may be reduced. I shall take an example that I have concentrated on before — the Select Committee's proposal for an extra 50,000 temporary jobs in each of the health and social services sectors. On the face of it, it is one of the most attractive of the Committee's proposals. I am most interested in it, because when I was Minister for Health, I was a genuine enthusiast about going over to a community-based model of care instead of having long-term stays in old institutions. But the important point is the reality of what is proposed.
  It is a mistake for those outside the health and social services sector to look upon community care as some sort of unskilled cheap alternative to hospital-based services. Those who still abide by that idea, including my hon. Friends the Members for Beckenham and for Batley and Spen, who gave all the reasons for looking at the community model, should ask the management and—as my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) said — the trade unions what they would think about 100,000 untrained people who have been out of work for three years or more being given temporary contracts in order to provide that care.
  Mr. Andrew Rowe: Will my right hon. and learned Friend give way?
  Mr. Clarke: I apologise for not giving way, but I am making one of the shorter speeches today.
  Finally, there is the proposed employment subsidy. Our experience is that such subsidies must be carefully and specifically targeted if they are not simply to support jobs that would have existed anyway; and they must be associated with some wage limit if they are not to be inflationary. The Committee's proposals are defective on both of those counts. Our estimate is that it might be
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  necessary to pay subsidies for 850,000 jobs to create the extra 350,000 which is the Committee's target. That is too expensive and unrealistic.
  But the debate on this immensely serious matter—the problems of the long-term unemployed—has moved on. To the Committee's credit, it has responded to our arguments by scaling down the size of its proposals, so that it is now talking about a target group in the first place that is 40 per cent. of the original size. But that does not remove all the difficulties. There would be more than £1 billion of extra expenditure and an even greater net cost per job created. It would certainly be four to five times higher than the current measures, and it would still involve major practical problems. For example, the health and social services point is just waved away and glossed over in the third report, although the difficulties remain.
  Thus, we continue to express reservations. However, we are at one with the Committee on the need to take quick and effective measures to tackle the problems that it has identified. The one thing that we are all agreed on tonight is that we must do something. There will be no answer to the problems of the long-term unemployed if we do nothing. The Government are acting on a similar but alternative course that is on an ambitious, imaginative and massive scale.
  Next Tuesday, 1 July, we shall be embarking on the most ambitious and comprehensive programme yet attempted to assist the long-term unemployed. In contrast to the Committee's proposals, the programme will offer assistance to each and every person employed for more than 12 months, and will seek to identify in discussion with each individual concerned his or her particular needs and a practical way of meeting them. We have already tested this in nine areas around the country. Indeed, as my hon. Friend the Member for Lewisham, West (Mr. Maples) said, that was a good way of trying out the practicability of our proposal. We are hopeful that the restart programme will offer in the next nine months personal help to some 1·25 million people registered as long-term unemployed.
  There has been some criticism about the jobs being offered. We have identified eight categories of opportunities that we can offer to those whom we approach. The full range is set out in our "Action for Jobs" leaflet. It is no good the hon. Member for Newham, North-East doing the knocking job that he tried to do at one point — before agreeing that he supported it, after all — by talking about the number of jobs in which people were directly placed. We are talking about placing people in jobs with private employers, placing them directly in jobs in the community programme and placing them in jobs clubs, which have a high success rate, about placing people in training, and in the enterprise allowance scheme, and about people taking advantage of the jobstart allowance.
  I believe that this ambitious programme, unique in its scale of comprehensiveness, is an answer to many of the pleas that have come from both sides of the House this evening to have another go at the problem of the long-term unemployed.
  The hon. Gentleman made references to the alternative that he would put forward. I have to say to the SDP and to the Labour spokesmen that, given that the Select Committee has revised its proposals in response to our reactions, they might well examine their own policies. The Labour party in particular relied heavily on the Select

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  Committee proposal to justify its 1 million jobs claim. It has always reacted with cynicism and some suspicion to our restart programme, talking about tea and sympathy.
  The first report of the Select Committee emerged at a time when the Labour party was making promises about jobs but had not, as it still has not, any clear policies. This was seized upon by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) in his speech on the Budget as an explanation. Professor Griffiths, it is claimed, shows that Government policies would reduce unemployment by the same amount, although over a little longer time. The same model says that our policy will reduce unemployment to a similar level a year later and that the Labour party's policies will push up inflation to three to five times higher in the next five years and increase the marginal tax burden by nearly one third.
  Mr. Prescott: How much—what is the inflation rate?
  Mr. Kenneth Clarke: It is three to five times higher—[Interruption.] If the hon. Gentleman is going to rely on Professor Griffiths' analysis, I rather welcome that.
  I would like to know what the hon. Gentleman and his hon. Friends mean by the commitment that they keep giving, somewhat cynically, about the extent to which they have policies that would reduce unemployment—claims that are easily made to deceive those who hear them. One has to be clear about this. Two claims are made by the Labour party. One is that it will create 1 million new jobs. The other is that it will reduce unemployment by 1 million. The two are clearly different and they amount to quite different figures.
  As the hon. Member for Kingston upon Hull, East knows, the Government have presided over the creation of 1 million additional new jobs since spring 1983, but demography means that unemployment remains high. The available labour force grew by 500,000 in 1984 alone. What Labour spokesmen plainly do not understand is the difference between the two claims and they use both formulations with reckless abandon. The fact that they keep changing shows that it is a bogus, irresponsible claim and in my opinion a cheat on the unemployed waiting for their share of economic recovery.
  I tried to bring this out last week with the shadow Chancellor. I do not think the "Dear Roy, Dear Clarke," exchange will ever be published as a example of great literature, but it was an example of prevarication and bombast, something of which the right hon. Member for Sparkbrook was accusing the Prime Minister earlier today. Let me explain what lies behind this so that Labour can clarify its policies. I want to give some quotations of what has been said by shadow Cabinet members in the course of the last six months when they have repeatedly made this kind of claim. The hon. Member for Kingston upon Hull, East, in the Daily Telegraph of 14 August 1985, was quoted as having said,
  "Altogether we can create 1,400,000 jobs at a cost of £3,800 million".
  That seems to bear no relation to current claims. Secondly, the right hon. Member for Islwyn (Mr. Kinnock), the leader of the Labour party, is reported in the Municipal Journal of 7 February 1986 as saying——
  Mr. Leighton: On a point of order, Mr. Deputy Speaker. Is the debate not about the report of the Select Committee, not a knockabout in regard to the deputy leader of the Labour party?
  Mr. Deputy Speaker (Mr. Ernest Armstrong): I will decide whether the right hon. and learned Gentleman is out of order.
  Mr. Clarke: The hon. Member for Kingston upon Hull, East took 20 of his 40 minutes bashing the Government. I am also referring to claims that are based, as the Budget speech of the right hon. Member for Sparkbrook shows, on this Select Committee report, which was clutched by the Labour party as a drowning man clutches a straw when it had already made these commitments to new jobs, but had no idea how to create them.
  I am sure that people will want to be reminded of what the right hon. Member for Islwyn said on 7 February. He said:
  "When we form the next Government our first priority will be jobs. We are going to work to generate one million in the first two years".
  That was the same occasion on which the hon. Member for Kingston upon Hull, East said in the same journal:
  "How did we get this promise of one million jobs? Who worked on the programme? Promises such as these simply label us with targets we cannot achieve and expose our credibility".
  Then we had the Budget speech in which the right hon. Member for Sparkbrook claimed, in what was the only detailed analysis of the policy that we have had—and this is to be found at column 310 of Hansard, 19 March —that 750,000 came from the first report of the Select Committee. On went the right hon. Member for Kingston upon Hull, East. He said the next day:
  "My right hon. Friend the Member for Sparkbrook pointed out how one million jobs could come in two years." —
  [Official Report, 20 March 1986; Vol. 94 c. 448.]
  This was repeated by the right hon. Member for Sparkbrook to the Union of Shop, Distributive and Allied Workers conference on 28 April when he said:
  "This programme will produce one million jobs in something like two years".
  Today the leader of the Labour party has been speaking in Jersey—he has made a speech of which I have a copy — and he has altered the promise again. He said:
  "By using the money that Nigel Lawson would fritter away in tax cuts and by putting it to productive use we can and will gain a million new jobs in our first years in office".
  As I have made clear, a million new jobs does not solve unemployment. As I understood the hon. Member for Kingston upon Hull, East earlier today, he committed himself again to the creation of 1 million jobs, and he admitted that would still leave 3 million unemployed. The fact is that the creation of those new jobs is merely matching what the Government have achieved. We are taking steps to try to speed up the process.
  The claims of the Labour party are imprecise and insecure and do not amount to a row of beans. There is no solid policy behind them. I will take the hon. Gentleman's final words and go away and work on them. It seems that Professor Griffiths of University College is now the bedrock of Labour policy. I look forward to exposing——
  The debate having continued for three hours, MR. DEPUTY SPEAKER interrupted the proceedings, pursuant to the Resolution [8 March].

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  Question deferred, pursuant to paragraph (2)(c) of Standing Order No. 19 (Consideration of Estimates).

ESTIMATES, 1986–87
  Class IX, Housing

    Housing and Environmental Services
    [Relevant documents: Third and fourth reports of the Environment Committee, House of Commons, papers 341 (1985–86) and 356 (1985–86).]
    Motion made, and Question proposed,
    That a further sum, not exceeding £1,010,095,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of the Environment on Housing, as set out in House of Commons Papers No. 284-IX.— — [Sir George Young.]
    Mr. Deputy Speaker (Mr. Ernest Armstrong): With this it will be convenient to discuss the motions relating to the following Estimates: Class X,
    That a further sum, not exceeding £5,820,177,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of the Environment on Other Environmental Services, as set out in House of Commons Paper No. 284-X.

  Class XX, Vote 18
  That in respect of Class XX, Vote 18, for expenditure by the Property Services Agency of the Department of the Environment on acquisitions, public building work, accommodation services, administration and certain other services for civil purposes in the United Kingdom, the balance to be surrendered to the Consolidated Fund he £171,101,000.
  7.18 pm
  Sir Hugh Rossi: This is the third time that the Select Committee on the Environment has reported on the Main Estimates of the Department of the Environment and the Property Services Agency, and the third occasion upon which the reports have been debated. As on previous occasions, the Committee has examined all the Estimates concerned, except defence accommodation, and is in general satisfied with the justification given for the Estimates. However, it has selected particular matters to which it believes the attention of the House should he drawn before Supply is voted. We inquired into the relevant sections of the public expenditure White Paper as well as the Estimates themselves.
  There are two motions on the Order Paper in my name for reductions in two sub-heads. Depending upon what my hon. Friend the Minister says, I am prepared to press them to a Division at the end of the debate. They do not necessarily involve the most important subjects in our report, but, as the House knows, our conventions governing the Vote of Supply allow us to propose reductions, but not increases. A number of our past recommendations have been accepted by the Department, for which we are grateful, and by the PSA. Those are acknowledged in the appropriate places in our reports, and some of them are listed in paragraph 3 of the report on the Department of Environment's Main Estimates.
  The two reports deal with some new subjects, but also explore further subjects upon which we have reported in the past. It is not to be expected that major subjects such

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  as the maintenance of the country's housing stock can be disposed of in a single year, so we make no apology for returning to such matters.
  The first subject that I wish to raise is on page vii, paragraphs 5 to 8, of the third report on the main Estimates, and relates to housing mobility. Under the national mobility scheme, local authorities agreed to make available 1 per cent. of their lettings to people moving into their areas from other parts of the country. The result so far has been pathetically small—only 6,000 houses were successfully released under the scheme in 1984–85. We have previously made proposals for improving the scheme and we make fresh proposals in our report. I hope that they will be acted upon.
  The scheme would help the mobility of the unemployed by assisting them to move into areas where jobs might be available. The root difficulty may be local authority reluctance to provide accommodation for new arrivals because they want to concentrate on those on their housing waiting lists. That is understandable, but more should be done to increase the mobility of labour. Perhaps my right hon. Friend the Secretary of State for Employment should take an active interest in this matter and discuss it with environment Ministers. I hope that my hon. Friend the Minister will respond to the debate more positively and less defensively than he has in the past—reluctant though he may be to upset local authorities. There is little point in setting up a national mobility scheme unless he is prepared to see it work. If it is defective, it should be replaced by a better scheme.
  My next subject, dog and game licences, is referred to on page viii, paragraphs 9 to 12, and is becoming a hardy perennial. The Government are asking the House for £3·87 million to pay the Post Office to issue licences that bring in only £900,000 in revenue. That is nonsense, which is why I have tabled a motion that the House should not vote the £3·87 million.
  Successive Governments have dithered about this matter since 1974. I recall tabling a new clause to the Control of Pollution Bill in that year, asking for changes in the system of control and protection of dogs. That led to the setting up of a working party which reported in 1976, and which made many recommendations that were widely welcomed. However, there is still no sense in the current system. When taking evidence we found that an overwhelming majority of people would prefer money to be spent on a dog warden service at local level. There is a need to collect strays and most of us, whether or not dog owners, want dogs to be kept under reasonable control in public places and the pavements in towns to he kept clean.
  The Government appear to be making unnecessarily heavy weather of this issue. It is very controversial, but it cannot be ignored for ever. It is absolute nonsense to pay the Post Office more than £3 million a year simply to push pieces of paper across counters to half of the dog owners in this country—the other half not bothering to take out licences, and there being no prosecution for those who fail to do so. The law is a dead letter. We are spending a large sum that could be put to better use. I know that my local hospitals need kidney machines, and that £3·87 million would provide quite a few of those. We should not waste that money.
  Mr. Richard Alexander: Does the position that my hon. Friend describe mean that those who refuse to take out dog licences, and are therefore acting illegally, are saving the country money?
  Sir Hugh Rossi: That is the strange position in which we find ourselves. One recommendation could be that all dog owners should break the law and not buy licences, thereby saving the country almost £4 million. I know that my hon. Friend the Minister will be appalled that such a suggestion should come from these Benches, but illegality would not be necessary if only he would act.
  Mr. Kenneth Hind: If a law is effectively unenforceable, does that not make the law look an ass and undermine the basic fabric and authority of this House? Is it not about time that we tackled the problem once and for all?
  Sir Hugh Rossi: I am grateful to my hon. Friend for reinforcing my words with such eloquence.
  Mr. Norman Miscampbell: The House should remember that there is a considerable body of opinion that dogs should be properly licensed and that simply to abandon licences would cause chaos in our streets. A proper dog licence, politically difficult though it may be, might be a better and more acceptable alternative.
  Sir Hugh Rossi: As the House is no doubt aware, in Northern Ireland a higher fee is paid for a licence and the money is devoted to a proper system of dog wardens, to the benefit of both the general public and the dogs. Indeed, we have recommended that course in our report, and the Government should address themselves to it. If they feel that some form of dog licence is necessary, they should ask local authorities to operate the system because they know the amount of control that is needed in their areas. In some areas a system of control is more necessary than in others. That matter was suggested by the working group nearly nine years ago, yet today we are still discussing it and no progress has been made. The fault does not rest simply with this Government. Previous Administration have also fought shy of tackling this problem, probably because there are many dog owners and it was feared that they may be offended in the process.
  1 would like to consider briefly the homeloans scheme which was introduced in 1978. That scheme had the commendable objectivity of encouraging home ownership for first-time buyers. Unfortunately, the sum which the scheme provides — £110 plus a £600 loan — has never been updated and has remained the same for eight years. That is now quite derisory. The Government should either make the scheme more attractive and advertise it, so that first time buyers know that it exists, or wind it up. The scheme seems to be nonsense.
  The scheme is also a compromise. The original scheme proposed from the Opposition Benches in 1978 was a pound for a pound grant scheme to first-time buyers with a cut-off point at £3,500. However, the Government in 1978, stampeded somewhat by that suggestion before a general election, brought in the present mouse of a scheme, which has been a failure. I hope that my right hon. and hon. Friends will consider whether home ownership is now so popular that this kind of incentive may no longer be required since 62 per cent. of people currently own their own homes. If so, perhaps the scheme should be disposed of and the money allocated elsewhere.

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  The most important matter dealt with in the report on the Department of the Environment's Main Estimates is housing maintenance. Unfortunately, up-to-date information on the state of the housing stock is lacking. There has been no progress on that since the housing condition survey in 1981. However, updating the figures in the report, some £40 billion needs to be spent on repairs and renovations.
  The money spent at present is doing little more than preventing the backlog of maintenance from growing. We should not delude ourselves over this matter. A firm action programme is needed. When we took evidence, it seemed as though the Department was inclined to shelter behind the fact that up-to-date information from the 1986 house condition survey must also be available. However, we know that that information will not be available for another two years. That is rather a long time to wait when it is already accepted that a vast sum of money needs to be spent.
  We have therefore made a modest suggestion that steps should be taken to have the preliminary results of the 1986 house condition survey available not in two years' time but in nine months. At the very least, I hope that my hon. Friend the Minister will be able to assure us that that information will be available.
  Mr. Chris Smith: Before the hon. Member for Hornsey and Wood Green (Sir H. Rossi) moves away from the report on the Main Estimates, may I draw his attention not to the main body of the report but to appendix 4 on page 34 and a supplementary note provided after the Committee had concluded its deliberations about the housing associations' construction programme? Is it not alarming that the figures show that, for scheme approvals and dwelling starts in the current financial year, there has been a drop of more than 20 per cent. in both those categories for housing associations? Should we not draw that fact to the attention of the House and ask the Government hard questions about those cuts in housing association provision?
  Sir Hugh Rossi: No doubt my hon. Friend the Minister has heard the hon. Gentleman's intervention and will deal with his points in the course of his reply. We must bear in mind that other figures have been put about concerning the excess of accommodation in relation to households. The Opposition produced a Green Paper many years ago when they were in government which stated that the problem was local and that there was a need for public sector housing for specialist groups such as the disabled and sheltered housing for the elderly. No doubt the Minister has more facts and figures at his disposal about these matters and I hope that he will be able to satisfy the hon. Member for Islington, South and Finsbury (Mr. Smith).
  Mr. David Winnick: The hon. Gentleman said that the provision of public sector housing should be for specialist groups. Whatever may have been the position in 1977, would he not agree that in the large cities — for example, London — many people, even on average earnings, simply cannot begin to buy a place because of house prices? That does not simply apply to London; the hon. Member for Hornsey and Wood Green (Sir H. Rossi) must be aware of the position in his own constituency. Does that not strengthen the argument that
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  many people — not just the poor — desperately need public sector accommodation, without which they will not be able to resolve their housing difficulties?
  Sir Hugh Rossi: I accept that many families, especially in the inner cities, cannot begin to contemplate the purchase of their own house, although there are many valuable schemes, such as equity sharing, which have been produced to assist as many groups as possible.
  Part of the inner-city problem— I am sure that the hon. Member for Walsall, North (Mr. Winnick) will not welcome this argument — is due to the fact that the private rented sector has died. We can look to certain legislation which has created an artificial shortage in that area and which has exacerbated the position for many families, especially when one considers that at one time the majority of housing provision was in the private rented sector. That has been killed off by legislation. We must take a much broader view of the position than that taken by the hon. Member for Walsall, North if we are considering an all-round solution to the problem.
  Mr. Robert B. Jones: Is not part of the explanation for that the commitment or lack of commitment of local authorities? Is my hon. Friend aware that Wandsworth council, which has many inner-city problems, has increased its owner-occupation rate from 27 per cent. to 53 per cent. since the Conservatives captured control of the council in 1978? That has been achieved with the assistance of many imaginative schemes which could be copied by the local authorities controlled by the Opposition which are so adamantly against home ownership.
  Sir Hugh Rossi: As always, my hon. Friend is well informed and, as usual, he is correct.
  I would like to consider the Select Committee on the Environment's fourth report on the PSA's Main Estimates for 1986–87. In that report we have made a number of recommendations about the PSA system of accounting and the way in which money is made available to the agency by the Treasury. I should like to draw attention to three points.
  First, we should like some hard evidence about whether the property repayment services system is producing economies. For three years, the PSA has been charging Departments for the accommodation they occupied. A vast amount of paper work is involved but there does not appear to be much evidence that the new system has resulted in more economy in the use of accommodation. What is the point of a reform of this magnitude if the results are not being monitored? They cannot be being monitored because nobody can give us the information that we want. Are we expected to believe in the PRSS as an act of faith?
  Secondly, the PSA should have a proper set of commercial accounts. It would like to follow a policy of buying and building more office accommodation and relying less on the expensive alternative of leasing it. The agency is inhibited from doing that because the cost of capital investment is charged in Government accounts in the year in which it is incurred. From the point of view of annuality, therefore, it is easier to pay a smaller yearly rent than to pay for the freehold in one year.
  All commercial properties are now subject to stringent rent review clauses. Gone are the days when one could get a 21-year lease on a fixed rent. Rents now have to be

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  reviewed every two or three years and in no time at all they exceed what would have been the cost of buying the freehold in the first place. That is a ridiculous situation into which the Government should not have got themselves and it is substantially the result of the Treasury convention of annuality. Environment Ministers should speak to their opposite numbers in the Treasury to see whether their accountants, whose ingenuity is no doubt unlimited, can find a means of spreading the cost over the lifetime of the asset, as any commercial undertaking would for the purposes of its accounts.
  Thirdly, freeholds come on the market on favourable terms at very short notice. It is silly that the PSA is unable to buy freeholds when they suddenly become available. It should have the money to buy them, but the Treasury refuses to make money available on a contingency basis. To anybody in the commercial world, that is bad business. We see no reason why the Government should not conduct themselves on more commercial lines for the benefit of taxpayers.
  Mr. Miscampbell: It might be useful for the Government to explain at the same time why they will not borrow from the commercial market if they do not want to produce the money themselves. Although they could buy the freehold of a property which they will need in a year or two at the most convenient terms, they refuse adamantly to go to the commercial market which is running with money and would lend to them. That would be a far cheaper approach.
  Sir Hugh Rossi: My hon. and learned Friend will know that there is a glimmer of hope. We were told in evidence that consultants have been hired to advise on these matters. Their remit should be made as wide as possible to cover the issues that my hon. and learned Friend mentioned and their report should be expedited. Perhaps a Treasury Minister rather than my hon. Friend the Parliamentary Under-Secretary of State should be present to answer today.
  One of the Select Committee's major worries concerns acquisitions and new works. They are dealt with in paragraphs 22 to 32 of the report. The PSA's original estimates of the cost of the new works have turned out to be wildly wrong in a significant number of cases. I shall give only two of the many examples that were given in evidence. The original estimate for a building for the Foreign and Commonwealth Office is being exceeded by 114 per cent. and the estimate for a court for the Lord Chancellor's Department is being exceeded by 77 per cent. Part of the fault lies with the commissioning Departments, which chop and change their requirements and specifications. Each time they do that, the cost of the project increases. There should be firmer control over commissioning Departments and the changes that they are permitted to make. Part of the blame, however, attaches to the PSA for inaccurate estimates. We are glad that the agency proposes to carry out a study into its estimating performance.
  As an expression of the Committee's disquiet, however, I have tabled a motion which would reduce that sub-head of expenditure by £20 million. I hope that my hon. Friend's reply will obviate the need for me to move it formally.
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  There is an alarming backlog of maintenance on the agency's Civil Estimate, amounting to £100 million, which seems to be growing. We all know that neglected maintenance leads to more expensive hills. The point has been reached at which the Treasury must make increased resources available, as the other sub-heads of the agency's budget have been bled white.
  I hope that we can hear satisfactory replies to the issues that I have raised. In view of the criticisms that we found it necessary to make in our report on the PSA's Estimates, the Committee has it in mind to carry out a full inquiry into the PSA during the next Session.
  7.47 pm
  Mr. Allan Roberts: I should like to put on record the fact that, as well as speaking from the Front Bench on behalf of the Opposition, I am a member of the Environment Select Committee, and I am pleased to speak after the hon. Member for Hornsey and Wood Green (Sir H. Rossi). I should like to pay a compliment to him as he chairs our Committee adeptly and skilfully. He guides us effectively, especially when it comes to choosing subjects on which we can produce reports that have all-party support. I pay that tribute, even if I disagree with some of what he said today. This debate is a little more political than our discussions in Committee.
  I shall concentrate on the Select Committee's report on the Department of the Environment's Main Estimates. My hon. Friend the Member for Blackburn (Mr. Straw) will address himself later to the report on the PSA. I want to mention gipsy sites, the Liverpool garden festival, which affects me in terms of constituency interest, dogs, help to first-time buyers, home owners, housing mobility, housing maintenance and the report's references to the traditional urban programme.
  The Environment Select Committee recently followed the hippy trail through the west country on its present inquiry into ancient monuments and historic buildings. Many of the local authorities which complained about the the peace convoy and said that they needed stronger laws of trespass to deal with it would have had the powers that they wanted if they had provided gipsy sites under existing legislation. If they had provided such camps, they would have been able to prevent travellers such as the peace convoy from squatting on land. Although there are 469 housing authorities, there are only 232 sites. The Select Committee welcomed the Government memorandum, the circular that has gone out from the Department of the Environment, but urged the Government to review the legislation and put strength in it so that local authorities which are not providing sites will have to provide them.
  Mr. John Mark Taylor: I should like to take the hon. Gentleman a little further on the matter of caravan sites and the so-called peace convoy. Is he honestly endeavouring to tell the House that if all the local authorities followed to the letter the law about the registration of necessary sites for itinerant people all the malpractice and anti-social behaviour of this so-called peace convoy would go away, and that the members of that convoy would settle down happily in any such designated sites?
  Mr. Roberts: I am speaking about the laws that local authorities need to move travellers on. The peace convoy comes within the definition of the legislation on gipsy sites.

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  The local authorities would have had the stronger powers that they seek under the law of trespass to move those people on if they had provided sites. I do not want to spend all my time discussing this issue because I should like to move to other points.
  Mr. Robert B. Jones: The hon. Gentleman has spoken about designation, and that would certainly give local authorities more powers in respect of public land. The point that arose in the west country related to private land. The law was perfectly clear but getting rid of these people caused the farmer great frustration and cost. That is the point that worries everybody.
  Mr. Roberts: I am well aware of the things that worry people because we met worried people on our journeys. Local authorities have powers to move on travellers if sites are provided, but only 232 local authorities have provided sites. As the Select Committee said, this leaves some 35 per cent. of gipsies and people who travel—leaving aside the peace convoy—without sites on which they can legally park. Something needs to be done about that before we become critical of travellers who trespass.
  I am pleased at the way that the Liverpool garden festival turned out. The Select Committee highlights that the festival cost £14·822 million to design and construct and £5·447 million to run. That is a total of over £20 million. The total revenue was £6·398 million, and that makes it look as if there was a loss on the festival of over £13 million. However, if we take account of the contributions of £883,000 and the £5 million value of the exhibition site and the buildings that were left, the loss is reduced to about £8 million.
  Partly at my request, the Select Committee visited the site. That visit was a catalyst that got people moving. Our inquiries were informal and unofficial and as a result the development corporation was able to bring in a private company, Transworld, and public sector involvement through the Merseyside development corporation. That has transformed what was to be a one-off international garden site into a permanent facility for the people of Merseyside. Transworld will invest £5·5 million and this year it has already spent £1 million on maintaining the facility. The company is investing money to turn the area into a major theme park.
  But for public expenditure and effort and the visit of the Select Committee on the Environment and this private sector partner, a formerly derelict dockland area would not have been transformed into a permanent benefit for the people of Merseyside. It is a pity that a lot of other development corporation land is still empty, despite having its negative value removed. Developers and private sector firms are not coming in, and perhaps the lesson is that a bit more public expenditure is necessary as a catalyst.
  The Committee recommends that the present dog licence should be abolished and that consideration should be given to empowering local authorities to raise revenue by the issue of dog licences at appropriate fees to cover the cost of a dog service. There would be certain exemptions. As the Select Committee points out, there are 5 million dogs in Britain. I think they are all in Bootle. When I leave my front door in Bootle it is like entering a safari park. I was in the local supermarket the other day—not the Coop—and a dog came in and peed on the South African oranges. One of my constituents said, "What will you do about that, Mr. Roberts?" I said, "I will buy Australian."
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  We need action to deal with the problem of dogs roaming in the streets and fouling the pavements. The dog licence is an insult because it is too expensive to collect. Local authorities should be given responsibility and power to deal with the problem and the Government should stop collecting the licence money. Local authorities could easily impose a heavy licence fee and use the money to run dog warden services. A service like that would be appreciated not only by people such as I who are not fond of dogs. Dog lovers would appreciate it as well. That is because it does dogs no good to roam neglected as they do.
  The hon. Member for Hornsey and Wood Green called the home loans scheme a Labour Government's miserable little scheme introduced just before a general election. It is better than any scheme that this Government have introduced. The home loans scheme that the last Labour Government introduced in 1978 was a fair attempt to enable first-time buyers who had saved some money to receive grants and loans from the public purse. That was an attempt to help create genuine owner-occupation. The scheme should be extended and developed and we shall do that when we form the next Government.
  We believe in owner-occupation and especially want to help first-time buyers. If the Government ask where the money will come from, let them look at the latest Estimate for 1985–86 which puts the total tax relief for qualifying interest on loans for the purchase or improvement of owner occupied property at £4·750 million. I am not suggesting that we should abolish income tax relief for owner-occupiers, but there is nothing wrong with redistributing that money.
  A basic 29 per cent. rate taxpayer with a 25-year repayment mortgage subject to MIRAS and an interest rate of 11 per cent. in the first year and a £12,000 mortgage receives £383 in tax relief per year. A person with a £30.000 mortgage, the maximum amount for which income tax relief is obtainable, receives £957. That is wrong. It is a system of subsidising owner-occupation that is based on that old English principle that the richer you are the more help you need with your housing. We want to see first-time buyers, the lower paid and house purchasers in the lower price range given more help by redistribution of the money.
  Mr. Robert B. Jones rose——
  Mr. Roberts: I will not give way because lots of other hon. Members wish to speak.
  I am not surprised that the hon. Member for Hornsey and Wood Green and the Select Committee on the Environment said:
  "We understand that the Minister has been unsuccessful in persuading local authorities to agree to"
  provide a certain percentage of their housing stock to allocate to people coming in from other local authorities. I regret that, but it is not surprising because if local authorities do not have the houses to allocate to their own people they will be understandably reluctant to allocate them to others.
  The reason for the shortage of housing is that the public rented sector has declined under this Government because it is being sold off and also because hardly any new council houses are being built. That is why the mobility scheme is not working and why local authorities are reluctant to give houses to people coming in from other areas. They have no houses to give to people on their own waiting lists, homeless people indigenous to their areas.

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  In 1981 house building fell to its lowest level since the 1920s. Under this Government public sector house building has been slashed. Fewer than 40,000 new council houses were started in 1984 and fewer still in 1985 — about 70 per cent. down on 1978. Taking public and private house building together, homes started under the Government are 37 per cent. below the number started under the previous Labour Government. The claim that the private sector can make up the lack of new council houses is clearly wrong. Over 500,000 extra homes would have been built by last year if Labour's house building plans had been maintained.
  The report of the Select Committee on the Environment on house maintenance is a damning indictment of the Government's housing policy. Because it is an all-party Committee, it is in softly, softly language, but, none the less, it is an indictment. Our last report said:
  "It seems certain that there is a very large backlog of housing maintenance at the present day and, against that background, it seems to us imperative that the available resources are appropriately distributed between the private and public sectors."
  That report talked about £30 billion — £40 billion at present day prices — being needed to maintain our housing stock. It goes on:
  "According to the Department's recent enquiry into the state of the public sector stock, some 3—8 million dwellings out of a total of 4—6 million require some attention and the total capital expenditure required is some £19 billion ie an average of about £4,000 a dwelling."
  The Select Committee concludes:
  "We are concerned—that is putting it mildly—about the state of repair of the housing stock. Neglected maintenance is not merely postponed but gives rise to the need for even more maintenance later on."
  Then comes the prediction of the return of the bulldozer—
  "Some property, particularly in the public sector, may be near the point where replacement rather than renovation becomes the only realistic but more, much more expensive option."
  The crisis highlighted by the Select Committee is a major one, growing into one of 1945 proportions. One third of today's homes were built before 1919. The worst conditions are in the private rented sector which Conservative Members want to revive. Nearly half of all unfit homes are owner-occupied. In England and Wales 1·25 million homes are unfit for human habitation and I million lack one or more basic amenities such as an inside toilet. In the United Kingdom 2·5 million are seriously affected by damp; 3 million require immediate repairs, each costing £2,500 or more; and 1·5 million have serious design defects.
  Mr. Robert B. Jones: The hon. Gentleman is clearly implying that a great deal of money should be spent on this problem. He has already told us that he believes in altering the tax relief system. At what level would tax relief be withdrawn by an incoming Labour Government?
  Mr. Roberts: At the high rates.
  The backlog of repairs and the blame for the current housing crisis that the Select Committee highlights lies firmly with the Government. They have repeatedly cut the budgets for housing expenditure. Indeed, since 1979 housing has borne the brunt of public spending cuts, with expenditure cut by more than a half, taking account of inflation. As a result, the proportion of its national income that the United Kingdom spends on housing is far smaller
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  than that of any other EEC country. That is the housing crisis as highlighted clearly by the Select Committee's report.
  The Select Committee received from the previous Secretary of State for the Environment, now the Secretary of State for Education and Science, a note on urban policy headed "Traditional Urban Programme", which is optimistic. But we must realise that the urban programme is not an urban policy. It is financially, managerially and politically marginal to urban government. In 1985–86 the urban programme comprises only £2 in every £10,000 of total planned Government spending. The base urban programme allocation for some programme authorities is less than 2 per cent. of their revenue budget.
  I welcome every penny of urban programme money that the Government give, especially if it comes to Bootle, but we must put it in perspective. Total urban aid from 1981 through to 1987 is £1,910 million. Government cuts in rate support grant to local authorities were nearly eight times more than that—£8,060 million. The only way to solve the urban problems of our inner cities with which local authorities are having to battle is not through the urban aid grant but through the mainstream programmes of local authorities which are highlighted in the report, such as housing and so on, about which the Select Committee is concerned. The only way to solve the problems is by increasing Government expenditure, not reducing it. I regret that the Select Committee cannot table any resolutions to increase expenditure rather than reduce it. If that were possible, that is what the Opposition would be doing.
  8.5 pm
  Mr. Robert B. Jones: I have greatly enjoyed being on the Select Committee on the Environment for the past two and a half years. Now that I am due to leave it I should like to take this opportunity to say that I very much enjoyed co-operating with hon. Members from both sides of the House during the production of our reports, and, in particular, serving under the chairmanship of my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi), one of the outstanding Chairmen in the House, who has led us through a series of most interesting subjects, not the least of which are the two that we are considering today.
  If I have one main regret about leaving the Committee, it is that I shall not be able to serve on the Committee during its detailed consideration of the Property Services Agency in the coming year. There is a major job to be done in that area.
  I want to refer in particular to two recommendations which are dealt with in the Select Committee's report and I shall take them, if I may, in reverse order. Recommendation 32 relates to the acquisition of freeholds. My hon. Friend referred to that in his speech. I find it baffling, and I know that other members of the Committee did too, that the policy on the acquisition of freeholds is not a calculated one on the basis of the facts available to the PSA, but is an ad hoc policy, based entirely on whether there happens to be any money in the kitty at the time. It cannot be right that it should wait until the last weeks of a financial year, knowing, as many Departments do, that they have to blow the money or hand it back in order to develop its property policy. It should have a clear set of criteria by which it decides whether to purchase and there should be a fund within the PSA estimates which

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  entitles it to acquire far more buildings than it has at present. There is no doubt whatever, given the recent history of property prices, particularly in the cities and the south-east, that freeholds are a good buy.
  Recommendation 31 refers to the central point, if I may call it that, of the report-the competence of the PSA in dealing with its programmes and projects. I took up two particular projects in some detail during cross-questioning of witnesses from the Department and I want to refer in particular to them.
  The first is the Hanslope park scheme. That is the uprating of an engineering service in a Foreign and Commonwealth Office establishment. That has overrun by £1,500,000 on an original cost of £1·1 million. That is an astronomic increase. Some increases are because of things that have happened in the meantime, which have resulted in extras being added in. I agree with my hon. Friend that it is most unwise to change the specification to provide more or different accommodation or whatever, because that does not give good value for money in terms of purchasing construction work in the private sector, but it is even more illogical that the whole building had to be redesigned to bring the engineering services up to current safety standards. That was responsible for £630,000 —40 per cent.—of the overrun. The reason for that was that it was very late in the day when the Department decided to consult the laboratory of the Government chemist. If it was important to consult the laboratory of the Government chemist about the design, surely the proper time to consult was at the beginning of the project, not halfway through so that it resulted in a significant overrun. When I questioned the witnesses from my hon. Friend the Minister's Department they could offer no real assurance that it would not happen again. Indeed, they seemed thoroughly complacent about their performance on this and other matters.
  The second project is the Derby Crown courts. One would think that the Property Services Agency had some experience of courts. After all, it has dealt with them in a number of different parts of the country. It has overrun with monotonous frequency, but I am sure that in part it is due to the Lord Chancellor's Department revising its requirements. I hope that my hon. Friend will take up vigorously with the Lord Chancellor the point that he, too, should get things right at an early stage.
  There are two other factors involved beside changing the specifications. In mid-1983, in the middle of the project, the Civil Service Catering Organisation changed its catering policy to include a coffee shop style of catering in some courts and provided a completely new brief. That cost the taxpayer an extra £41,000. Admittedly, that is small in terms of the total overrun of £2·7 million. That overrun relates to an original estimated cost of £2·9 million, almost as bad as the other example I gave.
  The real villian of the piece was the PSA, which, on examination of the design, decided that it was necessary to make improvements, particularly in the fire escape routes from the dining and jury circulation areas. The consequent redesign was more expensive. That was £696,000 out of the total £2·7 million overrun. What happened? It is curious, but the fire authority was not consulted until late in the project. I find that extraordinary and when I cross-questioned witnesses from the Minister's department they said:
  "The lesson we have learned from this is that it is not good enough to devolve responsibilities for designing something as
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  complex as a court to our regional organisation simply on the basis that they have the requisite numbers of architects or engineers. One must make a more detailed inquiry as to the skill and experience of these architects and engineers that we now have."
  Anyone who has any experience of the private sector in dealing with construction projects would have known perfectly well that that was the case. Anyone in a private sector company who placed an order with a company for a design of a building without having investigated whether it was capable of carrying out the project would deserve to be sacked on the spot. I ask my hon. Friend the Minister to say what disciplinary action has been taken against the civil servants in the PSA whose incompetence cost the taxpayer £700,000 on one project alone.
  Those are just two examples out of a whole list that the Committee examined. We have examined similar examples in previous years and I am grateful to my hon. Friend the Member for Hornsey and Wood Green for having secured this debate. It is about time that the scandals came to public attention and time that the Minister really took control of the PSA to make sure that we do not have the same sad story next year. If we do, it will not only be the Select Committee on the Environment which will be seeking a debate in the House on the PSA estimates; it would rightly and properly be something being sought by other Select Committees, by Opposition Members and by my hon Friends.
  I shall turn to a number of items in the Department of the Environment's main heading. Some of them have been touched on by the hon. Member for Bootle (Mr. Roberts). I simply wish to put a somewhat contrary view, which will not surprise him, on one or two points. First, I shall deal with gipsy sites. My hon. Friend the Member for Hornsey and Wood Green touched on the points on which we had cross-questioned the Department of the Environment. Of course, the letter is appended to the report.
  Those of us who have constituencies which are on the fringe of urban areas know what the problem is. When an authority applies for designation saying that it has sufficient official sites to cater for the number of gipsies in the area, one may get an influx from all sorts of other neighbouring areas, especially if they had designation first. My hon. Friend the Minister responsible for planning and the designation of gipsy sites has tried to deal with applications on an inward-outward basis because that is the right way to do it. However, he is still sitting on the application for designation by Hertfordshire county council in respect of Dacorum borough council, which covers my constituency and part of the constituency of my hon. Friend the Member for Hertfordshire, South-West (Mr. Page).
  In the middle of the Minister's consideration, one of the local Socialists in Berkhamsted challenged the consultation process in the courts. She was perfectly entitled to do that. Of course, it went out for further consultation and it has gone back to my hon. Friend for another examination. I think that he must make an urgent decision on this because we are suffering every bit as much as people in Somerset from influxes of caravans, or various sorts of people who camp out on the byways, tear up the hedgerows, chop down young oaks and cause a great deal of petty and serious crime in the area. Obviously one wishes to see proper arrangements for permanent housing and schooling for many of those families. However, I do not think that it is right for any local authority to be

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  required to cater for the sudden influxes that come from different parts of the country at any one time. I hope that my hon. Friend will convey those thoughts to the Minister responsible.
  I want to refer to Vote 4 in passing. My hon. Friends on the Select Committee are aware of the fact that it was at my suggestion that the Select Committee did a one-day inquiry into the use and future of Hampton Court palace. It was a most interesting study, which provoked some interesting and quick decisions on the part of the Department of the Environment. Quick decisions are often welcome. Obviously, since that time the very sad events have taken place that led to the partial destruction of Hampton Court. We were all grateful to the Secretary of State for his assurance that funds would be made available for the reconstruction of Hampton Court. I simply want to ask my hon. Friend the Minister to assure us that we will not have any barmy modern architectural practices forced on to the beautiful Hampton Court palace and that it will be rebuilt properly in a combination of mediaeval, Tudor and Wren. I know that many people in that part of London are worried at a suggestion from an architect whose name I cannot remember——
  Mr. John Mark Taylor: Mr. Chapman.
  Mr. Jones: No, it was not my hon. Friend the Member for Chipping Barnet (Mr. Chapman). The architect suggested that the ruins should simply be glassed over as a monument to the destruction. That would be quite unacceptable.
  I should like to refer briefly to Vote 3 referring to the Commission for the New Towns. It is the policy of the Government, one that I fully support, that assets of the Commission for the New Towns should be released into the private sector in order to allow funds to be made available for other capital projects. I think that there is some evidence that the commission is using that remit to try to extract outrageous sums on the non-trading side of the commission. I am not talking about the sale of factories and so on, but the sale of some of the social assets. For example, the centre for the blind in my own constituency is on a 99-year lease on a peppercorn rent. Therefore, it seems wholly unreasonable for the Commission for the New Towns to insist on market price if the trustees of the centre for the blind wish to purchase it. It has no value to the commission since it is on long lease with a peppercorn rent. I hope that my hon. Friend will look at that and other examples to see whether he could give revised instructions to the Commission for the New Towns to ensure that it has proper regard to the social obligations in constituencies such as mine, Welwyn, Hatfield, Stevenage, Crawley and other new towns where their own corporations have been wound up.
  I have also worried considerably about the commission's attitude to the sports facilities that it owns. I must declare my interest, albeit it a non-pecuniary one, as president of the Dacorum sports council. We are worried that, as the commission owns some of our sports fields, it will be tempted to seek planning permission for housing development on that land to get the maximum capital gains for itself. That would not be consistent with the general policy that has existed in the area for many years, which is that we should try to have the maximum sporting facilities in the town.
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  Vote 6 deals with rate support grant which is always a contentious matter. My hon. Friend the Minister will be well aware that when we last debated RSG I did not support the Government in the Lobby because I felt that Hertfordshire was being particularly adversely treated. I do not wish to defend excesses in expenditure. It is striking that since the Conservative party lost control of the county council in 1985, the alliance, together with the Labour party, which together form the majority, have pushed through an increase in spending of 11 per cent. That is second only to Liberal-controlled Somerset as an increase in expenditure. My ratepayers and others in Hertfordshire are having to carry the can for that sort of excess.
  My anxiety is that the RSG distribution is unfair. It seems fair to say that because my constituents and others are wealthier than average—our per capita income is about 10 per cent. greater than the national average—we should pay more. But the average ratepayer in Dacorum pays 41 per cent. more in rates than the national average, and that is unfair. That is because of the way in which rateable value is taken into account in distributing the money available. The sooner my hon. Friend presses on with the reforms that have been heralded in the rates Green Paper, the better it will be for areas such as mine.
  Mr. Allan Roberts: Is the hon. Gentleman aware that the Green Paper envisages that the change to a poll tax will take the duration of five Parliaments? Does he really believe that the Government will do anything about it?
  Mr. Jones: I sincerely hope that my hon. Friend the Minister will take note of the importance of having a community service charge, because that will be a much fairer way of distributing the cost of community services than the present rating system. I make no bones about the fact that I support that proposal. Indeed, I have said that vigorously in my constituency and received a large amount of mail from people who agree with my stand.
  My point refers to the other half of the Green Paper, which deals with how RSG distribution would take place. I certainly welcome the division of RSG into two halves: a per capita half and a resources half. One anomaly in the present system, which I am sure my hon. Friend would not wish to get rid of, is the London discount. London is given a 25 per cent. discount on its rateable value because it is considered to be high. In all fairness, either that should apply to Hertfordshire, Surrey, Berkshire and other local authorities which surround London and also have high rateable values, or the London discount should be abolished. I leave it to my hon. Friend to decide which he thinks is fairer. Certainly it is most unfair that London enjoys a privilege that is not extended to other areas.
  The hon. Member for Bootle made a most interesting speech on housing. Unfortunately, he did not go as far as we in the Conservative party might have liked as he did not let his cat entirely out of the hag. However, the front six whiskers of the cat were quite enough to frighten many of my constituents, who would find their mortage interest tax relief abolished because they pay higher rates of tax. I do not know whether the hon. Gentleman realises that a senior school teacher in my constituency married to a manual worker in one of the computer industries would easily fall into that bracket and would end up paying a great deal more in tax if the relief were altered.
  The hon. Gentleman did not tell us — the Labour party must come clean on this—where the Labour party

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  would set the limit for tax relief. He said that it was reasonable that tax relief should be given on mortgage loans up to £12,000 but implied that it was wrong that it should apply to loans of £30,000. At which point between those two figures does the Labour party propose to cut relief? I have heard it said that £20,000 is the point at which the Labour party imagines tax relief should end. If so, many home owners in the south-east will be extremely hard hit.
  Finally, housing is a changing area of public policy, and rightly so, because people's aspirations change. It is not many years since most people's expectation to rent gave way to an expectation, especially among young people, to own their home. I pay tribute to the Government for having liberated a large number of my constituents from their previous feelings that home ownership was not available to them. It is now.
  If we are to progress on the housing policy front we need to see more local authorities following the example of Wandsworth, which is prepared to involve the private sector in work and to bring in capital from private development companies to produce much better houses in the areas where grim, awful, council estates previously stood. It is hardly surprising that the Conservative-controlled council there was triumphantly re-elected in May. It gives many people in Wandsworth a chance of something which every Opposition Member has — a home of their own. Because that is the rallying call of Conservatives in local and national government, I am pleased to be a supporter of the Government.
  8.27 pm
  Mr. John Cartwright: I must be the first hon. Member to speak who is not a member of the Select Committee. I should like to offer my congratulations and thanks to it for the way in which it has examined these Estimates. I propose to select three issues to which it has referred in its helpful report.
  First, I turn to the issue of the home loans scheme. As has been pointed out, the scheme began life in 1978 as the home purchase assistance scheme, and since then it has been virtually ignored by the Government. The financial limits are exactly the same as when the scheme was first introduced. Applicants who have saved for two years qualify for an interest-free loan of £600 and a grant of £110. However, since 1978 house prices have more than doubled and the Nationwide building society's housing price index which stood at 172 for the fourth quarter of 1978 shot up to 377 by the first quarter of 1986. Yet throughout that period the figures for the home loans scheme have not been increased by one penny piece, nor has the scheme been promoted seriously by the Government. As a result, it is hardly suprising that the number of applicants has decreased to only 3,000 a year. Indeed, it is surprising that as many as that know that the scheme exists.
  At present, as the finance director of the Department of the Environment admitted to the Select Committee:
  "the repayment of loans exceeds the outgoings so there is a net income to the Exchequer from it."
  In other words, we have the crazy position in which a Government finance scheme, designed to put money into the pockets of first-time home buyers, has become a nice little earner for the Government. The sums involved are paltry. That was underlined in the Select Committee's examination by its Chairman, the hon. Member for
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  Hornsey and Wood Green (Sir H. Rossi), who pointed out that the Government were spending £2·8 million on the home loans scheme and £3·8 million on dog licences. As he pointed out, if the Government scrapped dog licences, they could double the much needed help to first-time buyers.
  The home loans scheme was designed to help genuine first-time buyers on modest incomes. People who already have a foot on the ladder, who have some inherited money or whose parents are prepared to give or lend the money for a deposit do not need such help. If the Government are as committed as they say that they are to extending home ownership, they must do more to help those young people struggling to pay rent or living with their parents while trying to save money to buy their first home. The scheme needs to be revamped. It should be limited to those on modest incomes, average earnings or below, who are saving to buy their own homes.
  Rather than continue with the present arrangement of a loan grant, we should return to the original idea of matching grants so that the amount that people save will be matched pound for pound over a period of at least two years and up to a reasonable maximum figure. If the scheme were properly promoted and advertised, it could give a real incentive to young people to own their own homes. Much more important, it would bring home ownership within the reach of many young couples who are now denied it.
  I move from a scheme about which little is known to an issue about which all too much is known — the condition of local council housing stock. Last November, the Department of the Environment published its famous report on the extent of dilapidation in local council housing. In summary, the report said that 3.836,000 dwellings, 84 per cent. of the council housing stock, were considered to require expenditure totalling £18·84 billion, at an average cost of £4,900 per dwelling. The estimate For local authority capital expenditure on renovation in 1985–86 was £1,150 million. That is only 6 per cent. of the money that needs to be spent, assuming that there is no further deterioration.
  We all know that the condition of the housing stock is getting worse all the time. In its April 1985 report on capital expenditure controls in local government in England, the Audit Commission pointed out:
  "the total maintenance backlog will have been building up at the rate of at least £900 million a year at 1984 prices over the past several years".
  That implies that our current level of spending for repairs in council housing has an impact of only around £250 million a year in improving the situation. In other words, the overall bill for housing repairs in the council sector may be coming down by as little as 1 per cent. a year. On present trends, this could mean that it will take us up to the end of the next century to bring all council housing up to acceptable standards.
  Obviously, all these Estimates have a certain broad ball park element to them. We know that the Department of the Environment is conducting selective follow-up surveys to the 1985 exercise, and that in 1986 the housing condition survey will give us more accurate information about the state of the public sector and its housing. A clearer view of the trend to deterioration on the one hand and the counter trend in terms of maintenance and repairs on the other will be emerging over the next few years.

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  The underlying problem is clear, whatever the precise figures. The Select Committee said clearly and firmly in its report:
  "Neglected maintenance is not merely postponed but gives rise to the need for even more maintenance later on. Some property, particularly in the public sector, may be near the point where replacement rather than renovation becomes the only realistic but much more expensive option. Accurate information is important but the necessary decisions are urgent and should not be postponed while the proposed House Condition Survey follows its protracted course."
  I strongly endorse the sense of urgency contained in that recommendation.
  Those of us who represent a substantial number of council tenants know only too well what this past neglect means for council tenants and families. It means leaking roofs, decaying plaster, rotting window frames, flats running with damp and condensation, old fashioned, ineffective and expensive heating systems and all the rest that so reduces the quality of life for many families in council housing.
  There is a wide agreement across the House that the Government have not given capital expenditure the priority that it deserves. Capital spending on housing has been cut by 60 per cent. since the Government came to power and we know that there are no plans to increase the amount being spent on housing. Even last year, when the then Secretary of State was reported to have won a famous victory in the annual public spending round, it turned out that the increase of £250 million for housing spending was a decrease of £185 million. This was a confidence trick achieved by creative accounting and a revision of the amount of capital receipts that local authorities were allowed to spend. If that was the scale of the victory achieved by a leading Cabinet wet, it is doubtful how much faith one can put in a Secretary of State who is reported as having started the annual spending round by reducing the figures for his Department.
  There is a general view that we must put greater emphasis on capital spending and increase investment in our national infrastructure. In 1970, we spent 7 per cent. of our national product on public investment. Today, the figure is down to only 2 per cent. We must, at the very least, restore the share of capital spending to its 1979 level. That means a boost of about £2 billion to be concentrated on housing and roads.
  Public expenditure is not enough. The Government hope to attract private finance into the local authority sector to assist in tackling a tremendous backlog of maintenance. In principle, I welcome that approach, but it has to be based on a genuine partnership between local authorities, financial institutions, developers, tenants and the local communities involved. It is not clear at this stage whether the Government have found the right mix, and it is doubtful whether a genuine impact can be made without both an increase in Government spending and significant incentives to encourage private investors to put their money into the restoration of council houses.
  The Audit Commission pointed out that, although about £1 billion might be available to invest in council housing, the response in the local authorities has been
  "underwhelming to say the least."
  The Audit Commission contrasts that lacklustre approach with the experience of north America where in cities such as Atlanta, Baltimore, Cleveland, Detroit, Minneapolis,
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  New York and even Washington DC there has been clear evidence that only with a productive partnership between public and private sectors can the problems of inner cities in particular be addressed. In its report of March 1986, the Audit Commission set out a number of ways in which public-private partnerships can be developed. I hope that the Government and the local authorities will examine these proposals further and produce capital initiatives before much longer.
  The hon. Member for Hertfordshire, West (Mr. Jones) mentioned briefly the next issue on which I shall talk—caravan sites, gipsies and the travellers. I notice that the Select Committee recommended last year that the time was ripe for what it called a "modest review" of the effectiveness of Government policy. As a result, a consultative document was issued by the Department of the Environment in March this year.
  On the basis of my experience in my constituency over the past 11 years, I cannot believe that the present policy is effective. In 1971, my authority of Greenwich provided a site for 54 travellers, gipsies and their caravans because we had a traditional involvement with such travellers and we thought that it was right to provide such sites. It is much larger than the sites required by the Caravan Sites Act, and cost us more than £300,000 to provide. We had only occasional problems.
  Once the Thamesmead area was opened up for development, we were subject to regular invasions of caravans. There were difficulties when the landowners or the borough council used their powers under the Caravan Sites Act to take cases to court. We all know that the court procedure is slow, cumbersome and only moves the problem from one place to another. That was difficult enough until we had a change of political attitudes on the part of the GLC and the London borough of Greenwich in 1982. They declined to take any action to remove caravans in the area unless a severe problem had resulted.
  As one can imagine, the caravans are now no longer part of the problem in the Thamesmead area but a permanent feature of life there. This morning, I counted and found that Thamesmead is disfigured by more than 70 caravans, mainly along the main road. My constituents have to put up with the rubbish and the filth created by some travellers, although not all. In particular, those who indulge in metal breaking, site clearance and encouraging others to tip in the areas near their caravans are causing a problem. There is also the problem of the horses that roam wild around people's homes and gardens and even into school areas. On occasion they have caused serious accidents through running free on main roads.
  The Greenwich council has now proposed a second travellers' site in Thamesmead for up to 60 caravans. It is less than a mile from the original site. I cannot accept that that is either fair or reasonable. We have to share the burden of responsibility within one borough across other boroughs as well. I accept that we have to make reasonable provision for those who have a travelling lifestyle and who need to move around the area, but I believe that we must also show consideration for working people who pay substantial sums of money in rent, rates and mortgage repayments. They bitterly resent the creation of shanty towns around their homes and throughout their communities.
  Therefore, like the Select Committee, I look forward to hearing the outcome of the Government"s deliberations as a result of the consultation document on travellers and

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  their caravans. I hope that at long last, after all these years, there will be effective action to deal with a problem that has been allowed to drag on for far too long.
  8.40 pm
  Mr. John Mark Taylor: This will necessarily be a brief intervention, but I should like to follow the hon. Member for Bootle (Mr. Roberts) and my hon. Friend the Member for Hertfordshire, West (Mr. Jones), both of whom are fellow members of the Select Committee on the Environment, in expressing appreciation of the excellent lead of my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) on the Select Committee. The more obvious dividend that he collects — and collects again on our behalf as Members of the Select Committee on the Environment — is the way in which he has succeeded in persuading the managers of the business of the House of the importance of Select Committee reports so that they are debated here from time to time. My hon. Friend's record in that regard probably exceeds that of any other Select Committee.
  Mr. Allan Roberts: On that point, perhaps the hon. Gentleman will ask the Minister to tell us when we may expect a response to the remainder of the Select Committee's report, on the disposal of nuclear waste.
  Mr. Taylor: That is an interesting point. The hon. Gentleman will not be short of techniques with which to advance his sense of urgency about the report, and I am quite sure that he will do so.
  The hon. Member for Woolwich (Mr. Cartwright) referred to the north American experience and to some of their major urban problems. Many of them have close parallels with those that we face in our main conurbations. His mention of Baltimore aroused my interest, because it was the pioneer city of homesteading—that most daring of privatisation measures. Homesteading means gathering together the title deeds and handing them over to the young, first-time house purchasing couple for, in many cases, a dollar, in return for a covenant to repair a property that, sadly, has fallen into disrepair. It is a very interesting experiment which we should examine further.
  As repair is the theme of the moment, it surprises me that it should he necessary to say again in this Chamber that the curve which it is possible to plot or draw—the graph between deterioration and cost—is not linear and never was linear. Our grandmothers told us that a stitch in time saves nine, and all modern analysis and modern science have led us to precisely the same conclusion: that delayed repair is exponentially expensive. One of the more worrying features that emerges from the environmental studies is that we are too complacent in our repair programmes and repair policies.
  I think that it would be right to echo the words of other right hon. and hon. Members in the debate. They returned again, in surprise, to our national governmental practice of annual regimes of Government accounting. The local government experience of many right hon. and hon. Members taught them the difference between the discipline of the capital account on the one hand and the revenue account on the other. All branches of the accountancy profession are absolutely wedded to these principles, yet in our nation's affairs at the highest level we subject ourselves to the kind of financial scrutiny that would be unacceptable to the humblest district auditor.
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  This is not merely disturbing to me but, as we have heard, it leads to some perverse consequences. It is not just a bizarre way of presenting the accounts on a kind of national receipts and payments basis. It is not just eccentric in that sense. It is actually harmful. It is because of these accounting principles that the Property Services Agency, for example, was faced with what has turned out to be a complete disincentive to enfranchise leases, when other speakers have already said that enfranchising leases would make sense from so many points of view. The accounting technique has, for all practical purposes, prevented what would otherwise be a common-sense policy.
  In drawing my remarks to a close, I hope that the hon. Member for Bootle will not mind if I remind him that those with the largest mortgages are very often those who put down the smallest deposits. At that time in their career as property owners, they may be able to put down only a small deposit. I refer to those who buy their first house with a mortgage of 95 per cent. and, in some cases, even more. In my division of Solihull many constituents are buying properties for, shall we say, £32,000. They are just moving over the stamp duty threshold and they are doing so with mortgages of, say, £30,000. I should not want them for a moment to think that the Opposition consider that they are affluent members of society and that they should therefore suffer not only the punishment and penalty of stamp duty but also the erosion of the income tax relief that they have been led to expect. The first-time home buyer is often at the point of maximum borrowing and minimum personal input.
  When Select Committee reports are reviewed, many criticisms are voiced, but I end with a compliment to the Property Services Agency. Not long ago I went to see the Cabinet war rooms, a public presentation that both right hon. and hon. Members and tourists are able to visit. That job has been very well done.
  8.48 pm
  Mr. Tom Clarke: I hope that the Under-Secretary of State for the Environment will not take it amiss if it is impossible for me to hear the whole of his wind-up speech, but I have other duties in the House. However, I promise that I shall read his remarks very closely—all the more so, because I hope that he will respond to some of the points that I am about to make.
  I address my remarks to class XX, vote 18, of the Supply Estimates that are being considered by the House. I welcome the debate, and particularly the clear pledge by the hon. Member for Hornsey and Wood Green (Sir H. Rossi) that his Committee will conduct a searching inquiry into these matters. I was delighted to hear him give that pledge. I hope that if he has an opportunity to study my remarks, he will feel that the Coatbridge south circular road project is a matter that his Committee ought to consider with extreme urgency.
  The subject does not come as a surprise to the Minister. He was present, and indeed he replied, when I initiated it in an Adjournment debate on 25 March, almost three months ago. I am astonished that all that time has passed and my constituency still has such a serious problem. We still make profound criticisms of the method of budgeting and the preparation of estimates by the Property Services Agency. Those criticisms were echoed in general terms by almost every hon. Member who has taken part in the

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  debate. In the light of those criticisms, I should have expected a decision by the PSA about the Coatbridge south circular road project. I should certainly have expected the Minister and his right hon. and learned Friend the Secretary of State for Scotland to have taken some action by now.
  The Minister will be aware that I am referring to the office replacement and the new office provision of the Department of Employment and DHSS offices in Coatbridge. During the Adjournment debate on 25 March, the hon. Gentleman described the offices as
  "not quite Victorian but very old."—[Official Report, 25 March 1986; Vol. 94, c. 925.]
  That hardly describes, in graphic detail, the appalling conditions which exist in both offices. The Minister does not dispute that. He knows that inspectors from the various departments have commented on the conditions which exist. He accepts—I give him full credit for it—that the case for replacing the two offices in my constituency is unanswerable.
  Class XX, vote 18, of the Estimates makes no reference to the money which the Minister promised my constituents a long time ago. Perhaps he will put the record straight tonight. As the Minister knows—he has been in touch with the Department of Employment — unemployment in my constituency is about 22 per cent. Those offices would serve the village of Gartcosh—the House knows a great deal about the problems of Gartcosh — which has an unemployment rate of over 30 per cent.
  I shall not bore the House with the facts that I put on record during the Adjournment debate. However, I am entitled to remind the House of the promise that the Minister gave in a letter he sent to me in December 1984. I should have expected the money that he promised my constituents to be included in the Estimates or in the Estimates which were last published.
  The Minister's letter of December 1984 stated:
  "The delay over several years in providing a new office at Coatbridge for DE and DHSS has been a result of other pressures on the Property Services Agency's Office and General Accommodation programme. These pressures will continue in the foreseeable future, but the deterioration in the condition of the existing accommodation is I know becoming very severe."
  I remind the House that the letter was dated December 1984. The Minister continued:
  "and I recognise also that a decision now to relocate both Departments to the South Circular Road site could make a valuable contribution to the redevelopment of the area.
  As the Minister also responsible for the inner cities, I believe it vital that Departments including PSA should bear in mind the importance of urban regeneration when determining their own programmes. I am pleased therefore to confirm that, despite the tightness of funds, I have now authorised PSA to enter into a commitment for construction of new offices for DE and DHSS at the South Circular Road site which we will purchase on completion in 1986/87."
  Time has passed. A start has not even been made on the construction. The Minister had to write to me again on 5 March 1986. He wrote to me again, after all that time had passed and after the commitment and involvement of the Scottish Development Agency, the local authorities, Monklands district council, Strathclyde regional, British Telecom and everyone else who was interested in clearing the site and preparing it for the offices. All that was based on the hopes that the Minister gave to my constituents in the letter he sent to me in December 1984.
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  The Minister's letter dated 5 March 1986 stated:
  "It was because I could not allow a contractual commitment to be entered into without funds being earmarked that I had to hold the project up at the last minute. I realise how disappointing this is for all concerned; and I can assure you that I am actively pursuing a solution with my ministerial colleagues in the hope that a new building can go ahead shortly. But at this point. I can do no more than promise to search for funds."
  Perhaps the search is continuing. However, there is very little evidence that that is so. The Minister's letter of 5 March came, as he rightly said, as a considerable blow to everybody concerned, not least the staff of the Department and those who frequent both offices who have found that their privacy was not being respected.
  The Minister is well aware that the Scottish Development Agency and those involved in the project have already spent about £600,000 on clearing the site so that the building can go ahead. The Minister may argue yet again, after a three-month gap, that the project has not been cancelled; it has been postponed. If he does so, I must remind him that postponements cost money. We estimate that the postponement is costing the taxpayers £450 a day. In the Adjournment debate, the Minister said that Monklands district council had engaged Males and McDonald as its consultants and they would carry out their duties in that capacity. Those consultants were engaged by the PSA. The PSA should accept the responsibility. The PSA should urge upon the Minister the need to reach a solution to the problem.
  Because the Minister has said, time after time, that he is actively pursuing the matter, I should have thought that a conclusion would have been reached by now. The Minister said that he was looking for a solution as soon as practicable. I should not have thought it would take three months from the debate on 25 March. I have heard disturbing rumours that the money that might have been allocated to the project may go to a new town somewhere in the United Kingdom, and possibly to a computer project. If such a provision is included in the Estimates, it would be a massive insult to the people of the west central belt of Scotland and especially my consituency. i invite the Minister to clarify the position.
  The PSA has been criticised for the fact that, when there is a change of specification, it does not seem to be as alert to the consequences as it should be. That certainly applies in this case. The PSA encouraged the planning for a two-storey building instead of the previous ideas. The PSA must accept the consequences. The PSA cannot argue that that has caused a delay and increased the price. Of course it has, but the PSA should have the experience and knowledge to judge the consequences of its decisions.
  I am appalled at the PSA's activities in Scotland, and I am not alone in that view. I am appalled that the promises made when Gartcosh was closed have not been fulfilled. In March this year, the Secretary of State for Scotland said that the Government would do as much as they could to help because of the substantial losses in the steel industry in Lanarkshire. Those views were expressed publicly also by the chairman of the Conservative party and many others.
  There have been even more job losses, but what sticks in our gullet is that they have occurred because the Government have failed to co-ordinate appropriately and significantly with the PSA. I am sorry to say that the Under-Secretary of State has not yet lived up to his word to me. I urge the hon. Gentleman and the House to ensure

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  that there is greater scrutiny of the PSA's estimates. I say that based on the experience in my constituency. If that experience means anything, the PSA, and therefore the Department of the Environment, should come under the greatest possible scrutiny. I hope that the Under-Secretary of State will address himself with greater urgency to this serious problem.
  9 pm
  Mr. David Winnick: Reading the chapter on housing in the Supply Estimates would not make one realise that a formidable housing crisis exists. There is a passing reference to enabling local authorities and housing associations to provide new homes for those whose needs cannot be met in the private sector, but that is not being done. It is deliberate Government policy that local authorities should not have the financial power and resources to build new dwellings to rent.
  I remind the Under-Secretary of State, as I have done previously, that the reduction in housing public expenditure since the Conservative party came to office in 1979 is more than 60 per cent. in real terms. The number of new council dwellings being constructed is the lowest ever in peace time. It has been fairly low in recent years hut, this year, the number of new public sector starts will be almost certainly less than 30,000 and, quite likely, well below that figure.
  This has resulted, as one would expect, in an acute shortage of local authority housing. Waiting lists have grown substantially. Hundreds of thousands of people know that they stand no chance of obtaining a mortgage, and will not benefit from any scheme which has been introduced by the Government. They cannot be rehoused by the local housing authority, in the main through no fault of the council. That, as I have stated, has been deliberate Government policy.
  The Chairman of the Environment Committee referred to the needs of special groups in the community for council dwellings. I pointed out that many people—obviously those on below-average incomes, as well as many others —are not in a position to obtain a mortgage. Imagine a person with no substantial savings who earns less than the average income and is trying to buy a place in Greater London at current house prices. To some extent, that problem occurs in other parts of the country as well.
  This explains why local authorities are spending £1 million a month on bed-arid-breakfast accommodation. Research has shown that, for a couple with two children, the saving in providing new council accommodation rather than putting them in bed-and-breakfast accommodation would be between £7,000 and £10,000 a year. Is it not disgraceful that so many people, including couples with children, are now in bed-and-breakfast accommodation? What will the Government do about the problem? What additional assistance, if any, will they give local authorities so that it is not necessary to place families in that unsatisfactory accommodation?
  The report from the Environment Committee notes concern about the state of repair of the existing housing sector. Wisely, they point out that neglected maintenance is not merely postponed but gives rise to the need for even more maintenance later on. It is a very telling point and one would hope that the Government take it on board.
  The Committee cross-examined witnesses from the Department of the Environment. Some £19 billion is
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  needed for all the necessary work to be undertaken. That figure was not disputed by the civil servants who gave evidence before the Environment Committee.
  Last week, in a speech that was amazing even by the standards of this Government, the Minister for Information Technology stated that councils were demanding extra billions for repairing and modernising council housing. He complained about that. He said that the claims were exaggerated and were designed to curry favour with the unions. He condemned demands for extra spending by his ministerial colleagues as electoral bribes. In his warped view, he said that council housing breeds slums, delinquency, vandalism and waste. What a truly disgraceful and ignorant attack by a Minister of the Crown upon the millions of residents who live in council dwellings. That Minister showed himself to be utterly unfit to hold public office.
  It is of some interest that so far not one of his ministerial colleagues has come to his defence, including the Prime Minister. I immediately tabled a question to the Prime Minister, as one would expect an hon. Member to do. I asked her if her hon. Friend's speech last Monday week reflected Government policy. 'The Prime Minister gave some sort of justification for the Government's housing policy, but she never mentioned the Minister or his speech. I do not know whether that was considered to be some repudiation of his remarks.
  It is likely that the comments of that Minister reflect to an extent the prejudices and dislikes of public sector housing that some of his colleagues, including some in the Cabinet, may have. Clearly, if that is the position those Ministers will not say anything in public. I should not be at all surprised if the general feeling in the Government is that that Minister opened his mouth too wide. It has been said that the speech was supposed to give him some prominence, that he was fed up with being obscure, that perhaps it was a hid for promotion. The next time that there is a Government reshuffle, we shall see whether his gamble has worked.
  Undoubtedly, up and down the country, there are estates that the Environment Committee commented on which need to be modernised, improved and repaired as quickly as possible. I make no apology for returning to the subject of an estate in my constituency. I have mentioned it before. It causes me a great deal of anxiety, but even greater anxiety is caused to the tenants who have to live on that pre-war estate.
  These houses, as I believe the Minister should know by now, were built between 1934 and 1938. They are desperately in need of modernisation. They lack modern facilities and in many cases there are no indoor toilets. The kitchens are unplastered. Hand basins have not been provided over the years. The estate is urgently in need of modernisation.
  The fault certainly does not lie with the tenants. No one in his right mind would suggest that tenants are responsible for a pre-war estate getting into its present condition, where the minimum of work has been carried out over the years. Of course, the work should have been done some time ago. Walsall metropolitian borough council has been keen for the estate to be modernised, but the housing investment programme allocation in recent years has been insufficient for the work to he carried out.
  Last July I took a deputation from the residents' association to see civil servants at the Department, as no Minister was willing to see us. In the following month, the

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  senior official at the west midlands regional level went round the estate and saw the amount of work that needs to be done. More recently, negotiations have taken place between the council and the Government's urban housing renewal unit over funds. The unit has undoubtedly been trying to pressurise the council to sell some land and properties on the Rosehill estate to the private sector. The local authority has made it clear that it is not in favour of any such sale. There have been several meetings of residents and the tenants have also made it clear that they are not in favour of any land or houses being sold to the private sector. I should point out that this has nothing to do with selling to existing tenants.
  In a written answer on 9 June the Under-Secretary of State who is to reply to this debate said that although the unit encouraged local authorities to take full advantage of obtaining private sector contributions
  "There are no rigid preconditions for schemes supported by the urban housing renewal unit".—[Official Report, 9 June 1986; Vol. 99, c. 22.]
  The Under-Secretary is nodding. If that is the position, the local authority should not be under such pressure to sell off the land and houses in order to obtain the extra funds that are so necessary if work is to begin at the end of the summer.
  It is essential that the Rosehill estate should be modernised. Indeed, I shall continue to table questions about it, because the funds should be made available and the work should begin at least by the end of the summer.
  The Government have a deplorable housing record. People are increasingly coming to understand the need for more money to be spent on housing, as well as on the Health Service and education. Last night I was upstairs watching "Panorama". In the main it interviewed Tory voters, or at least those who had voted Tory. Several of them, I believe, were members of the Conservative party. It was clear that if there is a choice next Budget time between a cut in taxation and more public expenditure, they want more public expenditure. They are absolutely right, because that makes sense.
  The Health Service, education and housing are desperately in need of more funding. Those interviewed last night were mostly owner-occupiers, just like most—if not all — Members of Parliament. But, unlike Ministers, they understand that those who do not have the means to become owner-occupiers still have a right to proper and adequate accommodation. That accommodation is only likely to be provided by local authorities and genuine housing associations. Incidentally, we should not forget how housing associations have also had their funds undermined during the past few years.
  The previous debate involved employment issues. If local authorities had the finances necessary to build and modernise houses, many of those who are unemployed would be able to earn a living. It is estimated that roughly 25 per cent. of all those involved in the construction industry are currently unemployed. Would it not be sensible for those people to earn their living and provide the dwellings that are so urgently needed? However, we do not expect any sense from this Government.
  We have been told that there will be no major changes in Rent Act regulations during the lifetime of this Parliament. However, we have not been told what changes might occur if the Government are re-elected.
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  The Minister has a duty, before the next general election, to explain to the country what will happen if the Government are re-elected. Will the present regulations be abolished? Will there be a position similar to that under the Rent Act 1957 when all newly rented accommodation on the market was decontrolled, with no security for tenants and no ceiling to rents? The country will want to know that. It is no good Ministers trying to keep it a secret. I do not believe that the Government have any chance of being re-elected, but the Opposition, at every possible opportunity, will press the Government about what changes they intend to make if they are re-elected.
  I have raised matters of great importance to many people. I mentioned the speech last week by the Minister for Information Technology. It is wrong for the Government to continue on a path that means that so many people are denied adequate housing. It is right and proper that Opposition Members use every opportunity, such as that presented tonight, to explain what is happening, to put their case and to try to get Ministers to understand how important it is that people should be properly housed.
  9.16 pm
  Mr. Jack Straw: I commend the speeches of my hon. Friends the Members for Bootle (Mr. Roberts), for Monklands, West (Mr. Clarke) and for Walsall, North (Mr. Winnick). My hon. Friend the Member for Walsall, North reminded the House of the speech last week by the Minister for Information Technology, who made offensive and insulting remarks about those living on council estates. His description of them is something unknown to us. My hon. Friends and I know a little about living on council estates, where most of us spent our childhood. The Minister's description of delinquent vandals is something that we would not expect, even from Conservative Members.
  My hon. Friend also raised the question of the Government's policy towards the Rent Acts. Ministers have said that there will be no major legislation before the next election, but that is because they have electoral cold feet. We want to know what conclusions were reached in the major review of the private rented sector that was carried out within the Department of the Environment last year. When will the results be published so that the House and the public can judge whether it would be right to embark once again on a major decontrol of the private rented sector?
  Taken together, the Estimates of the Department of the Environment and the PSA under classes IX, X and XX amount to £13,035 million, which on any basis is a great deal of money. The principal function of the House is to order and superintend Supply to the Crown. That difficult task is made more difficult given the magnitude of the figures with which we are dealing.
  I would like to begin by commending the hon. Members for Hornsey and Wood Green (Sir Hugh Rossi) and his colleagues, including my hon. Friend the Member for Burnley (Mr. Pike), my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) and my hon. Friend the Member for Bootle for their work on the Select Committee on the Environment and for the excellent and perceptive reports they have produced. The reports emphasised much of the unsung work of the Select

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  Committee. They are a testament to the initiative taken by the right hon. Member for Chelmsford (Mr. St. John-Stevas) in the reforms that he introduced in 1979.
  In both reports, the Select Committee has secured a fine balance in the subjects upon which it focused. There is always a tendency for council committees, and perhaps also for Select Committees, to favour the small, understandable items rather than the large, more important but less comprehensible items. I am sure that we can all tell stories of the millions of pounds worth of expenditure shooting through council committees while there were major arguments over the expenditure of £100 on the mayor's chain or a gown for the mayor's attendant.
  In my judgment, the Select Committee was right to focus on one or two relatively small issues as sometimes, by small example, bigger issues are raised. Although the total expenditure on dog licences is, in the vast sweep of Government public spending, a mere drop, none the less the heat that the issue can generate is disproportionate to the expenditure and it is right that we should consider it.
  I can see my hon. Friend the Member for Burnley smiling. Those of us who are acquainted with north-east Lancashire have burned on our souls the fact that the Labour party in that area went down a wrong turning over the control of dogs in parks and almost came to grief. When I was a member of Islington council, i learnt an early lesson in the art of the possible. When I was chairman of the housing, management and maintenance committee of that worthy council, we were urged by a group of tenants on an especially difficult block estate to enforce the conditions of tenancy which stated that there should be no dogs. We set about enforcing those conditions and we were quickly down the road that led us to conclude that the only way to enforce these rules was to evict the tenants. We finally decided that some things were impossible to implement, no matter how desirable, and we were forced to back off.
  Mr. Peter Pike: My hon. Friend referred to the experience of Burnley council and the difficulties that arose over a dog ban in an small section of the parks in the borough council. I hope that my hon. Friend will stress to the House the difficulties of this kind of issue. Will he stress that whatever is done ultimately over the future of dog licences—whether there he an increase in the fee or an abolition of' it—it is most important that action is taken nationally rather than that it should be left to the local level, where the aggravation caused will be out of all proportion to the implications of the case?
  Mr. Straw: I share my hon. Friend's view from the experience in Burnley and from that experience burned on my soul while I served on Islington council.
  This issue arouses an enormous amount of heat. As a parent, I am deeply concerned about the state of the parks in which my children have to play. Although I am not a consensus politician, I can offer the Minister the chance of all-party agreement on the issue of the control of dogs. This is generosity indeed. This issue can only be solved if it does not become one upon which hon. Members base party political affiliation. It easily could be such a case if it is not handled properly.
  Sir Hugh Rossi: Will the hon. Gentleman spell out exactly what his offer is? His comments are very intriguing. His colleague, the hon. Member for Burnley (Mr. Pike), suggested that the issue should he dealt with not at local
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  level but at national level—that the Government should take the stick for any unpopularity that results. I would be interested to know whether the Labour party is now suggesting that it is prepared to implement the working party report recommendations that were sent to the previous Labour Government upon which no action was taken for many years.
  Mr. Straw: My offer is to sit down with the Government, if they wish to do that, to see whether there is a way in which we can reach agreement. It is extremely difficult for any Government to act because they are scared of the political repercussions. The matter should not be a subject of the party political divide.
  Before I was diverted, I was saying that the Select Committee has identified some areas of relatively small expenditure which are none the less important and that it was right to focus on some areas of major expenditure, especially housing maintenance and the home loan scheme, on which many millions are spent at the moment and on which many millions more will have to be spent in the future.
  My hon. Friend the Member for Bootle covered the housing issues in great detail and with great eloquence. Class X amounts to £10·125 billion, of which £9·246 billion is devoted to rate support grant for England. The legend at the top of class X, vote 6, says that the vote is a cash limit. Whatever other decisions we would make about the level of rate support grant, we shall keep it cash-limited.
  The vote is cash. Unlike the discussion of funny numbers in the public expenditure White Paper, we are here discussing cash which is being paid in aggregate to local authorities. We are not discussing the much more difficult figures in the public expenditure White Paper concerning overall local authority spending— that paid for by rates and that paid for by the Government. During the past three years, we have repeatedly argued that it would be far better for the Government to focus on what they contribute to local authorities rather than to try, through the public expenditure White Paper mechanism, to control that which they cannot truly control— total local authority expenditure. We have challenged Ministers to deny that, in the context of the things that they say that they worry about, such as the money supply and the public sector borrowing requirement, local authorities' current expenditure out of the rates cannot affect the major monetary aggregates because local authorities cannot borrow long-term to finance current expenditure.
  The then Secretary of State dismissed such arguments when the Rates Act 1984 was going through Parliament. I am pleased to see that some Ministers accept that there is a good deal of validity in what we have said. The previous Secretary of State—now the Secretary of State for Education and Science—is reported as having said that he accepts in broad terms the case that we are making. The Financial Times reported on 27 May that even Treasury Ministers now accept a case such as we have made. As this is a large sum of money, I should be interested to have the Minister's views on the relationship between the Government and local government.
  Perhaps the Minister would also like to say something about class X, vote 8, on rate rebates. At the moment, people on the lowest incomes receive a 100 per cent. rebate. In the Social Security Bill, which is now in another place, the Government are trying to ensure that, regardless of a person's poverty, everybody should have to pay at least 20

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  per cent. of their rates and, in future, 20 per cent. of their poll tax. The Government were defeated last night in another place. There has been a suggestion on the tapes that the Government will overturn that decision. Also on the tapes are the sage words of an hon. Member who is on the wet wing of the Conservative party, like the Under-Secretary of State—the hon. Member for Brentford and Ongar (Mr. McCrindle). I hope that the Government will follow his wise counsel and accept the defeat in the Lords. If they do, they will be doing themselves at least an electoral favour.
  I should like to raise with the Minister the comment in the report of the Select Committee of the Environment about the administrative costs of the London Docklands development corporation. This is supposed to be the jewel in the crown of the Government. It is certainly true that the LDDC can spend money as if there were no tomorrow —if one judges by the quality of the paper on which its PR documents are printed. It is an intriguing comment and I should like to hear the Minister's view on it. The comment appears at paragraph 3 in the report.
  I should like to turn to the Property Services Agency which is class XX, vote 18. I shall deal first with one specific item before turning to the wider issues that are raised in the report about the property repayments system, dispersal, and the issue of rentals. The specific issue is about the proposals, as part of a major reorganisation, to close the area offices of the PSA at York, Leeds and Newcastle and to concentrate the work at the Leeds regional headquarters. This has caused a great deal of worry to the PSA staff in York. The staff side has been in direct correspondence with me and so has the Labour parliamentary candidate for York, Mr. Hugh Bayley, who has pursued the matter with great vigour with my colleagues and with me.
  The PSA staff side and Mr. Bayley made two comments. First, they say that the proposal would lead to the loss of 60 jobs in York and possibly up to 20 redundancies. Secondly, they say it would lead to a substantial net loss to the PSA, and that it would not save money and there would be no increase in efficiency. The loss of jobs may be small when compared to the millions of people who have lost their jobs in the last six years, but it is serious. There is no point in saying that some of the people who lose their jobs will find jobs in Leeds, because those jobs will be lost to York.
  I shall be happy to give the Minister the figures that I have been given about cost savings and outgoings. The figures were drawn up by the staff side and they suggest that on capital costs there will be savings of £300,000 and an outlay of £2·27 million. Therefore, there is a much greater capital outlay than there is savings. On running costs, there will be a saving of £380,000 and an outlay of £2·4 million. I hope that the Minister will give us far more details than he has given the House up to now about the kind of savings that are likely to be achieved.
  I suspect that this exercise is part of some empire-building reorganisation and not part of a sensible proposal simply to reorganise the PSA. Insult is added to injury in York because I think it is acknowledged by senior officials, including I am told Mr. Geoffrey Chipperfield, at a meeting between him and the full-time officers of the union that the York PSA office is good and cost-effective. If that is the case, why should this reorganisation go ahead?
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  The hon. Member for Hornsey and Wood Green spoke of the rental policy of Government buildings. The subject is also raised in the report. Of the total of £994 million, some £225 million of the PSA vote is spent on rates. It is the largest single item. Three issues are raised here. The first is the method of charging under the property repayment system. The idea seems to be to charge Departments for the cost of the accommodation they use. That is a sensible idea, and one which encourages financial stringency. According to paragraph 8 of the Select Committee report, the discipline is a crude one because Departments are charged a standard rate whatever the accommodation they occupy. In other words, they are charged at a notional rate.
  If the discipline is to work, it is essential that a Department should be charged for the cost of the accommodation that it occupies. There is plainly a difference between the cost of accommodation in Westminster and that, for example, in my constituency. The Committee is right to say that if Departments are charged only notional rents, it becomes a vast paper exercise with no benefits.
  The second issue that is touched upon by the Select Committee's report is the dispersal of Civil Service jobs from London to the north. If Departments were charged, office by office, the economic cost of the actual rent of the accommodation would give natural encouragement through the mechanism of the market, to which Conservative Members are more attached than we are, to disperse jobs and accommodation from central London.
  One reason why, as far as one can judge, there will be no savings in transferring the York office to Leeds is that rent levels are roughly the same. In fact, I think that they are rather less in York than in Leeds. But there are enormous differences in the cost of accommodation in central London and the north of England, as the excellent report from Debenham Tewson and Chinnocks has made clear.
  Mr. Robert B. Jones: Perhaps more relevant is the fact that there is a considerable difference between renting a high street site and one that is slightly further from the centre of a town or city. I had hoped that minds would be concentrated on relocating offices to a place to which people would find it easier to travel and where parking might be easier as well as cheaper.
  Mr. Straw: That is also true. Indeed, the report makes it clear that it is a lot cheaper to site across the river in London, even given rate levels, than it is to site this side of the river.
  Let me give the combined rent and rate figures so that we are dealing with the total cost of accommodation which are provided in the report. In Westminster the cost is £35·20 per sq ft and in Lambeth £21·25, compared with Manchester which is £9·85, Sheffield £9·15 and Newcastle £8.70 a sq ft. There are enormous savings to be had if it is possible to locate staff outside London.
  I do not underestimate the problems of dispersal. Some jobs have to be in central London. This is the capital city and the seat of government. But there is scope to do much more and it is tragic that the dispersal policies were abandoned by the Government in 1979. I hope that we shall hear from the Minister that the Government are now seriously looking at the possibility of changing that policy.
  My last point is on the distinction between renting and buying that is made in the report. The point was well made

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  by the Chairman of the Select Committee. I say only that millions of pounds are being wasted by the fact that the PSA and the Department are trapped by a ludicrous Treasury convention. There is no good reason whatever for preventing the PSA from buying freeholds and every reason for establishing new conventions—that is all they are: there is nothing God-given about them—of the kind that any other company or decent public institution would follow so that capital is accounted for in a different way. I hope that we shall hear more from the Minister now than has been hinted at in the report.
  The Estimates are important. I commend the work of the Committee and I look forward to the Minister's reply.
  9.38 pm
  The Parliamentary Under-Secretary of State for the Environment (Sir George Young): The debate has covered a wide range of issues across my Department and the PSA. I shall try to cover most of the points that hon. Members have made, focusing particularly on the recommendations of the Select Committee's report. If I do not cover all the points, I shall write to the hon. Members concerned.
  I join in the tribute paid to my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi), the Chairman of the Select Committee. The House and the Department are lucky to have an expert Committee with a skilled Chairman. As a former senior Minister he knows what questions to ask and where some of the bodies are buried.
  I shall not be sidetracked by some of the broader issues that have been raised. I do not propose to deal with the rate support grant system which was raised by my hon. Friend the Member for Hertfordshire, West (Mr. Jones). We have had several debates on housing policy generally, in which the hon. Member for Walsall, North (Mr. Winnick) has taken part, and I shall certainly not embark on a macroeconomic speech on some of the other issues that were raised.
  Mr. Winnick rose——
  Sir George Young: I must try to answer some of the questions which have been posed. If I have time towards the end, I shall give way to the hon. Gentleman.
  I propose to start with housing mobility, the first issue raised by my hon. Friend the Member for Hornsey and Wood Green. The Committee made a number of recommendations about the national mobility scheme. The scheme is a voluntary arrangement between local authorities, and the Government have no power to compel membership or compliance. Of course, we must try to persuade authorities to honour their commitment to offer I per cent. of vacancies to applicants for the scheme, and eventually to increase that percentage. I have just become the chairman of the National Mobility Steering Committee and I intend to use that position to discuss the possibility of expansion with the local authority associations.
  The mobility scheme is just one part of our policy towards improving housing mobility. It is useful and we will do our best to develop it. We have the right to exchange as part of our tenants charter, and we have also implemented the tenants exchange scheme.
  I now turn to the issue of dog licensing. The Committee said:
  "The Deportment is obviously having difficulty in deciding what to do:"
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  I would not dissent from that. I shared the Committee's hope when the House debated my Department's Estimates last year that the vexed question of dog licensing might have been resolved by now. We have long acknowledged, on financial grounds alone, that the present licensing arrangements are absurd. We remain determined to change them. As the House knows, it is not an issue on which any Government finds decisions easy, and it has not yet been possible to announce our conclusions on the future of dog licensing in Great Britain. Opinions are sharply divided, and I am grateful that this year the Committee has made a firm recommendation on the course which the Government should follow. We will, of course, consider that carefully before we reach a decision. However, I must remind the House that abolition of the requirement to have a licence to keep a dog would require primary legislation, and I cannot guarantee that an early opportunity for that will be available.
  Mr. Alexander rose——
  Sir George Young: I shall finish this before I give way.
  I understand the impatience and frustration underlying the motion tabled by my hon. Friend the Member for Hornsey and Wood Green to reduce the Estimates in relation to provision for the issue of dog and game licences. As I have just said, I must plead with him and the House to be patient a little longer. The policy is notfficequite ready to leave the kennel. We want to consider the Committee's recommendations, which have been with us for less than two weeks.
  I must stress that our arrangements with the Post Office, which collects the licence fee on behalf of local authorities, are contractual and we cannot bring them to an end overnight before an alternative to the present licensing system is in place. As I have said, the aboliton of the licence requires legislation. I think that it would be a precipitate step for the House to reduce Supply tonight, although I appreciate my hon. Friend's wish to see the present arrangements brought to an early end.
  Sir Hugh Rossi: Can my hon. Friend say how long it would take to terminate the existing contractual arrangements with the Post Office if the decision was made to do that? Can he also explain why that cannot be done, even before the Government make up their mind whether to introduce a different scheme? My Committee was primarily concerned with the waste of public money.
  Sir George Young: I think that there would be a penalty if the Government broke the contract with the Post Office. I am afraid that I cannot give my hon. Friend the precise details of the contractual arrangements with the Post Office or how much notice we would have to give. However, we could not bring them to an end overnight and we would have to compensate the Post Office. I shall of course write to my hon. Friend as soon as I have that information. However, I hope that my hon. Friend will feel able to withdraw the motion on the assurance that we wish to bring the present arrangements to an early end. We hope that it will not be too long before we can make a firm announcement.
  The report suggested that we should review the home loan scheme in the light of present day conditions and the needs of first-time buyers. We regularly review housing policy and the part that the home loan scheme plays. It provides the first-time buyer who has saved for two years

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  with a grant of £110 and a loan of £600 free of interest and capital repayments for five years. The total figure of £710 is a considerable sum to a marginal first-time purchaser and I know that it is welcome to many people. We are committed to increasing the level of owner-occupation and the assistance to first-time buyers will be kept under review. My right hon. Friend the Secretary of State will shortly be making an order increasing the limits in the light of house price movements. The limits are, and have been since the scheme's inception, reviewed regularly and revised when necessary.
  Mr. Winnick: The Minister mentioned various schemes for owner-occupation and he will know of our view that there is also a need for rented accommodation. Does he associate himself with the remarks about council housing made by the Minister for Information Technology?
  Sir George Young: I propose to reply to the debate and the recommendations of the Select Committee.
  Mr. Winnick: Come on.
  Sir George Young: I read a very good article by my hon. Friend the Minister for Information Technology in The Sunday Times which seemed to be an excellent statement of policy.
  I share the concern expressed by many hon. Members about the condition of the nation's housing stock. We must keep it in a satisfactory condition. The latest evidence from the 1985 Greater London house condition survey shows no dramatic alteration since 1979, although the number of dwellings lacking amenities fell. -1 he 1985 inquiry into the condition of the public sector stock showed that local authorities considered that significant sums needed to be spent. We took action and increased the capital resources available by £200 million, and authorities should now be giving increased priority to the problems of their stock.
  As the hon. Member for Woolwich (Mr. Cartwright) recognised, more public spending is not the only answer. He talked about partnership, and authorities should develop imaginative solutions on problem estates, involving the private sector where possible. My Department's urban housing renewal unit is making good progress, going round authorities and discussing ways of turning round rundown estates, and schemes for 24 estates have already been approved.
  We are not standing still and decisions are being made, but we need a full survey to help us decide priorities. That is the point of the English house condition survey every five years. The survey starts in September and will be larger than any previous survey, involving the collection of more information. Unfortunately, it will take time to analyse the results, and I would not want to predict how long that might be. However, in response to the Select Committee's request for a further report on these matters before it considers the 1987–88 Estimates, I shall let it have a note on the progress we have made.
  Finally, on the Department of the Environment's Estimates, the hon. Member for Blackburn (Mr. Straw) mentioned the London Docklands development corporation. The Select Committee commented on the administrative costs of the corporation and I welcome, as it did, the progress being made to reduce its costs. There
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  was an absolute fall in its administrative budgets in 1986–87 compared with 1985–86. I know that the corporation wants to make more progress, and I intend to encourage it.
  If I do not deal with all the points made about the Property Services Agency, I shall write to hon. Members. This is the third time that the Select Committee has examined the PSA Estimates and, as we might expect from its Chairman and members, it has turned in a thoroughly useful report. I particularly welcome the constructive nature of its work. An essential part of the Committee's job is to monitor the PSA's current performance. I hope that we have been able to show that, where improvements are needed, they are in hand.
  Much of the report is directed at making forward-looking recommendations on the way in which the PSA expenditure should be handled and presented. Some of them are not easy to accept and implement, particularly those which come up against the normal conventions, whatever hon. Members may think about them, which involve increased public expenditure. But all the recommendations are helpful and workmanlike. We should like to move in the direction proposed by the Committee, and its ideas and support will be valuable in making progress.
  The Select Committee criticised the Government for not setting up a monitoring system when PRS started in 1983 which might have identified what economies were being made. With the benefit of hindsight, I accept that criticism, although it is fair to add that at the time this measure was one of several aimed generally at promoting greater cost consciousness among Civil Service managers. We would have argued, as indeed Lord Rayner did, that it was justified on those grounds. However, the changes that will take effect on 1 April 1987, following a major review of the system are a step forward from the original concept of PRS. This time we have thought it right to monitor the effects.
  Therefore, we asked all Departments to complete a questionnaire showing the current size of their occupations of the civil estate, their expenditure on their present delegated functions, and the staff resources deployed on PRS. We shall ask the same questions in subsequent years and so compare the position before and after. We have also commissioned annual performance reports from the new formed planning and liaison system that we are setting up between the PSA and our client Departments throughout the regions. We shall be looking more selectively at the value for money being achieved in certain properties where consultants will advise us on what is being achieved under the existing rules by the PSA and what happens when clients take on the increased delegations that they will have from 1 April next year.
  I do not claim that these results will show conclusively that the PRS is solely responsible for any given level of savings, because one cannot always isolate any one pressure for economy from the many other measures that we are taking to promote cost effectiveness. We should at least have a much better starting base for considering the case for any further changes in the system when it is next reviewed in 1988.
  My hon. Friend the Member for Hornsey and Wood Green referred to commercial accounts. We see the potential advantage of commercial accounts, but we are also aware that, as well as possibly being expensive to introduce, they might not be easy to adapt to the PSA.

  273
  Before going ahead, we want to make a thorough study of the advantages to be gained and the cost involved. That is why we are calling in consultants to make a study of the options. We expect to do this during the summer. I cannot give a date for a completion of the study because it will, to a large extent. he dependent on what the study finds. We envisage the consultancy being divided into at least two stages so that we have an opportunity to stop and think about any problems revealed in the early work. I hope to he able to show the Committee at least the first fruits of this work when it examines the PSA on our Estimates for next year.
  On capital expenditure, there have been a number of comments that the convention for the public sector was different from the convention for the private sector. The study to which I have referred will necessarily have to look at different treatments of PSA capital and current expenditure and we must await that study to see what options are available.
  My hon. Friends the Members for Hornsey and Wood Green and for Hertfordshire. West spoke about buying offices as opposed to leasing them. It is some time since we did a detailed study of the economics of owning freeholds as opposed to leasing, and we should be happy to look at the situation again. The Committee makes the fair point that recent movements of the property market are likely to have reduced the current advantages of purchasing options. The inherent advantages of ownership are likely to be large enough for us to continue to gain, and we shall bear in mind the Committee's recommendations.
  Sir Hugh Rossi: The point is not merely the possibility of being able to buy freeholds instead of leasing, but the ability to move into the market quickly if an opportunity comes to buy a freehold at an advantageous price. That requires immediate action and great flexibility. Can that be looked at?
  Sir George Young: I hope that my hon. Friend's persuasive report will be read by the Treasury which, as he will know, has overall responsibility in public expenditure for decisions such as this. I accept that there are advantages in owning one's estate rather than leasing it.
  There have been errors in estimating the procedures and the performance to which my hon. Friend the Member for Hertfordshire, West referred. No Minister can be happy that any errors in estimating should occur, hut, at the very least. I hope that the size of the errors and the number of cases will be reduced in later years both by the use of improved control procedures and by stricter application of these to projects. An essential part of the procedures is close monitoring of performance. I am involved in this myself because all larger schemes have to be reported to me before a contract is let, and I shall be looking carefully at all of them to see that they are being properly controlled.
  As I explained to the Committee in my letter of 19 May, published in the report, we have had cause to tighten up this procedure, which I regret did not operate properly in the case of the Natural History museum scheme. I trust that, as a result, there will be no further cases of that sort. More generally, the PSA has taken on board the need to look at performance not just case by case, the basis on which financial control has previously been carried out, but right across the board. This requires a statistical
  274
  approach to measuring performance and in the short term may be limited by the need to do it manually. Within the next two years or so, we hope to be able to build this analysis into the replacement computerised management information system for new works projects which is part of the PSA's information technology strategy. We shall try to meet the Committee's request to include in next year's Estimates information about the design stage to which cost figures relate.
  I turn to my hon. Friend's suggestion that £20 million should be removed from our Estimates. Of course I understand the concern about the large increase in cost. I share that concern, even though, as I believe the Committee recognised in its report, that is not characteristic of the PSA programme as a whole. The way to deal with such cases is to concentrate on improving the financial control of projects. As I have just said, we hope to make progress. However, it would not strengthen our hand if we reduced the PSA's major new works provision this year by £20 million.
  As the Committee knows better than any other right hon. or hon. Member, the vote for this Estimate is very tightly drawn. Already we face major difficulties on new works and other subheads in keeping expenditure within the provision. Most of the expenditure under the new works subhead is by now related to work in progress. On the office programme, out of the total provision of £46 million, about £40 million relates to contracts that we have already let; and because of the pressure on the vote, the remaining £6 million of new starts must now be at risk. Very little, therefore, of the £40 million could be saved without bringing work to a stop and incurring large penalty payments.
  To save £20 million would require a ban on all starts for specialised building projects. It would involve stopping progress on two new prisons, providing 1,310 places, and it would also involve stopping work on some court schemes. In both cases, the programmes are urgent. In view of the consequences, of which I hope my hon. Friend is aware, I trust that he will not press that motion to a Division.
  I have in front of me a letter to the hon. Member for Blackburn about reorganisation in the north-east region of the PSA that I shall sign the moment that I sit down. I hope that he will find that it is a helpful response to the issues that have been raised.
  On PRS, we moved from 1 April 1986 to a new system that assesses the market rental value of each property, building by building. Therefore, occupying Departments will get the full benefit of reduced rental payments by moving from expensive locations to cheaper ones.
  The hon. Member for Monklands, West (Mr. Clarke) referred to a matter that he raised in an Adjournment debate about three months ago. The project has not been abandoned. We are looking for the resources with which to make progress. I acknowledge the hon. Gentleman's concern about getting this project off the ground. Conditions are not satisfactory in the DHSS office that is involved. Subject to the usual discussions on resources that take place at about this time of the year, we hope to be able to reach a decision on the matter later this year.
  The Committee also drew attention to the PSA maintenance backlog. We accept that more resources will be required. We are holding discussions with the Treasury about it, but I do not have to tell the House that maintenance demands have to be balanced against other

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  public expenditure requirements. That is the purpose of the public expenditure survey upon which we have just embarked.
  Mr. Winnick: What about Rosehill?
  Sir George Young: I am able to confirm that there is no insistence on involvement with the private sector in Rosehill. If the hon. Gentleman looks at the schemes that have been approved by the urban housing renewal unit, he will find that disposal is not a component of the majority of the schemes. However, I hope that he recognises that many Labour-controlled local authorities have entered into agreements with the private sector that involve disposal. The agreements are supported by tenants and local residents. I hope, too, that the hon. Gentleman will not adopt a dogmatic approach by denying the role that the private sector has to play in tackling the problems on estates such as Rosehill.
  Vigorous action has been taken by the PSA in the past two or three years to improve performance in those areas where criticism has been voiced. I refer in particular to the steps that have been taken to stamp out fraud and corruption and to improve the management and monitoring of the maintenance operations that are carried out by the PSA's territorial organisation. As recommended by the Committee, we have substantially increased the amount of work that is delegated to occupying Departments under the PRS scheme.
  The Committee's report shows that we need to improve the procedures for handling major new works, although the failures have been isolated. I assure the House that the necessary improvements will he tackled vigorously. In effecting those improvements, the PSA's chief executive will be assisted by three new outside members of the PSA's executive board who will bring to it expertise in building, property and finance. Having said that, I hope that the probation upon which my hon. Friend placed me over the £20 million will now be discharged.
  9.59 pm
  Sir Hugh Rossi: By leave of the House, Mr. Speaker, may I say that I accept the difficulties that my hon. Friend the Under-Secretary of State has mentioned with respect to the £20 million. We shall investigate the PSA in depth and, therefore, keep our powder dry on that aspect.
  As for dog licences, I await my hon. Friend's letter on the contractual relationship with the Post Office. Again, we shall keep our powder dry on that. Possibly, we shall return to that matter at the first opportunity. On that basis, I shall not move the motions.
  Question deferred, pursuant to paragraph (2)(c) of Standing Order No. 19 (Consideration of Estimates).
  It being Ten o'clock, MR. SPEAKER proceeded to put forthwith the Questions which he was directed by Standing Order No. 19(5) (Consideration of Estimates) to put at that hour.

ESTIMATES 1986–87

  Class VIII, Vote 3
  Question,
  That a further sum, not exceeding £27,735,000, be granted to Her Majesty out of Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of Employment on the administration of benefit services and on central and miscellaneous services.
  put and agreed to.

  Class IX
  Question,
  That a further sum, not exceeding £1,010,095.000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of the Environment on Housing, as set out in !louse of Commons Papers No. 284-IX.
  put and agreed to.
  Mr. Speaker then proceeded to put forthwith the Questions necessary to dispose of the remaining Estimates appointed for consideration this day.

  Class X
  Question,
  That a further sum, not exceeding £5,820,177,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of the Environment on Other Environmental Services, as set out in House of Commons Paper No. 284-X.
  put and agreed to.

  Class XX, Vote 18
  Question,
  That in respect of Class XX, Vote 18, for expenditure by the Property Services Agency of the Department of the Environment on acquisitions, public building work, accommodation services, administration and certain other services for civil purposes in the United Kingdom, the balance to he surrendered to the Consolidated Fund be £171,101,000.
  put and agreed to.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, the Commonwealth Development Corporation Bill [Lords] and the Land Registration Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Malone.]

Commonwealth Development Corporation Bill [Lords]
As amended (in the Standing Committee), considered.
Commonwealth Development Corporation Bill [Lords]

  New Clause 1
  TAX EXEMPTION
  'The Commonwealth Development Corporation shall be exempt from all taxes and imports imposed on bodies corporate in the United Kingdom.'.—[Mr. Bowen Wells.]
  Brought up, and read the First time.
  10.2 pm
  Mr. Bowen Wells: I beg to move, That the clause be read a Second time.
  This recommendation was made to the Government in 1982 by the Select Committee on Foreign Affairs in the report on the Commonwealth Development Corporation. I should like to run through briefly the reasons why the Select Committee considered why this would be an advantageous position for the CDC.
  The British Government taxes the CDC's profits in this country, and the host country in which the investment is made also taxes the CDC's operations, project by project or, alternatively, as a corporation as a whole within the country in which the investment is made. This means that there is a leaching of money, first to the host country. We might say that this is a sensible and proper arrangement whereby the Government, by facilitating the CDC's investment in that country, gain tax that they can use for social and political purposes, as they so decide. At the same time, it reduces the amount of money available to the CDC, and therefore to the country in which that investment is made, which can then be re-invested in profitable enterprises in that country and in other developing countries. When that money is repatriated to this country, it is again subject to British taxation.
  Let me point out the extent to which the Commonwealth Development Corporation — a concessionary-funded organisation—is beginning to pay tax in this country. According to its annual report, in 1981 it had to pay £7·1 million in taxation; in 1982, £7·1 million; in 1983, £400,000; in 1984, £7·4 million; and in 1985, £3·8 million. That is money clawed back through taxation into the Government's hands, thereby reducing the amount available to the corporation to put into its reserves and reinvest in developments in the countries which the Treasury had agreed, when it made the investment in the corporation, should benefit from that investment.
  In other words, there is the usual crazy position where, on the one hand, the Treasury gives money to the Commonwealth Development Corporation to invest in profitable enterprises overseas and, on the other, takes money from it in the form of taxation. The Treasury grabs back the money into its own hands for universal British public use. It is absurd that the Treasury should do that. The money should be left in the corporation and should not be taxed. The Treasury should allow the corporation to turn over the money for development purposes.
  Let us consider the overall position of the Commonwealth Development Corporation regarding Government finances. Even if hon. Members do not take into account the taxation figures I have just cited, they will
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  find that, in 1981, the Government gave the corporation £16·1 million, less principal and interest paid to the Government. In 1982, the amount was £5·1 million. In 1983, it was £10·9 million; in 1984, £36·7 million and, in 1985, £13·3 million. For that, the Commonwealth Development Corporation invested an enormous amount of money. Without boring the House with the figures, I shall just say that in 1985 alone, the figure was £106·4 million. Therefore, for an investment of £13·3 million in 1985, less the taxation paid to the Government of £3·8 million, the corporation invested an amount of £106·4 million in new projects overseas. The amount was £106·4 million in the year and £907·7 million total investment and committed at the year end. On a leverage of about £9 million, the corporation invested £106·4 million. That was a good record for the Government. It could have been increased by £3·8 million if the Government had not taken the taxation from the corporation.
  Obviously, a host Government will not permit the Commonwealth Development Corporation to be tax-exempt in its own country if the effect of being tax-exempt in its own country adds to the tax take of the British Government. Clearly, the host country will seek to take the money from the corporation in the form of taxation so that less is given to the Treasury in this country. That seems to be a crazy position. It does not apply to the World Bank. I believe that the Commonwealth Development Corporation's investments overseas are equally as good and are of the same category as those of the World Bank.
  The World Bank enjoys total tax exemption in the host country and in the United States where the headquarters of the Bank are situated. In that way, the World Bank is able to regenerate money and make more money available for development overseas.
  The taxation system of the Commonwealth Development Corporation is one of the crazier — it is not the craziest — financial operations of the Treasury and the Overseas Development Administration. I urge that we make sense of the position. We should exempt the Commonwealth Development Corporation from taxation in this country on a reciprocal basis only. That is all that I put forward. If we exempt the Corporation from tax in this country, the host country in which the CBC is operating should also exempt the Corporation from tax in that country.
  I have no doubt that the Minister has been briefed by the Treasury to respond to the new clause. The observations of the Government on the work of the Commonwealth Development Corporation were made in April 1983, in paragraph 16 of Cmnd. 8857, where it comments on the Select Committee's recommendation that the corporation should be tax-exempt in this country. Let us read this little bit of bureaucratic gobbledegook:
  "The 1978 Act, which consolidated previous legislation relating to CDC, expressly provides that it is not exempt from tax liability"—
  as if that was a justification in itself.
  "There are other state corporations and state-owned companies and private sector bodies whose overseas activities parallel CDC's in many respects."
  Now we see the bureaucrat and the administrator at work. We cannot exempt the CDC for fear of the implications for other state corporations. There is no other state corporation that is in any way the same as the CDC. It is an absurd argument. No other corporation is charged with investing overseas, to stimulate private investment in

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  viable and profitable projects overseas. Therefore, that statement is absurd. I should be grateful if those who were responsible for that sentence could at least realise that hon. Members are not quite so foolish as they take us for.
  Paragraph 16 continues:
  "Exemption would require complex legislation"
  There is a threat to this House.
  "and would be technically and practically difficult to administer."
  They are dealing with one corporation, and they cannot administer that. Is that not an extraordinary recognition of failure and inability on the part of the tax authorities?
  Even my own tax returns, which are not uncomplicated are much simpler than exempting the CDC from tax in this country, but, that is the sort of gobbledegook we are given in the House, and we are expected to take it. I say "expected to take it", but there has been no response from the Overseas Development Administration. So far as I know, the Treasury may have been saying something, but of course the House is not privy to those discussions.
  No doubt, if I raised the matter in a late, late-night debate, or early in the morning, there would be a peremptory reply from an overtired Minister, who would say that this is our reply and just accept it. But I do not believe that we should just accept it. The paragraph continues:
  "The Inland Revenue keeps CDC's interests in mind when negotiating double taxation agreements. These agreements would become more difficult to secure if separate arrangements were made for individual bodies. The Government does not therefore accept that giving special exemption from UK corporation tax would, in a broader view, be to the UK's advantage."
  That sort of weak excuse is not acceptable to the House or to the country. If we gave the money and Parliament voted the money to be invested by CDC overseas in profitable investments which then returned to the corporation dividends and any profit, and the capital was repaid to the Government — I have shown that in the figures — surely it would be a sensible and simple measure for the Treasury to accept the new clause CDC would then be exempt from tax in this country, and would be directed by the Minister to make certain that in investment agreements with the host countries tax exemption would be negotiated on a reciprocal basis, on the basis of the permission given by the Treasury to do so, if it also waived its concern. In that way we would make available, as does the whole Bill, additional non interest-bearing resources to CDC for work for which Parliament and the Treasury decided the money should be given.
  10.15 pm
  Mr. Tom Clarke: Like the Standing Committee, the House has reason to be grateful to the hon. Member for Hertford and Stortford (Mr. Wells) for enabling us to discuss a measure that invites us to consider the role of the CDC itself. In that spirit, I shall ask the Minister some questions in the hope that they will clarify a few of the issues that stem from the new clause.
  The hon. Member for Hertford and Stortford referred to the World Bank. I had not envisaged that the CDC and the World Bank fulfilled precisely the same function, and it would be interesting to know whether the Minister shares my view.
  In what measure does the CDC spend public as well as private money? To what extent is the money that the CDC
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  invests in various projects designed to secure a return on capital, and to what extent is it in a sense competing at more reasonable rates with private capital? I am really asking what sort of animal we are talking about. Is the modern CDC a hybrid that is designed to implement Government aid and development policy without there being any financial return for the United Kingdom? Alternatively, are we talking about a corporation that has an increasingly mixed portfolio, containing both aid projects that are comparable with those in the private sector with which it may be competing?
  We need to know how the Minister perceives the CDC's status and function before we can consider the proposals put forward by the hon. Member for Hertford and Stortford, and it would be helpful if the Minister could answer some of those points.
  The Minister for Overseas Development (Mr. Timothy Raison): The hon. Member for Monklands, West (Mr. Clarke) seemed to use the new clause as a vehicle for raising the whole question of the function and scope of the CDC. I should have thought that that was stretching the wording of the new clause a bit far.
  However, the Bill does not envisage a dramatic change in the CDC's role. Its functions and objectives are pretty well known throughout the world. The Bill is useful in that it strengthens the CDC's ability to carry out those functions, but it does not represent a major change. The CDC bears some comparison with the World Bank. After all, they are both important development organisations in their different ways. One of the characteristics of the CDC is that it operates in the developing world. But it does not operate as an aid agency pure and simple in terms of giving away money in support of good projects. It is proud of its tradition of getting a good return on investment. In other words, it is looking for financially viable projects. We do not think that that will change.
  I was asked whether the CDC was spending public as well as private money. It is, of course, spending public money. It does not spend private money—that is not its job. Nevertheless, it helps the private sector. An important part of its activities involves helping the private sector by operating in parallel with, or in support of, private sector schemes. It works in partnership with the private sector. Thus, this animal will not change dramatically as a result of the Bill.
  My hon. Friend the Member for Hertford and Stortford (Mr. Wells) spoke about his new clause with his customary eloquence, bringing to bear his great depth of knowledge of the CDC, which he has known for a number of years. I am always happy to listen carefully to what he says. I realise that he has a point, that he has fairly made, which is that if the CDC did not have to pay tax, it would have more money to spend on its admirable activities. That is incontrovertible, and I cannot deny it for one minute. On the other hand, in a moment I will come to the reasons why we do not think it wise for the House to adopt the new clause.
  There is one point on which my hon. Friend left me a little puzzled. He said that the new clause envisaged reciprocity, that is, that this tax exemption would apply only when the countries where the CDC was operating also applied a tax exemption. I cannot see anything in the new clause that indicates that this reciprocity would be

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  there — it is certainly not stated explicitly. I do not understand how he thinks, if the new clause were accepted, his idea of reciprocity would be accepted.
  Mr. Bowen Wells: My right hon. Friend is correct to be puzzled. When Back Benchers introduce new clauses I believe that they are at a severe disadvantage. My right hon. Friend will recall that he immediately criticises for technical deficiencies, advised by the well-briefed people in his Department, almost any new clause that is tabled. Certainly that is my experience from the Finance Bill. I therefore kept the clause as simple as possible.
  I believe that my right hon. Friend and the CDC are perfectly capable of negotiating agreements with host countries administratively, saying, "Look, we are tax-exempt in Britain and we therefore expect you to give us tax exemption as the host country." It has to be an example set by Britain. We first have to take the action to exempt the corporation from the tax, and we then argue with the host countries whether they should do likewise.
  Mr. Raison: My hon. Friend has given an explanation. On this occasion, it is not my advisers who have led me to believe that there is an oddity about the clause in relation to the way that he described it; it is all my own work. I am not sure that my concern is completely allayed by my hon. Friend. As I have always said, I do not believe in drawing on pure technicalities to overthrow amendments by hon. Members on either side of the House who have a real point to make. However, it seems to me, although I understand my hon. Friend's explanation, that this does not give the reciprocity to which he is attached.
  Nevertheless, it is for other reasons, which my hon. Friend no doubt will regard as excessively bureaucratic, Treasury-minded and all sorts of other awful things, that I do not feel able to accept the new clause. It is not just that the tax treatment of the Commonwealth Development Corporation by the Government is in accordance with the policy of all previous Governments as far as I know—I would not rest the argument on that—but I think one is entitled to say that there is a valid distinction to be made between bodies such as Government Departments, which in a sense relate to the Crown and are immune from taxation, and other bodies that are subject to taxation.
  The most obvious example that I would give of other corporate bodies subject to taxation is the nationalised industries, but there are others. These corporate bodies are treated for tax in the same way as companies in the private sector. They have an independent corporate existence, they are not mere creatures of the Government and I believe that the corporation would recognise this. In many cases, these corporations are in competition with the private sector. This may not be particularly true of CDC, but it is certainly true of other such corporate bodies. I think that my hon. Friend would be among the first to protest if public corporations automatically got some kind of privileged treatment in comparison with private companies.
  Within this class of corporate bodies, there are many, such as the CDC, in receipt of concessionary funds or even subsidies from the Government. Many are in competition with private sector companies, and others such as the CDC operate overseas. I am sure that a number of those bodies would claim that they had distinctive merits and financial methods. Again, like our predecessors, we feel that it is
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  more just as a general concept to subject all those corporations and companies to the same taxation. If we were to exempt the CDC from that normal practice, inescapably we would have endless claims from other bodies demanding the same privileged treatment.
  An important point is that it would be very odd to tackle such taxation within the purview of this narrow Bill about the CDC. It has implications for other corporations, and the House would find it a rather peculiar way of going about its business to legislate under the auspices of this Bill.
  I have acknowledged that if the CDC did not have to pay tax it would have a little more money to spend on its excellent work. However, the tax is not really a major burden. My hon. Friend gave a figure for taxation for 1985 that I do not recognise as valid. I think that the figure is £1·8 million as opposed to the £3·4 million that he suggested——
  Mr. Bowen Wells: It is in the annual report.
  Mr. Raison: I made the figure £1·8 million or £1·9 million for 1985. I stand to be corrected, but I was looking into the matter a few moments ago and I believe the figure to be £1·8 million. Against that, during the financial year 1985–86 the CDC received £41 million in concessionary loans from the aid programme, which is obviously a much more substantial sum. Therefore, the taxation does not really impose an onerous burden. In the discussions about the Bill, the CDC did not say to me that it wished the Bill to be used as a vehicle to remove the burden of taxation. I have not been pressured on that point.
  If the House thinks for a moment or two about the sheer common sense of the matter, it will appreciate the force of the argument that this Bill is not really the way to tackle the taxation of such corporate bodies. I therefore ask the House to reject the new clause.
  Mr. Bowen Wells: I thank my right hon. Friend for explaining why he will not accept the new clause, and I understand his reasons. He has to deal with the Treasury on this issue and, as he said, the Treasury is obviously frightened that there would be implications for other corporations. I am glad that we have had this opportunity to emphasise that, as parliamentarians, we do not agree with the Treasury making absurd and unnecessary complications in what is essentially a simple issue. I do not think that my right hon. Friend believes that it should do that, but he cannot say that and I understand why.
  My right hon. Friend suggested that he wanted to treat the CDC as a nationalised industry. Are the ODA and the Treasury consistent in treating it as a nationalised industry in terms of investigation, monitoring and interest and capital repayments? In fact, their treatment is wholly inconsistent. If my right hon. Friend agrees that the CDC should be treated as a nationalised industry throughout the Civil Service, the CDC and the ODA budgets would benefit enormously. I shall not dwell on that point because it is one on which I have not been fully briefed. However, if my right hon. Friend investigates the matter, he will find that there are serious inconsistencies in the way in which the Treasurey treats the CDC.
  My right hon. Friend argued that he did not want to include taxation in the purview of the Bill.
  10.30 pm
  The Select Committee made recommendations about the CDC in 1982, yet the House has not debated the

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  corporation in the intervening period. Indeed, although it has been usual for the chairman of the CDC to have a motion proposed in the other place so that Parliament could discuss the CDC budget and the return on its money, that has not happened for a considerable time. Nor has a relevant Bill been promoted by the ODA or the Minister.
  Back Benchers do not have the opportunity to influence Government policy decisions other than by trying to tack provisions on to Government measures. In Congress, such tacking on takes place all the time. In this country many measures would be improved if, when introduced, all manner of provisions could be tacked on to them. In a way, that is happening with this Bill in that it provides additional resources to the CDC, and I congratulate the Government on taking that step.
  Mr. Tom Clarke: I found it necessary to ask the questions that I put earlier precisely because we have not had a debate of the type to which the hon. Gentleman refers. I was anxious to discuss the new clause in the context of the Government's thinking about the CDC. My impression so far in the debate is that the Government view the CDC as being between the World Bank and a nationalised industry.
  Mr. Deputy Speaker (Sir Paul Dean): Order. I have permitted a wide debate to take place, but I remind hon. Members that we are discussing a new clause which deals with taxes and imposts. We cannot debate the whole of the CDC in discussing the new clause.
  Mr. Wells: I accept the wisdom of your ruling, Mr. Deputy Speaker, and I hope that the hon. Member for Monklands, West (Mr. Clarke) will take part in the Third Reading debate, which I confidently expect will succeed the Committee and report stages of the Bill this evening.
  I hope that I am in order in referring to the World Bank, because the new clause relates to taxation treatment and the treatment of the CDC for tax purposes is different from that applied to the World Bank, although the only distinction is that the CDC undertakes the direct management of projects whereas the World Bank does not. In every other way, the CDC's operations are parallel to those of the World Bank. It is a smaller organisation which does its investment bilaterally— and, in my view, more sensitively and more effectively — but it is very similar to the World Bank.
  That is why it should receive the same taxation treatment, both in respect of the host country in which the investment is made, and in this country, from which the original investment comes. To do other than that is ridiculous. The general public would agree if they were told, "Here is the Treasury giving money for development overseas, yet when the money returns it is taxed."
  The Minister has explained his position and we, as parliamentarians, have explained why we do not accept the bureaucratic arguments he has been forced to adduce. We have brought the issue to the top of the filing tray, where I hope it will stay. I am confident — because of the existence of this measure—that the civil servants will think again, and I hope that before long the Minister will introduce a Bill to implement what we have suggested tonight. For the time being, I beg to ask leave to withdraw the motion.
  Motion and clause, by leave with drawn

Clause 1

  AMENDMENTS OF COMMONWEALTH DEVELOPMENT CORPORATION ACT 1978
  Mr. Deputy Speaker: I now call the hon. Member for Hertford and Stortford (Mr. Wells) to move amendment No. 1.
  Mr. Bowen Wells: I need not delay the House for long in dealing with this sensible new clause, the arguments for which, relating to immigration, were rehearsed in the report of the Select Committee on Foreign Affairs in 1982. One of the problems in the present Bill——
  Mr. Raison: On a point of order, Mr. Deputy Speaker. I believe that my hon. Friend is under a misapprehension. I understand that you have not selected new clause 2 which deals with immigration.
  Mr. Deputy Speaker: We are dealing with amendment No. 1.
  Mr. Wells: On a point of order Sir Paul. I thought that I had tabled new clause 2.
  Mr. Deputy Speaker: Order. New clause 2 has not been selected. I have called amendment No. 1 and the hon. Gentleman must speak to that amendment.
  Mr. Wells: Further to my point of order, can I have an explanation of this, if not now, at some other time?
  Mr. Deputy Speaker: The hon. Gentleman knows that it is not usual for the Chair to give explanations about selections. If the hon. Gentleman is puzzled and would like to have a private word with me at some other time, I will try to enlighten him. We are now dealing with amendment 1.
  Mr. Wells: I would be grateful for such a discussion. I now beg to move amendment No. 1, in page 2, line 18, after 'may,', insert
  'after consultation with the Corporation and'.
  This was the subject of discussions between my right hon. Friend the Minister and members of the Committee. It involves whether we should allow the Minister the power to give grants to the CDC. The CDC has never been eligible to receive grants from the ODA. It has been financed through loans. Many people have criticised that as inappropriate, as the corporation is risk-taking and should therefore be financed by equity capital and not loan capital. It has battled for many years against that disability. It has now generated its own funds, which enable it. in effect, to have equity capital, although the Government did not give it such equity capital.
  An equity and loan arrangement for the corporation would he the correct way in which to tackle the issue. I made that point in Committee. That would, of course, mean a reorganisation of the corporation's finances and balance sheets, but I do not see why my right hon. Friend the Minister should not have thought that that was a sensible way in which to solve the problem in the Bill. None the less the Minister has not done that.
  The Minister has taken the power to give grants. That could fundamentally alter the relationship between the ODA and the CDC. I would like my right hon. Friend to explain what he has in mind to do with the grants that he is asking the House to give him the power to bestow. I believe that that power could do what my right hon.

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  Friend does not really want to do. It could ruin the CDC in its present form and reduce it to a profitless and relatively useless organisation, in the day-to-day control of the ODA officials.
  I accept that the purpose of the powers could be to increase the resources of the corporation. I would say "Hoorah" to that. However, why do we want to give grants rather than loans? My right hon. Friend said in Committee that he wanted to reduce the amount of money paid out of the ODA budget to the CDC by giving it grants. Grants are manifestly more valuable than loans. How much more valuable is a question of judgment and of arithmetic to which we will not be privy. Grants could be used to affect the CDC's core funding. That would affect the independence of the CDC board.
  My right hon. Friend and I know that, if the ODA gives grants, the ODA will therefore have to require the CDC to apply for grant money. If it is granted, the ODA must issue the grant on the basis of a prospectus or proposal put up by the CDC. It will then be incumbent on the ODA to ensure that the grant money is used for the purpose for which it was granted.
  The Foreign Affairs Select Committee will ask my right hon. Friend what he has done with the grant money that he has given to the CDC. The relationship between the ODA and the CDC, which is an arm's length relationship at the moment, will be destroyed. The CDC board's independence will be diminished and the ODA will take over. My right hon. Friend and the ODA have given me every assurance that that is not their intention. I believe that to he true, but the possibility of what I have described exists. That fear is certainly shared by the management and board of the CDC.
  The arrangement will affect the discipline that the board can exert over its management in the field. Because the management does not have to repay the capital and the interest, the management will be able to make loans and investments which are below the standards that the CDC now expects. That could lead to the CDC being unable to repay its capital and interest and unable to invest in successful projects overseas. The management of the companies established by the CDC will have a diminished discipline to make a proper return on capital. The arguments with the host Government to ensure the profitability of a company will be weakened, and the necessity to remit funds from the host country to Britain will also be diminished.
  There are some positive aspects to making grants, which we all accept. My right hon. Friend can give the CDC grant money in support of projects in which it has invested, such as roads, education, health and housing to meet costs which, in a developed country, a normal project does not have to bear. It means that my right hon. Friend can give technical co-operation assistance to CDC projects. Trained personnel can therefore assist projects by training management in technical resources and undertake investment in agricultural training centres in Swaziland, for example, in research. I applaud all of that, but I should like my right hon. Friend to spell out how he intends to use the proposed power.
  Mr. A. J. Beith: The hon. Member for Hertford and Stortford (Mr. Wells) has distinguished himself by speaking more often and at greater length on this Bill than the two Opposition parties added together. I do not intend to imperil his record by
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  speaking at great length. I listened to his argument at several stages of the Bill. I was not a member of the Committee and, although I read the report of the Committee proceedings and noted his comments, I am still not convinced. The picture that the hon. Gentleman conjures up is one of the Overseas Development Administration smothering the CDC with grants to such an extent that the officials of the CDC look up with horror at the sight of yet another gift-bearing emissary from the ODA coming to the door with more grants and more control. In my wildest dreams I cannot conceive of this situation coming about.
  10.45 pm
  The hon. Gentleman may be right in his analysis of what might happen if anyone were to undertake such a smothering exercise, because lie well knows the workings of the CDC. No one in the House knows them better than he does, and no one in the House would dare to argue in such detail about them. I cannot envisage a situation in which the ODA would be in a position to make such extensive dispersals as would pose a threat to the CDC, nor can I imagine that the CDC would be forced to accept such largesse if it was genuinely worried that its independence was being threatened. I agree with the hon. Gentleman that a situation may arise in which it is pressured to accept a grant instead of a loan for a specific project. But if the situation was as difficult as he described, it would be open to the CDC to resist the blandishments.
  Mr. Bowen Wells: Without the amendment that I have suggested, the CDC will have no option. If the amendment is accepted, the Minister at the time will have to consult the CDC. I should be grateful if the hon. Member for Berwick-upon-Tweed (Mr. Beith) could agree to the amendment. It would have a humble and limited effect: the Minister would have to consult the CDC before he gave it a grant.
  Mr. Beith: The Minister may well find something wrong with it, although I cannot imagine that the ODA would give a grant to anybody without first consulting him about it. I would be the first to suspect Government Departments of not consulting. I have frequently criticised them for failing to consult people. But the one Department which usually consults is the one which is proposing to give money to somebody. Not only does it consult, but it inquires in the various ways that the hon. Gentleman has mentioned.
  The hon. Gentleman may have a point, but he has not convinced me. Even if my wildest dreams are realised and an alliance Administration has stepped up the annual rate of overseas aid to meet within five years the United Nations target and disbursements are being made thick and fast in pursuit of this policy, he has not convinced me that one of the consequences would be that the independence of the CDC would be greatly jeopardised because of the number of grants being made to it in preference to loans. Not even my imaginings about Ministers who may succeed the present Minister lead me to share the fears expressed by the hon. Member for Hertford and Stortford. I would, of course, wish the Minister to consult with the CDC before making grants, and I should be very surprised if he did not do so.
  Mr. Jim Lester: I support the amendment. We all recognise the value of the CDC and the

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  contribution that it makes. If there is any suspicion that by changing the formula its independence will be threatened or that it will feel in any way less able to operate in the same way as it has operated in the past — an operation which has been widely acclaimed and supported by every investigation of the House into its affairs—then the acceptance of a minimal amendment which relieves that suspicion is well worthwhile.
  I do not necessarily share the analysis of the situation by my hon. Friend the Member for Hertford and Stortford (Mr. Wells), but if the amendment is accepted it will reinforce the independence of the CDC and ensure its ability to make that contribution to development that we would all applaud and support.
  Mr. Raison: It has been useful to have this short debate, and it was right that my hon. Friend the Member for Hertford and Stortford (Mr. Wells) should have put forward the amendment. We discussed this matter at fairly considerable length in Committee, and I do not think that I shall be expected to explain why we are introducing this grant provision element in the Bill. However, my hon. Friend asked one or two specific questions about that aspect and I shall briefly respond to him.
  As I said in Committee, the introduction of the grant scheme can give useful support to the CDC — that is what the whole thing is about. It provides a flexibility in ways of financing the CDC as well as the opportunity to provide the parallel or supporting operations to which my hon. Friend has referred and which he favours.
  We certainly do not see in the Bill a drastic change in the Government's attitude towards the CDC. We have had a long and friendly association with the CDC in our joint business of assisting and investing in developing countries. We fully recognise that the CDC must fund and invest in projects that show a good financial return and are economically sound. We have no desire to relax the financial discipline which has been one of the good features of the CDC's management. I certainly am not trying to take away from it its reputation as an aid agency of a kind which nevertheless manages to operate against strict commercial standards. That has been its proud boast, and I hope that it will continue to be its proud boast. I have no desire that things should be otherwise.
  Nor do we in the ODA desire to engage in day-to-day interference in the management of the CDC. We have confidence in the management, and it is not the job of the ODA to run the organisation. It is the job of the CDC's board to run its organisation in accordance with sound investment principles, but again operating within the developing world.
  Of course, in the last resort, we have responsibility for the CDC and that has always been accepted. It remains a statutory body financed by concessional funds from the aid programme, but we do not want a day-to-day interference in its management. I am grateful to the hon. Member for Berwick-upon-Tweed (Mr. Beith) for recognising that it is not our desire to do any of those things.
  However, I recognise that it is important that if we implement this grant-giving power we should do so in conjunction with the board of the CDC. I made it clear in Committee that that was our intention, but my hon. Friend the member for Hertford and Stortford has put
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  forward an amendment which would write that into the statute. I am happy to accept my hon. Friend's amendment, and I hope that the House will agree to it.
  Amendment agreed to.
  Motion made, and Question proposed, That the Bill be now read the Third time.
  10.52 pm
  Mr. Tom Clarke: The Bill is essentially a short technical measure. Despite some of the reservations which the Opposition have about what appears to be the Government's extension of some of their monetarist philosophies into the field of development—a view most eloquently expressed by my hon. Friend the Member for Vauxhall (Mr. Holland)—several times in Committee, the Minister will be pleased to hear that there will be no attempt on our part to obstruct the Bill's passage through the House.
  In Committee the Minister attempted to outline the main issues in the Bill as he sees them, and I am sure that he will do so again this evening. Four main points arise from the Bill. First, the CDC will now be able to borrow on the financial markets. Secondly, it can do so in more than one overseas country. Thirdly, the Government can guarantee borrowing, and, fourthly, the Government, as we have heard, can make grants. I hope that that is a fair summary of the main points of the Bill, but I am sure that the Minister will point out any omissions from that fairly quick summary.
  The Bill naturally reflects the substantial and worthwhile development of the work of the CDC. It recognises that in trade and technical assistance underdeveloped countries are increasingly able to help one another and are not solely dependent for aid and technical assistance on the developed world. While we accept our own responsibilities in these matters, we welcome this recognition of co-operation and co-ordination of effort among Third-world countries.
  In another place Baroness Young gave us an example of the kind of project which the Bill would seek to facilitate. She mentioned that the CDC has provided funds for Shelter Afrique, a Kenyan-based organisation which, in turn, supplies finance for housing activities in a number of countries in the continent of Africa. Because of present legislation, the CDC has to confine the use of finance to Kenya itself. When the Bill is enacted, the CDC could, as I understand it, if it wishes, provide finance for Shelter Afrique to support housing developments in other countries. That is an example of how the CDC would be allowed to extend its activities.
  In our discussions this evening reference has been made to the World bank. It is not my intention to delay the House in its consideration of the Bill. However, some of the World bank's attitudes—I know that this is a matter for a more comprehensive debate — especially about conditionality, do not lend themselves to the philosophy which we would expect the CDC to adopt. Therefore, although I am convinced, as the Minister has said, that there are some similarities, I hope that in time we will see that there are considerable differences in approach as they affect individual countries.
  One of the saddest commentaries of our times was contained in Baroness Young's view that some of those projects would not easily attract private sector finance from those who are looking for a quick profit. That may have influenced the Government and the Minister to take

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  the view that they have and that is enshrined in the Bill on the question of grants. Certainly it was a major matter in Committee. The hon. Member for Hertford and Stortford (Mr. Wells) expressed a strong view, tonight, as the House would have expected. He took the view that these grants should not be used as a device to reduce loans. I think that it is fair for me to point out that my hon. Friend the Member for Vauxhall also saw many aspects of the Bill as a Government attempt to reduce the public sector borrowing requirement. He said that he would be watching that very closely.
  I have to repeat the question put by my hon. Friend the Member for Vauxhall in Committee:
  "Will the Minister give an assurance…that the CDC will never get a grant from his Department or from the Exchequer simply to subsidise the higher interest rates that would have to be paid on these Euromarket loans?" — [Official Report, Second Reading Committee, 26 February 1986; c. 7.]
  He used the word "Euromarket" in the general sense of global financial market loans. As I have said, we shall be watching that aspect of the legislation very closely.
  I come briefly to the work of the CDC in the context of the Bill. The Bill gives us the opportunity as it did the Committee, to talk about the efforts of the CDC and, in so doing, to acknowledge the splendid work which that organisation has done and will no doubt continue to do. It is an organisation which is widely respected, not only in the House but throughout the United Kingdom and, I think it is fair to say, in the Commonwealth itself. I had the opportunity, with some of my hon. Friends, to visit at least one of its projects in Papua New Guinea and again in Swaziland. I think that the CDC deserves the greatest possible praise for its efforts in bringing investment, employment and prosperity to those parts of the world, and long may those efforts continue. That is what we seek to encourage. However, we are also bearing in mind the need for greater emphasis on agriculture and rural development, and the involvement of grass roots organisations which articulate and serve the needs of local people. That is also extremely important.
  Those views were reflected in the last annual report of the Commonwealth Development Corporation, in the remarks of the chairman and in the management report. In view of our concern about Africa, I wish to refer briefly to the chairman's remarks whih give a good indication of the Bill's objectives, especially for the poorest parts of the Commonwealth and the world. The chairman said:
  "Africa has perhaps suffered more than any other area from the combination of falling commodity prices, overambitious domestic investment policies and debt burdens made more weighty by the long period of high interest rates."
  Unfortunately, when we compare this year's annual report with that for last year we see that there are still aspects of crisis for the Third world. We see the contrast between 1984 and 1985. Drought has been alleviated a little, but the world debt problem is as great as ever. I know that the Minister would want the Bill to be effective in trying to deal with the many problems that arise from the debt crisis which the world faces. Certainly it would be nice to see the whole British aid programme expanding at the same rate as the CDC programme, and to see the same priority and emphasis being given to these issues.
  We must consider the CDC and the Bill in the context of current and, perhaps, even future debt problems. The CDC's sense of urgency regarding debt is correct, reflecting the critical nature of the issues facing developing countries, especially those in Africa. One of the aspects of
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  the Bill and of our discussions both in Committee and in the House which delights me is that we have started again to use the word "Commonwealth" with some pride. Some of us were disappointed during our debate on South Africa when the Commonwealth seemed to be frowned on by a minority of Conservative Members. It is important that the Commonwealth should be seen as playing an important part in offering a solution to development problems, while at the same time the work of the CDC expands successfully into non-Commonwealth areas.
  The Minister would be somewhat astonished if I did not at some stage refer, albeit briefly, to the problems of the Mindanao project in the Philippines. My views are on record in Committee, and I do not withdraw anything I said there. However, I am sure that all hon. Members will agree that it is most important that all hon. Members, including, I hope, the Minister, who seems to find reasons for disagreeing when most hon. Members appear to be uttering the obvious, learn the lessons from that experience. If we have, in the spirit of constructive criticism which I have endeavoured to offer both this evening and in Committee, surely we can look to the future with confidence.
  The guidelines given to the corporation some years ago called for emphasis on helping poor countries —presumably that is what the Minister envisages in this legislation — with particular priority for investment in the projects concerned with the renewal of natural resources. Therefore, it was a little disappointing to find that disbursements in 1985 totalled £82·2 million, sharply down from the 1984 figure of over £109 million, of which only 62 per cent., as against 82 per cent., went to poorer countries.
  Bearing in mind the future work of the CDC, I ask the Minister three brief questions. First, on the status of the CDC, does he see it as a disburser of British aid and essentially humanitarian, or as a private development corporation? Secondly, will he encourage it to try to resolve whether it is working on behalf of communities, or necessarily with Governments and was not this one of the issues posed by the Mindanao project? Thirdly, is there not a case for the CDC to renew its models of agricultural development, which might have been progressive in the 1960s, but are open to criticism today?
  The potential contribution of CDC to enabling people throughout the world to lead decent lives without fear of hunger or poverty, and participating in the development of their communities, is immense. Both the CDC and the House, recognise the needs of Africa for long-term solutions even more than immediate injections of relief. It was George Orwell who said some time ago that we might expect to live in a world where one half of the universe saw the other half on television suffering or dying from starvation. The stark reality of that prediction is that it was an understatement. One third of the world is watching two thirds of humanity on the verge of starvation or worse.
  When the late John Strachey signalled the introduction of the legislation that led to the CDC being set up, he said:
  "We believe that this new departure— and it is a new departure — is essential because the world would not tolerate much longer the leaving fallow of undeveloped areas".—
  [Official Report, 6 November 1947; Vol. 443, c. 2018.]

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  That is true, and our great regret is that 40 years later, we have still not come near to realising the objective that he set or the achievements that he and the House would have liked.
  I give a broad, if cautious, welcome to the Bill. We are grateful for the vision that those responsible for the CDC have provided in the past for future generations. In that spirit, the Labour party will not impede the Bill. However, we shall monitor its progress, when enacted, with the greatest possible care.
  11.7 pm
  Mr. Bowen Wells: I shall not detain the House for long. It has already been indulgent of my interests in this subject. However, I make it clear that I welcome the Bill wholeheartedly. It is a response to an Adjournment debate that took place in 1982, with my hon. Friend the then Financial Secretary to the Treasury, at about 6 am, during the proceedings on the Consolidated Fund Bill. The argument put by him was that the CDC was subject to the PSBR requirements that had been firmly established, and were administered, by the Treasury, and that even if the CDC were to borrow overseas, invest that money overseas, and receive repayment overseas, that was a borrowing that had to count as part of the PSBR.
  That manifest absurdity is being put right in the Bill enabling the CDC to borrow and lend overseas, and ensuing that that does not have an impact on the PSBR. This is an ingenious way to have managed to do this. I am sorry that the time of officials and the House has had to be taken to invent this way to get round economic dogma and definitions. However, the fact that ODA and Treasury officials and my right hon. Friend the Minister for Overseas Development have spent that time upon it demonstrates their commitment to the Commonwealth Development Corporation and their concern to provide the necessary resources with which to expand its very valuable work overseas.
  The whole of the corporation's finances are involved in a mix of ODA financial receipts at concessionary rates of interest and borrowing on commercial terms, thus making more money available for the essentially commercial, profitable and viable investments that it is making overseas. I welcome that development. It is the way in which development can take place in the most sensible and disciplined way possible.
  I pay tribute to the CDC's results this year. They emphasise my belief that the CDC is of unique benefit to countries overseas. I do not share the fears of the hon. Member for Monklands, West (Mr. Clarke). One only has to look at the results of the CDs commitments this year, which amount to about £106 million. They will create 12,800 new permanent jobs overseas. I should have thought that all right hon. and hon. Members would welcome that result. A livelihood will be provided for 94,200 small and impoverished farmers. I wish it were in Mindanao where some of the poorest and most deprived people in the world live. I do not share the apprehensions of the hon. Member for Monklands, West, other than his apprehensions about the human rights difficulties that face those small and impoverished farmers. I believe that the CDC's efforts will improve their standard of living and enable them to withstand that kind of oppression.
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  About 210,000 hectares have been brought into cultivation or have been rehabilitated, either as estates or as small farmer or outgrower projects, with plantings of oil, palms, rubber, maize, sunflower, rape, cotton, beans, hardwoods, coffee and tea. Those are major investments in basic commodities that are produced for export. They will provide foreign exchange which will enable the standard of living in those countries to he improved. That investment will result in orders in the United Kingdom. That, too, is important. The orders will benefit this country, just as economic development worldwide will benefit this country. At least £19 million worth of orders will be generated during the implementation phase of these projects. The result in foreign exchange earnings for the host countries is very important.
  The ability of countries overseas to import essential spare parts and improve the infrastructure will result in foreign exchange earnings for the host countries of at least £270 million per annum. That is a very proud record. We can all take pride in it. My right hon. Friend is entirely justified in his support for the CDC and in his desire to increase the amount of money that is available to it, and he deserves our wholehearted support.
  11.13 pm
  Mr. Beith: On behalf of the alliance, I welcome the Bill without any reservations. Its provisions are wholly desirable. They remove irksome and unnecessary restrictions upon the work of the Commonwealth Development Corporation. The Government are to be commended for introducing the Bill. I cannot, however, commend the Government's business managers. If anything has delayed the Bill, the activities of right hon. and hon. Members have not delayed it. The Bill had its Second Reading on 26 February, but only now have right hon. and hon. Members been given the opportunity to debate it on Third Reading.
  One might think, having heard the comments of the hon. Member for Monklands, West (Mr. Clarke), that the proceedings in Standing Committee involved a protracted and deep dialectic about the Government's monetary policies, but the entire proceedings in Standing Committee lasted 40 minutes.
  Mr. Tom Clarke: That is not so.
  Mr. Beith: That is indeed the case. I have the text in front of me. The proceedings began at 10.30 and ended at 11.10 am, which by my reckoning is 40 minutes. Neither I nor the hon. Member for Monklands, West was present.
  Mr. Tom Clarke: If the hon. Gentleman does his homework he will find that there were two sittings. The first lasted a great deal longer.
  Mr. Beith: That is not so. The hon. Gentleman has not done his homework. There was a Second Reading Committee on the Bill, of which he and I were members, which lasted for 1 hour and 40 minutes. There was a Standing Committee which sat once for 40 minutes.
  I stand by the comments I made originally. Neither the Second Reading Committee debate nor the Standing Committee debate was protracted, and rightly so. I make the point merely to underline that the general wish of hon. Members has been to get the Bill on to the statute book as quickly as possible. If anyone is to blame for not doing so, it must be the Government's business managers. The

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  contents of the Bill well deserve the commendation of the House. I have a rare opportunity to welcome a Bill without any reservations whatsoever.
  11.15 pm
  Mr. Raison: I rise bathed in the bonhomie which the hon. Member for Berwick-upon-Tweed (Mr. Beith) has just expressed. I had intended to draw to the attention of the House the fact that in an earlier intervention he said that, in his wildest dreams, he could imagine a doubling of our GNP percentage for aid. In other words, he was saying that the Liberal party's official position corresponds with his wildest dreams, which does not quite have a ring of conviction about it. However, I shall not tease him because he has been extremely helpful to us this evening. I thank him for that. I also thank other hon. Members who have contributed to the passage of the Bill.
  I think that we have given the Bill a reasonable amount of attention. It would have been a pity if the Bill had simply gone through on the nod without any discussion, because it concerns an important matter. The future of the Commonwealth Development Corporation is important. I, the Government and, I am glad to find, the House have great respect for the corporation. I do not begrudge the minutes in Committee and the short number of hours on Second Reading that have been spent discussing it.
  The hon. Member for Monklands, West (Mr. Clarke) welcomed the Bill. I am grateful to him for that. I think that at one point he described it as an extension of our monetarist philosophy. I did not quite know what he meant by that. The introduction of a grant-giving power is not normally thought of as a monetarist activity. Whatever else one may have to say about it, no doubt, deep down in the hon. Gentleman's subconscious, something is stirring which he is about to release.
  Mr. Tom Clarke: When the right hon. Gentleman reads Hansard, he will see that I was referring to the views of my hon. Friend the Member for Vauxhall (Mr. Holland). I thought it right that those views should be placed on the record.
  Mr. Raison: The hon. Member for Vauxhall (Mr. Holland) would see monetarism under any stone or in any corner that he chose to look. I am only surprised that the hon. Member for Monklands, West should see himself in the role of the mouthpeace of the hon. Member for Vauxhall who is, if I may say so, a different kind of creature from himself.
  Mr. Tom Clarke: And from the Minister.
  Mr. Raison: And from myself also. I claim no identity with the hon. Member for Vauxhall.
  As the hon. Member for Monklands, West said, the Bill enables the CDC to borrow and operate in overseas countries. As my hon. Friend the Member for Hertford and Stortford (Mr. Wells) said, it can do so without recourse to the public sector borrowing requirement. That gives a greater flexibility. I think that everybody would welcome that. Under the Bill, the Government have the duty to guarantee such borrowing. The Bill introduces the grants facility which we discussed earlier. I think that all those measures add up to greater scope for the Commonwealth Development Corporation.
  The hon. Member for Monklands, West referred to Shelter Afrique. I think that he accepted that one of the merits of the Bill is that it could permit support for such
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  an operation, as my noble Friend Baroness Young said in the other place. That is another advantage. The hon. Gentleman made some comparisons between the CDC's operations and World Bank conditionality. I believe that what the World Bank is doing, in trying to bring about structural adjustment in a genuine attempt to get to the root of the economic problems of Africa and other countries, is all to the good. I very much support that. The CDC is a somewhat different operation in that respect from the World Bank. I hope that the CDC will be used for real development. That is what the Bill is about.
  The hon. Gentleman asked me three questions. He asked me whether I see the CDC as a disburser of humanitarian aid or a private corporation. I do not see it as either exactly. It is not exactly a private corporation. It can work in partnership with and give strength to the private sector. One of the healthiest aspects of the United Nations special session on Africa a few days ago was the recognition of the importance of the private sector.
  The CDC is not exactly a humanitarian aid organisation. It is operating in developing countries, contributing to the strengthening of their economies, especially important sectors such as agriculture. It is not exactly a charitable organisation. It is trying to contribute to fundamental development.
  As to whether it works with communities or with Governments, in operating in a Third world or other country, one must recognise that they have legitimate Governments. One may not like them, but they are Governments. It is difficult to waltz into a country and say, "We shall forget about the Government and do our own thing." Of course, the CDC is concerned to do things that are worth while in the economic and social development of the places in which it operates. That is an important part of aid strategy generally and the CDC contributes to it.
  The hon. Member for Monklands, West raised the vexed question of Mindanao, and I understand his concern. We discussed the issue at some length in Committee and I cannot add much to what the hon. Gentleman has said. Since the change of Government in the Philippines, pressure from certain voluntary organisations on that matter seems to have abated. I do not know whether that is because they find the new regime more to their taste, as clearly many people do. Perhaps there are lessons to e learnt from this affair. However, the CDC can claim that jobs and prosperity are being generated in that area, and that, should not be dismissed.
  The hon. Member for Monklands, West asked whether the CDC would review its models of agricultural development. The corporation is always prepared to bthink about the most effective ways of operating. It brings to that consideration enormous practical experience. The CDC works in the field. We are perhaps all tempted at times to pontificate about developments, but the CDC is the body out in the field. The way in which it applies its expertise is very much to the good.
  I think that I have covered the main points raised in this short debate. We are right to be proud of the CDC as an organisation. As my hon. Friend the Member for Hertford and Stortford (Mr. Wells) said, the Bill will strengthen the CDC in its activities. I commend it to the House.
  Question put and agreed to.
  Bill accordingly read the Third time, and passed, with amendments.

Land Registration Bill [Lord]
As amended (in the Standing Committee), considered.
Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, and Prince of Wales's Consent, on behalf of the Duchy of Cornwall, signified].
11.21 pm
The Solicitor-General (Sir Patrick Mayhew): I beg to move, That the Bill be now read the Third time.
This short but technically complex Bill gives effect to the Law Commission's report on land registration, No. 125. Its purpose is to simplify and modernise three aspects of the law on land registration which seemed to the commission in need of reform—the conversion of title, the registration and protection of leases and the method of determining the priority of dealings in certain equitable interests in registered land.
At this time of night, I do not think that it would be profitable to detain the House with a detailed explanation of the Bill's provisions. It is enough to say that it has been generally welcomed as a useful measure of law reform which should make the system of land registration easier to understand and operate. I commend the Bill to the House.
11.23 pm
Mr. Nicholas Brown: Legislation arising from Law Commission reports has a small cult following in the House. The Solicitor-General and I emerge into the Chamber, usually very late at night, to practise our rites. I should like, in that spirit and with your indulgence, Mr. Deputy Speaker, to offer my congratulations and those of my right hon. and learned Friend the Member for Aberavon (Mr. Morris) to the Solicitor-General on his elevation to the Privy Council. As someone who was born in the Solicitor-General's constituency, may I say that I hope that he will take a pride in being thus honoured.
The Land Registration Bill is not contentious, as anyone who has studied the Official Report of the Second Reading Committee and the Standing Committee will readily confirm. The Solicitor-General and I heard in Committee this morning on another matter some hard words about the Law Commission, which were unjustified and came from Poujadist elements.
It is traditional on these occasions to thank the Law Commission. For myself, that is not just a matter of form. In my modest Front Bench responsibilities, I have had an opportunity, of necessity, to gain an insight into the Law Commission's work. My appreciation has grown with my understanding of it and my thanks are sincere.
The Bill is not contentious or wide in its scope. It is a useful and practical reform to simplify and update the law relating to lease registrations and the byways of registered land. I am pleased to commend its passage to the House.
Question put and agreed to.
Bill accordingly read the Third time, and passed.

Dornoch Firth (Crossing)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]
Mr. Robert Maclennan: In the past week, two parliamentary answers have been given concerning the Dornoch Firth crossing, which is in my constituency. One was an answer to my question by the Minister of State, Department of Transport, and the other reply was given to the hon. Member for Moray (Mr. Pollock).
The latter answer was given by the Secretary of State for Scotland. He said that it was his intention to proceed with plans to construct a road bridge over the Dornoch Firth. He said:
"Subject to the availability of finance and the satisfactory completion of statutory procedures, construction of the approach roads is planned to begin in financial year 1987–88, with construction of the bridge structure to follow in 1988–89. My Department will be holding a design-and-build competition for the bridge, the first stage of which will be to issue an invitation at the beginning of July to selected competitors for the submission of design proposals." — [Official Report, 18 June 1986; Vol. 99; c. 532.]
That reply was, I suppose, encouraging, because it marked another stage in a very long saga that goes back to the mid-1960s when it was first proposed to construct a road bridge across the Dornoch Firth, as part of a scheme to bridge the three firths north of Inverness and to greatly shorten the transportation route between the north coast and the markets of the south.
The answer by the Minister of State related, however, to the possibility of a rail bridge being constructed across the Dornoch Firth, in conjuction with that road. That answer was negative in that the Minister indicated—it is important that I repeat these words too in the context of the debate—that the British Railways Board was not proceeding with that proposal. The Minister said that no detailed request had been made for special funding. He understood that British Rail had been considering the case for a rail crossing of the Dornoch Firth and it had had discussions with the Scottish Office and various interested bodies.
I wish to draw attention to this part of the reply. He understood that British Rail:
"cannot make a financial case for funding the scheme wholly themselves; nor can it show that sufficient additional funding would be available from other sources."—[Official Report, 17 June 1986; Vol. 99, c. 481.]
Turning to the significance of the link between those two answers, it is right to sketch in the history of the project and, indeed, the projects. So far as I am concerned, they have dogged my every step in the House of Commons over a period of close on 20 years.
On 22 July 1969, Dr. Dickson Mabon agreed to my request that a feasibility study of the Dornoch Firth should be made. That, I think, was one of the earliest references to the matter in the House. On 9 May 1972 in an Adjournment debate on the subject I deployed the arguments in favour of the road crossing at some length, and received a wholly negative reply from the then junior Minister at the Scottish Office, now the Secretary of State for Defence. I petitioned the House on behalf of my constituents in 1973, and pressed the Highlands and Islands Development Board to conduct an economic survey of its importance. In October 1975, that survey was completed. It was not until 1978 that Lord Kirkhill, then

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the Minister of State, Scottish Office, announced, on 10 March, the then Labour Government's decision in principle to build the bridge.
Following the change of Government in 1979, however, once again the whole process went into slow motion. The then Parliamentary Under-Secretary of State, now the Secretary of State for Scotland, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) said on 17 June 1981, in answer to a question from me, that the earliest date for the crossing being constructed would be the financial year 1985–86. That is almost exactly five years ago. I draw attention to the considerable slippage that there has been in the Government's best hopes since that time.
There was a more encouraging response from the Parliamentary Under-Secretary of State for Scotland, the hon. Member for Argyll and Bute (Mr. MacKay), whose presence at the debate I particularly welcome as a Member of Parliament representing the Highlands, if not as the most munificent of Ministers. In July 1984, in the course of a debate in the Scottish Grand Committee, he told me that plans were going ahead as fast as possible, and it was hoped that work might begin in 1986. We are well into 1986, and we are now told by the Secretary of State for Scotland in a written answer of 18 June that work will not begin in 1986 and indeed, we shall be very lucky to see any work begun before 1987–88. We are told that that is contingent upon funds being made available.
I hope that in replying to the debate the Minister will have something to say about the funding of the road bridge because that is a matter of considerable importance. There are too many escape clauses in the Secretary of State's written answer to me. I fear very much that there may be further slippage in what has been a sorry tale of delay from the beginning.
I turn now to the question of the associated rail bridge. This is a much more recent development. It is true that it was mooted in the initial economic study conducted by the Highlands and Islands Development Board back in 1975, and it did not find favour with the consultants who were employed by the Highlands and Islands Development Board at that time. The beginning of the modern proposal for the association of the rail bridge I think could be dated from the announcement of the then manager of British Rail, Scottish region, Mr. Christopher Green, on 17 January 1985, at a press conference held in Inverness following his first meeting with the Highlands Regional Council and the Highlands and Islands Development Board, that this was a proposal that British Rail favoured. In his statement he waxed lyrical about the prospects for the project and said that Sutherland could become a little Switzerland if it went ahead. He warned that if the major opportunity that he described was missed, the hour's difference between road and rail times could prove catastrophic for the line's future.
Mr. Green pointed out that the journey by rail would he 33 per cent. slower than the road journey if the rail bridge was not built. He said that he hoped that, as £300 million was being spent on the A9 between Perth and Wick there would be some investment in the railway. He said that there was a precedent for help from the Scottish Office and that the European Community looked favourably on equal treatment for road and rail.
That was a considerable launch for an exciting and imaginative proposal. I became involved in considerable discussion and a lightning exchange of letters with
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ScotRail in the spring of that year. I made it plain at all times that I had two major concerns about the rail project, and I aired them in public at a meeting I held in Lairg that year. The concerns were that the loop, which has become known as the Lairg loop, should be kept open for a residual service, and that the plan to build the rail bridge should not delay the construction of the road bridge, whose importance to the revival and regeneration of the economy I regarded as paramount. That was always clearly understood to be my position by ScotRail and the Minister.
I wrote to the Minister in the autumn of last year and he replied on 11 November. I raised the question of the timing and asked him to make the assumption that British Rail had found the money for the project. On that basis, I asked whether he anticipated the same time scale for a combined road-rail crossing of the Dornoch firth. He gave me an extraordinarily interesting answer. He understood my concern about timing, but also affirmed much more than I had asked. First, he said that his Department had been in close co-operation with British Rail on the possibility of a joint crossing of the firth. He said that his Department had told British Rail that proposals for a joint venture would be considered favourably provided that they did not delay unduly the proposed road scheme.
How favourably the Scottish Office has considered the project must now be called into question. Indeed, it is part of the purpose of this debate to elicit what is the Government's current attitude to the project in the light of what has happened this week.
Lest there be any doubt about where British Rail stood when the proposal was originally put forward, Mr. Christopher Green, the general manager of Scot Rail as it had then become, said, in a key letter in the history of this affair dated 29 April 1985, that he had had a very useful second round of meetings with the Highlands regional council and the Highlands and Islands Development Board in March, when they were able to summarise the results of their research.
Mr. Green made three points. The first was that the bridge could be built within the time scale of the road works for about £11 million; secondly, that if ScotRail did nothing it would lose 20 to 25 per cent. of its passengers when the new road opened, which put the whole future of the line at risk; and thirdly, that it might just be possible to achieve a financial payback over 30 years for rail cut-off option in isolation.
Those points are of considerable significance. They reveal that a modest sum—£4·5 million to £5 million—was being sought from the Scottish Office. It was clear from public statements that the European Community would meet 50 per cent. of the cost of the project, that the Highlands and Islands Development Board was prepared to meet a substantial tranche of the expenditure—it had said that publicly — and that the Highlands regional council would meet £1 million of the cost.
A modest sum indeed, therefore, was being sought from the Scottish Office, which, the Minister had assured me, was working in close co-operation with British Rail, and had told British Rail that proposals for a joint venture would be considered favourably.
Imagine my astonishment when a Department or Transport Minister announced last week that British Rail could not show that sufficient additional funding would be available from other sources. The funding from other sources that was missing was the £4·5 million from the

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Scottish Office. I exploded in rage and anger at the thought that there had been some deception. I do not know where the deception was and I make no charges against the Minister, who did not answer my question and who simply said that he had nothing to add to what he had already said.
This modest sum should be forthcoming for this extremely important project, which has enjoyed the support of the whole community and which, I believe, is supported throughout Scotland. The Scottish Council for Development and Industry said on 29 August last:
"We believe that the additional cost of a rail crossing on the agreed road bridge across the Dornoch Firth would be a sound investment in the infrastructure of the Highlands and would secure the future of the rail network north of Inverness."
Mr. Donald McCullum, the council's chairman, said:
"It would be a fitting conclusion if these objectives would come together. I hope that the Scottish Office and the Department of Transport will share British Rail's vision and will support this imaginative investment."
The reason for this debate is not to trawl over errors or mistaken decisions. It is to avoid further mistakes being made. Its purpose is to make the Minister aware of the importance of not foreclosing on the option of a rail bridge being built in the future. He and the Scottish Office must not accept for the road bridge a design, for which a competition begins in July, which would be incompatible with a rail bridge. I have asked the Minister to bear this in mind when issuing guidelines when tenders are invited.
I hope that the Minister will give me a positive response tonight, and I am grateful to him for coming to the House at this late hour and for agreeing to see me and my colleagues about this matter later in the week.
11.43 pm
The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): I am grateful to the hon. Member for Caithness and Sutherland (Mr. Maclennan) for raising the question of the Dornoch bridge and the future of the north line. I am particularly grateful for the chance to set the record straight in the light of a considerable amount of misinformation and ill-informed comment that has appeared in the press and elsewhere in the last week.
I realise that post-mortems serve only a limited purpose, but I hope I shall have time to comment on the future of the line to Thurso and Wick. In view of the remarks of the hon. Gentleman, perhaps I should like to begin by establishing categorically three crucial facts. The first is that, when ScotRail initially approached my Department in November 1984 with the suggestion that a rail element be included in the road bridge project, it was given a positive response and the offer of technical assistance.
It was made clear to ScotRail then, and again throughout the following year, that the assistance was being offered on two conditions. The first was that ScotRail should not delay the road bridge project, which the hon. Gentleman supports, and the second was that ScotRail would meet its own share of the costs. Given the ordinary way in which rail projects in Scotland are funded, I hardly think that it would have expected otherwise.
In other words, ScotRail was aware right from the start that in working up its proposals it should not expect any
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special Government funding for the project. I would mention, in passing, that British Rail already receives, of course, very substantial annual subsidies from Government and, in so far as the Dornoch crossing is concerned, if it had decided to go ahead it would have stood to save about £1·5 million by combining a rail crossing with the proposed road crossing, by comparison with the cost of building a separate rail crossing. I released last week the full text of a letter which I wrote to Mrs. Winifred Ewing, MEP on 23 April 1985 — and which was quite extraordinarily, selectively and partially quoted in the Glasgow Herald last Thursday to give a completely misleading impression — which made the position on funding quite clear.
The second point which I should like to establish clearly is that neither I nor my Department was ever approached formally by ScotRail with a request for special funding to be made available from Government. Nor did the Railways Board submit any investment proposal to my right hon. Friend the Secretary of State for Transport. It is true that there were continuing discussions between ScotRail officials and my own and on a number of occasions the difficulties about funding were raised. However, at no stage was ScotRail given any indication that special funding from the Scottish Office would be available.
Nevertheless, I did not in the course of consideration of this issue rule out any possibilities of special funding. If a detailed case had been made to me, I would have considered it on its merits. I made this abundantly clear when I wrote to the hon. Member for West Bromwich, East (Mr. Snape) in April 1986 when I said that I would be prepared to look carefully at any proposal that was submitted to me. But no case was submitted. ScotRail, or if not Scot Rail then the British Railways Board, was not prepared to back a scheme, the financial appraisal of which had by then become apparent. I will return to this point.
The third area in which clarification is necessary is that concerning possible European funding. Here, too, we were not prepared to consider recommending European regional development fund grant until we had a detailed application in our hands and could see whether or not it was plausible. It would have been quite wrong of us to have prejudged an issue without all the facts being available. But to obtain the facts we needed an application from ScotRail. We never received it. The Scotsman last Thursday quotes the Member for Caithness and Sutherland as quoting, in turn, European Community officials as saying that there were precedents for ERDF help for projects such as this. That is a self-evident point. Valuable ERDF support has been received in the past for transport infrastructure projects in areas such as the Highlands. As I am on record as having said at a much earlier stage in the consideration of this matter, the proposed Dornoch rail crossing would have appeared in principle a reasonable case for such assistance, but there is an important distinction between eligibility in principle and a satisfactory project on the ground worthy of support.
The case would have to be judged on its detailed merits, and it would have to be judged by the rules requiring value for money that apply in the case of ERDF grants as much as they do in any other case of proposed public expenditure. The European Community rules state that any infrastructure project costing more than 15

301
million ecus—which is approximately £8·5 million—has to be subject to an appropriate socio-economic benefit assessment. It is there for a purpose, to require sufficient information on the project to be available for a judgment on it to be made. The statements that have been made by hon. Gentlemen in this last week somehow seem to suggest that this could be ignored, or pre-empted. That is simply not the case, and I suspect that they know it. ScotRail too is very familiar with ERDF procedures. It is a frequent applicant to the fund through the Scottish Office, and is currently benefiting from ERDF grant for a number of projects in Scotland. It is therefore well aware of how the system operates. In the light of this, its repeated public statements that 50 per cent. funding of the proposed Dornoch rail crossing would be provided by the European Community were, to say the least, premature.
The hon. Member for Caithness and Sutherland mentioned the Highlands and Islands Development Board guarantees. As I understand it, the HIDB did not give any such undertaking. That was a misquotation on the hon. Gentleman's part. So why then did ScotRail never make a formal application for funding, either by my Department or by the European Community? The facts are plain, and rest in the figures which emerged at the end of ScotRail's consideration of this project. These are that the rail link—even allowing a benefit of some £1·5 million from combining it with the road bridge — would cost £12·7 million. That is ScotRail's own figure, and, in my view and that of my advisers, is likely to be a very conservative one. The purpose of the investment would have been to secure a revenue of some £120,000 a year—that is 20 per cent. of the present passenger custom which ScotRail estimates will be lost if the road bridge proceeds without the rail bridge. I emphasise that these figures are not mine — they are ScotRail's. It is self-evident from them that the investment could not have been justified on any sensible criterion. That is surely why no application for funding was made.
The hon. Gentleman has asked tonight that the options be kept open to allow a rail crossing to be built at a later date, if that proves possible. In the first place, I can give an assurance that the line of the route for the road crossing would not jeopardise any future proposals by British Rail to undertake a rail crossing similar to that planned, and reflected in its provisional order.
The engineering differences between constructing a combined road and rail bridge and a road-only crossing are such that, to design the road bridge on the chance that a rail component might be added later would involve substantial additional expenditure which could not be justified. If, however, British Rail decided to proceed with its scheme as a separate rail crossing in the future, my Department would be prepared to make available to it the results of the substantial amount of preparatory work, including geological and soil investigations, carried out by consulting engineers for the road bridge. I hope that that might be considered helpful.
I should explain why the proposed road bridge across the Dornoch Firth is now proceeding without the rail component. There is no reason now to hold up the road bridge, which shows a positive rate of return on the proposed investment in it. It appears unlikely in the extreme, from ScotRail's figure, that any delay in building the road bridge would lead to any different decision about the rail crossing.
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The hon. Member has himself gone on record on a number of occasions, including tonight, to say that the road bridge must not be unnecessarily delayed. Indeed, in July 1984, in the Scottish Grand Committee, he was attacking the Government for being dilatory in building the road bridge. Not a mention then on his part about concern for the railway line, or the need for a rail element. Indeed, the question of the railway did not emerge until some months after the road bridge proposal had been confirmed, and then it did not emerge from the hon. Gentleman. All he wanted then was the road bridge, and he wanted it fast. In saying that, I am sure that he was reflecting the views of almost everyone in the area, who recognised the benefits to be derived from the proposed road bridge. The proposed timetable, subject to the availability of finance and the satisfactory completion of statutory procedures, is for construction of the approach roads to begin in the financial year 1987–88 with construction of the bridge structure itself to follow in 1988–89. I do not believe that the hon. Gentleman is asking me to let this timetable slip, especially after his previous strictures.
I should like to say something about the future of the north line. Hon. Members will by now be aware that ScotRail had made it clear that it has no plans to close the line north of the Dornoch Firth as a result of the decision not to proceed with the rail bridge project. I am aware that that worried the hon. Gentleman and I am sure that he was as pleased as me about ScotRail's announcement that its planned improvements on the line remain unaffected by this decision. It is important to bear in mind that there will be no change in the railway's competitive position vis-a-vis bus operators until the road bridge is complete. ScotRail therefore has several years — until at least 1991—to prepare itself for any increased competition that the road bridge will bring.
Also, although the road bridge will undoubtedly make rail services less competitive on timing than at present, they will still have a number of other competitive advantages which they should be well able to exploit. Many people quite simply prefer to travel on trains, particularly in winter. There must be considerable opportunities for exploiting the tourist potential of the line, especially with the introduction of the new Sprinter trains, which I understand is shortly to take place. There is no doubt that a lot can still be done to market this service, and I am sure that ScotRail will do so with the enthusiasm that it has recently demonstrated on other parts of its network.
Returning finally to the matter of the proposed rail bridge, I hope that I have shown that ScotRail had every possible opportunity to establish a case for its proposal. The reasons why it has been unable to do so and has decided not to proceed with its proposals are patently self-evident. Its reasons are shown in the figures that I mentioned earlier. It is important that the people of Caithness and Sutherland are about to get a splendid road bridge which will improve access for them and contribute to the economic welfare of their area. They have pressed for that. They will also enjoy a considerable improvement in the rail service available to them, both in terms of comfort and reliability, through the new investment that ScotRail plan. I am confident that this offers a real hope for the long-term future of the line as well as for the prosperity of the region.

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Obviously, everybody would always like to see the best project available, but, in terms of the figures that I have given the House, the decision taken by British Rail was
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understandable. I hope that misrepresentations and misinformation similar to those that were put out about the project during last week will now cease.
Question put and agreed to.
Adjourned accordingly at four minutes to Twelve o'clock.

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Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Saint Albans.

Severn Estuary Barrage Study
Lord Sandys: My Lords I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the latest position on the River Severn barrage project, and when their response to the report on the project is due to be announced.
Lord Brabazon of Tara: My Lords, Her Majesty's Government have recently received the report of the Severn Tidal Power Group which has been engaged for the last two to three years in a study, partly funded by Government, to assess the viability of a private sector barrage across the Severn estuary. The report is comprehensive and detailed. Consultations are taking place with the Severn Tidal Group and other interested parties before a response can be made.
Lord Sandys: My Lords, while I thank my noble friend for that interesting Answer, can he assure the House that it is still the Government's view that the potential of the Severn's tidal power is as great as any in the world and indeed greater than the project brought to a successful conclusion at La Rance in France?
Lord Brabazon of Tara: My Lords, yes, indeed. This is potentially the second largest tidal barrage in the world and is certainly larger than that in France. There is one in Nova Scotia which is presently the largest, but this would be the second largest in the world.
Lord McNair: My Lords, can the noble Lord tell me whether the report which the Government have received refers to the shorter barrage or the longer one from Weston-super-Mare?
Lord Brabazon of Tara: My Lords, this would be the near-Weston-super-Mare to near-Cardiff barrage.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that it is generally agreed that this is a very important project? Does he recall that in another place on 18th April his honourable friend in answer to a question from Mr. David Mudd, said that the report would be published shortly? It is now 24th June, nine weeks later. Can the noble Lord say when we are likely to see the publication of the report, and will a copy be placed in the Library?
Lord Brabazon of Tara: My Lords, I am afraid that my answer is still "shortly", but I hope that the period will be shorter than the one mentioned the last time such a question was asked. I shall indeed ensure that a copy of the report is placed in the Library.
Lord Cledwyn of Penrhos: My Lords, perhaps I may follow up my noble friend's question and the noble Lord's reference to "shortly". Does the noble Lord recall that four-and-a-half years ago, in February. 1982, we had a debate in this House on the Bondi Report and his noble predecessor, on winding-up that debate, said, if I recall, that the Government would shortly be reporting after they had considered the issues? How long does it take for this Government to make up their mind—four-and-a-half years? In view of the great concern and interest in Wales in this project and the high unemployment in the Principality, and bearing in mind that it is thought that if this project were put in hand, it would provide several thousand jobs, will the noble Lord be a little more specific and be good enough to accelerate the response to the report?
Lord Brabazon of Tara: My Lords, in fact I do not think that the noble Lord will have long to wait. Following the publication of the Bondi Report, the Government promoted the Severn Tidal Power Group's report, which was half-funded by the Government. Originally the group was expected to report within two years. In fact, the report was published in May, 1983; so it has taken slightly over three years. However, one must remember that it is an extremely large project and, as the noble Lord, Lord Cledwyn, said, very substantial job opportunities are linked to it.
Lord Sandys: My Lords, does my noble friend agree that hydrologists and engineers have been working on this since the first design in 1849?
Lord Brabazon of Tara: My Lords, I am sure that my noble friend is right, but I am afraid that my memory does not take me back quite that far.
Lord Underhill: My Lords, does the noble Lord appreciate that this matter has many facets? Therefore perhaps he will forgive a third member of the Opposition Front Bench asking a question. My question has transport connections. As a review concerning a second Severn crossing is under consideration, have the two groups been liaising?
Lord Brabazon of Tara: My Lords, the report produced by the Severn Tidal Power Group will concentrate on the energy-producing aspects. However, in their response the Government will have to take into account not only that but the environ-mental impact on the area, plus of course the possibility of a road crossing, which is what I think the noble Lord, Lord Underhill, was referring to, and also of course the possible effects upon recreation and tourism.
Lord Moran: My Lords, will the Government satisfy themselves that, if this barrage is built, migratory fish going up or down the Rivers Severn and Wye will be able to pass through the barrage without excessive loss, and that consequently there will not be severe losses to the stocks in those and other rivers?
Lord Brabazon of Tara: My Lords, I am sure that that is one of the matters which will be taken into consideration.

ILEA Teaching Pack
2.43 p.m.
Lord Harris of Greenwich: 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 response they have received from the Inner London Education Authority to the letter from the Department of Education and Science concerning the teaching pack Auschwitz: Yesterday's Racism.
The Earl of Swinton: My Lords, as my noble friend Lady Hooper said in a Written Reply to the noble Lord on 3rd June 1986, the authority accepts that parts of the teachers' guide to the pack are inappropriate and has undertaken to revise them.
Lord Harris of Greenwich: My Lords, I thank the noble Earl for that reply. Given the deplorable nature of this particular piece of propaganda, relating, as it did, to the death of many millions of Jew in concentration camps, to the Prevention of Terrorism Act, and the dispute over GCHQ, may I ask him whether the Inner London Eucation Authority has now agreed to withdraw this teaching pack from schools pending the revisions which I understand are now being made to it?
The Earl of Swinton: My Lords, I understand that ILEA has said that it will not issue any more copies of the pack until the text has been revised. The department has written to the authority suggesting that the pack be withdrawn meanwhile if the necessary amendments cannot be made quickly, and the reply to that has yet to be received.
Lord Orr-Ewing: My Lords, can my noble friend go a little further and say that this pack is so monstrous that it should be withdrawn? It is not a question of not issuing any more. If you have sinned and been found out, you should be redeemed by withdrawing all the copies which now exists in our schools.
The Earl of Swinton: Yes, my Lords; I agree entirely with my noble friend that this pack is monstrous, and that is why the department has written to the authority suggesting that the pack be withdrawn.
Lord Harris of Greenwich: My Lords, if the noble Earl or the department do not receive a reply very soon indeed from the Inner London Education Authority, can we take it that the Secretary of State will make it clear that he expects this guide to be withdrawn forthwith, and that if it is not he will consider what other steps to take?
The Earl of Swinton: My Lords, I think that the noble Lord would have me answer a hypothetical question. It would not be right to do so because matters are not helped by conjecture, and the Government in fact decide their actions on the basis of the circumstances of an actual case. They would need to know, for example, if matters fell out as the noble Lord's question implies, why it was that ILEA has decided to act in that way. What I can say, though, is
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that in such an event we would scrutinise very carefully indeed the circumstances of the case and the authority's reasons. I can also add that if we do not receive a reply in the very near future we shall be taking up the matter again with ILEA.
Lord Taylor of Blackburn: My Lords, is the Minister aware that this is not the same authority to which the letter originally went? Since the original letter was sent there has been an election and a new authority has been elected. Will the noble Earl give it time to settle in first?
The Earl of Swinton: My Lords, the letter went on 29th May. As I understand it, even if elections take place it is still the same authority, though the personalities may have changed. We have given it a lot of time. By the same expression, we do not expect it to take very much longer to answer.
Viscount Trenchard: My Lords, my noble friend has answered the question I was going to ask, which was the date at which the department had written to the Inner London Education Authority. In view of the fact that no reply has been received, how much longer is my noble friend going to wait before taking further action? Would he not agree that his last but one answer was worthy of the very best of Sir Humphrey Appleby?
The Earl of Swinton: My Lords, I should be delighted to be compared with Sir Humphrey. The answer to my noble friend's question is: not very much longer.
Lord Elwyn-Jones: My Lords, would it be possible for a copy to be put in the Library of the House? The word "Auschwitz" has terrible memories for so many of us.
The Earl of Swinton: My Lords, I am not quite sure what the noble and learned Lord is asking for a copy of.
Lord Elwyn-Jones: My Lords, a copy of the document which has now been the subject of question-ing for the past 10 minutes.
The Earl of Swinton: My Lords, I shall undertake to the noble and learned Lord and other noble Lords to have that placed in the Library forthwith, but I think it may horrify some of your Lordships.
Lord Elwyn-Jones: My Lords, I did not mean to be discourteous to the noble Earl. We are old friends.
Lord Mulley: My Lords, without intervening on the merits of this case may I ask the noble Earl the Minister to at least bear in mind the limited powers that the Secretary of State has in all these matters? When I was involved in a dispute with a local authority which six weeks after an election had not met to elect its chairman, I was turned down by the House of Lords for wrongfully interfering with that local authority.
The Earl of Swinton: My Lords, the noble Lord is not the first person to have had trouble with this noble House.
Lord Harris of Greenwich: My Lords, would the noble Earl agree that as well as putting the original document in the Library he will also put the revised text into the Library at the same time?
The Earl of Swinton: My Lords, I undertake that when it is produced, that will be done.

School Expeditions: Safety Procedures
2.48 p.m.
Baroness Sharples: 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, in the light of the Land's End tragedy in 1985, advice is being given by the Department of Education and Science to schools to help improve safety procedures during school visits and expeditions.
The Earl of Swinton: My Lords, in March of this year the Department of Education and Science issued a bulletin (Safety in Education Bulletin No. 4) to local education authorities and to schools, containing general guidance to all involved with the organisation of outdoor pursuits and school expeditions. The bulletin supplemented previous departmental guidance on the subject and in particular drew on lessons arising from the Land's End tragedy.
Baroness Sharpies: My Lords, I thank my noble friend for that reply, and I congratulate his department on this extremely good bulletin. Will my noble friend please assure the House that expeditions and visits have not been restricted since this disaster last year? Will he also tell us whether all schools have received this bulletin?
The Earl of Swinton: My Lords, I am glad to say that I think that schools continue to produce a number of educational and outdoor expeditions. I understand that the numbers are not in fact falling off. Copies of the bulletin have been distributed widely through LEAs and other education bodies who are free to reprint the guidance to schools and colleges without copyright restriction. I cannot answer my noble friend as to whether every school in England and Wales has received a copy of it.
Baroness Masham of Ilton: My Lords, does my noble kinsman agree that it would be most useful if the teachers and children in all schools had first aid classes, especially before undertaking expeditions?
The Earl of Swinton: My Lords, I think that that would be a good thing. In fact Her Majesty's inspectors and the department concentrate on getting the right advice out to schools to see that these awful accidents do not take place so that first aid is not necessary.

Test Ban Treaty: Soviet Offer
2.50p.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
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The Question was as follows:
To ask Her Majesty's Government why they have not accepted Mr. Gorbachev's offer to agree to verification by seismic monitoring stations inside the Soviet Union as part of a comprehensive test ban treaty.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, the qualified nature of such offers would not provide adequate levels of verification for a comprehensive test ban treaty.
Lord Jenkins of Putney: My Lords, while I thank the noble Baroness for that Answer may I ask her why the Government have not pursued the matter further? Why did they block all measures and all proposals to move towards negotiations in Geneva? Why did they even block an Australian compromise proposal that a draft should be drawn up to outline the objective negotiation? Why do the Government apparently not want to discuss this subject? Is the position really that they do not want a comprehensive test ban?
Baroness Young: No, my Lords, that is not the position. I have made clear on this occasion and on many others in your Lordships' House that the crucial question is one of verification.
Lord Mellish: My Lords, will the Minister be good enough to reaffirm that last July the Government put forward proposals for verification? I should like to know what the Soviet reaction was to that? What have the Soviets done about our proposals?
Baroness Young: My Lords, I am grateful to the noble Lord, Lord Mellish, for raising that point because last July the United States proposed an exchange of test site observers and invited Soviet observers to visit a United States test site. This goes to the heart of the issue, which is verification, and it is a matter of much regret that the Soviet response so far has been dismissive.
Lord Mayhew: My Lords, does the noble Baroness recall her reply to a recent parliamentary Question—that if negotiations were to be resumed, questions other than concerns over verification would need to be addressed? Will she say what these other questions are and whether they include the need of the American or British Governments to make further tests?
Baroness Young: My Lords, I recall the Question that the noble Lord asked a little while ago. The other matters which would have to be dealt with are scope, duration and compliance; but the key issue is verification.
Lord Cledwyn of Penrhos: My Lords, will the noble Baroness agree that international scientific advice is that verification techniques are now extremely accurate? Secondly, will she confirm what I thought she said before—that a comprehensive test ban treaty is one of the Government's clear objectives?
Baroness Young: My Lords, we should like to see a comprehensive test ban treaty. With regard to the question of verification and recent scientific advances, to which the noble Lord referred, and indeed the claims that verification is not a problem, particularly in the light of advances in seismology, the Government do not agree, and we do not believe that the recent arguments advanced invalidate the conclusions of a United Kingdom paper presented to the Conference on Disarmament in July 1985. For example, these arguments concentrate largely on detection, ignoring problems of discriminating between explosion and earthquake.
Lord Mellish: My Lords, will the noble Baroness say whether the Soviet Union gave any reasons why they did not take any action or refused to consider our proposals of last July?
Baroness Young: My Lords, they have not indicated their reasons.
Lord Mayhew: My Lords, may I ask the noble Baroness to clarify her reply to me just now? Was she saying that questions other than verification, which would need to be addressed if negotiations were resumed, would not include the need of the United States or British Governments to make further tests?
Baroness Young: My Lords, what I said to the noble Lord on the question that he asked me about other issues that have to be raised besides verification on a test ban treaty related to difficult questions such as the scope of the treaty, its duration and its compliance. But the key issue is verification.
On the other point that the noble Lord asked about concerning testing—he has asked about it several times—we are committed to making progress. We are committed to maintaining the effectiveness of our nuclear capabilities; but it is a hypothetical question at the present time to ask what would happen under a test ban treaty.
Lord Jenkins of Putney: My Lords, but the question remains: why are the Government even refusing to examine the Soviet proposals for on-site seismic verification?
Baroness Young: My Lords, among the most recent developments is an agreement only in principle, though it is not yet confirmed, of the Soviet acceptance of United States monitors. But the Russians apparently are prepared to accept non-official American scientists to start stations in the Soviet Union but are not prepared to talk to the United States Government scientists about verification. The Soviet proposal suggests that non-official US scientists should be admitted to the Soviet Union. The Americans are prepared to agree that Soviet Government scientists should be admitted to the United States. Clearly this is a difference of view, but we hope that there might be a resolution of it.

Business
2.56 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Davidson will, with the leave of the House, repeat a Statement that is to be made in another place on restriction on the movement of sheep.
It may be for the convenience of the House if I announce that the Committee stage of the Wages Bill will be adjourned at approximately 7.30 p.m. for approximately one hour and that during this adjourn-ment three Representation of the People Regulations and the Committee stage of the Consumer Safety (Amendment) Bill will be taken.

Bournemouth-Swanage Motor Road and Ferry Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
Plymouth City Council Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Private Bill Procedure
The Lord President of the Council (Viscount Whitelaw)The Lord President of the Council (Viscount Whitelaw) rose to move, That this House do concur in the resolution communicated by the Commons in their Message of Wednesday last.
The noble Viscount said: My Lords, in moving this Motion standing in my name on the Order Paper I should briefly explain its purpose. The House of Commons agreed last week that it would be desirable to appoint a Joint Committee of both Houses to consider the whole question of Private Bill procedure and in particular whether there were any ways in which certain matters now requiring the promotion of a Private Bill—for example, those concerned with the construction of works—might be dealt with other than by private legislation. Concern has been expressed recently, particularly in the House of Commons, but also in your Lordships' House, about certain aspects of what I will broadly call private legislation procedure. These arose, for example, in the Joint Committee considering the question of the Okehampton bypass and in the Joint Committee considering the Edinburgh western relief road.
It is now some 30 years since Private Bill procedure was last considered, and the noble Lord the Chairman of Committees, following discussion with the Chairman of Ways and Means, agrees that it would now be appropriate for both Houses to set up a Joint Committee to examine these issues and to consider whether any changes might be made. I hope therefore that your Lordships will agree to this Motion, which will lead to the formation of a Joint Committee. In due course the Committee of Selection will be asked to choose those Peers who will be appointed to the

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committee and who will face what I know will be a formidable inquiry. My Lords, I beg to move.
Moved, That this House do concur in the resolution communicated by the Commons in their Message of Wednesday last—(Viscount Whitelaw.)
On Question, Motion agreed to, and it was ordered that a Message be sent to the Commons to acquaint them therewith.

Gas Bill
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order—

Clause 1,

Schedule 1,

Clause 2,

Schedule 2,

Clauses 3 to 9,

Schedules 3 and 4,

Clauses 10 to 15,

Schedule 5,

Clauses 16 to 60,

Schedule 6,

Clauses 61 to 67,

Schedules 7 to 9,

Clause 68.—(Lord Belstead.)

On Question, Motion agreed to.

Safety at Sea Bill
Read a third time.
The Earl of Lauderdale: My Lords, I beg to move that this Bill do now pass. Before we leave this matter, it would be churlish not to congratulate the promoter of this Bill in another place, the Member for Banff and Buchan, Mr. Albert McQuarrie, for his ingenuity and resourcefulness in bringing it forward. His was the first work in drafting; he pursued it through, and one would hope that such a useful Bill, which after all carries the mantle, as he himself does, of the noble Lord, Lord Boothby, will be remembered as the McQuarrie Bill. I beg to move.
Moved, That the Bill do now pass—(The Earl of Lauderdale.)
On Question, Bill passed.

Health Service Joint Consultative Committees (Access to Information) Bill
Read a third time and passed.
Children and Young Persons (Amendment) Bill
Report received.

Wages Bill
3.2 p.m.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Trefgarne.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES (Lord Aberdare) in the Chair.]
Clause 1 [General restrictions on deductions made, or payments received, by employers]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 1:
Page 1, line 9, at end insert ("is reasonable in amount having regard to all the circumstances of the case and").
The noble Lord said: Amendment No. 1. in my name and those of my noble friends, comes to a central issue in a Bill which will take away a protection for a very large number of working people. With the leave of the Committee, I shall move this amendment and speak also to Amendment No. 56. It is my understanding that the noble Lord, Lord Rochester, will speak to his Amendment No. 2, in the course of the same debate.
This central issue is that just 90 years ago the Truck Act 1896 protected most deductions from wages on broadly a two-pronged basis. First, no deduction could be made unless there were a clear contractual base for it in a written contract or a notice in writing at the workplace. Secondly, the 1896 Act required that the deductions from wages should be fair and reasonable. Of course, it is true that those provisions applied only to manual workers and it has long been a non-controversial point of policy in many quarters that the division between manual and non-manual workers should cause this aspect of the law to be changed; although, as we shall see, the Government set up in this Bill a new dichotomy between two different types of worker.
The question is how to amend the law. Should it be amended to apply to all workers no protection or a protection based only on a contract of employment; or should it retain the second element which has been there—and indeed has been there as a crime— since 1896: that it is wrong and illegal to deduct unfair and unreasonable amounts from the wages of a worker? When the noble Lord the Secretary of State spoke to the House on Second Reading on 6th June he gave this explanation of this part of the Bill at col. 1205 of Hansard. He said:
"The Truck Acts also include statutory controls on deductions from wages. The Government have decided to bring those up to date. That is necessary for several reasons. The controls are uncertain in their effect; they apply only to manual workers and, in part, to shop assistants; they establish criminal offences to deal with what are essentially contractual disputes between workers and employers; and they are designed to deal with problems that existed in 1896 not 1986.".
We agree that the manual worker division should be revised; we can see the case is there to treat the matter in the civil law as against criminal offences, although it depends upon how you do it. We dispute that there has been great uncertainty in this part of the law. No evidence has ever been brought forward to suggest it. We certainly dispute the suggestion that the problem, is for 1896 not 1986. All the evidence is the other way. The Secretary of State appeared not to know that there is a mass of evidence that deductions from workers' wages play a major and an increasing part in the lives especially of the low paid, the ill-organised, the isolated and the weak groups of workers in our society.
Employers in many areas—certainly not in all but in many areas such as garages—have extended these deduction practices beyond anything that could remotely be called reasonable. The evidence of the Citizens' Advice Bureaux in regard to that Government's consultative document gave many examples. The Government, I am sure, would not write off the evidence from such a responsible body. They told them about long-distance lorry drivers who had large deductions made from the month's wages for expenses without reasons being explained. The other cases included a young man of 17, a forecourt attendant, on duty when a group of children stole sweets from the shop. He could not leave the shop unattended as that risked even worse fault on his part. That whole loss was deducted from his wages, leaving him £5 living expenses for the week.
The trade union movement knows of these practices. The Union of Shop, Distributive and Allied Workers has spoken of employers increasingly introducing the power to deduct for shortages into the contracts of workers if it cannot be resisted. The idea that this is a problem for 1896 and not 1986 is defeated even by the law reports. In the case of Sealand Petroleum Company and Barratt, in this year's All England Reports, in the second volume, at page 360, noble Lords will find that an 18 year-old lad was taken on after an afternoon's trial at a self-service petrol station, with a statement in writing which said that he was to be liable for any loss of cash, stock or other equipment as a result of his breach of contract or other duty or any negligence; and that that amount could go immediately from his pay. That was interpreted as meaning, for example, that if he did not take the vehicle number of any customer who did not pay for the petrol at the self-service station, that amount would be deducted.
This came to the court under the 1896 Act. He had to look after the shop and the self-service station and he had to look after the car-wash bay, which was difficult to see from where he primarily worked. The Divisional Court of the Queen's Bench Division had no doubt whatever that this could not be supported under the 1896 Act. Mr. Justice Nolan said that the,
"contract afforded no adequate means by which the respondent could check or supervise the calculations of deficiencies for which he was to be held responsible".
He could not get near the till when it was checked.
"Thus his prospects of being able to mount a successful challenge… by complaint would be negligible."
He was not trained.
"He was, it must be remembered, 18 at the time… and was taken on after only one afternoon's trial."
The judge concludes that this contract,
"gave a wholly arbitrary power to the employer within the limits of the total loss ascertained by the employer as to the amount of the fine."
Lord Justice Watkins said that it,
"contains a very one-sided obligation. It is an obligation on the employee to accept the consequences of whatever it is the employer determines shall be the effect of his finding a deficiency in the takings at the end of a working day".
As I say, the evidence is there that this is very common in garages. It is quite common in other parts of retail employment, but it is also increasingly found in employment which is not retail and not in garages, although the worst practices appear to be in many garage chains. The essence of the problem is that these deductions fall hardest on employees who are the most vulnerable. They are the least unionised and the least protected in any other way. As the citizens' advice bureaux evidence put it,
"You find workers who will take almost any terms in the labour market of today."
Having got a weak labour market, as we like to call it in rather abstract terms—a market in which workers like these are open to exploitation—how should we amend the law? Should it be by making sure that every deduction is provided for in the contract? Yes, but it has to be said and it has to be understood that in regard to the worker in a labour market in the kind of situation Anthony Barratt was in on that garage forecourt, consent by contract is to a large extent a fiction. Consent by contract is in fact submission in order to get a job at all.
The Truck Act of 1896 was based upon debates, including debates in your Lordships' House, almost 90 years ago which were about precisely this problem although no doubt the social context was different. I do not know whether the problem was more or less widespread: perhaps it was more. But it was not about the issue that we are debating today; namely, whether to take away (as this Bill would) the protection of reasonableness as a residual way of stopping these arbitrary practices. The debate was whether or not deductions from wages should be prohibited altogether or whether there should be a limit assessed by the standards of reasonableness. So the whole axis of the debate today is one step backwards on the Bill which is before us and which this amendment would only bring back to the debate of 1896 and go for the same solution. That solution has not proved wholly unsuccessful. It has not been wholly successful, partly because, founding itself on a criminal basis, it was necessary to have a wages inspectorate which enforced it beyond the resources which the wages inspectorate has usually had, especially during the past few years.
But the idea that there should be at least these two parts of possible protection for workers of this kind seems to us the most elementary protection for which one can ask. Nor is it true that our law of contract does not know of this concept. Indeed, not only in the Unfair Contract Terms Act of 1977 but in many other statutes—and in particular in the Act of 1977—the idea that certain contractual terms should not be permitted to operate according to their tenor on the face of the contract but should be moderated by the

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court by some concept of what is reasonable is now established part, certainly of consumer transactions and of many other areas of the law contract.
What we are asking for in this amendment is that workpeople in this position should not be made responsible for possible losses from thefts by customers or thefts by other employees; or as a result of defects in stock control mechanisms which we shall come to later today; or by failure to train workers like Anthony Barratt (who had only an afternoon's training) or certainly by failure of management supervision. No doubt there are failures all round them; but there are these deductions of amounts for which they are not, in anyone's moral perspective, themselves responsible, other than on the paper which they have had to take to get the job.
The matter goes further because some of the practices are really scandalous. There are garage chains—and Heron Garages appears to be one—which set a ratio of oil sales to petrol sales on past experience, and if the petrol sales then come to so much on a check they assume that the oil sales should have come to the same ratio; and if there is some discrepancy to the disadvantage of the attendant, they deduct amounts from wages on that basis. That will be in the contract or the document of at least most of those workers.
However, is it right that there should be nothing else in the law to protect them in that situation? We say that for the employee and indeed the manager—because this matter can go to the managers of such retail outlets—there should be some protection. This is for all workers in respect of the amount that can be taken from the wage upon which not merely the worker but the family at home depend. The family expects a weekly wage; and if the worker is responsible for some specific misconduct, that is another matter. But the broad test should surely be what we have had for 90 years: that the family expectation of the wage should be limited by what is in the contract and by what is reasonable. Take away the second protection, leaving various avenues of exploitation for those who wish to exploit—the bad employers who may well be in the minority but who exist in terms of the practices going on now—and the workers are at a double disadvantage. They are the most vulnerable and the weakest. That is what this Bill would do.
It is our great hope that the Government will at least say they will think again about putting into this Bill a protection and not mark themselves as a government in favour of unreasonable deductions. This amendment asks only for that which is reasonable, and I beg to move.
Lord Rochester: It may be for the convenience of the Committee if I speak now, with leave, to Amendments Nos. 2, 13, 70 and 112.
Lord Campbell of Alloway: Would the noble Lord forgive my interrupting him? I am very grateful to him. There is an objection because they are totally disparate considerations that arise under this Amendment No. 1 and on Amendments Nos. 2, 13 and 70. It would import, with the greatest respect to the noble Lord, an intolerable degree of confusion if he were to try to deal with two wholly separate and
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distinct concepts at one and the same time. If the Committee is with me on this, I would respectfully suggest that we deal with the amendment of the noble Lord, Lord Wedderburn, and then in due course deal with the other set of amendments.
Noble Lords: Hear, hear!
Lord Rochester: I am in the hands of the Committee. I had understood that there was a measure of agreement that this was the procedure which should take place. Perhaps the noble Lord, Lord Trefgarne, would help us on behalf of the Government.
Lord Trefgarne: I hope my noble friend will feel able to agree that we should proceed in the way proposed by the noble Lord, Lord Rochester. As my noble friend will appreciate, considerable discussions go on through the usual channels as to how we should handle these matters; and if they fall apart as soon as we get to the Floor of the Chamber very often we find ourselves considerably detained. So I hope my noble friend, at least on this occasion, will feel able to agree that we should discuss the amendment of the noble Lord, Lord Rochester, with the one proposed by the noble Lord, Lord Wedderburn.
Lord Campbell of Alloway: I am obliged to my noble friend the Minister. Quite clearly, the usual channels have messed this one up, but if they have done it, they have done it and we had better get on with it.
Lord McCarthy: I think it was our intention that, although the noble Lord, Lord Rochester, could speak to both amendments, there would be a separate vote on our amendment. We intend to press our amendment to a separate vote. Therefore, if the noble Lord were in a position in which he wanted to support one rather than the other, he would in the end be able to do so.
Lord Rochester: It was worked out and that is why I said at the outset that it was my intention to speak to these amendments, rather than at this stage to move any. Like the amendment which has just been moved by the noble Lord, Lord Wedderburn, the amendments to which I referred—perhaps for the convenience of the Committee I should just repeat that they are Nos. 2, 13, 70 and 112—are aimed at ensuring that deductions from wages are reasonable, but they set about the task in a way different from that proposed by the noble Lord, Lord Wedderburn.
At the Second Reading of the Bill I expressed the view that there was a strong case for a code of practice to be drawn up by the Advisory, Conciliation and Arbitration Service after consultation with other interested parties to facilitate the implementation of Part I of the Bill. In response the noble Lord, Lord Trefgarne, assured me that guidance material would be produced before Part I commenced and added that ACAS was also aware of the suggestion that it should produce advice on aspects of the Bill.
Since then I have come to feel that the area which could most usefully be covered by such a code is that

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of deductions from wages, particularly in relation to the form which the relevant term in the contract of employment should take. Indeed, it was a discussion in another place of the need to build on good practice in this matter which led the Under-Secretary of State to say, first, that he should perhaps be responsible for recommending that ACAS should produce guidance on it and then, more specifically, that it would be a good idea if ACAS was to propose a draft form of contract.
Between them, the amendments to which I am now speaking seek to take the matter a little further, first, by providing in Amendment No. 2 that deductions from wages should accord with a code of practice; secondly, by requiring the Secretary of State—that is, under Amendment No. 13—to issue such a code prior to the date on which Part I of the Bill comes into force; and, thirdly, by stipulating in the new schedule referred to in Amendment No. 70 that the objective of the code should be to ensure that deductions from wages are fair and reasonable. The terms of the proposed code of practice are set out in the schedule and they follow closely Section 3 of the Employment Act 1980, except that in this case the issuing of the code by the Secretary of State would be mandatory rather than, as in 1980, permissive.
Initially, as under the 1980 Act, the Minister would have to consult ACAS, publish a draft code, consider representations made to him about the draft, and have the draft approved by both Houses of Parliament. Once it was introduced, failure to observe the code would not render an offender liable to proceedings, but in any proceedings before a court or industrial tribunal the provisions of the code would be admissible in evidence and could be taken into account in determining any relevant question. Amendment No. 112 is consequential in simply enabling the process of introducing the code to begin at the time the Bill is passed, rather than waiting until the rest of Part I of the Bill comes into force.
If I may turn to the amendment which has been moved by the noble Lord, Lord Wedderburn, it follows from what I have so far said that I am in sympathy with its objective. As he said, the Bill as it stands does not even uphold the existing statutory safeguards, particularly those which were a feature of the Truck Act provisions of 1896. In general, the contract of employment should, in my view, be regarded as inviolate—that is, as between the employer and the employee—but the principle that deductions from wages should continue to be reasonable in amount seems to me to be of such basic importance that it should be treated as an exception to the general rule. My only doubt is whether a requirement that the deduction should be,
"reasonable in amount having regard to all the circumstances of the case",
to quote the terms of the amendment just moved by the noble Lord, Lord Wedderburn, would of itself prove effective.
In two recent well publicised cases concerning petrol station attendants—the noble Lord referred to one of them—the courts have done their best to interpret the law as it now stands, but in doing so they seem only to have succeeded in adding to current doubts about its
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application. It appears questionable, therefore, to me whether the insertion in this subsection of a test very similar to the one now in operation would serve its intended purpose.
The aim of my amendment is to see that it has a better chance of doing so by providing additionally for a code of practice containing practical guidance on this subject. In my view this would both diminish present uncertainties and produce a welcome measure of consensus in what would otherwise remain a contentious area. Indeed, I have enough faith in ACAS to feel that if the task of drawing up such a code were entrusted to it, the outcome would prove generally acceptable. I hope, therefore, that the Committee will support the introduction of a code of practice of the kind proposed in this amendment to facilitate implementation of this part of the Bill. I shall not move this amendment, but will leave the matter there for the time being.
3.30 p.m.
Lord Campbell of Alloway: May I first speak to Amendment No. 1 and then, with the Committee's leave, to Amendments Nos. 2, 13, 70 and 112. I speak in opposition to both amendments in the names of the noble Lord, Lord McCarthy, and the noble Lord, Lord Rochester. On Amendment No. 1, I have listened with that degree of attentive awe which any practitioner owes to a law don, but I fear that I am unable to follow the logic of the argument of the noble Lord, Lord Wedderburn, other than on the basis that, as he said, consent by contract has become a fiction—a proposition with which I hope your Lordships' Committee will not agree.
Amendment No. 1 is open to serious objection because it has to be seen in context with Amendment No. 4, which seeks to excise paragraph (b) of Clause 1(1) from the Bill, and unlike the amendments in the name of the noble Lord, Lord Rochester (Amendments Nos. 2, 13, 70 and 112), it does not impose an unacceptable qualification on Clause 1(1) (b); it simply seeks to excise it.
There are three grounds of objection to Amendment No. 1 moved by the noble Lord. First, there is the imposition of a wholly unacceptable qualification on subsection (1) (a).
Lord Wedderburn of Charlton: When we come to the amendment concerning Clause 1(1)(b) I shall be happy to explain to the Committee and to the noble Lord its purport, but at the moment he should not assume that its relationship is either alternative or otherwise to the amendment we are discussing.
Lord Campbell of Alloway: I am assuming that it is both, because it is either one or the other. If noble Lords will be good enough to look at Amendment No. 4 they will see that it excises Clause 1(1) (b). If it excises Clause 1(1) (b), in those circumstances the objection is to excision, because who better than the worker to judge in this day and age whether he should signify his consent? Therefore it is objectionable on that ground. If it does not excise Clause 1(1) (b) it is objectionable because if Clause 1(1) (b) is left in it imports a wholly impracticable qualification affecting the operation of

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Clause 1(1)(b). I know the noble Lord intervened to assist, but, with respect to him, I had worked this one out, and whichever way you put it there is a problem. I am seeking, not unkindly I hope, to expose the problems that lie within the proposed amendments. That is the first objection.
The second objection as I see it is the one to which I have referred—the excision of subsection (l)(b), taking the point that it is an alternative objection. The third is that Amendment No. 1 read in context with all the amendments to Part I of the Bill in the name of the noble Lord—
Lord Mishcon: I wonder whether the noble Lord with his usual courtesy will allow an intervention, because this is upsetting the whole rules that govern us in discussion at Committee stage. We are either discussing amendments that have been moved or by arrangement are to be spoken to or we really find ourselves in complete disarray. Amendment No. 4 has in no way been moved. My noble friend may decide when he comes to Amendment No. 4 either to move it or not to move it, but if we start discussing amendments which by arrangement are not to be discussed and assume that they are going to be moved, we really end up in chaos. Since the noble Lord was anxious to avoid chaos before, in his submission to the Committee, I am sure that he will now wish to avoid it in his own case.
Lord Campbell of Alloway: The noble Lord, Lord Mishcon, for once and wholly exceptionally fails to do me justice. The whole problem arises because one has to look at Amendment No. 1 objectively. If you look at it without Amendment No. 4 it raises the objection which I have made. If you look at it—and I take only a moment to say it—with Amendment No. 4 it raises the objection to which I have also spoken. I am not speaking to Amendment No. 4. This is one of the reasons I was hoping that these two sets might be dealt with separately. I hope that I have satisfied the noble Lord on that.
I come to the third and last objection to Amendment No. 1. If you look at Part I of the Bill as the Government propose it should be—there are no government amendments to Part I—and if you look at Part I of the Bill wth Amendment No. 1 and the set—I say no more than that—of Opposition amendments in the name of the noble Lord, the whole structure of Part I which is broadly intelligible and satisfactory is drastically altered. The hope must be that my noble friend the Minister will not accept Amendment No. 1 for the reasons that have been given, because any qualification by this Bill which qualifies as distinct from repealing or amending (and one goes to Clause 1(l)(a)) what,
"is required or authorised"
by statute or alters what has been agreed under a contract of employment makes a vast general superimposition on existing statute law which is wholly unacceptable and also indeed on the freedom of contract.
Those are the basic objections to the first amendment. The set of amendments moved by the noble Lord, Lord Rochester, raises quite different objections. I have listened with due deference to the
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noble Lord, who speaks with authority on all matters relating to good working relations between management and staff, but the objections to this set of amendments go not only to form but to substance. First, the provisions of Part I of the Bill operate to ensure that the deduction should be fair and reasonable in all the circumstances, broadly; secondly, the proposed injection by paragraph 1 of the Schedule—and the Committee will find that in Amendment No. 70—of standards of what is fair and reasonable could operate to qualify retrospectively existing statute law or obligations under the employment contract under Clause l(l)(a); or to negative matters of consent in writing, no doubt given on the basis of independent advice under Clause 1(1)(b).
The third objection is that because the obligation is upon the Secretary of State to issue a code of practice under paragraph 1 of the Schedule—that is in Amendment No. 70—and is upon Parliament under paragraph 4 to approve the code, and upon courts, tribunals and the Central Arbitration Committee to take the code into account under paragraph 7, that is neither appropriate nor requisite; nor indeed is it acceptable. There is an internal conflict in the proposals of the noble Lord, Lord Rochester, which, with respect to him, makes no sense because in (2A) in Amendment No. 13 you have the type of code that has no legal effect at all. It is a mere practical code of guidance that is not taken into account. If you look at paragraph 7 of Amendment No. 70 you see the type of putative effect of the code. The two lie in irreconcilable conflict and the source of confusion is all but unimaginable.
The set of triple amendments is objectionable on that ground. The further objection is basic. What the noble Lord, Lord Rochester, has done is to make a fundamental departure from settled practice under which the trigger clause which introduces the code, and which determines the legal efficacy, is found in the body of the Bill and not, as he has put it, in the schedule. Paragraph 1 of the schedule, which mistakenly he has put in the schedule instead of in the body of the Bill (hence the conflict) is borrowed from Section 3 of the Employment Act 1980. A similar section is found in Section 6 of the Employment Act 1976.
I shall not detain the Committee but there is, in any event a very serious objection, recorded in the debate on 15th January in which the noble Lord was good enough to take part, as to resort to this type of code—and it is all on record in Hansard. It has given rise to concern. It is the type proposed in paragraph 7 of Amendment No. 70. To borrow a phrase in another context from Churchill, it is neither one thing nor the other. Although it is admissible under paragraph 7(a) in Amendment No. 70, there is no sanction whatever if it is not taken into account under paragraph 7(b). There is no appeal and there is no judicial review. It is mere putative efficacy dressed up as a sort of legal doll. If a code is needed—which is much to be questioned because ACAS has certain responsibilities which it could discharge—then either it should be the code of practical guidance which is the very type proposed in subsection (2 A) of Amendment No. 13, or it should be a code having full legal effect such as is taken into

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account at first instance and then can be taken into account on appeal or judicial review; analogous, as the Committee will remember, to the Commons amendment to the Animals (Scientific Procedures) Act 1986. There is another example which will be moved on Report in respect of the Bills dealing with the disabled and gas next week.
Therefore, this set of amendments of the noble Lord, Lord Rochester, proposes a type of code which follows an evil precedent. The form of the set of amendments is open to objection on the ground of irreconcilable conflict. It departs from settled practice and it imports wholly unacceptable qualifications into Clause 1 of the Bill. For those reasons, which are quite distinct from the reasons on Amendment No. 1,I hope that my noble friend the Minister will not accept that set of amendments.
3.45 p.m.
Lord Denning: As between these two amendments, I should like one or other of them to be accepted, but of the two I prefer that proposed by the noble Lord, Lord Rochester. Let us think for a moment of the problem under the 1896 Act. That applied only to manual workers. It did not apply to people working in shops, and the like. Under that Act it was permissible for an employer to make deductions from his men's wages so long as he put up a proper notice warning them about it. In addition, he could deduct from their wages subject to this: the men had only one form of complaint—they could not go to the civil courts or to a tribunal but had to prosecute the employer before the petty sessions magistrate and had to prove that the deduction was not fair or reasonable.
No wonder that in those days nobody went through that archaic procedure. No man did. I remember no case brought before my court under those Acts in all the years I sat. In the last year or two some petrol garage people have become alive to the situation and as the noble Lord, Lord Wedderburn, said, some petrol attendants, and so on, have been faced with contracts or notices enabling the employer to deduct everything—all the deductions and so on—from the workers' wages. That was taken before the magistrates and then before the Divisional Court and it was held to be not fair or reasonable. It was a very proper decision, if I may say so, but it is time that we had another attempt to put the law on this matter on a proper footing.
As I read this Bill and these clauses they go a long way towards putting everything in proper order. There has to be a proper contract for the employee. He must have signified his agreement to it in writing. The employer must then deduct in accordance with that contract and there is provision that he cannot deduct more than 10 per cent. That is a very good way of dealing with the matter. Moreover, if the man is dissatisfied and states that it is not good enough, he can go before the tribunal. That is all right and proper.
However, there is one omission from this Bill which was in the 1896 Act—it must be fair and reasonable. That is why I suggest—and the noble Lord, Lord Wedderburn, was quite right—that many of these so-called contracts are a pro forma. A form is set before
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the man and he signs it without reading it. Members of the Committee will have done that dozens of times in contracts that they have signed. These printed forms are hopeless and time after time I have said in the Court of Appeal that they ought to be fair and reasonable. Under the Unfair Contract Terms Act 1977 the legislature has said that many commercial contracts, with all these exemption conditions, are enforceable only if they are fair and reasonable.
Therefore, we should have in this Bill a provision to ensure that deductions can be made only in accordance with a contract that is fair and reasonable. In the circumstances of the case, whatever the man has done, the deductions must be fair and reasonable. That is the way in which I hope the Bill will be amended in due course.
What is to be the form of the amendment? With respect to the noble Lord, Lord Wedderburn, the first amendment goes only a little way. It says nothing about fair and reasonable. It only has to be,
"reasonable in amount having regard to all the circumstances of the case".
That is only looking at the amount—whether £10 or £5 should be deducted. That is not looking at the terms of the contract, or the arrangements, and what has happened to the man—whether or not he has been careless. There is nothing in that amendment as to whether it is fair or reasonable. But the condition of fair and reasonable comes into the proposals of the noble Lord, Lord Rochester. The first paragraph of Amendment No. 70 states:
"The Code of Practice issued by the Secretary of State … shall have as its objective to ensure that any deductions from wages is fair and reasonable having regard to all the circumstances of the case".
That is just to my liking. As my noble friend Lord Rochester has said, there is an advantage with a code of practice that all these matters are not necessarily allowed to be dragged up in the courts. They may be small matters, so let them go if your please. They should not come under the strict and rigid rules of law. These matters should go before a tribunal which will consider the terms of the contract and whether they are fair and reasonable. It is for this reason that I favour a code of practice. Codes of practice are now widely recognised in law. They are very useful in dealing with cases where there is a mass of detail to be considered which, if I may say so, it would be quite inappropriate to consider in your Lordships' House. Let us consider the Highway Code. A person in charge of a vehicle has to exercise due care and attention but details such as when he is to keep to the right side of the road and when it is considered safe to overtake, and so on, are left to the code of practice. These matters should be dealt with by a tribunal and the code should be there for guidance. We have an industrial relations code which is concerned with whether a person has been properly or reasonably dismissed. It is recognised that decisions of this kind depend very much on the individual situation.
We should not put such details in a statute but in a code of practice. For example, in the Police and Criminal Evidence Act which was passed a year or so ago, the words of the statute are very difficult for people to understand. Even I fail to understand a lot of the statutes that we have now. The value of a code of practice is that it puts everything into simple words, so

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that the people who have to act according to the code of practice can read and understand it. At the moment I am afraid that in Clause 1 of the Bill as it now stands there is a great deal of detail. For example, subsection (5):
"Nothing in this section applies—

(a) to any deduction from a worker's wages made by his employer …

(b) to any deduction … or any payment received from a worker by his employer".

There is a great deal of detail already in the Bill.
When we come to the amendments of the noble Lords, Lord Wedderburn and Lord McCarthy, there are all sorts of other details, such as the proposal that a copy of the provisions should be presented by the employer when he makes any deduction, and so on. Many of these matters are very appropriate for a code of practice, but are much too detailed for your Lordships to have to consider time after time in Parliament.
On the whole, if there has to be a choice between Amendment No. 1 and Amendment No. 2., I should be against Amendment No. 1 and in favour of Amendment No. 2. However, if I may say so I am not sure but that the better course is for the Minister to take this point away and for him to bring back something which will give effect to the underlying principle, which is that in all the circumstances, whether under the contract or not, the deductions should be fair and reasonable—just as was provided for in the 1896 Act. I am against Amendment No. 1 and in favour of Amendment No. 2 on the whole.
Lord Murray of Epping Forest: We should perhaps remind ourselves that a major aim, perhaps even the main purpose, of this part of the Bill is to extend cashless pay. This was the basis of discussions between the TUC and a former Secretary of State for Employment. It is a purpose that I think should commend itself to the Committee and indeed to most people. It is right and proper to the extent that the Truck Acts are an impediment—and various inquiries have shown that they are only a minor impediment—to the extension of cashless pay in an orderly way.
This particular provision smuggles in behind or underneath the purpose of extending cashless pay a serious and indeed improper weakening of what was the original, definitive purpose of the Truck Acts, which was, in short, to stop unscrupulous employers from cheating their employees. It would indeed be a happy state of affairs had unscrupulous employers disappeared from the face of the earth, but I fear that it is not so. No doubt they are only a minority of employers but evidence has been put before Parliament that they are most certainly there. It would also be a happy state of affairs if alternatively the workpeople concerned had had the prescience, foresight and ability to organise themselves collectively in order to resist victimisation, oppression or cheating. But, as has already been said, the extent of trade union organisation, partly because of the nature of the trades and occupations, is very limited indeed.
It is therefore still incumbent upon this Committee to ensure that the conditions of working people are not made worse by their inability to resist an impost by
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their employer by incorporating within the legislation the degree of protection that is suggested in the amendment that is now before us. I find it odd that employers have a unilateral right in any event to impose fines upon their employees. If the employee is guilty of dishonesty, let him be sacked or prosecuted; if the employee is cheated by a third party—such as a motorist who drives away with a full tank of petrol—let the employer look to his management systems and supervision and not impose a penalty upon the employee, who may not have caused the original distress or damage.
Be that as it may, this Bill gives employers a great power which they can exercise against individuals who are weak, who are anxious for a job and who. as the noble and learned Lord, Lord Denning, has said, will sign almost anything in order to get work.
It is right that the tribunal, if it is to be a tribunal, should have at its disposal not only the powers that are expressed in the Bill but also the further power to ask whether what the employer has done is fair and reasonable. It should have the further power to search behind the narrow words—words of which perhaps the employee has repented, regretting that he had not had sufficient foresight—and to ask that question. The Government themselves have acknowledged the need for common sense to be operative in this context in that they have suggested that a figure of 10 per cent. should be applied in certain circumstances. We are not arguing about the level of the figure. The idea of the figure indicates that there must be some common sense and some application of shrewdness of judgment, in order to prevent the worst excesses. That is why I think we should incorporate some further protection within the legislation or, perhaps I should say more accurately, why we should preserve a protection which has historically been found to be necessary and for which, regrettably, time has not removed the need.
Lord Milverton: I am quite prepared to accept either the amendment of the noble Lord, Lord McCarthy, or the amendment of the noble Lord, Lord Rochester. I have listened to the different arguments and 1 am prepared to support either of the amendments, because I think it is thoroughly disgraceful that, as has been suggested, young people who do not have the means, the power or the strength to insist on fair play, can be taken advantage of. That is why I am prepared to support either of the amendments. I do not think it can be too strongly emphasised how thoroughly disgraceful it is if young people are being taken advantage of and how essential it is that it should be stopped.
4 p.m.
Lord Coleraine: I shall speak only to Amendment No. 1 which was moved by the noble Lord, Lord Wedderburn. Because I find myself basically in sympathy with it, I should like to say in answer to what I think was the only point of substance made in relation to the amendment by my noble friend Lord Campbell of Alloway that I cannot for a moment agree that consent by contract is a fiction in these filling-station cases. The amendment is designed to underpin the protection offered by the Bill to low-paid

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workers in what are in times of high unemployment very vulnerable jobs indeed. Whether the amendment goes far enough is one question, and I am mainly going to direct what I have to say to the question of whether there is a need here which the Bill does not rectify.
This is not a party political question. The Truck Act 1896 was introduced under a Conservative Administration, with general support, to meet the needs of its time. Now it limps. It is interesting to note that about a third of this Bill, and almost all of Part I of it, is devoted to re-legislating the 1896 Act in respect of deductions from wages. I see that as a clear indication that the problem of deductions, though it may have a different shape now, is just as much with us as it was at the turn of the century.
There is in my view a relatively widespread problem which this Bill does not tackle adequately. Once a provision allowing deductions from wages is in a contract of employment, no matter how unreasonable it may be, provided that the employer is alert to see that the modest requirements of the Bill have been complied with, there will be nothing that the county court, the magistrates' court or the industrial tribunal can do to protect the employee. There will be just the same abuses as were seen in 1896.
I should like to draw briefly on two examples of what actually happens, each taken from a recent decision of the Divisional Court. The judgment in the first—and that is the case of Mr. Barratt, to which the noble Lord, Lord Wedderburn, referred—was only four months ago. Perhaps I may mention that Mr. Barratt went to the stipendary magistrate and complained that his employers had unlawfully fined him. The stipendary found the case proved, fined the employers £250 and ordered them to pay costs and to repay to Mr. Barratt the deduction which had been made, amounting to £75.90.
Under the Bill the making of wrongful deductions is to be decriminalised. It is only necessary to pause to consider for a moment the size of the fine in this case compared with the amount of the deductions to see that one strong deterrent to the making of wrongful deductions is to go with the repeal of the 1896 Act.
I would also point out to the Committee that on the facts of the case Mr. Barratt worked for only three weeks at the filling station. His net wages were to have been £55·90 a week. In one week he lost £20; in another he lost the lot. Mr. Barratt was lucky. What the court found in his case was that his employers had wrongly imposed a fine on him and so they put themselves outside the Act. They had not taken his money by way of compensation for their loss, which might have been legitimate as between an employer and an arguably negligent employee. The Divisional Court decided that as a fine it was not a fair and reasonable one.
The second case, also a filling-station case in the Divisional Court, was decided a year ago. A Mr. Bristow was a cashier. He, like Mr. Barratt, was 18 years old. In what seems to have been a written contract of employment there was this provision:
"Every site employee, together with other site staff working with him, if any, is responsible for all cash shortages that may occur in the cash till that he is using. He will, therefore, undertake to make good
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to the company either all or his share of the total shortages on every shift that he works, either immediately or by deduction from any wages outstanding".
That made the employee liable for cash deficiencies, and he signed a separate acceptance of responsibility in respect of stock deficiencies.
In that case the intention of the employers was that Mr. Bristow should be legally liable, irrespective of whether he or indeed any other employee was culpable, for a share of all loss of cash and stock. In the five weeks of his employment in 1983 there was deducted from his pay packet an average of 17 per cent. of what should have been his weekly net wage.
Mr. Bristow failed both before the magistrates at Brentford and in the Divisional Court because he could not show in his case that the deductions were fines and so covered by the Act. He could only proceed under Section 1 of the Truck Act 1896, which deals with fines, because he was not under that Act a workman; he was a shop assistant and shop assistants are protected only by Section 1 of the Act. That is one of the fine but outdated distinctions in the Act which are to be eliminated with this Bill's passage into law.
What seems to me to be common to both cases is that the deductions were unreasonable, but if the Bill is passed unamended it would be possible for unscrupulous employers to continue to make those unreasonable deductions. Both Barratt and Bristow were 18 years old. What sort of introduction to employment was that, and what sort of first-job experience was it?
The amendment proposed by the noble Lord is a modest one. I wonder whether it could not be widened to provide, in effect, that all contractual provisions for deductions must be fair and reasonable and not just that the deductions made under the provisions must be fair and reasonable. Might it not be better to influence employers to write fair contracts in the first instance, rather than to leave it to employees to find out that unfair contracts are unenforceable?
I hope that my noble friend will think again about this clause in the Bill and perhaps come back at a later stage with something to meet what seem to be the general feelings of the Committee today.
Lord Trefgarne: It may help if I briefly explain the philosophy of the controls on deductions from wages in Part I of the Bill. The Government conducted a consultation exercise in 1984 on controls on deductions from wages that should be established if the Truck Acts were to be repealed. The results suggested that there is no major problem that workers are currently experiencing in the field of deductions from wages other than in the limited area of deductions concerning cash shortages and stock deficiencies. The Bill provides for general controls on deductions from wages that, broadly, allow the parties to agree their own terms, but then ensures the employer sticks to the terms. It provides for special controls in Clauses 2 and 3 on deductions to cover shortages.
It is quite reasonable that employers will make in some circumstances disciplinary deductions from wages as a sanction for breaches of discipline that do not merit dismissal. If such deductions were entirely

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prohibited employers might more readily resort to dismissal. The philosophy of the Bill is to let employers and workers sort out rules governing such deductions in the contract. But Clause 1(3) ensures that the worker knows what the rules are; Clause 1(4) ensures that the rules cannot be changed retrospectively by the employer to allow a deduction in respect of events that are past; and Clause 5 ensures that the workers can enforce the rules before an industrial tribunal. I believe that these are fair and reasonable provisions.
I recognise that the amendments moved by the noble Lord, Lord McCarthy, and his noble friend are inspired by a desire to reinstate certain words in the Truck Act 1896 concerning reasonableness. It is proposed that deductions from wages or payments by workers to employers should be reasonable in amount, having regard to all the circumstances of the case. But the fundamental difficulty with a requirement that deductions be "reasonable" is that what is reasonable is a matter of opinion. Employers and workers would just not know where they stand if these amendments were accepted.
If we say in the statute that deductions must be "reasonable" the employer will never know if a deduction is lawful until he has had its lawfulness tested before an industrial tribunal. In practice, employers may simply not take the risk of having to waste a morning arguing the case before an industrial tribunal and simply punish breaches of discipline by dismissal. Surely it is enough simply to say that the terms of the basis on which the parties are prepared to go on offering and accepting employment are reasonable terms.
One must also recognise that the more we tie up people with statutory requirements which they must follow in deciding whether to offer and accept employment, the more likely it is that we shall deter would-be employers from offering employment at all.
Lord McCarthy: Not again.
Lord Trefgarne: With regret, I think that the practical effect of the amendments, however well-intentioned, would be to increase the number of dismissals, leave employers in an impossibly uncertain position and reduce the number of jobs on offer. I noticed considerable derision when I made that observation a moment ago. I wonder how many noble Lords opposite have been in the position, as I have, of being a small employer and being genuinely concerned about the bureaucracy that is attached to taking on new employees. It is a deterrent. Noble Lords opposite should not lose sight of that.
May I turn to the proposal for a code of practice? My noble friend the Secretary of State has considered closely whether it would be appropriate for him to issue guidance on good practice in drawing up contractual terms concerning deductions. On balance, he thinks that it would not. However, I can assure the Committee that the Department of Employment will issue guidance on the law before Part I comes into operation.
It is possible that a number of independent organisations such as the Institute of Personal
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Management or ACAS may wish to produce some guidance on good practice in framing contractual terms of deductions. ACAS is aware of the point which was raised during earlier stages of the Bill, but ACAS is an independent body governed by a council that includes TUC and CBI representatives. It is not an instrument of the Department of Employment. It would not be appropriate for Ministers to seek to direct ACAS in any way, but the ACAS council will doubtless consider the call for a code.
The noble Lord, Lord Wedderburn, and my noble friend Lord Coleraine referred to the case of Sealand Petroleum Company Ltd. v. Barratt. That case demonstrates, if I may say so, that a High Court case was required to determine whether the 1896 Act protected the employee. I believe that supports the proposition that the 1896 Act, after 90 years, is uncertain and therefore largely ineffective.
A number of questions have been asked about the concept of "reasonableness". I shall perhaps help the Committee with an example. Suppose that an employer is faced with a worker who has breached a safety regulation, perhaps putting other workers at risk. The employer does not wish to dismiss him and the contract says that workers can be fined for such breaches. Suppose that the employer fines the worker £10. Is that lawful? With the amendments, the employer does not know until he comes before an industrial tribunal. He spends a day arguing his case and is told that £5 was perhaps reasonable but not £10, or perhaps £10 but not £15. The employer just does not know where he stands. I have said that the Truck Acts have caused considerable confusion on that issue. At an earlier stage the noble and learned Lord, Lord Denning, was right to describe them as ineffective. They are a poor model.
I hope that those difficulties will have persuaded the Committee that we should not proceed in the way suggested in the amendments. I hope that the amendment will not be pressed.
4.15 p.m.
Lord Wedderburn of Charlton: It is a novel experience for me to hear, albeit from the noble and learned Lord, Lord Denning, that I am not going far enough, but I take his point. After consultation, my noble friends and I have come to certain conclusions. I shall say just two or three things about the arguments against our amendment. The noble Lord, Lord Trefgarne, speaking for the Government produced some astonishment. Every time there appears in this Chamber any Bill that has anything to do with the protection of workers, we are told that it must be bad because it will stop recruitment into jobs. There is no evidence of that in relation to matters which have come before us recently, any more than there is that jobs will be promoted by the Government's plan to charge workers £25 for going to an industrial tribunal which is contained in their latest policy document.
The noble Lord fell into another error which must be faced. He said that the amendment rests upon "reasonableness"; that what is reasonable is a matter of opinion; that no one would know where they stood and therefore we should not have such a law. Many laws stand on "reasonableness". On the noble Lord's

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reasoning we should never have had a law on unfair dismissal. I am not sure that the Government want an unfair dismissal law. No doubt if they come to repeal it, that is the argument that they will use. It is a poor argument, because many parts of our law depend on what is reasonable. The Factory Acts, which the noble Lord cited frequently, depend upon the employer doing what is reasonable or what is different but perhaps more difficult, that which is reasonably practicable. No one suggests that we should repeal the Factory Acts because they include such formulae.
I do not hold such a low opinion of British employers, be they small or large, that I believe that they would not know in the vast majority of cases when a fine on a worker was reasonable and when it was unreasonable. I do not believe that. I do not believe that the noble Lord, Lord Trefgarne, when he was a small employer, would not have known in the vast majority of cases when he went home at night whether he had treated someone unfairly.
The noble Lord, Lord Coleraine, rightly took us to two cases. I did not cite the Bristow case because it seemed to me more concerned with the definition and interpretation of what is a fine, which does not appear in our formulation. We have had cases in the courts because petrol companies have gone in for scandalous practices. In 1896 the Home Secretary, replying to a debate on the Bill, said on 4th May at col. 523 of Hansard that he did not apprehend any vexatious litigation over the expression "fair and reasonable". He felt sure that one or two decisions by the courts of law would settle the meaning of that expression. In this context he was right. It is only when employers in this area have gone for such outrageous practices that cases have gone to the courts.
There has been a wages inspectorate. Although we all criticise it, over the years it has also maintained standards on the basis of a test of reasonableness. The noble Lord, Lord Campbell, spoke to other amendments. I shall reserve my comments until we come to those amendments. I must put one matter right in case it was my slip of the tongue rather than his mishearing. I hope that I did not say that all consent for workers by way of contract was a fiction. I hope I said that the groups of workers with whom we are dealing, the formal contract is more in the nature of a submission than of real consent. The noble and learned Lord, Lord Denning, gave other illustrations of when that is so.
If the noble Lord, Lord Campbell, will look at the report of bodies such as the Citizens Advice Bureaux he will find hundreds of cases described. They are not all by any means in retail shops or petrol stations. There are hundreds of cases with questionable deduction clauses in workers' contracts. As the North Warwickshire Citizens Advice Bureau put it, they are individuals who are desperate for employment, only too eager to sign the contract and only later when the deductions affect their living standards and their families do they fully realise the consequences. That is the reality of today. Those are the workers for whom we are worried.
My noble friends and I are not concerned about the precise order of the amendments on the Marshalled
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List, but we are interested in workers in stock rooms, store rooms, petrol stations, shops and driving jobs who suffer those practices and whose families suffer them. If there be a sense in the Committee that the first amendment is in some ways too mild and insufficiently full, or not quite right, we shall not press the matter as there may be a better solution.
I understand that Amendment No. 2 will be pressed. As I read it, it demands that deductions must be in accordance with the standards of the code of practice. That is to say, the code of practice will not be merely a document suspended in some judicial levitation above employment practices but will be there, right in the middle. Its standards must be observed. It is possible that this is something that some Members of the Committee prefer. Because my noble friends and myself regard it as so important to establish the broad principle and because the two amendments, it seems to me, are very much at one, I beg leave, on the understanding that we can go into the Lobby on Amendment No. 2, to withdraw this amendment.
Amendment, by leave, withdrawn.
Lord Rochester Lord Rochester moved Amendment No. 2:
Page 1, line 9, at end insert ("is in accordance with the code of practice referred to in subsection (2A) below, and")
The noble Lord said: I have already spoken to this amendment, and I sense that the Committee wishes to reach a conclusion on the matter in general. I should like, briefly, to thank all noble Lords who were good enough to contribute to the discussion on the amendment to which I spoke earlier. I respect very much the opinion of the noble Lord, Lord Campbell of Alloway, who criticised my amendment on grounds both of form and substance. I felt, if I may respectfully say so, that, on substance, the noble and learned Lord, Lord Denning, demolished that argument pretty effectively. If it was only a matter of form, and if there was some imperfection in the code that could be improved upon, that is one thing. It could readily be done, I am sure, at another stage. But it is the principle, clearly, with which the Committee is concerned. It is that, I suggest, to which we now have regard.
I was particularly grateful to the two noble Lords on the other side of the Committee, who spoke in favour of the general proposition. I admired very much the manner in which the noble Lord, Lord Coleraine, spoke. Clearly, the noble Lord has considerable knowledge of the subject. I was greatly disappointed by the response of the noble Lord, Lord Trefgarne, who seemed to be saying, in effect, that what the employer and the employee agreed between them on the contract to be followed was sacrosanct. I do not regard that as nearly good enough. What is required is that employees, often, as stated at an earlier stage, among the most lowly paid, should be adequately protected in terms of deductions from wages being fair and reasonable. The noble Lord the Minister said that it was the intention that ACAS should offer some guidance on this subject. I do not believe that this is good enough. What we want to see is something inserted in the Bill to that effect.
I am grateful to the noble Lord, Lord Wedderburn, for agreeing in the circumstances and in the light of the

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discussion that has taken place, to withdraw his amendment in favour of mine. I wish therefore to move the amendment.
Lord Trefgarne: Before the noble Lord decides what to do with his amendment, he has, I believe, slightly misunderstood what I said during my remarks. I was not in the least intending to be unreceptive to the proposal that he made. I said that the Department of Employment would be issuing guidance before Part I of the Bill became law. I pointed to at least two bodies that might wish to prepare a code of practice that would further assist employers and employees operating the provisions of this measure. I am not sure how much further the noble Lord wants me to go. If it helps him, I would be happy to agree to look again at the possibility of my noble friend preparing a code of practice of his own which I believe would go some way to meeting the noble Lord's concern.
Lord Rochester: I thank the noble Lord for what he said. I thought that I had made plain at an earlier stage that we are anxious—I believe that I speak for most, perhaps all, noble Lords on this side of the Committee and for a number on the other side—that something should be written into the Bill upholding the principle that has been enunciated this afternoon. I wish both to move and to press the amendment.
4.26 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 101; Not-Contents, 125.

DIVISION NO.1

CONTENTS

Airedale, L.

Harris of Greenwich, L.

Amherst, E.

Hatch of Lusby, L.

Aylestone, L.

Heycock, L.

Bacon, B.

Hirshfield, L.

Banks, L.

Hooson, L.

Birk, B.

Houghton of Sowerby, L.

Blease, L.

Hughes, L.

Blyton, L.

Hunt, L.

Boston of Faversham, L.

Irving of Dartford, L.

Brockway, L.

Jenkins of Putney, L.

Brooks of Tremorfa, L.

Jessel, L.

Bruce of Donington, L.

John-Mackie, L.

Burton of Coventry, B.

Kaldor, L.

Carmichael of Kelvingrove, L.

Kilbracken, L.

Chitnis, L.

Kilmarnock, L.

Cledwyn of Penrhos, L.

Kinloss, Ly.

Coleraine, L.

Kirkhill, L.

Crawshaw of Aintree, L.

Lawrence, L.

David, B. [Teller.]

Leatherland, L.

Davies of Penrhys, L.

Listowel, E.

Dean of Beswick, L.

Lloyd of Kilgerran, L.

Denington, B.

Lockwood, B.

Denning, L.

Lovell-Davis, L.

Diamond, L.

McCarthy, L.

Donaldson of Kingsbridge, L.

McNair, L.

Elwyn-Jones, L.

Mar, C.

Ennals, L.

Mayhew, L.

Ewart-Biggs, B.

Milverton, L.

Ezra, L.

Mishcon, L.

Falkender, B.

Morton of Shuna, L.

Fisher of Rednal, B.

Mulley, L.

Gallacher, L.

Murray of Epping Forest, L.

Glenamara, L.

Nicol, B.

Graham of Edmonton, L.

Northfield, L.

Grey, E.

Oram, L.

Hampton, L.

Parry, L.

Hanworth, V.

Ponsonby of Shulbrede, L.

178

Rhodes, L.

Taylor of Mansfield, L.

Ritchie of Dundee, L.

Tordoff, L.

Rochester, L. [Teller.]

Turner of Camden, L.

Ross of Marnock, L.

Underhill, L.

Sainsbury, L.

Walston, L.

Seear, B.

Wedderburn of Charlton, L.

Shackleton, L.

Wells-Pestell, L.

Shepherd, L.

Whaddon, L.

Silkin of Dulwich, L.

White, B.

Simon, V.

Williams of Elvel, L.

Stallard, L.

Wilson of Langside, L.

Stoddart of Swindon, L.

Wilson of Rievaulx, L.

Strabolgi, L.

Winstanley, L.

Taylor of Blackburn, L.

NOT-CONTENTS

Allerton, L.

Lothian, M.

Ampthill, L.

Lucas of Chilworth, L.

Arran, E.

Luke, L.

Auckland, L.

Lurgan, L.

Belhaven and Stenton, L.

McAlpine of West Green, L.

Belstead, L.

MacLehose of Beoch, L.

Bessborough, E.

Macleod of Borve, B.

Boyd-Carpenter, L.

Mancroft, L.

Brabazon of Tara, L.

Marley, L.

Brookes, L.

Marsh, L.

Brougham and Vaux, L.

Masham of Ilton, B.

Broxbourne, L.

Maude of Stratford-upon-

Caccia, L.

Avon, L.

Cameron of Lochbroom, L.

Merrivale, L.

Campbell of Alloway, L.

Middleton, L.

Carnegy of Lour, B.

Molson, L.

Cathcart, E.

Monk Bretton, L.

Constantine of Stanmore, L.

Montgomery of Alamein, V.

Cottesloe, L.

Morris, L.

Cowley, E.

Mottistone, L.

Cox, B.

Murton of Lindisfarne, L.

Cross, V.

Napier and Ettrick, L.

Cullen of Ashbourne, L.

Nugent of Guildford, L.

Dacre of Glanton, L.

Onslow, E.

Davidson, V.

Pender, L.

De Freyne, L.

Perth, E.

Denham, L. [Teller.]

Porritt, L.

Dilhorne, V.

Portland, D.

Dormer L.

Reay, L.

Dundee, E.

Rochdale, V.

Eccles, V.

Rodney, L.

Elles, B.

St. Aldwyn, E.

Elliott of Morpeth, L.

St. Davids, V.

Elton, L.

Sanderson of Bowden, L.

Fanshawe of Richmond, L.

Sandford, L.

Forester, L.

Sandys, L.

Fraser of Kilmorack, L.

Savile, L.

Gainford, L.

Selborne, E.

Gardner of Parkes, B.

Sempill, Ly.

Glanusk, L.

Shannon, E.

Glenarthur, L.

Sharples, B.

Gridley, L.

Shaughnessy, L.

Halsbury, E.

Skelmersdale, L.

Harmar-Nicholls, L.

Strathcarron, L.

Hives, L.

Strathcona and Mount Royal,

Holderness, L.

L.

Home of the Hirsel, L.

Swinton, E. [Teller.]

Hood, V.

Thomas of Swynnerton, L.

Hooper, B.

Thomeycroft, L.

Hunter of Newington, L.

Tranmire, L.

Hylton-Foster, B.

Trefgarne, L.

Inglewood, L.

Trenchard, V.

Kaberry of Adel, L.

Trumpington, B.

Killearn, L.

Vaux of Harrowden, L.

Kimball, L.

Vickers, B.

Kinnaird, L.

Vinson, L.

Kintore, E.

Vivian, L.

Knollys, V.

Westbury, L.

Lane-Fox, B.

Whitelaw, V.

Lauderdale, E.

Wise, L.

Layton, L.

Young, B.

Lindsey and Abingdon, E.

Young of Graffham, L.

Lloyd of Hampstead, L.

Zouche of Haryngworth, L.

Long. V.

Resolved in the negative, and amendment disagreed to accordingly.
Viscount Long: My Lords, I think that it would be appropriate at this moment to take the Statement. Therefore, I beg to move that this House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Chernobyl Accident: Movement of Sheep, Scotland
4.35 p.m.
Viscount Davidson: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable and learned friend the Secretary of State for Scotland. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement on the control on the movement and slaughter of sheep in Scotland.
The results of tests on sheep in slaughterhouses in Scotland, the latest findings from which were published yesterday, give no cause for concern. We now have results of tests on young lambs in Scotland. These results are being published today.
"Generally they are satisfactory. No readings have been obtained comparable to the highest in North Wales and Cumbria, but there are five readings over 1,000 Bq/kg for caesium 134 and caesium 137 together, which is the limit at which by international recommendation action should be considered. One of these readings, the lowest of the five, comes from Easter Ross and, at 1,017 Bq/kg, is within the margin of sampling error. Three of the other readings were found in Dumfries and Galloway, including the highest at 1,272 Bq/kg, and the remaining reading is from Arran.
"The animals tested were only two to three months old and will not be ready for market for some weeks yet, by which time the level of radioactivity may be expected to have declined well below the 1,000 Bq/kg level. I can say categorically therefore that there is no danger to public health and no reason for consumers to refrain from purchasing and eating lamb.
"It is Government policy to insist on the highest levels of safety, and, in order to keep under supervision lambs in those areas of Scotland where relatively high levels of radioactivity have been identified, I have made an order which will be laid before Parliament to come into effect today to prohibit for the next 21 days the movement and slaughter of sheep within Dumfries and Galloway, Arran and Easter Ross.
"Monitoring in these and other areas will continue and the restrictions will be reduced or removed as soon as testing confirms the expected fall in levels.
"I recognise that these measures may cause some interference with the marketing plans of some farmers in the areas concerned. I am sure they will understand why this action is being taken and in this connection I must pay tribute to the responsible and co-operative attitude shown by the National
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Farmers' Union of Scotland. If it should prove necessary, the Government will be prepared to discuss cases of compensation for severe loss in particular circumstances to specific farmers."
My Lords, that concludes the Statement.
Lord John-Mackie: My Lords, there is not much that one can say which was not said on Friday when the Statement on Wales and Cumbria was made. However, I think that the importance of letting the public know what is happening should be re-emphasised, and the noble Viscount has done so, because there were some considerable scare stories in the press last Saturday morning. However, this is a difficult task to carry out, and I understand that there has already been a drop in the price of lamb. My own wife's reaction is that she will not buy lamb unless it is New Zealand lamb. This has a rolling effect which is seen in the fact that lamb prices have come down, in spite of the fact that many of these lambs are not yet of marketable size, although in 21 days they can come a long way.
I should like to ask the Minister why, only three days after the Statement on Friday, we have this Statement. I hope that the Government have not been sitting on these reports because it is rather important that farmers should know all along the line what is going on. I hope that that is not the case here.
The matter of compensation will be very important because all the areas which have been mentioned, apart from Easter Ross, almost entirely rely on at least the next two months for the sale of store and fat lambs for their total income for the year. Therefore, it is very important indeed that this matter should be looked into very carefully and that we be ready to give help when it is required.
On several previous occasions when compensation has been paid, the matter has dragged on for a long time and farmers have had to wait for their money. I re-emphasise that these are areas where the farmers' income comes solely from sheep and if we have another Statement from the Government, it will be very serious for them. I hope that the Minister can assure us that there will not be another Statement in the near future because that would give rise to a very serious situation as it would begin to cover all the lamb-producing areas in the country.
Lord Hooson: My Lords, it is obvious that in circumstances of this kind the Government, in the public interest, must err on the side of caution, and this the Government have done. Would the noble Viscount confirm that there is strict monitoring going on, and that in fact the lambs in this and the surrounding areas will be tested again to reassure the public, and that the results will be published as soon as it is done?
With regard to the question of compensation, these are innocent farmers, very often with one cash crop in the year, and that is lamb. The words used in this Statement in respect of compensation might cause considerable alarm. It is clear that this interference with the normal marketing process will cause loss to farmers. For example, if lambs are kept back for three weeks they put on excessive fat and will not grade properly.

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The words used in the Statement are:
"If it should prove necessary the Government will be prepared to discuss cases of compensation for severe loss".
Should not the Government compensate for any loss? Why should it be confined to particular circumstances with specific farmers? If fanners as a result of these actions are going to suffer loss, surely the Government should compensate, and look to the Soviet Union for compensation nationally? Would the noble Viscount not agree with that?
Viscount Davidson: My Lords, I am grateful to both the noble Lord, Lord John-Mackie, and the noble Lord, Lord Hooson, for their reception of this Statement. In general, I would agree with the noble Lord, Lord John-Mackie, that this problem was discussed at length on Friday when my noble friend Lord Belstead repeated a Statement made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food.
I do not think that I can add much to what my noble friend then said. But on certain specific points, the noble Lord, Lord John-Mackie, asked why was the order not laid last Friday. We said then that we would act on the basis of monitoring data, and that is what we have done. Following on the monitoring topic, I would assure the noble Lord, Lord Hooson, that we are keeping monitoring on a continuous basis and will publish the results.
The noble Lord, Lord John-Mackie, raised the subject of consumption. If it is any help, perhaps I may just give him a scientific answer from my brief and not from my brain. At 1,000 Becquerels per kilogram of total caesium, which is caesium 137 plus caesium 134, the total does in a year to the average consumer, assuming he eats meat at the average consumption rate throughout the year of five kilograms, would be 0·15 millisieverts. This compares with an annual does from natural sources of 2 millisieverts, to which we are all subjected. Therefore, there is no danger whatsoever.
On the question of compensation, which both the noble Lord, Lord John-Mackie, and the noble Lord, Lord Hooson, raised, I take note of what they said. This is always a difficult problem in these matters. Our intention is that any distruption will be minimal disruption, and the position on compensation was spelt out by my right honourable friend the Minister of Agricuture. If it should prove necessary, the Government will be prepared to discuss cases of compensation for severe loss in particular circumstances to specific farmers, and more than that I cannot say at the moment.
Lord Kimball: My Lords, could my noble friend say why sheep only? Are we monitoring the position as regards fat cattle? Certainly in Easter Ross some fat cattle will be coming forward for slaughter in the near future. Can my noble friend say a word on the position of monitoring of cattle?
Viscount Davidson: My Lords, the monitoring results so far—and there has been monitoring for cattle as well—show that there is no cause for concern withother food products at the moment. The point is that he young lambs have been feeding on the
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contaminated pastures and have been ingesting a great amount of food, and that is why they have been particularly susceptible to risk.
Lord Ross of Marnock: My Lords, am I right in thinking that the Government took action as soon as they received the information in respect of the recent analysis? But it is rather obscure to say that there is no cause for concern. There may be no cause for concern to the consumer; but there is considerable cause for concern to the farmer, especially when the noble Viscount suggests that there may be some disruption of the market.
You cannot have a policy of restricting movement and no slaughter without seriously restricting the market for those hill sheep farmers affected. What percentage of the stock of sheep in Scotland is held in Arran? It is not very high, I would fancy. But when you think of Dumfries and Galloway particularly, and Easter Ross, it must be getting well on to 15 per cent. of the whole stock. That is a considerable disruption.
Can the noble Viscount tell me one other thing? When he talked about a restriction on movement and slaughter, is this absolute? Is there to be no movement at all even within an area? Can he give us any indication of what is going to be the basis of compensation when that is dealt with? Compensation will be needed, and needed speedily when we are dealing with what is an acceptable—and readily acceptable—cash crop for farmers who are going to be denied it, having had a fairly rough winter already.
Viscount Davidson: My Lords, in reply to the noble Lord, Lord Ross of Marnock, I do not have the figures of the number of sheep affected. On the effect of the order, in Dumfries and Galloway it forbids for a period of 21 days, beginning on 24th June, the movement of sheep off farms and the slaughter of sheep except with the consent of the department. Slaughter will be permitted for welfare reasons, and this is already provided for in the order, on condition that the meat does not …. There is no end to that sentence. I apologise for the fact that my noble friend the Minister of State is in Inverness today. I am afraid I forget the noble Lord's other question. Perhaps he would remind me.
Lord Ross of Marnock: My Lords, I asked about the stock, and whether there was an absolute bar on the movement and slaughter of stock, and I gather that there is not provided something or other that we do not know about, and that the Minister has not been adequately briefed about. I asked about the effect of compensation. There has already been a loss and a drop in price. It may not affect just these areas. It may be general through all the lamb and store lamb markets at the present time. The other question was about the basis of compensation, and whether it will be paid quickly.
Viscount Davidson: My Lords, I understand. What I meant to say earlier when I was talking about no cause for concern was that I was talking about the consumer. There is of course considerable cause for concern for the farmers affected here. I am certain that my right honourable friend will bear that in mind and do his best to assess and pay the compensation to those who have really suffered from this tragedy.
Lord Boyd-Carpenter: My Lords, if the Government find it necessary to pay compensation in respect of Scotland, Cumbria, or of Wales, will they seek reimbursement of the cost of that from the Government of the USSR in view of the fact that the whole problem has been created by a failure in the industrial system of that country?
Viscount Davidson: My Lords, I think all I can say to my noble friend is that I shall pass on his question to my right honourable friend.
Lord McNair: My Lords, may I ask the noble Viscount to tell me whether the monitoring of cattle, to which he referred, includes the monitoring of milk, and if so, with what results?
Viscount Davidson: My Lords, I am sorry but I do not have the answer with me.
Lord Cledwyn of Penrhos: My Lords, while I agree with what my noble friend Lord Ross of Marnock has said about the producer, may I ask whether the noble Viscount is aware that it will ease public concern considerably if he makes it clear that within the 21 days referred to in the Statement the amount of caesium in the lambs will have reduced sufficiently to make it safe to slaughter and to eat the lamb? That is the point in the public mind that has not been made clear. If he can say that today, it will be of considerable benefit.
Viscount Davidson: My Lords, I can state categori-cally that that is what we are expecting to happen; that the amount of caesium will be reduced over the next 21 days.
Lord John-Mackie: My Lords, may I ask the noble Viscount about another point which might worry farmers? If the price comes down I hope the Government will not rely on the variable premium to make it up. There is a limit to the variable premium and it would not make up a loss of 25 per cent., which is the figure stated. I do not know how accurate that figure is, but it has been quoted in some of the reliable press. That is something that must be carefully watched: the Government, who are pretty good at this kind of thing, relying on the variable premium, which I do not think they can do in this case.
Viscount Davidson: My Lords, I am grateful to the noble Lord, Lord John-Mackie. I shall certainly draw his remarks to the attention of my right honourable friend.

Wages Bill
4.50 p.m.
House again in Committee on Clause 1.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 3:
Page 1, line 10, leave out ("one of)
The noble Lord said: In moving this amendment I wish to speak also to Amendment No. 4. Now that we have settled the broad issue that no test overall of
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reasonableness is to be imported into the control of deductions, it is perhaps more important than ever to look with great care at just what the Government have put into their Bill and at their main plank of contractual arrangements being clear.
These amendments go to a puzzle as we see it. It can be put shortly in this way: deductions are to be allowed under the Bill if they are authorised either by statutory provision or by provisions in the worker's contract. That one would understand, but then there is a further wheel to the coach, an alternative to the provisions allowed by contract, those matters to which the worker has previously signified in writing his agreement. If he signifies his agreement in writing in any formal way, as one would expect it to be, would that not become a variation of the contract? If it is a variation of the contract it falls within paragraph (a) and paragraph (b) is not needed. Paragraph (b) is clearly needed where the writing is not imported into the contract; a writing standing alone which would not be legally binding unless it were a sealed deed. What kind of documents do the Government have in mind that would not be a part of a contract? Is this a document where there is perhaps a homeworker who does not have a contract? That is a difficult example to take because the whole of Part 1 of the Bill is based on a worker who does have a contract and the home worker without a contract is not brought in. All we are left with is this very uncertain area of signification in writing of consent or agreement that is not contractual because then it would be within paragraph (a).
At this stage so that we can consider the matter—because our efforts have not been availing in trying to find a clear explanation in another place in its debates on this matter—we ask the Government to clarify what is meant so that the matter can be considered further. I beg to move.
The Deputy Chairman of Committees (Lord Nugent of Guildford): Before I put the Question, I should explain, as the noble Lord was speaking to Amendment No. 4, that if Amendment No. 4 were agreed to it would pre-empt Amendments Nos. 5 and 6 so that I should not be able to call them as well.
Lord Trefgarne: As the noble Lord has explained, the amendments restructure Clause 1(1), which provides that the basic protection for workers that deductions from wages (or payments by a worker to his employer) are unlawful unless provided for in a statutory provision—for example income tax—in the contract or by the written consent of the worker.
Incidentally, I believe that Amendments Nos. 10 and 11 come within this group as well. I notice that the noble Lord, Lord McCarthy, nodding in assent.
The effect of these amendments would be to remove written agreement as a method of authorising a deduction or payment. But it would create great difficulties both for employers and workers if the route of authorising a deduction by the written agreement of the worker was closed. For example, a set of deductions to recover a loan to purchase a season ticket could then only be authorised by varying the contract, which would be a needlessly cumbersome method of achieving a result desired by both parties. But in so far as the method of varying the contract was

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by the agreement of the worker the steps involved would amount to much the same thing except that agreement would not necessarily be in writing—so the standard of protection of the worker would, I think, be reduced.
I hope that in the light of these two difficulties the noble Lord will not wish to press his amendment.
Lord Wedderburn of Charlton: I am grateful to the Minister for that explanation. It is one that I followed in one respect, namely that if the effect of the amendments was to reduce the protection of the worker we certainly should not wish to move it. But, in a phrase, the objective and effect of the amendments—I apologise to the Committee and to the Minister because Amendments Nos. 10 and 11 on the new numbering are those we agreed should be considered as they involve the same thing—would not be to remove written agreement from the Bill. Written agreement is presumably contractual. It is intending that the parties should be bound. If I have a contract of employment and a document is put before me saying "Here is £100 as a loan to buy your season ticket. Will you agree to that being deducted from your wages?" and I accept, whether by signature or otherwise—that is a point we are coming to—then it is difficult to understand how that does not vary the relationship: my consideration being my going on working on those terms and the employer's being employing me on those varied terms. That is a variation of the contract of employment. I could imagine very bizarre documents that would not be, but the noble Lord the Minister did not put any of those to us. I am still mystified.
This is an important matter and not just a technical one. It is not a technical matter because if the Bill stays in this state it will suggest to employers and their advisers that there is an important category of writing which can be the foundation of lawful deductions which, because it is in paragraph (b) is not necessarily contractual and not a variation of the contract, not within the contractual sphere. The example that the Minister gave, a loan to purchase a season ticket with a written agreement to repay by deduction, is plainly a variation of the contract of employment. So the only possibility it would seem to me, with respect, would be agreements which are collateral to the contract of employment. That is what I expected the Minister to say. If this is aimed at contracts which are collateral to the contract of employment then Clause 1(1)(b) assumes quite a serious area of danger and problem because then it can go outside the employment relationship in new ways. For the moment, hoping that the Government will be able to say something a little clearer on what are the writings which are not contractual and come within paragraph (b) and do not come within paragraph (a) when we come to the point once again on Report, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4 not moved.]
5 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 5:
Page 1, line 14, after ("signified") insert ("to the employer").
The noble Lord said: In moving Amendment No. 5, with the leave of the Committee I shall also speak to Amendment No. 6. There are two very short points here. They both relate to paragraph (b) and they may be put in this way. We are now on the writing that is not contractual, which is within paragraph (b), and not within paragraph (a), by which the worker signifies his assent.
First, in signifying assent, will he not sign the document? If it is not signed, will there not be uncertainty about his assent, his "agreement or consent", as the paragraph has it? So would it not be better to have it signed, to require signature? The Government are concerned about uncertainty. We heard that in relation to Amendment No. 1. Surely signature should be required.
With regard to the first and main amendment that I am moving, since the worker is so signifying his consent, to whom is he signifying it? Everyone will assume that he is signifying his assent to the employer. But that is not what the paragraph says. That is a much more serious problem because one can well imagine a document which is proffered by the worker to someone else or perhaps a document proffered by someone else, perhaps a customer or perhaps someone in a commercial relationship, to the worker and that later being relied upon by the employer and the worker saying, "I didn't signify my assent to you in that document".
Many such situations can be imagined. They would always be unusual ones, but the law is concerned with the unusual situation; the law is concerned with the pathological rather then the normal. Therefore, in order to avoid uncertainty, will the Government consider perhaps asking that in paragraph (b) the writing, the written document, should be something which signifies consent to the employer specifically and clearly. I beg to move.
Lord Trefgarne: Both these amendments seek to change the provision in Clause 1(1) that a deduction is authorised if the worker,
"has previously signified in writing his agreement or consent to the making of it".
Amendment No. 5 requires that the worker has signified his agreement "to the employer". But the employer could not make a deduction authorised by this provision unless he knew that the worker has signified his consent. So the worker must in practice signify consent to the employer or to a third party, but at the same time informing the employer of this consent, which surely amounts to the same thing. If the worker gave consent to a third party but neglected to inform the employer, the employer obviously could not make a deduction authorised by such a consent. I assure the Committee that the additional words in Amendment No. 5 add nothing in that context of practical value.
Amendment No. 6 requires the worker to sign the agreement or consent he has given in writing. But the clause already requires the worker to give his consent in writing, which means that the worker must write a consent or sign a consent written by someone else. I see no reason to say that a consent written out by the worker but not signed is not a valid consent, and the more complicated we make these provisions, the more

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Likely it is that an employer will trip up on a small technicality and find himself having to repay to the worker a perfectly justifiable deduction from wages. I believe that these amendments add nothing and, arguably, create a rather confused Subsection. I hope that the noble Lord will not press them.
Lord Wedderburn of Charlton: Sometimes I think it difficult to make these subsections rather more confused than they are, but no doubt if we have achieved that, it has not been a very good step to take. The noble Lord the Minister's objection to the amendments seems to be that they change the provisions of the Bill. That, of course, is the objective of amendments to a Bill. Let us take the two examples that he gave, because they are important. He said —and I follow him a long way—that the agreement must be signified in such a way that the employer knows about it. So it can either be signified to the employer or to a third party and, so long as the employer knows about it, then that is good enough. Well, if the employee does not inform the employer, that he says, would create a problem.
But let us suppose that the third party then informed the employer. The Minister's example has to have added to it the rider that if a third party informed the employer then, on his hypothesis, that would satisfy paragraph (b). How uncertain! The noble Lord the Minister ended up by saying that in practice therefore it would be all right. Every time you hear the draftsman of a clause say, "Oh, in practice, it will be all right", you can be sure that there is something wrong with the clause. No one should ever have to defend a clause with the words, "If it is not right on paper, it will be all right in practice". A clause should be clear, a clause should cut out all possible—it cannot ever cut out all—predictable uncertainties. And there are two here.
The first the noble Lord did not meet—except merely to say that it would be all right in practice. As for the second, the noble Lord the Minister says that the worker must sign a document drawn up by someone else—I accept that—or draw up his own document which he need not sign. Why not? Why not say that it should be signed? Then everyone would know where they stand. For example, we have a document drawn up by, say, a noble Lord. I say, "This is your document". He says, "But I haven't signed it. It's not my handwriting". An element of uncertainty immediately appears.
Lord Trefgarne: I understand the point that the noble Lord is trying to make. I think it will generally be a matter of fact whether or not the employee actually wrote out the document concerned, if he did not sign it. It would be presumed generally in such circumstances—and I guess that they will be pretty unusual ones—that he had written it out in the presence of his employer who therefore knew that it was his document and that he was thereby assenting to the actions to which this provision applied. I understand the anxiety in the noble Lord's mind on this matter. If the noble Lord will allow me, perhaps I may look into this a little further, particularly in the context of a document which the employee has written
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out himself, to see whether there is any way in which I can meet the noble Lord's anxiety.
Lord Wedderburn of Charlton: I am glad to have that qualified assurance, as perhaps I should call it, from the noble Lord the Minister and on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 6 and 7 not moved.]
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 8:
Page 1, line 15, at end insert—
("and unless the deduction is made by reason of dishonesty, default or other conduct on the part of the worker.").
The noble Lord said: I beg to move Amendment No. 8, which stands in my name and in the names of my noble friends Lord Wedderburn of Charlton and Lord McCarthy. I think it would be convenient to take with this amendment Amendments Nos. 29 and 30. As I read the Bill, Clause 1 as it stands gives the employer carte blanche to make deductions from an employee's wages provided that the employee has previously signified his consent or agreement in writing. Those deductions can arise not from any action on the part of the worker or employee himself but from action on the part of others. That is the reason for this amendment.
Once the employee has made his agreement he cannot retract from that; and we must bear in mind that the employee probably made that agreement at the commencement of his employment and, once having made it, it is unlikely that he will be able to alter it unless there is a provision for review within the agreement or if the employer would himself agree or perhaps if the employer gave the employee the right to renegotiate the agreement without fear of victimisation or dismissal.
Clearly, as the noble and learned Lord, Lord Denning, pointed out in our first debate, the employee is put in an impossibly weak position when he is applying for a job or when he is starting his job. The employer consequently is put in an unacceptably strong position. For a youngster or a person who has been unemployed for a long period to be asked to sign such an agreement before he knows the implications and what his job entails is a shameful strengthening of the employer's position and a weakening of that of the employee. But once he has signed the agreement the employee is trapped. He has not realised, and probably will not realise until he begins work, that his employer can fine him not only for his own dishonesty or default or indeed for any conduct on his own part but also for such behaviour of others over whose actions he has no control.
We have heard, for example, of the case of the attendant at a petrol station. My noble friend Lord Wedderburn of Charlton and the noble Lord, Lord Coleraine, referred to cases of forecourt attendants. We heard of the case of a petrol station attendant controlling perhaps six pumps. It is no easy task during a busy period to control six pumps. Yet if a dishonest motorist fills his tank and roars off without paying and the attendant fails to note his number—which in any case may be obscured by dirt or, at night, may not be

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properly illuminated — the poor attendant, under Clause 1 of this Bill, if the employer so decides and the employee has agreed at the beginning of this employment, has to pay up for a dishonest motorist clearing off without paying for his petrol. He is being punished not for his own dishonesty but for the dishonesty of someone else. Such a situation is unfair and unjust. After all, it is not really the responsibility of the employee to insure his employer against the thefts of others but, as the clause stands, that is precisely what employees can be required to do.
That is not all. It will be possible, particularly in respect of stock discrepancies, for an employer to fine his employees for the dishonesty, misdemeanours and inefficiencies of others, perhaps even of himself. Certainly it will be all too easy for an employer to be lax in the matter of proper control mechanisms if any losses are to be made up by his employees. Why in such circumstances should the employer put himself to the trouble and expense of imposing proper control disciplines if in fact he can draw money at will from his employees?
This clause and this Bill are heavily weighted in favour of the employers and against the employees. They penalise financially the poorest section of the workforce and those whose very status and occupation indicate that they need most protection. Our amendment seeks to somewhat redress the balance between employer and employee and to protect the weakest, in bargaining terms, among the country's workforce. I commend the amendment to the Committee and I beg to move.
Lord Trefgarne: The effect of this Amendment, No. 8, will be to add a further restriction on contractual or agreed deductions or payments. It would ban deductions that are not made by reason of dishonesty, default or other misconduct on the part of the worker. This would ban a great many perfectly reasonable deductions: for example, to recover loans or to pay subscriptions to a company's social club.
Under the Bill as it stands, the worker can be made to compensate the employer for a loss or shortage only if the worker has a contractual responsibility for the loss or shortage; that is, if his contract makes clear that he can be asked to compensate the employer for the loss or shortage. This is clear law and it is reasonable that the parties should agree their own rules in the contract, and stick to them. It is quite reasonable that where a worker has accepted a contractual responsibility for losses or for the cash that is the lifeline of the business, he should meet such loses or shortages.
The Government have considered these amendments carefully but we have concluded that they would lead to uncertainty and complexity and would possibly cost jobs. The amendments would require the employer to seek to determine responsibility in fact for losses and shortages, rather than simply agreeing with the worker to make a deduction and drawing a line under the matter. This might make the employer, faced with continuing unexplained shortages that he had to meet as he could not prove dishonesty, more likely simply to dismiss the worker concerned.
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The amendments would lead to complex and lengthy tribunal cases, investigating who was in fact responsible for particular losses or shortages. The more we complicate the Bill with statutory constraints on the ability of employers to offer and workers to accept jobs on terms they can agree, the more likely it is that the number of jobs on offer will be reduced. I ask the Committee to accept that, however well-intentioned, the amendments could lead to complex-ity in law and to the loss of jobs.
5.15 p.m.
Lord Rochester: I have some sympathy with this amendment. There is a widely-held view that any deductions for cash or stock deficiencies are outmoded and should be replaced by better management and better methods of control. I think that was one of the points that the noble Lord, Lord Stoddart of Swindon, was making. My fear is that incompetent management may seek to hide that incompetence at the expense of the employees. Under the Bill it is possible for poor management to make deductions from wages rather than carrying out sound practices such as, for example, moving employees thought to be responsible for deficiencies in cash or stock from one shift to another. Our aim in the long term should surely be to get employers to accept that it is their responsibility to establish procedures under which their employees are protected from what may be the misdeeds of others, rather than taking refuge in penalising people who may not themselves be at fault.
I am in a difficulty here because, as I have already indicated in the general discussion on the first two amendments, I am not happy, any more than is the Minister, about doing something (except in the most exceptional circumstances) which violates, as it were, the contract between the employer and the employee. I rather hope that in those circumstances this particular amendment will not be pressed but that the thought which underlies it may perhaps be introduced at some later stage when I may find it easier to support it.
Lord Denning: I am afraid that I do not support the amendment. It is not wise to put rigid rules such as this into the statute itself. As I indicated earlier, it is really much better for there to be a code of practice or code of guidance so that the matter may be considered as to what is fair and reasonable in all the circumstances. I hope the tribunal will be sufficiently interested and have wide enough powers to decide what is fair and reasonable. I would not hamper it by having through-out this Bill rigid rules laid down for it, or for the employer, to operate on.
Lord Murray of Epping Forest: Very briefly, may I say that I would not wish it to be assumed that silence on these Benches implies, in any sense, acceptance of the statements or unsupported assertions made by the Minister; for example, the reiteration of the assertion that this measure is designed to produce jobs. There is not a shred of evidence that measures of this kind defend jobs. If his argument is that this measure is necessary to defend the job of a defaulter who other-wise might be taken to a tribunal, the answer is that if there is dishonesty his job should be at stake. If there is alleged dishonesty, he should have the right to go to

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a tribunal and defend himself there. I make the point merely because, if the Minister repeats something many times, that does not mean that we are accepting the basis of his argument.
Lord Harmar-Nicholls: What the Minister said is borne out every day with people who have to run businesses, particularly small businesses. When one is thinking of opening a department in another town, particularly when people have to handle money and one has to pay for the stock which is to be put into the shop, one must be satisfied with the people who will be handling money without day-to-day supervision, because one cannot always transfer top, responsible management to a new department in another town. The employer must feel that he has some sanction which will ensure that the business is being properly run, as regards the cash that comes over the counter.
The arrangement that you come to, perfectly properly, is that if the money taken does not conform with the normal percentages of the other branches, and if there are no circumstances which make that new branch different from the others, the employee knows that he will be responsible for any discrepancies that cannot be accounted for. That makes him that much more efficient. If you do not have that sanction, you think twice about risking your capital in the stock, in the rent and in all the other things that go with opening up new premises. That is common form.
I am interested, too, in a group of hotels where people are in charge of various departments and cash is coming in. If the money taken at the door for a dance, where there is no real check other than the tickets that have been handed in, is short somebody is responsible for the discrepancy. The people who take on that responsibility know that and they are that much more keen to see that the takings at the door conform with the tickets. If there are special circumstances, such as rowdyism, an employer takes that into account.
However, I do not think there is any need for the state to come in on this. There is no need for a statute, which means all kinds of pettifogging forms having to be filled in and procedures having to be followed. The Minister is absolutely right. I have great respect for the noble Lord who has just spoken as a trade union leader. He knows his men and it is right that he should want to defend them from any kind of interference by anybody. But I am on the other side of the counter and I know that, before you take a risk and put in investments, you want certain protections. This is a very sensible one which you enter into with the employee concerned. If it is not there, it will interfere with your decision as to whether you open a department, and therefore it will interfere with the employment of certain people.
Lord Stoddart of Swindon: It has been an interesting short debate. I think I can understand the reservations of the noble and learned Lord, Lord Denning, and the noble Lord, Lord Rochester. I understand their preference for the insertion of what is fair and reasonable and a code of practice. We had the opportunity to vote for just those things, but unfortunately the Committee in its wisdom or
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otherwise decided that it could not agree to that. Had it done so, this amendment would have been completely unnecessary and we should have certainly withdrawn it. But I understand those reservations and, in any event, I shall probably not press the amendment.
The noble Lord, Lord Harmar-Nicholls, seems to think that employers in the retail trade, and in other such trades, should have this sanction of fining their workers, because that is what it amounts to—
Lord Harmar-Nicholls: No.
Lord Stoddart of Swindon: Yes, indeed. Just listen for a minute. He is proposing that there should be a sanction in those trades of a fine to be placed on the workers quite indiscriminately in respect of defalcations, shortages in the till or shortages of stock. That is what he said. I was listening to him very closely.
Lord Harmar-Nicholls: The noble Lord's interpretation of what I said bears no relation at all to the words that I used. What I said—and I repeat it—was that I believe that a contract made between the employer and the employee is all that is necessary. They both agree that, in order to get the efficiency that they both need, they are prepared to pay for discrepancies which common sense shows are there. There is no question of fining anybody. The kind of interpretation which the noble Lord put on it shows the bias with which he approaches this question: that the employee can never be wrong but that there are dirty employers who always want to be wrong. That is the wrong attitude here and the noble Lord reflects it far too often. But he must not reflect it by misinterpreting my words.
Lord Stoddart of Swindon: On the question of bias, I think that it is a case of the pot calling the kettle black. The noble Lord is very well known for his bias in many respects, and for his forthright speaking in the House of Lords, which is particularly what we want. I understood perfectly what he said about the contract of employment, but I thought I explained earlier the difficulties that a worker may very well be in when he signs that contract of employment. He is at that moment perhaps starting a job without knowing what it entails, or he may be applying for a job but before he can get it he will have to sign the contract. Therefore he is in a weak position, at that point in time, in relation to his employer. That is what I was getting at, and in those circumstances it is wrong. It militates against the interests of the employee, and in favour of the employer, if he is under that contract subject to being fined for defalcations and shortages which may not be his own fault.
The noble Lord asks: who is going to start a small business or department in those circumstances? Marks and Spencer did and they employed workers under the protection of the Truck Acts. Today, Marks and Spencer see no reason to fine their employees for shortages and what have you. The reason they do not is that they manage their business properly and ensure that there is proper control, both of cash and of stock. It is made clear to their workers that any of them who

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are found to be dishonest will no longer be welcome to be employed by Marks and Spencer.
Although the noble Lord the Minister said that condoning dishonesty by punishing collectively is better than the sack, from the point of view of the business and from the point of view of his fellow workers it is much better that a dishonest worker should be sacked. It is a protection for the employer and it is a protection for the other people who are employed. That is the way to run a business. I therefore think that the noble Lord, in suggesting and bringing up this question of dismissal, is guilty of perhaps misleading himself and by misleading himself is misleading the Committee. As I said, I do not intend to press this amendment at this stage, but I hope that the noble Lord, Lord Trefgarne, will ensure that the debate which has been a short but interesting one is well read in the department. It may well be that we shall come back to this matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 9 to 11 not moved.]
5.30 p.m.
Lord McCarthy Lord McCarthy moved Amendment No. 12:
Page 2, line 3, at end insert—
"(2A) Where an employer makes a deduction from any wages of any worker employed by him and one ground for such deduction relates to any loss or any event causing, or likely to cause, loss, to the employer, which has been, or which it is reasonable to believe has been, occasioned by the dishonest conduct of some other person without default on the worker's part, the deduction shall not exceed one-twentieth of the net amount of the wages payable to the worker on that day.
(2B) Where an employer receives a payment from a worker employed by him and one ground for the payment relates to any loss or any event causing or likely to cause loss, to the employer which has been or which it is reasonable to believe has been, occasioned by the dishonest conduct of some other person, without default on the workers part, the payment shall not exceed one-twentieth of the net amount of the wages payable to the worker on that day.").
The noble Lord said: This amendment is one more attempt to civilise the operation of Clause 1. As has been said by my noble friends on this side of the Committee, if our Amendment No. 1, or if Amendment No. 2 which was moved by the noble Lord, Lord Rochester, on the reintroduction of the reasonability test, had been passed by the Committee, all these amendments would not need to be moved. It is precisely because the Government now take power or now wish to give employers power to dismiss unreasonably and unfairly in any circumstances that we find it necessary to move these amendments. In answer to the noble Lord, Lord Harmar-Nicholls, I have to say that we are not asking for any category of new and extended rights.
It is our central submission today that the workers so far as they were covered were better off and would be better off with the 1896 Act than they will be under this Bill. We are not asking for anything that has not existed since 1896. In effect, we are not asking for the same degree of protection. We are trying to mitigate the consequences of what the Government are doing, particularly because they will not accept the retention of the fair and reasonable test. There is nothing new in what we are trying to seek.
So far we have not had any success not simply on the reasonability test but also on the small and minor points which my noble friends have sought to introduce to the Committee. What we are trying to do in this similarly minor amendment is to limit the rate of repayment to one-twentieth of the wages due on that day in circumstances in, "which it is reasonable to believe",
that the deduction,
"has been occasioned by the dishonest conduct of some other person without default on the worker's part".
In other words, this amendment bites only where the deduction arises as a result of somebody else's conduct and not the conduct of the worker concerned, where the employer cannot show that the worker has been dishonest or in some other way in default. In those circumstances, because noble Lords opposite would not accept any of our previous amendments where we wished to restrict the employer's rights to do these things by reference to dishonesty and so on, we are asking them to accept some small reduction on the rate of return.
There are many reasons one could give why this is a modest thing to ask. But I would suggest that the Government themselves accept the principle behind this amendment because the Government propose in Clause 2 in particular that where workers sell directly to the public or to fellow workers or to other individuals in their personal capacities, there shall be a limit of one-tenth—that is what Clause 2(1) says—and that the rate of repayment,
"shall not exceed one-tenth of the gross amount of the wages payable to the worker on that day",
whether it is his fault or not. We say that if in those circumstances the Government are prepared to accept a limit of one-tenth, surely in the rather more general circumstances of this clause they would be prepared to accept the limit of one-twentieth. I beg to move.
Lord Trefgarne: Under the Bill as it stands a worker can be made to compensate the employer for a loss or shortage only if the worker has a contractual responsibility for the loss or shortage (for example, his contract makes clear that he can be asked to compensate the employer for that loss or shortage). This is clear law and it is reasonable that the parties should agree their own rules in the contract and stick to them. It is quite reasonable that where a worker has accepted a contractual responsibility for losses, or for the cash that is the lifeline of the business, he should meet such losses or shortages.
We have considered this amendment very carefully but have concluded that it would lead to uncertainty and complexity. The amendment would require the employer to seek to determine responsibility in fact for losses and shortages rather than simply agreeing with the worker to make a deduction and drawing a line under the matter. This might make the employer, faced with continuing unexplained shortages that he had to meet as he could not prove dishonesty, more likely simply to dismiss the worker concerned. The amendment would lead to complex and lengthy tribunal cases investigating who was in fact responsible for particular losses or shortages.
The 10 per cent. limit on deductions on account of cash shortages or stock deficiencies is a response to

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what emerged as a particular problem area in the consultation exercises conducted in 1983 and 1984. We consulted on the 10 per cent. figure, which proved acceptable. There is no evidence of any more general problem and no reason for the 5 per cent. limit proposed in this amendment. Even if the principle that workers could not be asked to accept a contractual responsibility unconstrained by various statutory controls on the behaviour of the employer were accepted, these particular controls seem to have no great merit. Why a 5 per cent. limit on wages when someone else is responsible for the loss? I think it would be wisest just to leave matters to the parties as is proposed in the Bill.
Lord McCarthy: The noble Lord really is amazing. If he wants to say that he should like our amendment to propose one-fifth rather than one-twentieth, of course we will do that; but otherwise what he says is quite irrelevant. We say one-twentieth because we are trying to be reasonable. It is not an argument against our reasonability for the noble Lord to say that we should have been unreasonable or less reasonable.
Then he says that he thinks there are circumstances in which when stoppages occur as a result of cash loss or stock loss one-tenth is a reasonable figure; but where deductions arise not from cash or stock but from some other cause no figure at all is reasonable. What possible argument can there be for that? I expect the noble Lord to make the arguments about uncertainty. I expect him to tell me that otherwise employers will not be able to employ people. I think it is time he set that to music.
Amendment, by leave, withdrawn.
[Amendments Nos. 13 and 14 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 15:
Page 2, line 14, after ("more") insert ("express").
The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendment No. 16 as both amendments refer to the same point.
We are now, as my noble friends and I see it, faced with a Bill where every part of the dice is loaded against the worker, at any rate against the worker who does not have strong union organisation. The point has not yet been made, but what spin-off effects this Bill will have in those areas where the union is organised among workers involved has yet to be investigated. No doubt at some point the Government will tell us what they expect there.
These are the circumstances of the vulnerable and isolated worker. He is now to be bound by contract or by a written document signifying his assent, with a certain number of uncertainties. We hope the Government will say there is at least a document that he has signed. We then come to what is meant by his contract—the "relevant provision" in subsection (3). The terms which are within the relevant provisions are either express or implied. If the Government are concerned about certainty and uncertainty, such a phrase in a statute of this kind is a recipe for disaster. The Government must take the responsibility that it is not just a disaster in the abstract but a disaster for the
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worker because it will always operate against him on the structure that we now have.
Lawyers know very well, and laymen know even better if they have been involved in litigation (and many laymen know as well as lawyers) that terms implied into contracts by tribunals or the courts, and especially appellate courts, are often very difficult to predict. There are terms implied in fact; there are terms implied in law; there are terms implied because of that well-known test, "An officious bystander would think that the parties intended to include them although they did not include them". There are terms implied to give what the court thinks is, in the old phrase, "business efficacy" to the contract; there are terms implied by some judges because, especially today, they think it is reasonable for them to be implied.
The Government, who eschewed "reasonableness" on our Amendment No. 1, specifically include implied terms and bring in reasonableness in litigation by another door. There are terms implied because of a custom or usage of the trade; and there are terms implied by other judges because they see them as part of the relationship between the parties and not coming under any of the other heads. Those broad categories only begin to elucidate the complexities of the implied terms.
Implied terms are nearly always the cause of controversy. For example, in 1931 the Court of Appeal implied a term allowing an employer in Lancashire to deduct for bad workmanship because, the court said, that was a normal part of Lancashire cotton weaving. One of the Lord Justices came from the area. He believed that, even if the workers had never heard of it, that had to be implied into the contract.
Many Members of the Committee will have seen, a little outside the area, the decision on 30th May this year about what is implied in the contract of a teacher. That was a matter of great dispute between the parties. The learned judge in the High Court held that the contract of employment in a professional capacity would not normally be expected to detail all the obligations but that it must include whatever could be seen as a professional obligation, though not referred to. He thought that meant the standards set both by the profession and by public expectation. I appreciate that is not about deductions but it gives some illustration of the kind of controversy and complexity which always surrounds implied terms if an argument breaks out between the parties. Whether those decisions are right or wrong does not matter, but they illustrate the uncertainty.
Why let lawyers litigate when—and the Government say this is what they want—there should be clarity in the contractual arrangement? Why have the matter brought to implied terms? Indeed, the matter is to be put into writing in one way or another; In subsection (3)(a) and (b) one would expect something in writing if only because (and this was an amendment that we did not move but which referred to the issue that most employees have written particulars of their employment) one would hope to find a reference there. So why the insistence that we must have implied terms to deal only with the situation of an oral agreement? That would seem very undesirable.
Consent under Clause 1(1)(b) must be in writing. Why should we not have similar clarity in the Bill, even on the basis of the Government's logic and not on the basis of any of the arguments we have hitherto advanced? Surely the Government will consider again whether implied terms should be kept out and that clarity between the parties must at least make the deduction clause an express term of the contract—that refers to the first amendment—and leave out reference to implied terms because that will only increase uncertainty and establish an area for new controversy which would not otherwise be there. I beg to move.
5.45 p.m.
Lord Rochester: I should like a little more clarification from the noble Lord, Lord Wedderburn, because I do not altogether understand the significance which is attached in this amendment to the distinction between an express and an implied term of contract; and I must admit to being something of a layman in these matters. If, for example, there is a collective agreement which sets out, say, a disciplinary procedure, that could lead to pay being withheld and that would surely be recognised (would it not?) by any court or tribunal as a valid implied term of the employee's contract.
Moreover, as I understand the Bill, it protects employees against arbitrary wage deductions based on implied terms because the employer has to tell the employee that such a term exists and give him a written explanation of what it means before making any deduction. The employee also has the fallback remedy to which I suppose we shall come later. If he believes there is no implied term in his contract he can complain to an industrial tribunal, which will decide whether there is such a term.
It may be that I have misunderstood what the noble Lord has in mind or that there is much more to it than what I have seen, but I felt that I should give expression to that doubt.
Lord Denning: I am afraid I do not support the amendment. When speaking about terms of a contract we in the law know perfectly well that they can be express or implied, or they can be oral or in writing; and we always manage to deal with them quite well. In the old days we had requirements for the terms to be in writing, but we have lost all that and we can have them quite generally, as the words are in the Bill. Therefore I do not support the amendment.
Lord Trefgarne: Having listened to the noble and learned Lord, I am not sure there is any more I need say; but perhaps I should explain that under the Bill as drafted the employer will have to give the worker a copy or a written explanation of any terms authorising a deduction from wages prior to the making of a deduction authorised by them. The important objective is to ensure that the worker knows of the terms before any deduction is made on account of them.
Taken with Clause 1(4), which deals with retrospective amendments of the contract, these are strong controls. Proposals to strengthen these controls must be balanced against the added complexity for the employer, and the danger of creating a situation where
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he can easily trip over a technicality. The amendment would rule out implied terms of contracts from being terms which could authorise a deduction.
The amendment seeks to bar the implied terms of contracts from being terms which, as I say, could authorise a deduction. I understand that it is common for terms of contracts to be implied from collective agreements with trade unions, custom and practice in the industry, or company rule books. A relevant example would be a term implied from a company disciplinary procedure which might itself be part of a collective agreement. There seems to be the thought behind the amendment that there is something undesirable about implied terms. That is not the case; but in any event, since the Bill makes it clear that the worker must be given a written explanation of the implied term, he will not remain in ignorance of the term simply because it is implied. I hope that in the light of this explanation the noble Lord will not wish to press the amendment.
Lord Wedderburn of Charlton: If I do not press the amendment, I shall certainly press the argument, and it is a matter to which we may come back on Report because, with great respect, a number of fallacious concepts seem to be floating about in the Committee. It is perhaps the hour of the day. For example, there is a distinction made between terms which are implied in a contract and terms which are incorporated into a contract by reference.
So far as concerns collective agreements, the normal position is that the statement of written particulars of the employee will refer to the collective agreement, and that is not an implied term. I know of no authority to say that that is an implied term. It is a term incorporated by reference. If the two categories alone are permitted, it is more in the camp of "express" than anything like that of "implied". A company disciplinary procedure incorporated by written particulars or other document or express reference by the contract of employment is of course incorporated.
It is true that on occasion when an employer does not get his written particulars right, or when he is slovenly about the document which he is obliged under Section 1 of the Employment Protection (Consolidation) Act to give to each employee, the courts sometimes have to bend their minds to implying other documents—be they collective agreements or works rules—when it comes to the contract of employment, and they have frequently done so to the disadvantage of employees in the last decade.
It is exactly that fact to which my noble friends and I object. We object to the fact that the worker will not have the certainty of finding it in his written particulars or other document, be it under this Bill or under the Employment Protection (Consolidation) Act, and there will plainly be a great deal of overlapping of pieces of paper in that respect to which no attention appears to have been given. He is entitled to the certainty of something written down which will attract his attention. But if one is saying that we can use the implied term where the employer has been slovenly in his practice, and where he cannot even be bothered to give to the employee the proper written particulars to refer him to the documents where the deduction clause

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may be found and that that is where the implied term will be used, of course it will. That is precisely the matter to which we object in this amendment.
I say with great respect to the noble and learned Lord that the idea that just because most statutes and most judgments use the phrase,
"terms of a contract express or implied, oral or in writing",
then we have to use it here seems to me not to follow at all. Indeed, the implied term has expanded its scope in the contract of employment in the last 10 years—it is common knowledge—to the disadvantage of workers. In cases such as the notorious Hollister decision the courts have expanded the implied term "to co-operate" on the workers' side in such a way that, despite one or two judgments putting obligations on employers, managerial prerogative has been expanded in business reorganisation in the common law to a very large extent.
If the noble Lord, Lord Trefgarne, says that it will be all right because the worker will have something written down and he must know of it under this Bill, what is the point of the implied term?—because then presumably this will be covered by the Bill without the implied term and a written explanation will be enough.
I confidently expect that when we look at Hansard it will be found that there is something in the point that implied terms will operate exactly as I have outlined, when this Bill even on its own premises, should not encourage the practice of bad management. That is a situation where management has not given to workers in advance the documentary evidence of their obligations to which they are entitled. It is precisely there that the implied term will be used and, on the structure of the Bill, must be used. We ought to look again at the matter when we see the nature of our debate today. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 16 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 18:
Page 2, line 19, after ("contract") insert ("or any such provisions").
The noble Lord said: I wonder whether I may put this amendment very briefly to the noble Lord the Minister because I think that perhaps there is no difference of principle, especially in the light of a phrase that he used when speaking on the last amendment. I am moving Amendment No. 18 and for convenience I shall speak also to Amendments Nos. 19 and 20.
The point can be put simply. The noble Lord the Minister, as I understood him, remarked that the Bill prevented certain types of retrospective deduction. It is fairly obvious that on anybody's premises retrospective deduction is not really a very good idea. However, as I understand it, subsection (4) allows for the prohibition of variations of the contract under Clause l(l)(a) and all types of written consent under Clause 1(1)(b), but that does not cover the case of a contract which itself permitted retrospection.
I should like to give an example. Let us suppose that a young man helps out on Saturdays in a computer shop; and any Members of the Committee who have had any contacts with computer shops will know that the best time to go to these places is on a Saturday when the teenagers are there, because they know all about computers. So the young man helps out from time to time and then he is taken on as a part-time employee. Let us suppose that there is a contract in that clause which allows for deductions for any losses which occur in any period during which he has worked there. That would not be a variation. It is an original contract, and as I understand it it will not be covered by Clause 1(4). It is a contract which provides for the possibility of retrospective deduction without variation and of course does not come under the heading of the written consent.
I have other examples, but I shall leave it at that. In the hope that the Minister will say that he will take this amendment away and look again at Clause 1 (4) I beg to move.
Lord Trefgarne: Clause 1(4) prevents employers from varying the contract or obtaining the consent of the worker to the making of a deduction in respect of a particular event and then deducting in respect of an earlier event. For example, it would be unlawful for an employer to vary the contract or obtain consent to his making deductions for lateness, and then to institute deductions for incidents of lateness that had occurred some months previously.
I must assure the Committee that Amendments Nos. 18 and 20 are of no effect, but that Amendment No. 18 amends the reference to relevant provisions in Clause 1(4) to cover all provisions of a contract, and since deductions can be authorised only by relevant provisions as defined in Clause 1(3), this is of no effect. Amendment No. 20 simply says that deductions or receipts covered by the subsection are unlawful, which is already the case. Amendment No. 19 would have the effect that an employer could not enter into a contract with the worker and then make a deduction from his wages on account of a matter that occurred before the contract was entered into.
I wonder how real is the problem that the amendment seeks to deal with. If an employer agrees to take on a worker for the first time, what event might there be that happened before the contract was forged in respect of which the employer might want to make deductions? It cannot be anything to do with the employment relationship, as there was no employment relationship.
The amendment might have some unfortunate side-effects. It would debar an employer from reaching an agreement to take on a worker, subject to the worker agreeing to have deductions from his wages in respect of something that had already happened before the employment commenced; for example, the individual had borrowed money from the employer before he worked for him or had run up a debt with him as a customer of his business.
The problem that the clause deals with is where the employer agrees terms, seeks to vary them and then makes a retrospective deduction in respect of an event related to the employment relationship that occurred

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before the variation. This is rather different from employer and worker agreeing terms at the outset of employment that incude provisions for deductions in respect of past events when the worker was not employed but was perhaps a customer. I think that the amendment adds little by way of extra protection, at a possible cost of some unintended side-effects, and I hope that the noble Lord will not wish to press it.
6 p.m.
Lord Wedderburn of Charlton: One of the problems with these amendments and with the noble Lord's response is that many of them relate to apparently small points, but they are real ones. Each one, it is argued, will either be all right in practice or will have no effect.
If I may illustrate, the Minister by advancing up the flanks, as it were, has forsaken his mid-field. He says that there must be the possibility in a contract to allow for the recovery of money borrowed from the employer or debts incurred previously by way of business; so the principle of retrospection is not to be absolute. I can see some force in that. One might wish to take account of that, but the Minister will not allow variations for that. Why not? The provision does not allow variations for money borrowed, debts run up in business, and so on, previously. On the Minister's logic he ought to allow variations for that.
I merely take two points. Secondly, the Minister asks how real all this is. It is very real. The example that I gave was a simple one of a youngster working in a shop, just helping out and then being taken on. But we are dealing especially with the part-time employee, the short-term contract, the casual contract and all the other forms of a typical and marginal employment which are now being analysed by the academics but which are not doing a great deal of good for some of the workers, compared to their need for full-time and secure employment. We rarely get the numbers broken down into the jobs that are part time and insecure.
The point about short-term or casual contracts is that there may well be a short-term contract for a few days and then for a week or two. Those would be broken up and they would be separate contracts. They would not fall under the ban of variation. They are not variations one of another; they are short-term and separate contracts, except that in some such cases the courts—and this is an area of complete confusion in case law—imply what they call a global contract to cover the relationship. But in the majority of such cases there are fragmented, short-term relationships for such workers; fishermen, for example. There have been cases recently where people have been held to have only short-term contracts, interspersed with periods away.
I take the Minister's point that different types of debt may well be considered separately. But no kind of retrospection is to be forbidden there. It is not within the Government's logic to permit restrospection there, for all types of debt anyway, and to ban it for variation. I ask the Minister whether he will say that he will look at that again. In practical terms that could be an important point. We all know that deductions are often made in respect of stock losses—perhaps a little
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less so for cash shortages—which take some time to come to light. Periods of time matter in the relationship between the parties. In asking leave to withdraw the amendment, I hope that the noble Lord will consider carefully what result subsection (4) as it stands will have.
Lord Trefgarne: Before the noble Lord seeks permission to withdraw the amendment, he has asked me specifically whether we will look at the matter again. I am bound to say that I cannot see much scope for that. However, I wish to be as constructive as 1 can be. I think that he is asking us to look at the possibility of distinguishing among different kinds of debt, where some would be deducted retrospectively and others would not. I believe that that presents considerable difficulties of definition. Nonetheless I shall ask for the matter to be looked at, but, to be frank, not with much expectation of success.
Amendment, by leave, withdrawn.
[Amendments Nos. 19 to 21 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 22:
Page 3, line 12, after ("person") insert ("(not being a person employed by, or directly or indirectly under the control of. the employer)").
The noble Lord said: This amendment is concerned with Clause 1(5)(d), which is already known by those who know the Bill—and they are few so far but there will be more—as the check-off clause. It takes out of all the controls of this part of the Bill certain deductions made in accordance with its terms, with the agreement of the worker, which are to be deducted and paid over to a third person.
Many people concerned with employment matters will immediately think of the check-off; that is to say, the arrangement whereby the employer deducts a portion of wages due to the worker who is a union member and pays it over to the trade union. It is an arrangement which in terms of stability and good industrial relations has an important place in a number of industries and indeed now in a number of services and in the public sector.
Clause 1(5), however, goes rather further. It relieves the employer of the prohibition on deductions in subsection (1) so that he is relatively free, although it then reimposes the requirement for consent. As it stands, this provision in the clause relieves the employer of the requirement to gain consent, whatever the relationship of the third party to him. It does not seem to us that that can be right.
Some aspects of the Truck Acts originated in the "tommy shop" system. I am not suggesting that that would necessarily be re-created; that is, shops under the control of the employer. But would it not be desirable, as a condition of exempting the employer from the normal controls of subsection (1) and imposing merely the requirements of consent in subsection (5)(d), to insist that the third person should be independent of the employer; or should there not be some other formulation which prevented any kind of abuse in that respect? I put the point shortly, and I beg to move.
Lord Trefgarne: I understand that it is common for workers to agree that the employer can deduct sums and pay them to third parties—for example, to a trade union, a charity or a social club—with the third party telling the employer how much to deduct; for example, what subscription is due. The most common example is the check-off of trade union subscriptions, the worker signing an agreement that the employer pays directly to the union subscriptions of an amount notified by the union. Such arrangements are perfectly proper, but it would be wrong, I think, if the employer was guilty of an unlawful deduction if the union got its calculations wrong.
The amendment is clearly designed to protect the worker where the third party is employed by or controlled by the employer. The thought is, I think, that the employer could possibly instruct the third party to advise him to deduct a larger sum than was properly due, part of which was then paid back to the employer.
I believe that the worker is already well protected. Deductions on account of those arrangements are still covered by Clause 1, if the worker has not signed his agreement to the arrangement. The protection of the worker against the abuse of that provision is that he can always withdraw his agreement. I recognise the concern that lies behind this amendment, but I think that it is unnecessary because the worker is well protected even without it.
Lord Wedderburn of Charlton: I hear what the noble Lord the Minister says. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Baroness Cox): I must point out that if Amendment No. 23 is agreed to I shall be unable to call Amendments Nos. 24 and 25.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 23:
Page 3, line 16, leave out from beginning to ("or") in line 22.
The noble Lord said: I think that it will be convenient if I refer also to Amendments Nos. 24 and 25. They are all related to clause l(5)(e)—deductions made from workers' wages where the employee has taken part in a strike or other industrial action.
There are three major points which support the amendments to which I am speaking and moving. First, the paragraph relieves the employer of the prohibition upon deduction in Clause 1. The first thought that comes to mind is, why? Should there be no control just because there is a strike or industrial action? One might suggest that the employer should say in advance what he will do if he intends to deduct sums for industrial action, at any rate in general terms. That might lead to a document as to his policy on the matter. However, that is not required. He is left at large.
Secondly, as has been said in another place, it appears to be one of the Government's reasons for having the clause, that in effect it gives the employer the right in law without constraint to fine anyone who dares to take industrial action. What he can do will
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depend upon the state of industrial relations, trade union strength and the labour market. The Government may then say that one of the reasons for the provision is to keep strikes and industrial action away from industrial tribunals. If the deductions and fines for industrial action were covered by this Part of the Bill, complaints could be made to industrial tribunals. It has long been a policy of employment protection legislation that the controversial issue of what is a just or defensible industrial action, lock-out or strike should be kept out of industrial tribunals.
Of course, this is the Government which invented the procedure of joinder—that the trade union can be joined in an unfair dismissal action in an industrial tribunal if it threatened to take industrial action which induced the dismissal. With those provisions, the Government pushed the justice and equity of strike action into the tribunals.
It has been said in another place that the Government are relying upon the traditional argument—keep strikes out of the industrial tribunals. If that is so, the jurisdiction under the present law of unfair dismissal with regard to industrial action and strikes (the jurisdiction of the industrial tribunal) is destroyed under Section 62 of the 1978 Act in effect only where the employer treats all employees alike—that is to say, where he does not victimise one or some by dismissing them or refusing to re-engage them as against the others who were involved in the same industrial action or, under the amendments, the same industrial action at that establishment.
As it stands, the Bill allows for discriminatory fines and deductions and so it is not in line with traditional policy. Amendment No. 25 is a probing amendment to ask why that should not be included. If one is to impose the traditional policy of keeping industrial tribunals out of strike issues, why do the Government not do it in the way that is traditional—by saying that can be the case where the employer treats all his workers alike?
In other words, the clause takes a bit of the old policy and adds a bit of its own. To keep out the industrial tribunals, it excludes fines for strike action from the controls and any obligation to say in advance what the employer's policy will be with regard to that matter. I should have thought that was an arguable point on any basis. Having done that, and used the traditional policy for that, the provision does not go on to tell the employer that he will be at risk if he victimises some people as against others.
Our amendments ask the question: why not? If the logic of the parallel with Section 62 of the 1978 Act is to be followed, surely some equity must be imposed as a price for the lifting of all the controls. There is nothing here about workers' consent. I know what the Government will say about that. They will plainly say that where a strike and industrial action are concerned the workers' consent is irrelevant.
I should have thought that two other points would have caused the Government to look with care at the clause—first, the requirement that the employer should in some circumstances say something about his policy in writing and, secondly, the determination that if the matter is to be taken from industrial tribunals by removing it from the clause, the price should surely be

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that there is no unfair discrimination and victimisation merely because people have taken industrial action, which, in some countries and sometimes in this country, people like to refer to as the right to withdraw their labour.
At present far more than anything we have so far met in the Bill, the clause not only permits but positively encourages management victimisation by way of fines and deductions of those who take part in industrial action. I know that it will be said that such people may be lucky to have their jobs back. That is the stage we have reached. We cannot accept that that is a proper piece of legislation to pass now. I do not think that it is a piece of legislation that will be found in that form in any other Western European country. In the light of these amendments, we ask the Government to look at the matter again. I beg to move.
6.15 p.m.
Lord Trefgarne: Perhaps I may just swiftly explain the objective of Clause 1(5)(e). If a worker is involved in industrial action—for example, in a go-slow or other similar action in which the worker stays at work but deliberately hampers production—the employer is often entitled to deduct something from his wages. There may be an express term in the contract that allows for that, but more often there will be an implied term in the contract that the worker does not behave in that way and that, if he does, the employer is not obliged to pay him his wages in full.
The worker can of course go to the civil court and argue that the employer is in breach of the contract in making such a deduction. There are a number of cases where a worker has taken an employer to court and, in some instances, the courts have disagreed with the employer's interpretation of the implied term of the contract and have made an award to the worker.
Clause 1(5)(e) leaves the existing legal situation in respect of deductions on account of the worker having taken part in industrial action broadly unchanged, Clause 1 will not apply to such deductions, so the worker's redress if he believes that the deduction is not contractually authorised is to the civil court for breach of contract rather than to an industrial tribunal. In the Government's view, it is best that contentious and difficult problems concerning deductions in disputes, where emotions may run high, remain matters for courts and not for industrial tribunals. The courts—not tribunals—are best placed to deal with such matters. Each of these amendments changes that situation. Amendment No. 23 reverses it entirely. Amendment No. 24 effectively does the same thing as a tribunal could be asked to decide if a deduction was authorised by the worker's contract. Amendment No. 25 has the effect that a tribunal could be asked to consider whether the employer had treated all workers on strike equally. It is arguable, I believe, either way, whether the employer should be prevented from being selective and from deciding to forgo his right to make deductions from some workers, although our fundamental objection to the amendment remains that these issues are best not put to tribunals at all. I believe that Clause l(5)(e) is essential and that each of these amendments destroys it or erodes it significantly.
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The noble Lord, Lord Wedderburn, was concerned to know why we should exclude deductions for strikes and industrial action. The answer is that it is partly because, as the noble Lord himself said, the scope of implied terms is often uncertain, and particularly so, I fear, in this field. The employer would have real difficulty knowing what the implied term was and would therefore be debarred from making any deduction by the technical requirement of Clause 1 (3)(b) to explain the effect of the term in writing to the worker. I hope that these difficulties will have persuaded the noble Lord that he should not press the amendment.
Lord Wedderburn of Charlton: I am nearly encouraged to press it, especially when the Minister, to whom I am grateful, says that deductions can be made in the case of a go-slow because it will be a term, and often an implied term, of the contract that employers are allowed to do so. As seen in the recent teachers' case, this may be difficult to interpret. But the noble Lord goes on to say that implied terms arc very difficult and that this explains why the Government have excluded the area of strikes and industrial action from the scope of Clause 1. To exclude the problems of implied terms from Clause 1 and to leave the matter to common law where one finds implied terms that are very difficult to interpret seems a curious policy to follow. The Government wish of course the employer to be in the clear, so far as this is possible, in respect of fines for industrial action. That is what they wanted; that is what they have done. It is that approach that these amendments were meant to challenge. 1 beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
[Amendments Nos. 24 to 26 not moved.]
On Question, Whether Clause 1 shall stand part of the Bill?
Lord McCarthy: The Committee will not be surprised to find that we wish to oppose the Motion that the clause stand part of the Bill. I wish to say a few words about what the clause does, what the Government have said and done this afternoon and what the consequences, we believe, will be. This clause is to replace the provisions of the 20 or so Acts dealing with deductions and payments by workers with two broad tests: what is allowed and provided by the statute, and what is contained or implied in the contract. We have sought in various ways to argue that this is insufficient. We have sought to argue that it is an imperfect form of protection, in particular in relation to Section 1 of the Truck Act 1896 and most especially in relation to that part of the 1896 Act that has been represented this afternoon as the reasonability test.
As a result, we have tried to put down 10 effective—nine of them very minor—gateways, into reasonability. We tried to get the Committee to reintroduce the reasonability test. The noble Lord, Lord Rochester, tried to get the Committee, if not to introduce it by statute, to put it in the code of practice. We tried to get the Committee to limit the authorisation of deductions to those that were contractual only. We tried in Amendment No. 5 to say that consent must be by the employer. We tried in Amendment No.8 to confine a deduction to

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dishonesty and default of conduct on the part of the worker. We tried in Amendment No. 10 to limit the rates of reduction. We tried in Amendment No. 15 to insist on express intent. We tried in Amendment No. 18 to limit retrospection and, in Amendment No. 22, to have a limit on what can count as a lawful third party. Finally, my noble friend Lord Wedderburn tried to limit deductions in cases of strikes in Amendment No. 23.
What have been the Government's answers? I must be fair. Apart from the one, or perhaps one and a bit, that the noble Lord undertook to take away, to our 10 reasonable but minor ways into reasonability we have had five defences. The noble Lord has said that the amendments, or parts of the amendments, were declaratory of the Bill and therefore not necessary anyway. The noble Lord has said that even if they were not declaratory of the Bill, they would have no effect and were not required. Thirdly, he has said that they might have some effect but that they would also, unfortunately have side effects and that such side-effects could not possibly be tolerated.
The noble Lord has said repeatedly that the amendment would foster uncertainty. Here, we have had some advance on previous statements by the Government. I congratulate the Minister. Previously, and particularly in respect of the reasons for the Government taking out the reasonability test, we had no explanation at all. The Secretary of State on Second Reading—I had intended to read out his remarks but I shall not now do so—did not really refer to the reasonability test specifically at all. He talked about the chaos and the archaic nature of the present Truck Acts, as indeed did the Minister in another place. What they are really talking about is the difficulty of doing something about restrictions on deductions by check. That may be chaotic. We are talking about stoppages. We are talking about deductions.
For the first time, we have had some kind of defence in terms of uncertainty. We have been told about the position of the employer who would be uncertain if any of our amendments were accepted. And finally of course we have had our old friend, the employment effect. Employers would not like it. If these things were done, employers might not employ people, might employ fewer people or might dismiss people. Here, the Government ease into an area where there are a few facts. That is something that the Government do not like to do. Several surveys have been done including those by the Institute of Policy Studies and the Government's own study, Burdens on Business. These suggest overwhelmingly that when businessmen, even small businessmen are asked what it is that limits employment, their reasons—in so far as they give reasons—have nothing whatever to do with the Truck Acts. They are to do with VAT, with taxation and with all kinds of complex forms that come from the Department of Trade. Very few, if any, talk about Section 1 of the Truck Act 1896.
Nevertheless, the Minister says that there will be an employment effect. It is not only we, on this side, who say that there is no justification for this clause or indeed for Part 1 of the Bill. Evidence has been submitted, following upon the consultative document,
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by the National Association of Citizens Advice Bureaux, by the law centres, by the CBI and by the Institute of Personnel Management. The general thrust of this evidence is that there is no justification for this part of the Bill. There may be some justification for the chaos of check restrictions. But there has been no substantial evidence against Section 1 of the Truck Act 1896. We have therefore to ask the Committee to oppose this clause. We do not say that, in destroying the unfair and unreasonable provisions of the 1896 Act, that the Government want to be unfair and unreasonable. We do not say that the Government believe that the result will be that employers will be unfair and unreasonable. We say that, in the interests of their ideology and their friends, they do not care whether or not they are unfair or unreasonable.
6.30 p.m.
Baroness Turner of Camden: I rise to support my noble friend who is moving that this clause shall not stand part of the Bill.
As with the Shops Bill, we are discussing a situation which applies to employees who are in a particularly vulnerable situation. The Victorians believed that such people had to be protected. I remind Members of the Committee opposite that Disraeli played some part in that, because a long time ago, when I was at school, I remember reading his book, Sybil—the Story of Two Nations. I can still remember the description of the "tommy shops" and the operation of the "tommy shops" which eventually led to the Truck Acts legislation.
There was an acceptance then, and there should be now, that there was a parliamentary obligation to protect those who are most vulnerable. I believe that it is partly because the Government have not recently been seen to discharge that duty that the Shops Bill ultimately failed to pass, and that the Government were defeated in Committee in your Lordships' House last night on some key sections of the Social Security Bill.
I believe it was claimed by the Minister in another place that the new provisions on deductions represent a step forward for vulnerable employees. It does not appear to us on these Benches to be so. It is true that it abolishes the distinctions between workers. The Truck Acts were limited in their cover to manual workers and I know from my own experience as an official for a white-collar union that they did not apply to white-collar employees. Nevertheless, the mere fact that the Truck Acts were there inhibited employers when it came to making deductions, even as far as white-collar employees were concerned. There is no requirement now because we failed to get the amendment that any deductions had to be fair and reasonable past your Lordships' Committee. That of course was a key element in the older legislation.
There have been a number of cases recently which have been referred to in the Committee, and I do not want to go over that. However, I want to remind noble Lords that many of the people who operate as cashiers at petrol stations—and their cases have been referred to—are often from ethnic minorities with, in many cases, a very inadequate grasp of English. To suggest

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that these employees, who no doubt are often happy to have any sort of job at all, are capable of negotiating a contract about deductions and understanding what it means, is quite frankly absurd. Moreover, because of the transitory nature of much of this work, which has already been referred to in the debate, and the relative isolation of the people who do it, they are not particularly easy to organise into unions.
In such circumstances, if they cannot protect themselves, it is up to Parliament to do so. Just how necessary this protection is can be gleaned from some of the reports produced by some law centres. Fortunately, some employees who felt themselves to be victimised have been able to have recourse to such centres and law centres have been able to assist them in a number of cases. I should like to quote from a recent report by the Hounslow Law Centre, which has been doing a great deal of work in this area. It says:
"Till shortages can occur in many ways: customers can be dishonest; cheques bounce; meters are faulty or are misread; tired cashiers made to work without the breaks to which they are entitled may give too much change. In our experience management is rarely concerned to trace the error or give advice about preventing recurrences. It is much easier to make a cashier pay. The result is that cashiers' already low wages are regularly reduced below the poverty line as a result of events which are not their fault".
The Hounslow Law Centre says that in the past year it has dealt with 35 inquiries about deductions, 26 of which were from petrol station cashiers. It says that it has been successful in a number of cases.
Of course, with the absence of Truck Acts protection and with the absence of the fair and reasonable amendment which we tried to insert in the Bill before the Committee, these people will not have that protection in the future. If it is claimed that the law is difficult to enforce, all I can say is that we ought to do something about the inspectorate. We ought to have more inspectors in order to ensure that that law can be enforced for the benefit of a very vulnerable workforce. I support my noble friend's Motion that the clause shall not stand part of the Bill.
Lord Trefgarne: I am not sure whether the noble Lord, Lord Rochester, wishes to speak?
Lord Rochester: I thank the noble Lord for giving way. I feel obliged to say that, in the light of the discussion which took place over the first amendment relating to the need, as I saw it, for deductions from wages to be fair and reasonable, and in order to be consistent I must oppose the question that this clause shall stand part of the Bill even though, as the Committee will have seen, I have reservations about a number of amendments tabled thereafter.
Lord Trefgarne: Members of the Committee will not be surprised to hear that I very much hope this clause will remain part of the Bill. The clause of course provides a new and uniform protection for all workers, manual and non-manual, against arbitrary deductions from their wages. Deductions from wages will be lawful where they are provided for in the contract of employment, where the worker agrees to them in writing or where they are authorised by statute. This leaves it to the parties themselves to decide the circumstances in which deductions should be allowed, enabling the parties themselves to sort out provisions
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that are clear, easy to understand and mutually acceptable.
I believe that this is a fair and workable system. For manual workers the new protection replaces out-dated protections which were uncertain in their application, confusing to understand and which applied to circumstances which might have prevailed in Victorian times but which are no longer relevant to modern conditions. For non-manual workers they introduce for the first time statutory safeguards against unfair deductions where previously workers have had to rely on common law remedies.
The provisions are designed to be straightforward and clear so that employees and employers know exactly where they stand. I hope that Members of the Committee will agree that this clause should remain part of the Bill.
6.37 p.m.
On Question, Whether Clause 1 shall stand part of the Bill?
Their Lordships divided: Contents, 105; Not-Contents, 83.

DIVISION NO.2

CONTENTS

Airey of Abingdon, B.

Inglewood, L.

Allerton, L.

Kaberry of Adel, L.

Ashbourne, L.

Kimball, L.

Belhaven and Stenton, L.

Kinloss, Ly.

Belstead, L.

Knollys, V.

Birdwood, L.

Lane-Fox, B.

Boyd-Carpenter, L.

Lauderdale, E.

Brabazon of Tara, L.

Layton, L.

Bridgeman, V.

Long. V.

Brookes, L.

Lucas of Chilworth, L.

Brougham and Vaux, L.

Lurgan, L.

Broxbourne, L.

Macleod of Borve, B.

Caithness, E.

Mancroft, L.

Cameron of Lochbroom, L.

Marley, L.

Campbell of Alloway, L.

Marshall of Leeds, L.

Carnegy of Lour, B.

Massereene and Ferrard, V.

Cathcart, E.

Maude of Stratford-upon-

Coleraine, L.

Avon, L.

Colwyn, L.

Merrivale, L.

Constantine of Stanmore, L.

Molson, L.

Cox, B.

Monk Bretton, L.

Davidson, V.

Monson, L.

De La Warr, E.

Montgomery of Alamein, V.

Denham, L. [Teller.]

Mottistone, L.

Denning, L.

Mowbray and Stourton, L.

Eccles, V.

Munster, E.

Elliot of Harwood, B.

Murton of Lindisfarne, L.

Elton, L.

Nelson of Stafford, L.

Faithfull, B.

Onslow, E.

Ferrers, E.

Orkney, E.

Ferrier, L.

Orr-Ewing, L.

Fortescue, E.

Pender, L.

Fraser of Kilmorack, L.

Perth, E.

Gardner of Parkes, B.

Plummer of St Marylebone,

Glanusk, L.

L.

Glenarthur, L.

Polwarth, L.

Gridley, L.

Portland, D.

Hailsham of Saint

Reay, L.

Marylebone, L.

Renwick, L.

Halsbury, E.

Rochdale, V.

Harmar-Nicholls, L.

Rodney, L.

Hives, L.

Russell of Liverpool, L.

Holderness, L.

St. Davids, V.

Hood, V.

Sandys, L.

Hooper, B.

Savile, L.

Hunter of Newington, L.

Sharples, B.

Hylton-Foster, B.

Skelmersdale, L.

211

Strathcona and Mount Royal,

Vaux of Harrowden, L.

L.

Vickers, B.

Swinfen, L.

Vinson, L.

Swinton, E. [Teller.]

Vivian, L.

Teviot, L.

Wise, L.

Thomas of Swynnerton, L.

Young, B.

Tranmire, L.

Zouche of Haryngworth, L.

Trefgarne, L.

NOT-CONTENTS

Airedale, L.

Lockwood, B.

Amherst, E.

Longford, E.

Aylestone, L.

Lovell-Davis, L.

Bacon, B.

McCarthy, L.

Birk, B.

McIntosh of Haringey, L.

Blease, L.

Mackie of Benshie, L.

Blyton, L.

McNair, L.

Brockway, L.

Mar, C.

Brooks of Tremorfa, L.

Mayhew, L.

Bruce of Donington, L.

Meston, L.

Burton of Coventry, B.

Milner of Leeds, L.

Carmichael of Kelvingrove, L.

Morton of Shuna, L.

Chitnis, L.

Murray of Epping Forest, L.

Cledwyn of Penrhos, L.

Nicol, B.

Crawshaw of Aintree, L.

Northfield, L.

David, B. [Teller.]

Oram, L.

Davies of Penrhys, L.

Parry, L.

Dean of Beswick, L.

Ponsonby of Shulbrede, L.

Denington, B.

[Teller.]

Diamond, L.

Prys-Davies, L.

Ennals, L.

Rea, L.

Ewart-Biggs, B.

Rhodes, L.

Fisher of Rednal, B.

Ritchie of Dundee, L.

Foot, L.

Rochester, L.

Gallacher, L.

Ross of Marnock, L.

Glenamara, L.

Sainsbury, L.

Graham of Edmonton, L.

Seear, B.

Grey, E.

Shepherd, L.

Hampton, L.

Simon, V.

Harris of Greenwich, L.

Stoddart of Swindon, L.

Hatch of Lusby, L.

Taylor of Blackburn, L.

Heycock, L.

Taylor of Gryfe, L.

Houghton of Sowerby, L.

Taylor of Mansfield, L.

Jeger, B.

Tordoff, L.

Jenkins of Putney, L.

Turner of Camden, B.

John-Mackie, L.

Underbill, L.

Kagan, L.

Wedderburn of Charlton, L.

Kaldor, L.

White, B.

Kilmarnock, L.

Wilson of Langside, L.

Kirkhill, L.

Wilson of Rievaulx, L.

Lawrence, L.

Winstanley, L.

Lloyd of Hampstead, L.

Young of Dartington, L.

Resolved in the affirmative, and Clause 1 agreed to accordingly.
6.46 p.m.
Clause 2 [Deductions from wages of workers in retail employment on account of cash shortages etc.]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 27:
Page 3, line 35, at beginning insert—
("( ) It shall not be lawful for the employer to make any deduction from any wages of any worker employed by him to whom this section applies on account of one or more cash shortages or stock deficiencies unless the shortage or deficiency was caused by the dishonesty, negligence default of that worker or of a worker for whom he is responsible by virtue of the express terms of his employment.").
The noble Lord said: I rise to move Amendment No. 27, and I understand that it is for the convenience of those involved if I speak also to Amendment 37. In moving to Clause 2 it might be helpful if I read from the face of the Bill. Clause 2 provides that where a worker's employment involves selling directly to the
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public, to fellow workers, or to other individuals in their personal capacities, any deduction from his wages on account of a cash shortage or stock deficiency,
"shall not exceed one-tenth of the gross amount of the wages payable",
to him.
As background before I indicate the main thrust of my argument I wish to draw the Committee's attention to the fact that when one looks at the amendment it is clearly seen what we are not quibbling about; namely deductions in respect of dishonesty, negligence, or default of the worker, for which he is responsible by virtue of the express terms of his employment. That is in Amendment 27. What we say is why should an employee who is responsible, who is honest, who is not negligent and who is not at fault be penalised?
In another place we had some interesting observations. The Minister who introduced the Bill on 11th February said at col. 800:
"The Bill introduces an important new and modern set of rights for workers … a comprehensive, easily understood, easily enforeceable and fairer set of statutory rights concerning deductions".
Anyone who knows particularly the retail trade would object strenuously to that description.
As a matter of fact a Conservative Member, Mr. Richard Holt, had this to say at the Report stage at col. 739 of the Official Report on 14th May about the Bill and this clause:
"suggesting that [the Truck Acts] are being replaced by something superior, fairer and nicer simply does not hold water. It does not bear examination. The Government's case is wafer-thin, and water is seeping through … The Government have produced bad law on this aspect, and it will not be long before it will bring the whole Bill into disrepute".
Those are words with which I sympathise and which I accept. He happens to be a member of another party, a member of the Minister's party. The difference is that that person speaks with some experience of the retail trade. I profess at this stage to indicate a modest credential in that respect too. I am a director of a co-operative society. I have close connections with the co-operative movement, and declare an interest in the Union of Shop, Distributive and Allied Workers.
The main burden that the Minister has to satisfy is that it is right and proper that individuals not well paid, perhaps adequately paid, should bear the consequences of someone else's actions, because in the real world that is what will happen. Someone else can be careless; someone else can be dishonest; someone else can take a chance and someone else can be the victim of someone else's fraud, but the individual who is nominally in charge of the till or the cashpoint will have to carry the can. We cannot accept that that is right.
I do not believe the Minister will accept that is right either, because we are talking about business systems and the manner in which a business sets out to control its stock efficiently. Some stock control systems are good and some are bad. Some are able to control the amount of stock, to control the value of the stock, and are able to apportion and identify the responsibility so precisely that there is very little of what is known in the trade as leakage. Leakage is that amount of the stock,

213
or that amount when the cash and the stock are taken together, which is unaccountable for. In a normal well-run business an allowance is made.
Sometimes, dependent upon the nature of the business, there will be a variation. There certainly is a variation between departments, between the food department and the non-food department, even between the butchery, the milk department and the grocery department. There are understood norms. The attempt in the retailing business in 1986 is always to keep the expenses down as much as possible. That is fair. One of the expenses of a business is wastage, leakage, and one of the responsibilities of management is to make sure that that is kept down as low as possible.
In retailing in 1986 there are far more part-time employees than full-time employees. People will come on duty for two hours, or four hours or part of the day, and then go. We are talking about, as the Minister in another place said, what a nonsense it would be if every employee had his own cashpoint or till. Somebody has to be responsible but he is not responsible for the management, control and security of the cashpoint every minute of the day. The till may be left out of the control of the responsible person during lunch time, during tea break, coffee break or while that person goes to the toilet. There are a great many ways in which temporarily the person who will have to pay the shortage is not in charge of that point.
To leave this matter as it is is a charter for bad management because the bad manager says, "Although I know I should be responsible for providing training, education and making my employee far more efficient, I do not need to bother." If the employee is not diligent, honest and reliable but is careless, and there is a shortage, the Bill provides the bad manager a legal opportunity of taking 10 per cent., not once and for all but time and time again until the total amount is received. I cannot believe that that is the intention of a fair-minded government or of a fair Bill.
I believe that the stock deficiency aspect in this clause and in my amendment is part and parcel of the business risk. By and large that risk ought to be carried by the employer and not by the employee. I am talking about the honest and diligent person doing his job within the confines of the tools of the trade; that is, computerisation. In computerisation mistakes can be made. There are two kinds of losses: a real loss and a notional loss. There is a loss whereby goods are not there and a loss whereby on a piece of paper we are told that the goods are not there. When there is a reconciliation later, that is found not to be correct.
There is the transfer and the movement of the stock about a building, because each member of the staff has his own duties and the stock passes through many hands. Goods are received; they are stored on the premises; they are transferred to selling areas and placed on display. They are selected with and without the assistance of the sales staff. They are sold and they are packed. At each stage not only can those goods go missing but they can also be damaged; they can also deteriorate. Writing off losses, whether goods are sold cheaper or whether they are simply written off, are all aspects of the control of stock. In retailing in 1986 the
214
name of the game is to get the biggest volume of trade with the minimum number of employees. That means that the business wants the maximum amount of trade to be done by each employee. As I have already said, there is a great deal of coming and going.
Then there is the management. There will be shops open from 9 o'clock in the morning and increasingly to 8 o'clock or 9 o'clock at night—forgetting the Sunday nexus. Shops are open six days a week. I am tempted to deal with the Sunday trading issue, but time does not permit it. What about the manager who cannot work all those hours that the shop is open; that is, 56 or 60 hours a week? He needs his time off and somebody else is in charge of the shop. Businesses have their own ways of chastising a manager who is notdoing his job. If there is a leakage and it is shown that the manager is not as efficient as he ought to be, there are ways in which his promotion does not come along. There are ways in which, without fining him or making him responsible for the loss of stock, that manager is made to pay.
I hope that what we shall hear from the Minister is something that is helpful and fair. So far as we are concerned, a stock loss is a commercial risk which should not be passed to the employee. The employee has no means of exercising real control over stock. A true stock depends on the adequacy of management recording and monitoring systems. Stock checking systems have been proved in the past on many occasions to be inaccurate. I move the amendment and look forward to the faint possibility that the Minister may be able to say something kind about it. I beg to move.
Lord Rochester: I have some sympathy with this amendment. It seems on the face of it to offend against natural justice if the course advocated by the noble Lord, Lord Graham of Edmonton, is not followed. At an earlier stage I indicated that I think we want to reach a situation as soon as possible where there is no need for deductions from wages but we rely instead on better management practices and methods of control, as the noble Lord, Lord Graham, said.
I have a question to ask and a doubt to express, if the noble Lord, Lord Graham, would be kind enough to help me. Is there a danger that if some unscrupulous employer were denied the opportunity to effect a deduction by virtue of this suggested new subsection, he might approach the matter in an altogether different way by making use of disciplinary procedures which, more particularly in the case of employees having less than two years' service, might result in a pretty speedy dismissal? In that case, what sets out to protect the employee might, I suppose, in practice have the reverse effect.
At Second Reading, I made it plain that for my part there were a number of points in Part I of the Bill where I would wish to judge the matter on the merits of the particular case. This is one such case. I have an open mind about it. I look to the Minister for guidance and I seek reassurance from the noble Lord. Lord Graham, as to the doubt to which I have given expression.
Lord Trefgarne: These amendments would ban deductions relating to shortages except where these

215
were due to dishonesty, negligence or default of the worker himself or another worker for whom he was responsible. Under the Bill as it stands, a worker can be made to compensate the employer for a loss or shortage only if the worker has a contractual responsibility for that loss or shortage; that is, his contract makes clear that he can be asked to compensate the employer for that loss or shortage. It is reasonable that the parties should agree their own rules in the contract and stick to them.
It is also reasonable that, where a worker has accepted a contractual responsibility for losses, he should meet such losses or shortages. The amendments would require the employer to seek to determine responsibility in fact for losses and shortages rather than simply agreeing with the worker to make a deduction and drawing a line under the matter. The amendments would lead to complex and lengthy tribunal cases investigating who was, in fact, responsible for particular losses or shortages.
It should also be noted that a failure to pay a bonus due to a cash shortage or stock deficiency is treated as a deduction under Clause 2 by virtue of subsections (4) and (5). The effect of Amendment No. 27 would be to render unlawful bonus systems run by many reputable employers whereby managers get a bonus if stock shortages are kept below a certain level because such bonuses have nothing to do with dishonesty, negligence or default. Many large and reputable employers would be alarmed by that. Even if the principle that workers could not be asked to accept a contractural responsibility unconstrained by various statutory controls on the behaviour of the employee were accepted, these particular controls seem to me to have no great merit.
Why have a provision that allows deductions if the worker in question is contracturally responsible for another worker, even if the other worker has not been dishonest, but prevents them even if the worker in question has not been dishonest himself? It would be wisest simply to leave these matters to the parties. I hope that in the light of these difficulties, and, particularly, the penultimate difficulty to which I referred the noble Lord will not wish to pursue this proposition.
Lord Graham of Edmonton: It is the understatement of the night if I say that I am disappointed with the response of the Minister. He fails completely to see, in the context, very often, of very lowly paid employees, the situation of their having to be responsible for the acts of others when they are not dishonest, when they are not negligent or when they have not been at fault. I tried to explain to the Minister that in the nature of retailing there are many episodes and practices which will cause a stock loss for which a person who has been honest, careful and without fault can be held to be responsible. I simply ask this. Why should we not write on the face of the Bill a protection of that kind?
In the retail food and allied trades there are more than half a million workers. Their wage is £80 per week. Yet the Minister is saying to them that if there is stock deficiency, they should have some of their £62 or £64 a week deducted even though they have been honest and have not been negligent. There are, in
216
unlicensed places of refreshment, 116,000 workers. Their wage in 1986 is £73·26.
The Minister really reveals that he is not part of the real world. He reads his brief, he understands the Bill, he is able to argue it. But in the real world outside there are real people who will be faced—and never mind the question of equity and never mind the question of unfairness—sometimes by virtue of bad management decisions with having to pick up the tab and with being fined a few pounds through no fault of their own. I think this is a very unfair clause. I think this amendment is very reasonable and I intend to press it.
7.5 p.m.
On Question, Whether the said amendment (No. 27) shall be agreed to?
Their Lordships divided: Contents, 52; Not-Contents, 92.

DIVISION NO.3

CONTENTS

Bacon, B.

Lovell-Davis, L.

Birk, B.

McCarthy, L.

Blease, L.

McIntosh of Haringey, L.

Broadbridge, L.

Mar, C.

Brockway, L.

Milner of Leeds, L.

Brooks of Tremorfa, L.

Murray of Epping Forest, L.

Carmichael of Kelvingrove, L.

Nicol, B.

Cledwyn of Penrhos, L.

Northfield, L.

David, B. [Teller.]

O'Neill of the Maine, L.

Dean of Beswick, L.

Oram, L.

Denington, B.

Parry, L.

Ennals, L.

Ponsonby of Shulbrede, L.

Ewart-Biggs, B.

[Teller.]

Fisher of Rednal, B.

Prys-Davies, L.

Gallacher, L.

Rea, L.

Glenamara, L.

Ross of Marnock, L.

Graham of Edmonton, L.

Shepherd, L.

Heycock, L.

Stoddart of Swindon, L.

Houghton of Sowerby, L.

Taylor of Blackburn, L.

Jeger, B.

Taylor of Mansfield, L.

John-Mackie, L.

Turner of Camden, B.

Kagan, L.

Underhill, L.

Kaldor, L.

Wedderburn of Charlton, L.

Kinloss, Ly.

White. B.

Kirkhill, L.

Wilson of Rievaulx, L.

Lawrence, L.

Ypres, E.

Lockwood, B.

NOT-CONTENTS

Airey of Abingdon, B.

Eccles, V.

Alexander of Tunis, E.

Elliot of Harwood, B.

Ashbourne, L.

Faithfull, B.

Belstead, L.

Ferrers, E.

Birdwood, L.

Ferrier, L.

Boyd-Carpenter, L.

Fortescue, E.

Brabazon of Tara, L.

Gardner of Parkes, B.

Bridgeman, V.

Glanusk, L.

Brookes, L.

Glenarthur, L.

Brougham and Vaux, L.

Gridley, L.

Broxbourne, L.

Hailsham of Saint

Bruce-Gardyne, L.

Marylebone, L.

Caithness, E.

Halsbury, E.

Cameron of Lochbroom, L.

Hives, L.

Campbell of Alloway, L.

Holderness, L.

Carnegy of Lour, B.

Hooper, B.

Colwyn, L.

Hylton-Foster, B.

Constantine of Stanmore, L.

Inglewood, L.

Cox, B.

Kaberry of Adel, L.

Craigavon, V.

Kimball, L.

Davidson, V.

Knollys, V.

De La Warr, E.

Lane-Fox, B.

Denham, L. [Teller.]

Lauderdale, E.

Denning, L.

Layton, L.

217

Lindsey and Abingdon, E.

Rochdale, V.

Long. V.

Rodney, L.

Lucas of Chilworth, L.

Sanderson of Bowden, L.

Macleod of Borve, B.

Sandys, L.

Mancroft, L.

Savile, L.

Marley, L.

Shannon, E.

Marshall of Leeds, L.

Sharples, B.

Massereene and Ferrard, V.

Skelmersdale, L.

Merrivale, L.

Strathcona and Mount Royal,

Molson, L.

L.

Monk Bretton, L.

Swinfen, L.

Montgomery of Alamein, V.

Swinton, E. [Teller.]

Mottistone, L.

Teviot, L.

Mowbray and Stourton, L.

Thomas of Swynnerton, L.

Munster, E.

Tranmire, L.

Murton of Lindisfarne, L.

Trefgarne, L.

Nelson of Stafford, L.

Vaux of Harrowden, L.

Onslow, E.

Vickers, B.

Orkney, E.

Vinson, L.

Pender, L.

Vivian, L.

Plummer of St. Marylebone,

Wise, L.

L.

Young, B.

Polwarth, L.

Zouche of Haryngworth, L.

Portland, D.

Resolved in the negative, and amendment disagreed to accordingly.
7.14 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 28:
Page 3, line 36, leave out ("in retail employment").
The noble Lord said: In moving Amendment No. 28, it may be convenient if I speak to Amendments No. 31 and 38. The point can be made briefly that now we have reached this stage the Government's new dichotomy in the workforce is beginning to take shape in the Bill. That dichotomy is between those in retail employment and those who are not. There are two questions to be answered. Is it fair to have such a dichotomy? Does it work?
In one sense, the first depends on the second because obviously it is unfair to have some workers limited to a 10 per cent. deduction (to put it as a label) when others are at risk of having whatever is in the documents which count as consent under this Bill. Quite plainly, anomalies can arise between those in retail employment and those not. That is to say, the shop assistant may be in the retail sector but a stockroom assistant in the same shop might not be. One wonders whether even on the best of definitions that would be a fair situation. Why should the one not be limited to 10 per cent. deductions and the other be so limited?
The history of the definition of who is in retail employment of course began with the Bill in a very different state from what it is now. Leaving aside the minor points, in broad terms it began by a definition that said that those who carry out retail transactions directly with members of the public are to be retail employment sector employees. Of course the definition of "the public" is a well-known problem in many areas of our law. The company law prospectus issued to the public has caused a great many problems and there have to be special provisions as to what it meant by "the public".
However, the difficulties for the Government increased when they realised that here that was, in any case, an inadequate definition, however difficult, because transactions might not be with members of
218
the public but with fellow workers by those in retail employment or by other individuals—as they now put it,
"other individuals in their personal capacities".
But of course the retail transaction is not necessarily a sale: it is a supply of goods or services, including financial services.
What does this mean? Does the clerk in accounts who provides a supply of financial services to other workers in the firm, some of which are for their personal purposes, become someone in the retail sector? Is the stockroom or warehouse worker who supplies goods to other persons, who may be fellow workers within the area or without, a worker in the retail sector? Does it depend on whether the goods supplied are for their personal use? Does he have to ask? Does he have to say, "I am now supplying you with goods: are you going to use them in your personal and individual capacity or are you taking them as an agent or employee of your employer?"
I refer to garden centres as an example. I am sure many of your Lordships will have visited those. Take the garden centre which normally supplies goods or services wholesale. As I read the definition, if workers are taking goods on behalf of their employers, that would not be a retail transaction. However, suppose some members of the public come in and take goods. These definitions seem to lead to the type of uncertainty which we have seen earlier today and which the Government are beyond compare in their anxiety to avoid. Perhaps they could do better in their definition of what is retail employment and what is not if they want to avoid the core case of these amendments.
That core case—if I may repeat it briefly—is this. If some workers are to be guarded by the 10 per cent. protection and others are not, there must be a definition of the line between the two which works and is fair. Despite the changes in another place, that line neither works nor is fair, I beg to move.
Lord Sainsbury: We on these Benches support this amendment. I do not see why protection against excessive, unfair or unjustified deductions should be confined to the retail trade. I shall be very brief, because the noble Lord, Lord Wedderburn, has explained the situation so clearly. There are other examples, such as a wholesale cash and carry warehouse or a trade counter, which can also be subject to cash shortages and stock deficiencies. Therefore, as I said, we on these Benches will support the amendment if it is put to a vote.
Lord Trefgarne: As the noble Lord has explained, these amendments would have the effect of extending the protection provided by Clauses 2 and 3 to all workers and not only to those involved in retail employment. Let me clarify what we are trying to do with Clauses 2 and 3. Clause 1 provides certain basic protections against arbitrary deductions. All deductions must be authorised by statute, agreed in the contract of employment, or be with the prior written consent of the worker concerned, and the worker must have knowledge of any contractual term authorising a deduction before a deduction based on such a term is made.

219
What we are trying to achieve with the additional protection of Clauses 2 and 3 is a situation where workers do not suffer such large deductions or require-ments to make payments, on account of cash shortages or stock deficiencies, that they are left with very little or nothing in their wage packets; and it is because it is in the area of retail employment, and really only in that area, where there is evidence of abuse and public concern that we have restricted the special protection to that area. We are therefore covering sales staff, petrol station cashiers, milk roundsmen etc., but not people who are not actually engaged in sales, such as warehouse staff.
I think we would all be in agreement that practices which leave workers with almost nothing in their wage packets because they are asked to cover till shortages are undesirable. I hope we are all agreed that something needs to be done about such practices. We believe that we have struck the right balance in the protection provided here. We have included in the group to which additional protection is provided all those workers engaged in the sale or supply of both goods and services. Following amendments passed in another place, we have ensured that Clause 2 makes clear that the protections apply to all workers engaged in the sale or supply of goods to members of the public, fellow workers or other individuals in their personal activities; for example, members of a club.
We have also ensured that the person who sells not only to the public but also to companies is fully covered in respect of all his sales. The protection is also provided to those who are not involved in selling or supplying goods or services on a regular basis. This means that a worker who does not normally sell goods to the public but who, for example, covers for a colleague during a lunch break, will have the same protection as those workers who normally sell to the public. But we see no reason why protection should be extended to those engaged in activities other than selling to the public, where stock shortages might occur but where these are likely to be as a result of negligence or theft. I believe that the protection provided covers the areas of need and I hope that the Committee will resist these amendments.
Lord Wedderburn of Charlton: I thank the noble Lord the Minister for his reply. In case he said something that we would want to take into account, or there is a new point that we have missed, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 29 to 33 not moved.]
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 34:
Page 4, line 27, leave out from ("of) to end of line 30 and insert ("three months commencing with the date on which it was reasonably practicable for the employer to establish the existence of the shortage or deficiency".).
The noble Lord said: I beg to move Amendment No. 34 and, if it is for the convenience of the Committee, I think we should take with it Amendments Nos. 35 and 44. The amendment seeks to limit the period of time during which the employer
220
may seek to make deductions from an employee's wage packet in respect of a stock or cash deficiency. As the clause stands, an employer is given 12 months from the time when he established the shortage or deficiency to take action to deduct from an employee's wages, and that seems to be a quite inordinate length of time. Again, the Government seem hell-bent on favouring the employer at the expense of the employee.
A year is a long time to allow an employer to act and I am puzzled as to why this lengthy period of time was decided upon. Perhaps the noble Lord will explain the reasons. Perhaps it has something to do with annual accounting. I certainly do not know, but if it does it is quite nonsensical. Any businessman who has the slightest modicum of business and accountancy sense will check his cash and stock at frequent intervals, and in a well-run business any cash discrepancies or stock deficiencies would be spotted fairly quickly. Investigations into such discrepancies and deficiencies ought to be carried out immediately and completed in days or weeks rather than months, and our amendment limiting the period to three months is eminently reasonable in all the circumstances. It would be far more considerate of the employee's interest, too.
Why should an employee, 12 months after the event, be faced with deductions in respect of a deficiency of which he may have no knowledge? We must remember that we are dealing here not with people who are earning £20,000 or £30,000 a year, or even with people earning the national average wage of around £185 per week. We are talking about people earning around £55 to £70 per week, to whom a delayed deduction will come as a bombshell and will disrupt their already strained finances.
I do not know how many noble Lords present have experienced living a hand-to-mouth existence; some, perhaps, have. Certainly, having spent part of my childhood in the Rhondda Valley during the years of depression, I am aware of the strains and the stresses such an existence imposes on men and women and their families. It is no good the noble Lord sneering. This is exactly what happens in families on low incomes. They suffer from actions such as these, and I detest seeing the noble Lord sneering when we are talking about low-paid people such as those I have mentioned. Therefore I sincerely hope that noble Lords will have some understanding and compassion for these low-paid people and will help them in a small way by supporting this amendment. I beg to move.
The Deputy Chairman of Committees: Perhaps I should point out that if Amendment No. 34 is agreed to, it will not be possible to call No. 35.
Lord Rochester: I should like very briefly to support this amendment. An employer should surely not need a period as long as 12 months from the time when he should have established a deficiency until he makes a deduction from wages. Three months is quite long enough and I look forward to hearing from the Minister that he agrees, or, if he does not, why.
Lord Trefgarne: Before the noble Lord, Lord Stoddart, was so objectionable, if he will forgive me for saying so, I was thinking of offering some comfort to the noble Lord on this amendment. The fact of the matter is that my family comes from South Wales as well and I am quite aware of the matters to which he refers. I do not think it lies very well in the mouth of the noble Lord to accuse me of sneering as he said I was. The fact of the matter is that the sort of sentiments we hear from noble Lords opposite from time to time seem to me to represent attitudes about a century out of date, but be that as it may.
The Government introduced amendments during Committee stage in another place to ensure that deductions relating to cash shortages or stock deficiencies would be entirely prohibited if there was an unreasonable delay between the date the cash shortage or stock deficiency occurred and the date the employer made a deduction from wages in respect of that shortage or deficiency. It was said during that debate that there is nothing magical about the period of time one chooses, but 12 months was mentioned as a reasonable period. The amendments seek to reduce this period to three months. I really believe that in certain cases that is too short a period to enable an employer to discover the shortage and consider whether, taking everything into account, he really wants to make a deduction on account of a shortage.
I am supported in this view by the existence in the Bill of the requirement that if an employer could reasonably be expected to have found out about a shortage earlier than the date on which he did the deduction will be lawful only if it is made within 12 months of the date on which he ought to have found out about its existence. This I am certain provides the necessary safeguards and will prevent employers, who I am sure would be few in number, who decide to victimise a worker for whatever reason from dredging up a lot of old events on which they took no action at the time and starting to make deductions. I hope that those considerations will persuade the noble Lord not to press his amendment.
Lord Stoddart of Swindon: Let me first of all apologise to the noble Lord. If he was not sneering, I must confess it appeared that he was. But of course I welcome him as a compatriot. I accept that he was not in fact sneering at the difficulties that poor people have.
I listened to the noble Lord very closely. I understand from the Bill that an employer may not deduct from his employee amounts that the employer ought to have located within 12 months. I do not quite know how that is to be discovered. Therefore, I think that the assurance the noble Lord has given is not satisfactory. I still believe that the three-month period is the more satisfactory one. I believe it is adequate for the protection of the employer and I believe it is much more satisfactory from the point of view of the employee. Therefore I fear I must press this amendment to a division.
7.33 p.m.
On Question, Whether the said amendment (No. 34) shall be agreed to?
Their Lordships divided: Contents, 57; Not-Contents, 72.

DIVISION NO.4

CONTENTS

Airedale, L.

McCarthy, L.

Amherst, E.

McIntosh of Haringey, L.

Bacon, B.

Mackie of Benshie, L.

Barnett, L.

Mar, C.

Blease, L.

Morton of Shuna, L.

Brockway, L.

Murray of Epping Forest, L.

Carmichael of Kelvingrove, L.

Nicol, B.

Cledwyn of Penrhos, L.

Parry, L.

Crawshaw of Aintree, L.

Perry of Walton, L.

David, B. [Teller.]

Ponsonby of Shulbrede. L.

Diamond, L.

[Teller.]

Ennals, L.

Prys-Davies, L.

Ewart-Biggs, B.

Ritchie of Dundee, L.

Fisher of Rednal, B.

Rochester, L.

Gallacher, L.

Ross of Marnock, L.

Glenamara, L.

Sainsbury, L.

Graham of Edmonton, L.

Shepherd, L.

Grey, E.

Stoddart of Swindon, L.

Hampton, L.

Strabolgi, L.

Hatch of Lusby, L.

Taylor of Blackburn, L.

Houghton of Sowerby, L.

Taylor of Gryfe, L.

Jeger, B.

Turner of Camden, B.

John-Mackie, L.

Underhill, L.

Kagan, L.

Wedderburn of Charlton, L.

Kaldor, L.

White, B.

Kennet, L.

Wilson of Langside, L.

Kilmarnock, L.

Wilson of Rievaulx, L.

Lockwood, B.

Winstanley, L.

Lovell-Davis, L.

Ypres, E.

NOT-CONTENTS

Alexander of Tunis, E.

Marshall of Leeds, L.

Belstead, L.

Massereene and Ferrard. V.

Birdwood, L.

Maude of Stratford-upon-

Boyd-Carpenter, L.

Avon, L.

Brabazon of Tara, L.

Merrivale, L.

Brookes, L.

Molson, L.

Brougham and Vaux, L.

Monk Bretton, L.

Cameron of Lochbroom, L.

Monson, L.

Campbell of Alloway, L.

Montgomery of Alamein, V.

Carnegy of Lour, B.

Mottistone, L.

Constantine of Stanmore, L.

Mowbray and Stourton, L.

Cox, B.

Munster, E.

Craigavon, V.

Murton of Lindisfarne, L.

Davidson, V.

Onslow, E.

De La Warr, E.

Orkney, E.

Denham, L. [Teller.]

Pender, L.

Faithfull, B.

Plummer of St Marylebone.

Ferrers, E.

L.

Ferrier, L.

Polwarth, L.

Gardner of Parkes, B.

Renton, L.

Glenarthur, L.

Rochdale, V.

Gridley, L.

Rodney, L.

Halsbury, E.

Sanderson of Bowden, L.

Hives, L.

Savile, L.

Holderness, L.

Shannon, E.

Hooper, B.

Skelmersdale, L.

Hylton-Foster, B.

Strathcona and Mount Royal,

Inglewood, L.

L.

Kaberry of Adel, L.

Swinton, E. [Teller.]

Kimball, L.

Teviot, L.

Lane-Fox, B.

Tranmire, L.

Layton, L.

Trefgarne, L.

Lindsey and Abingdon, E.

Trumpington, B.

Long, V.

Vaux of Harrowden, L.

Lucas of Chilworth, L.

Vickers, B.

Lurgan, L.

Vinson, L.

Macleod of Borve, B.

Wise, L.

Marley, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.41 p.m.
Lord Brabazon of Tara: In moving that the House do now resume I suggest that we do not return to consideration in Committee on this Bill until twenty minutes to nine o'clock. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Representation of the People Regulations 1986
Viscount Davidson Viscount Davidson rose to move, That the draft regulations laid before the House on 13th May be approved. [23rd Report from the Joint Committee.]
The noble Viscount said: My Lords, I beg to move that the Representation of the People Regulations 1986 be approved. Similar sets of regulations for Scotland and Northern Ireland are on the Order Paper and, if your Lordships agree, it might be for the convenience of the House if I spoke to the three sets of regulations together. The Joint Committee on Statutory Instruments has considered all three sets of regulations and has made no comment.
These regulations replace the Representation of the People Regulations 1983. They are needed to lay down procedures for British citizens abroad to register as overseas electors and for holidaymakers and others to apply for an absent vote under the new provisions of the Representation of the People Act 1985. The regulations have been the subject of full consultations with representatives of the political parties and the local authorities and reflect the many helpful comments we received.
Regulations 23 to 28 deal with the new procedures for overseas electors to make declarations with a view to their being included in the electoral register. The same procedures will apply to Members of your Lordships' House resident abroad who, subject to the requirements in the Act, may register as electors at elections to the European Assembly. This is covered by Regulation 14.
Part III introduces changes in registration procedures including, for England and Wales, the identification of new names on the register and, for England and Wales and Northern Ireland, a regulation allowing the draft register to take effect as the final register. Part IV introduces new provisions on absent voting. Applicants for an absent vote at a particular election will need to say why they cannot reasonably be expected to vote in person. Applicants for an indefinite absent vote for an indefinite period will have to meet the countersignature and other requirements in Regulations 64 and 65. Part V allows the proceedings on the issue and receipt of postal ballot papers to be taken together when the polls at elections are combined, and Part VI deals with the combination of polls.
The regulations for Scotland and Northern Ireland contain similar provisions except in the few cases I have mentioned, and with the exception also of Regulation 13 of the Northern Ireland regulations relating to documentary evidence of identity.
We plan to make a commencement order as soon as possible following the approval of these regulations bringing the remainder of the 1985 Act into force. Our intention is that overseas electors should be able to start making their declarations straight away. The changes relating to applications for absent votes will be brought into force from 1st January next year and other changes relating to the conduct of elections will apply to elections held on or after 16th February 1987. Post Office regulations will be made before then dealing with the free delivery of unaddressed electoral material.
We shall be making new local elections rules later this year in order to apply to local elections the changes which have been made by the 1985 Act and these regulations to the parliamentary elections rules. New European Assembly regulations will also be made so that the new absent voting provisions and provision on the lines of these regulations can apply at European Parliament elections held on or after 16th February.
I hope that your Lordships will be content to approve the regulations. I beg to move.
Moved, That the draft regulations laid before the House on 13th May be approved. [23rd Report from the Joint Committee]—(Viscount Davidson.)
Lord Underbill: My Lords, I welcome the explanation of these regulations given by the noble Viscount, which I am sure will be appreciated by all concerned with running elections, both on the official side and on that of the election agents. We now have up-to-date regulations.
I am pleased to have the assurance from the noble Viscount that these regulations have been the subject of consultations with local authorities and the political parties and that no items are included which were not covered by primary legislation, particularly the 1985 Act. I am particularly pleased to note the extension under the Northern Ireland regulations—No. 13, I think—to which the noble Viscount referred, which extends the documents which must be presented by electors to polling stations to include a driving licence issued in Northern Ireland and a merchant seaman's card. Those regulations will be appreciated by all in Northern Ireland.
With those few remarks, I support the three regulations.
On Question, Motion agreed to.

Representation of the People (Scotland) Regulations 1986
Viscount Davidson Viscount Davidson rose to move, That the draft regulations laid before the House on 15th May be approved. [23rd Report from the Joint Committee.]
The noble Viscount said: My Lords, I beg to move.
Moved accordingly, and, on Question, Motion agreed to.

Representation of the People (Northern Ireland) Regulations 1986
Viscount Davidson Viscount Davidson rose to move, That the draft regulations laid before the House on 19th May be approved.
The noble Viscount said: My Lords, I beg to move.
Moved accordingly, and, on Question, Motion agreed to.

Consumer Safety (Amendment) Bill
7.48 p.m.
Baroness Gardner of Parkes: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Gardner of Parkes.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MURTON OF LINDISFARNE in the Chair.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 1:
Before Clause 1, insert the following new clause:
("Offence of supplying unsafe goods.

.—(1) A person shall be guilty of an offence if he supplies or offers or agrees to supply goods or exposes or possesses for supply goods which do not provide the standard of reasonable safety which a purchaser is entitled to expect taking into account all the circumstances including—

(a) the presentation of the goods;

(b) the use to which it could reasonably be expected that the goods would be put;

(c) the cost of the goods; and

(d) the state of scientific and technical knowledge.

(2) The Secretary of State may make regulations containing such provisions as he considers appropriate to specify standards of safety in relation to prescribed classes of goods and it shall be a defence to a charge of committing an offence under this section to prove that the goods complied with such standards in relation to the hazard in question.

(3) It shall be a defence to a charge of committing an offence under this section to prove that the goods complied with safety requirements in relation to the hazard in question.").

The noble Lord said: In moving this amendment I speak also to Amendment No. 2 relating to Clause 2 and Schedule 1. The two amendments hang together.
By way of explanation I should state that the noble Baroness, Lady Stedman, who spoke on behalf of the Association of County Councils at Second Reading and who should have been here tonight to speak to these amendments on behalf of the association, unfortunately is not able to be present. As I happen to be vice-president of the ACC, I have been asked to speak briefly on these matters today.
I do not intend to press any of these amendments to a Division because I am quite aware of parliamentary protocol and procedure in respect of the Bill making progress in another place, but I shall be grateful to have the Minister's observations. The ACC has asked me to say that if the Bill is not amended it could set unfortunate precedents for the expected government safety legislation which it hopes will include a duty to trade safely and will relate to product liability. The aim of the Bill to enable dangerous goods to be kept off
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the market can be achieved, the association believes, by workable compensation provisions and a 72-hour detention period.
The amendments are moved, as the House was reminded at Second Reading, against the sombre background of some 3 million people requiring hospital treatment for injuries sustained in accidents in the home, of whom about 7,000 die. Many of these accidents are avoidable, like the death in Leeds last Christmas of a five-year old child who died from playing with an imported toy pony. I am very grateful for the opportunity to speak on this matter in company with the promoter of the Bill, the noble Baroness, Lady Gardner of Parkes, and I am delighted to share her interest.
I know that MK Electric, which is the largest employer of labour in Edmonton, and a firm which must be known to the noble Baroness, Lady Gardner, will have as much interest as anyone, and I notice from the report of the Second Reading that there is a wide range of consumer bodies which are interested. Equally I am certain that many trade and commercial bodies have their own reputations to protect. I know that only last year MK Electric celebrated having made 1 million safety plugs, and Alec Fletcher, who was then a Minister, went along and congratulated the company on its standards. I look forward to what the Minister has to say and I beg to move the amendment.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): Since the noble Lord, Lord Graham of Edmonton, has invited me to make some comment on the new clause which is Amendment No. 1, it may be for the convenience of the Committee and indeed my noble friend if I do so at this stage.
This clause seeks to introduce a version of the general safety duty that is proposed in the Government's White Paper on the safety of goods. Perhaps I may say at this juncture that I am glad to note that the noble Lord opposite is taking this opportunity to probe the Government's intentions in this matter. Let me make it absolutely clear that we are committed to introducing a general safety duty. We shall do this in conjunction with legislation to implement the European Community directive on product liability at the earlest possible opportunity.
While I can only applaud the intention of the noble Lord in putting forward this new clause at this stage, in an attempt to introduce the general safety duty now, I must say that in our view it is not appropriate to extend the current Bill, and I think that the noble Lord accepts that. This Bill is about the enforcement of existing consumer safety legislation. I think that to include this new and wider offence would be very difficult. The inter-relationship between the general safety duty and the product liability directive is very complex and I assure the Committee that they can only be dealt with sensibly together.
It may be helpful if at this stage this evening I say a few words as to why these complexities will arise, because I think it may help us when we come, perhaps a little later, to discuss the wider implications which are in the back of our minds. As the clause is drafted—and I have no quarrel with that—it leaves a

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number of points unclear, quite apart from the unanswered questions about its relationship with the product liability directive.
For example, what is to be the scope of the new offence? Is it intended to cover all goods, including goods intended for the workplace—these are already covered by the general duty in Section 6 of the Health and Safety at Work Act—or is it really intended just to cover consumer goods, as is our proposal for a new general safety duty? Why is there a reference to a purchaser of the goods in line 4, when the offence is geared to the supply of goods which may not involve a sale as such and which may be of concern to many users of the goods other than the purchaser? At what time is the state of scientific and technical knowledge to be relevant? Is it at the time that the product was first put into circulation? What measures for enforcement will apply, given that the definition of relevant provisions does not include this? Would commission of the offence also attract civil liability? Those are just a very few of a great number of questions that will have to be answered, and those answers will not be very easy to arrive at, if we are to introduce a sensible, workable and enforceable provision as complex and far-reaching as the general safety duty.
So with all respect to the good intentions behind the clause, I say to the noble Lord that I am happy that he does not intend to press this amendment. I hope that he and those with whom he discusses these matters, and indeed my noble friend Lady Gardner of Parkes also, will perhaps do a little more work on the wider range of questions which will have to be answered and to which we shall provide answers, as I say, when we bring forward our legislation. As I said at the opening of my remarks, this will be just as soon as parliamentary time allows.
Baroness Gardner of Parkes: I thank the noble Lord, Lord Graham, for moving the amendment, which is an interesting one, and I also thank the Minister for his reply. I am not happy with the amendment as it stands because it seems to me that although very naturally it would be put forward by the Association of County Councils, it is placing the onus on the trader and removing the onus from the inspectorate. This of course would suit the county councils, particularly in view of the less favourable points about the number of hours and whether the authority would be liable if the goods proved to be satisfactory. So I can see that they have cause for concern.
This amendment seems to me to aim at moving responsibility soundly away from the county councils and on to the trader. I think that the trader does have a responsibility, and I see the point in the amendment of the words:
"taking into account all the circumstances."
So there are ways out. However, it seems to me that as the amendment is drafted it will be better considered (as I hope and believe it will be) when we look at this matter in a much wider context at a later stage. I think that at the present time this Bill aims simply at taking a first step of introducing the means of slowing down the presentation of goods and having the opportunity
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to inspect them. I am grateful that the noble Lord does not intend to press his amendment.
Lord Graham of Edmonton: I am grateful to the Minister for what I think is a sympathetic response to the intention of the amendment and I also thank the noble Baroness for her reception of it. The noble Baroness is absolutely right, and her final words were very pertinent. What we have in the Bill is a first step; and there is the promise of even more to come. I hope that, as the Minister said, between now and then even more work can be done upon it, so that what we shall have in future will be even better than that which we have now in draft. I am very grateful to the noble Lord. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Power of Commissioners to detain goods]:
[Amendment No. 2 not moved.]
Clause 2 agreed to. Remaining clauses agreed to.
Schedule 1 [Schedule to be substituted for Schedule 2 to the 1978 Act]:
[Amendment No. 3 not moved.]
Schedule 1 agreed to.
Remaining schedule agreed to.
House resumed: Bill reported without amendment: Report received.
Lord Brabazon of Tara: My Lords, I beg to move that the House do now adjourn during pleasure until 20 minutes to nine o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8 until 8.40 p.m. ]

Wages Bill
House again in Committee on Clause 2.
[Amendment No. 35 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 36:
Page 4, line 43, leave out from beginning to end of line 10 on page 5, and insert ("it shall not be lawful for the employer to make any further deduction in respect of that pay day").
The noble Lord said: This amendment attaches to Clause 1(4) which deals with an old problem. There is a sense in which it may be said to deal with reductions as against deductions; that is to say, the problem where the calculation of wages is determined by what the worker would certainly see as a deduction for a cash shortage or stock deficiency. There are a number of old cases on the question which relate to the Truck Act 1896 and to certain other statutes. If one says that there shall not be certain deductions from wages, one has to ask what wages are. Although the Bill at later clauses does something in that regard, here it faces the problem of what one says if the wages are calculated by reference to the events or other circumstances such as

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bad workmanship, which might be drafted in a different way as deductions.
Although there are old cases, I hope that I am not a century out of date, as we are constantly told things are in this Bill in our debates. There were more recent cases in 1945 which held that the calculation of wages by reference to the events which reduce the amount payable were reductions and not deductions.
Where that is the case, there would be an easy evasion here of perhaps the whole Bill. Perhaps we should look again at some of the matters we have discussed already on these clauses in that light. But, as I understand subsection (4), where wages are determined by reference to cash shortages or stock deficiencies and the gross amount is less than the gross amount that normally would have been payable, what is then to happen? Subsection (5) goes on to say that the employer is to be allowed to make further deductions, treating the net sum of wages, as it were, as the starting point. That at least is how I read it. We say that that is not the right approach. Once the reductions have been made on account of cash shortages or stock deficiencies in calculating the wages, in those circumstances the employer should have no more.
This has been said a number of times this afternoon but perhaps in the more placid climate of a post-prandial session I may say it again calmly but clearly. We are talking about workers who earn low wages and who are taking gross in many cases £50, £60 or at any rate no more than £70 a week. After the statutory deductions—after tax and the rest of it—they are not taking home vast sums. If a worker in that category is having his wages calculated by reference to cash shortage or stock deficiency, we are talking about someone whose family is taking from that wage-earner no princely amount. Wherever we come from, we should all recognise that that is what the Bill is about.
Our amendment would replace the approach of subsection (5) to the situation described by subsection (4). We would say that where cash shortages or stock deficiencies have already been taken into account, there ought to be no more. It seems to me that the Government face a difficulty if they do not accept that solution or at any rate something along those lines. As the Bill is drafted, the Government place great store by the fact that those in retail employment will be protected by the 10 per cent. limit.
In subsections (4) and (5) is there not an easy method of evading the 10 per cent, limit? If the petrol company puts a clause into the forecourt worker's contract, "Your wage is calculated by the following formula", and then builds in an element for, let us say, stock deficiencies or a cash shortage, without a clear limit being stated—it could be up to 50 per cent. of the wage in practice—that would be a contract formulated by reference to reductions. After the wage is calculated by reference to the reductions for cash shortages or stock deficiencies, the employer is now, it seems, to have another chance to deduct up to 10 per cent. more from the wages if subsection (5) remains unamended.
Our amendment does not deal wholly with the first of those two problems, but I suggest that the Bill does not either. I hope that the Minister will say something about the problem of reductions; that is to say, the lack
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of a limit on reductions in calculating retail employees' wages. That might save us having to raise that issue on clause stand part. I raise it now to help progress, although progress is not exactly how we would describe what is happening with the Bill.
The amendment, however, goes to the other problem. By however much the wage is decreased with the reduction formula, can it be right that further deductions should be allowed? To allow such a procedure makes nonsense of the 10 per cent. limit. Any well-advised employer, and certainly any well-advised rogue employer, would be able to put it aside with great ease. It is on those grounds that I beg to move the amendment.
Lord Trefgarne: Subsections (4) and (5), to which the amendment is addressed, deal with the situation where all or a part of the wages of a worker depend on the absence or extent of any cash shortage or stock deficiency. The aim of the subsections is to remove a possible loophole by saying that if an employer pays a bonus related to the absence or size of a cash shortage or stock deficiency, any failure to pay the bonus is to be treated as a deduction from wages related to cash shortages or stock deficiencies and is covered by the protection of Clause 2, which in effect means that the unpaid bonus must not exceed 10 per cent. of gross wages; that is, basic wages plus bonus.
Amendment No. 36, in amending subsection (5), appears to have the effect of removing any require-ment that any shortfall in gross wages paid due to a shortage or deficiency should be treated as a deduction and be subject to the 10 per cent. limit. It only prevents a further deduction being made in respect of the pay day in question. That would allow deductions from gross wages to be calculated without limit. That removes the protection which the provision seeks to achieve in respect of workers who are employed under certain bonus arrangements. I do not believe that that was what the noble Lord intended, but it is I fear the effect of what is proposed. I hope that the noble Lord will therefore see fit not to press the amendment.
Lord Wedderburn of Charlton: I have to admit that that was not my interpretation of the two subsections put together. It was our interpretation that the gross amount in Clause l(4)(b) was so treated that when we came to the end of subsection (5) the gross amount was still available for deductions. I shall read with great care what the noble Lord the Minister said and see whether he is correct in saying that we were incorrect in our understanding of the two subsections. Should that be so, I shall be happy. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Payments by workers in retail employment on account of cash shortages etc.]:
[Amendments Nos. 37 to 40 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 41:
Page 5, line 27, leave out ("on") and insert ("seven days before").
The noble Lord said: It will be convenient if I speak also to Amendments Nos. 42 and 43. It will perhaps be

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courteous to the Committee if I explain that Amendment No. 40, which was meant to go with these amendments for discussion on the same point, has fallen by the wayside through having acquired a wrong page number. It should have referred to page 6. It has appeared as referring to page 5. If that was our fault, we offer our apologies to the Committee with regard to the list.
This is perhaps a small point which would be covered by the three or, were they all there, the four amendments. In our submission, it brings about a particularly unfair result. It relates to the demands for payment for an alleged stock deficiency, and so on. The Bill says that the employer must make his demand in writing under Clause 3(2)(b) on one of the worker's pay days. There is the same structure in other parts of the clause.
The other amendments to which I am speaking raise the same issue. If we posit the position of a worker expecting his or her wage on a Friday, it seems that the Bill allows the employer to make his written demand on that day. The broad purpose of our amendments is to replace that structure by a period of notice which would have certain objectives. The purpose relates to the realities of the day on which the worker's wage is being paid. Commitments have been entered into. It may be that the family is in debt. Perhaps the milk bill has to be paid on the Saturday, and the wages are payable on the Friday. The rent may be due in the following week. Other payments may be due. When the worker returns on the Friday, does he have to say, "Well, they told me that there was a stock shortage and gave me this piece of paper and a demand. They said I had to pay up £9. Don't ask me how we are going to manage but there it is"?
If the limit of 10 per cent. is to mean what I take it to be intended for—after all, what is the purpose of the 10 per cent.?—is it not a recognition that those who are most at risk (they are said to be those in retail employment) of this kind of deduction should not suffer such penalties by the removal of their wages that their family life and way of living is wholly destroyed or endangered? If that is going to mean anything in terms of the realities of life, surely the employer should be required to give some notice to the worker as to the payment which he requires of him. I appreciate that it will be said, "Oh well, then you will create some asymmetry as between deductions and payments; the employer will simply deduct instead of demanding payments". The sense that I have gathered of the debate has been at least a hope—we hope that we can find a way with some code of practice or the like to bring this home to employers—that with regard to deductions some notification of the practice or the likelihood or expectation of their life could at least be required of the employer to the employee.
It seems that there is no difficulty as regards payments. That may be difficult to put into the Bill in the light of the discussions that we have already had. Why should the employer not give some days' notice to the worker that the payment is required? We have suggested seven days. We have obviously suggested seven days for the very good reason that the logic of our reasoning would be that at least one should go over
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from one pay day to the next, because the family may be able to meet its standing debts and requirements during that week and at least make some kind of plan for the next. That does not seem altogether unreason-able. Why should the employer be able to demand payment immediately?
I appreciate, and it may be that the noble Lord the Minister can explain this further, that in a sense the Bill does not say that the demand for payment must be for payment there and then. It is the demand of which the Bill speaks. On the other hand, as I read it, the Bill does not appear to prevent the employer—again the rogue employer—from demanding payment there and then. The sum total of this perhaps small but very important point for the worker and his family who are involved is: why should there not be some short period of notice with regard to demands for payment? In that probing way, I beg to move the amendment.
Lord Trefgarne: Clause 3 establishes controls on the amount of the instalments the employer may require the worker to pay him where the worker is liable under a contract or consent to pay for cash shortages or stock deficiencies. These are strong controls which require each demand to be made on a pay day. They limit the employer to demanding 10 per cent. of the wages payable on that day and require the employer to notify the worker in writing of his total liability and of each demand for payment.
The further requirements in the amendments that an employer must make any demand seven days before pay day, but must make the first demand seven days after the first day following the date when notification of the worker's total liability is given to him, are I believe unnecessary. The clause is designed to place controls on the amount of the instalments which an employer may demand that a worker pay where the worker is liable under a contract or consent to pay for cash shortages or stock deficiencies.
The clause does not control the timing of payments. There is no similar control on the employer if he wishes to make a deduction rather than require payment from the worker, and there is no reason why the two procedures should be treated differently. In any case, the first amendment will often be unworkable in relation to both payments and deductions. In the case of a weekly paid worker, the employer will often not know what his pay will be seven days before his pay day, and will therefore be unable to work out the amount that he is entitled to demand. Most important, I do not believe that the amendment would provide any particular additional advantage to either party. The existing controls in the clause are sufficiently strong and I hope that the noble Lord will not pursue the matter.
9 p.m.
Lord Wedderburn of Charlton: Whether or not I pursue the amendment, we are clear that the employer can pursue a demand for payment there and then. After all, what are the reasons given for not allowing the vulnerable worker a period of notice to pay this money? It is argued that it is unnecessary. That means that it is unnecessary for the workability of the Bill. It is argued that there is no control over the timing of

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payments. That is true, but it is something that we want to put into the Bill. It is argued that it does not apply to deductions. No, it does not, according to our amendment, but we could fashion an amendment to make something apply to deductions, if that really was an objection. The Minister knows that very well. The real objection appeared to be that the employer might not know what the employee was going to be paid a week from now. It is true that there may be variations week to week in the actual payments made to the workers we are talking about. But an employer could easily play safe by keeping within a 10 per cent. limit in most cases without any difficulty. It is then said that there is no particular advantage. I must say, no particular advantage to whom? To the wife, to the children, to the milk bill, to the rent? Of course there is a particular advantage.
We come to the nub of the matter time and time again. It is not the Minister's fault that he personally has to defend the Bill. It is a Government Bill. He takes collective responsibility with all those who put it forward. But whenever you come to an advantage or a disadvantage, the disadvantage is on the worker and the advantage is on the employer. What is so interesting about the Bill is that it is not a Bill about trade unions. Indeed, I do not think that trade unions have been mentioned from the Government side of the Committee. That is understandable. We would want such workers recruited and organised in trade unions because that is their real defence. It is very hard to organise such workers and it is very hard for such workers to be members of trade unions. There is a mass of evidence of people being dismissed for threatening to join trade unions and not being able to pursue redress in tribunals. There is no particular advantage, says the Minister. It is no particular advantage to the employer.
Lord Trefgarne: There is less, I believe, between the noble Lord and myself than he suggests. I wonder whether he has studied Clause 3(3)(a). If so—and I am sure that it is the case because he is so assiduous—he will have seen that the worker has some notice under the Bill's provisions. The Bill states:
"A demand for payment … shall not be made earlier than the first pay day of the worker following the date when he is notified of his total liability in respect of the shortage".
While he may not get the full period that the noble Lord seeks, he will certainly get some.
Lord Rochester: Is that not almost an accident of timing? I have some sympathy with the general point made by the noble Lord, Lord Wedderburn. It seems reasonable that a period of notice should be given and that there should be some even-handedness between the employer and the employee in the matter. I wonder whether there is any prospect before the noble Lord, Lord Wedderburn, determines what he should do about the amendment, that the noble Lord the Minister may hold out some hope that he is willing to give further consideration to the matter before the next stage of the Bill.
Lord Trefgarne: I am always willing to undertake further consideration if I think it likely to be fruitful. I
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believe, however, that there are real difficulties in the matter. The noble Lord, Lord Wedderburn, somewhat brushed aside one rather important difficulty. It is that the employer will not know the amount of the worker's pay very much in advance. I am thinking particularly of lower paid workers about whom the noble Lord, Lord Wedderburn, is understandably most concerned in this connection. They are very often remunerated as much by overtime as by their basic wage. It is not possible to determine how much overtime is going to be worked until very close to pay day. That affects substantially, or may affect substan-tially, the amount of the deduction that would be permitted under the provisions of the Bill. I believe that the noble Lord, Lord Wedderburn, and perhaps the noble Lord, Lord Rochester, have under-estimated the difficulties of what they propose. The noble Lord, Lord Wedderburn, will perhaps on reflection agree with that.
Lord Wedderburn of Charlton: I am not sure whether I am getting up or sitting down, but I take the Minister's point. I had, of course, noticed, although I did not mention it, that Clause 3(3)(a) requires a notification to the worker of his total liability. Presumably that means that the employer knows the score at that point. So the argument that the employer does not know, at whatever point that is, goes by the board. He knows the amounts—
Lord Trefgarne: I am sorry if I did not make myself clear. Yes, the employer may indeed know the liability. What he will not know is the amount of pay that will be due to the worker because he will not know how much overtime he has worked or how much bonus he is entitled to.
Lord Wedderburn of Charlton: Now we have it. Our discussion, as is usual after dinner, is very fruitful. Now we have it that the employer a few days before—perhaps we couched it wrong with "seven"—will know the liability and will know roughly the sort of amount that the employee is going to be paid. One can press this so far, I agree, in respect of the garage attendant, the forecourt attendant, the shop assistant, and the stock room worker, if in retail. Yes, it may vary a little, but we are not talking about vast sums when we finally discover that X has £3 of overtime, instead of none.
A few days before, as the Minister points out, an employer knows about the liability and he has a good idea of the sort of wage that is coming at the next pay day. Why cannot he give some sort of notice? I understand that the Minister says it is difficult; I am eager to join him on the field of difficulty. What I would not do is join him on the field of saying that there is no advantage in discussing this or of proposing this type of thing. If it is difficult, by all means let us discuss it and find an answer. Is not the Minister with me in saying that there is some point in telling the worker a little ahead? Surely there is merit in the argument of a low-paid worker knowing a little ahead that he will have a deduction or a payment. It really applies to both. Surely there is an advantage for him in that.

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Is there a disadvantage for the employer? The noble Lord is really saying that seven days off there may be, but a few days off, is it so great? Let us go back to what the Bill actually allows: after the notification to the worker, there is the demand and the payment there and then. Therefore, if we are genuinely looking at the balance for a worker of this kind in retail with the 10 per cent. limit, in the light of the discussions we have had, is it right actually to allow that, whatever the safeguard may be? It may be that we have asked for too much.
I very much hope that the noble Lord can say to us that at least he will have a look at this proposition which emerges from these amendments. Perhaps out of their ashes there is a point to be made about giving the worker and his family some time in advance some idea that such a reduction—and I use the word broadly and neutrally—is to be made in the amount that he expects to take home on that pay day. The Bill does not do that. That is very unfair. If the Minister can find no solace for us beyond that, then I shall—
Lord Trefgarne: As I said earlier, I am always willing to have a look at the propositions which the noble Lord puts to me if I think that there is some likelihood that we can reach an accommodation with him. However, I am bound to say, because of the difficulties which I have already recited, that I do not see much prospect of that. However, if it will give the noble Lord some comfort, I shall certainly agree to look at the matter further between now and the next stage.
Lord Wedderburn of Charlton: I am grateful for that. I do not expect too much; I am not quite sure whether I expect anything at all. However, the point has been made and I am sure that the least we can all do is look at the arguments. I am hopeful that when the Minister does that in the warm light of another evening, he will be able to press the points a little further. After all, we are a long way from our demand for reasonableness, which I know that he has rejected. We asked for reasonableness; we asked for no deductions where there was no dishonesty or wrong-doing. We are now asking for a few days before the money is taken away. I hope that the Minister will be able to find it in his heart—and more particularly in his head, because it rests on the case that he made as much as the case that I made in that exchange—to assist us. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 42 to 45 not moved.]
Clause 3 agreed to.
Clause 4 [Provisions supplementary to ss. 2 and 3]:
9.15 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 46:
Page 6, line 34, after ("termination") insert ("by lawful notice given to him by the employer").
The noble Lord said: Now we come to the employer-takes-all-clause—no more 10 per cent., but
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final wages; and, so long as various requirements are met which are not difficult to meet, all the wages can go. I was astonished at the number of noble Lords on all sides of the Committee who said to me after our very first debate in which the Barratt case was discussed, "Good heavens, I had no idea that that sort of thing went on". As the noble Lord, Lord Coleraine said in a previous intervention in the Committee, one week Anthony Barratt had the whole of his wages stopped in accordance with the broad and, as the court said, arbitrary clause of the contract. That could happen here even with retail workers who are most at risk. When it comes to the final instalment of wages it is possible to take the lot, and for them to be paid nothing where that is within the other requirements.
This is a limited amendment. We are not yet at the point of objecting to the whole notion of final instalment. For the purposes of this amendment we are looking at one question, and one question alone. If the employer is to have this penal power, as we see it—or at any rate, to put it neutrally, this power of deduction without limit—then surely he should not be entitled to grant that power to himself by his own act; or secondly, and alternatively, he should not be entitled to grant that power to himself by his own unlawful act.
The amendment goes to both points. The new arrangement, the lack of a 10 per cent. limit, applies in respect of a termination of the contract. It does not seem that that notion of termination is qualified in Clause 4. At least, I have not found that qualification. Indeed, Clause 4(1)(a) speaks of "termination for any reason". That, it seems, means termination lawful or unlawful. Our amendment would limit first the dismissal to a lawful dismissal.
Otherwise, in effect one destroys the employee's rights for unfair dismissal. If it is an unfair dismissal the employee can take a claim—if he has two years' qualifying employment, it is true—to the industrial tribunal, but, unfair or not, so long as the employer has terminated the contract this Bill seems to say that he can enforce deductions under the contract up to, and including, 100 per cent.
It is perhaps something that should be immediately said as a qualification of the proposition I have just put to the Committee that the only people who can go to industrial tribunals for unfair dismissal are employees, and this Bill ranges more widely than employees, stricto sensu, and includes workers who would not have such a right of approach to the tribunal on unfair dismissal. But we say secondly, as the amendment says, that the termination should be limited to lawful notice given by the employer. We say that because it is not at all clear what is meant by termination of the contract. Therefore, we take our stand on the Government's desire not to be unclear.
There are various kinds of temination of a contract and they cause a great deal of difficulty in employment law. A summary dismissal does not necessarily terminate the contract in every circumstance, although the House of Lord's Judicial Committee has recently held in the case of West London Co-operative Society v. Tipton 306, 2 Weekly Law Reports, for this year that a summary dismissal takes effect there and

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then, so that for most purposes that is the date of the termination. But if there is an appeal procedure and the employee goes through it and wins, then he will be reinstated retrospectively.
We may contrast with a summary dismissal a case where the employee rests upon an allegation of a constructive dismissal; the now well-established test that the contract is not terminated by a constructive dismissal unless and until the worker accepts the termination although it may be that in some cases the court will see him as having no option but to accept. The precise ways in which a worker ought to elect to treat the contract as terminated in a constructive dismissal situation are still a matter of some debate, and there are cases most months in the specialised law reports in the matter. Then, lastly, there is the case of a notice—even an illegal notice in the sense that it is less than the statutory minimum notice to which an employee is entitled—and that seems to mean that if the contract terminates it terminates no earlier than the expiry of any notice.
In all those types of case, which week is the last period? I can well understand that it may be said, "Well, there is no difficulty with a summary dismissal, or with a dismissal with notice, which is what is envisaged". But to say "termination for any reason" may beg a lot of questions. It is noticeable that the clause does not use the phrase common in employment law which would be the "ending of a contract and the effective date of termination". If the clause referred to the pay period which was the last before or on the effective date of termination, there would be some authority to turn to. If that is meant, perhaps that is what should be said.
Our amendment does not go so far as trying to solve all these problems. It does, I submit to the Committee, cover most of the difficulties by saying that there must be a termination by notice and that it must be a lawful notice. Clearly therefore the contract ends on the expiry of that notice. The important element which is built in, whatever else may be wrong with our amendment, is that the employer should be held to the necessity of acting lawfully in terminating the employment. Otherwise the clause permits him to take the larger amount by way of deduction by an act which in itself between him and the employee, him and the worker, may not be a lawful termination of the employment.
If the noble Minister can satisfy us on any of those points we shall be very happy. It might be better if this amendment were the vehicle through which the Government had another look at just what kind of termination is meant in Clause 4, having regard to the extraordinarily important nuclear consequences for the employee and worker now they are not to be protected by the 10 per cent. of the deduction. I beg to move.
Lord Rochester: I am not sure if what I have to say would not be more appropriately said on the following amendment, but I shall say it now to save the time of the Committee. It seems to me that the most important provision in this whole clause is really rather harsh, to say the least. As I understand it, the limited protection that there is for employees against
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having large deductions made from their wages will not apply to their final payment of wages: Not to mince words, if the employer decides to sack a worker he can take the whole of his final week's wages and thus deal him, as it were, a double blow.
I realise that the amendment proposed by the noble Lord, Lord Wedderburn, deals with this point only indirectly, but as he said in his closing remarks it relates to that central feature of Clause 4. I hope therefore that either now or on some subsequent amendment (on which, having spoken now, I shall not again browse) the noble Lord the Minister will have something of comfort to say to us about this general provision.
Lord Trefgarne: The aim of this provision is not only to ensure that workers are not left with little or no take-home pay due to deductions to cover cash shortages or stock deficiencies but also to ensure that employers can obtain sums to which they are contractually entitled. By removing the 10 per cent. limit on deductions from the last instalment of wages, this clause enables the employer to recover all that is still owing to him by a worker on the termination of a worker's employment.
Amendment No. 46 seeks to tighten the control on the deductions for cash shortages or stock deficiencies from the final payment of wages of a worker by providing that the 10 per cent. limit is disapplied only if lawful notice of termination of contract has been given to the worker. If the appropriate notice has not been given, the worker has alternative avenues of complaint via the county courts for breach of contract and to an industrial tribunal under the statutory notice provisions in Section 49 of the Employment Protection (Consolidation) Act 1978. These are adequate legal remedies and it would be wrong to prevent the employer recovering money owed to him by the worker merely because he failed to give lawful notice.
There are occasions when, because of gross misconduct, for example, no notice of termination need be given. It would obviously be unfair to penalise the employer on these occasions. In addition, it is only fair that the employer should be able to recover sums due to him by a worker on the termination of the contract. This amendment seeks to limit his right and I fear, therefore, that I must resist it.
There is a further difficulty. As I have already said, this amendment disapplies the 10 per cent. limit on the final payment of wages only where lawful notice is given by the employer. One unlooked-for effect, I think, would be that if the worker leaves—that is to say, the worker and not the employer gives notice—the employer has to pay the final payment of wages, and even if the worker has a large debt to him he is bound by the 10 per cent. limit. I am certain that that is not something which the noble Lord intended by virtue of his amendment.
There is another point—not one, I think, to which the noble Lord, Lord Wedderburn, would attach much importance but one which I think deserves mentioning nonetheless. I referred earlier to the consultation that took place a couple of years ago on this matter. Responses received then indicated that although a majority of employers were in favour of a

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limit on deductions they did not think that it should apply on termination of employment when the employer should be entitled to recover from the worker what was owed to him. They argued that it was reasonable for a worker's debts to be cleared on the termination of his employment. I have listed a series of difficulties about this amendment which I hope will carry some weight with the noble Lord.
Lord Wedderburn of Charlton: One advantage of debating a Bill with the noble Lord the Minister is the delightful circularity of some of the arguments which are deployed against one and which here have been exemplified, with respect, again—with one exception. That is the exception that most employers do not want what is in the Bill on consultation. I am all in favour of consultation. I believe devoutly in consultation; but I do not necessarily think that one gives a clause merely to what the majority of employers want.
I have to admit that our amendment would not deal with the situation where the employee gives notice. That is true. There would then be a 10 per cent. limit still. That would be an unlooked-for advantage for the employee. I can quite see how an amendment which gave some advantage to the worker is utterly and totally unacceptable. However, the circularity of the basic argument is surely, with respect, this: that the noble Lord says that the employer's claim must be respected on the final payday when it is to be a case of employer takes all because he must be allowed all the sums that he is owed by the worker.
You are owed a sum in law only if you can, in law, recover it. He is not owed more than 10 per cent. on all the other paydays because he cannot recover more than 10 per cent. because the law will say so. If the law went on saying that he could not recover 10 per cent. on the final day, then he would not be owed all these sums except in his own eyes. What you are owed is what the law says you can recover. Therefore it is wholly circular to say—
Lord Trefgarne: I know that the noble Lord is a considerable expert in these matters but I do not think that he is quite correct in that. I think that the question of the debt is a matter of fact. What we are discussing is the basis upon which the debt can be recovered. I suspect—I stand open to correction on this—that it is always open to an employer to recover his debt in the usual way, without deductions from wages, if he thinks fit; but of course that is not what we are discussing.
9.30 p.m.
Lord Wedderburn of Charlton: Of course there may be many different ways, as the noble Lord has suggested. The worker may be able to take different steps in regard, for example, to sums due on inadequate notice. When I said "recover" I meant to use the procedures of the particular matter which the Bill is covering. Therefore what you are—how shall I put it?—owed-recoverable by deduction in law is that which the Bill allows. Therefore if you kept the 10 per cent. limit, you would not be owed-recoverable by deduction. The noble Lord says, "You are still owed", and indeed you may have other procedures. You may
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be able to recover debts in insolvency. There are a variety of procedures you can use, but the law limits them. To say that because you can use some other procedure to recover all or only part of what the sum amounts to does not settle the issue of whether you should be allowed to use a particular procedure and whether the right is a right with a remedy of that kind. Remedies for rights are fashioned here by the Bill; and the Bill says, "Winner take all for the final payday".
I can see that we shall not make a great deal of progress with this, but it is another example of when an amendment throws up some perhaps unlooked-for advantage for the worker. In that case the noble Lord does not say to me, "Now make it equal either way and we will look at it." He says, "There is an advantage for the worker; it is utterly impossible to accept it."
I go back to the final point which I hope your Lordships will consider before the Report stage. It cannot be right to allow an employer to gain the new power to recover the entire wage on the final pay day by an act terminating the employment which is itself unlawful. That cannot be right. I know of no principle of English law which suggests that anyone should arrogate to himself the power to take away a family wage by an act which is unlawfully terminating the employment. So whereas I see the other points the noble Lord the Minister made, I come back to that central point of our amendment and I suggest that that point, at least, really must be looked at before the Report stage. I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 47:
Page 6, line 41, leave out subsection (2).
The noble Lord said: There is a sense, as the noble Lord, Lord Rochester, said, in which the previous amendment deals with Amendment No. 47, and perhaps it might be convenient if I were to mention Amendment No. 48. Perhaps it is wrong that your Lordships' Committee should continue without a pause to consider for a moment. At any rate, so far as my noble friends and I are concerned the whole idea, however it is brought about, of the final pay day allowing for an unlimited deduction, a total stoppage, seems to us to have no merit whatever.
The noble Lord the Minister has talked about the employer being entitled to get the whole of his debt, but the clause does not balance the need of the worker and his family to have some part of the wage. If there is no such balance to be struck, the entire moral case for the 10 per cent. deduction falls away. If that case is correct, if the employer's need for his debt is so overpowering at the end, the previous deductions obviously should be variable, because the employer's needs may be very great before the termination of the employment.
There is the more general point which has been put to me by a number of people who are concerned on the ground with these problems, especially in the citizens' advice bureaux, the law centres and the like. Have the Government really taken account of the enormous power of a threat to dismiss, which would have added to it the threat of a possible total stoppage? Is that not

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an increase in the power of the employer? Losing a job is bad enough, but the threat, in addition, to take away the whole of the final wage when a worker's family faces unemployment benefit, supplementary benefit and goodness knows how many months without a job cannot be right in the circumstances of this society. It cannot be right to give such a total and uninhibited power to the employer to stop the whole thing.
I take the opportunity of saying to the Government that we have not moved an amendment of this kind, but there are many who criticise this Bill from a different point of view. There are many who criticise it from the point of view that it is time that, in matters of wages and the maintenance of wages, all our efforts should be directed towards finding some kind of formula for the minimum amount that must be allowed to someone, except in the most extraordinary circumstances; for example, conviction of very bad dishonesty or whatever.
All these percentages really mask the issue that deductions should not, especially for the low-paid worker, go beyond that which is necessary for the very minimum income maintenance. That is a possible approach and it surely has more merits than merely allowing a total deduction. We are very strongly against this matter and it seemed right that I should not merely move the last amendment, which was about a specific matter, but should deal generally with the point on the whole clause in regard to this amendment. I beg to move.
Lord Trefgarne: The noble Lord will not be surprised if I say that I regret we cannot go along with what he proposes in this amendment. The aim of the provisions is not only to ensure that workers are not left with little or no take-home pay due to deductions, but also to ensure that employers can obtain sums to which they are contractually entitled. By removing the 10 per cent. limit on deductions from the last instalment of wages, this clause enables the employer to recover all that is still owed to him by the worker on the termination of the worker's employment.
These amendments seek to ensure that the Bill prevents the employer from recovering under these provisions sums still owed to him by the worker on the termination of his employment. If the employer could only recover any outstanding debt after the termination of employment in instalments of 10 per cent. of whatever amount he paid the worker, the employer could never recover his debt, because there are no payments. The amendment would wreck the careful structure of the controls. From that point of view, I hope that the noble Lord will not want to press the amendments.
It is not true to say, as the noble Lord, Lord Wedderburn, suggested, that the employer can deduct without any limit from the final payment of wages. The justification for the final payment is of course to obtain a clean break with debts discharged. The deductions permitted from the final pay are of course still constrained by the provisions of Clause 1 which we have already discussed.
Lord Wedderburn of Charlton: I take what the Minister said. I merely add this. The very fact that one is saying that after the contract has ended where the employer takes proceedings in another court one requires that court normally to recover that amount by instalments, would suggest to me that the one thread in the Bill which is virtuous and just is that by and large it tries not to impose huge amounts of deductions, payments and requirements in judgments for this kind of reduction upon the worker otherwise than by instalments. Here on the final instalment all those controls are gone. I take on board what the Minister says. I am subsuming in my argument that the points that have gone by in Clause 1 and so on are there on the table, but, subject to that, the employer has no limit in the way that he has on other pay days. It seems to us wrong. It is a pity perhaps that we cannot challenge this more directly. It is very difficult to know how to do so. It seems to us wrong and immoral and we shall go on saying so, but at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 48 not moved. ]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 49:
Page 7, line 28, leave out ("include") and insert ("mean").
The noble Lord said: Amendment No. 49 goes to that part of Clause 4—always a clause of which we take particular note—which suddenly crops up with a definition. Is it not strange that the definition which defines a deduction, or rather, to be more accurate, inclusively explains deductions in this part of the Bill, pops up here and not in the definition clause or some other part as one would expect? But there it is. We are suddenly told that a deduction made from the wages of a worker in retail employment or a payment from him,
"on account of a cash shortage or stock deficiency",
includes references to:
"dishonesty or other conduct … which resulted in any such shortage or deficiency, or any other event in respect of which he … has any contractual liability and which so resulted".
We have moved Amendment No. 49, first, to make that a definition because inclusive explanations have a habit of very difficult interpretation. The subsection suggests that there are various other things which can apply to deductions. It does not explain the deduction fully or define it; it merely includes a few things which are to be taken account of. So for the sake of certainty we suggest that that should be a definition.
Secondly, we have moved in Amendment No. 50 to leave out lines 33 to 35 although I must say that on second look we could easily have moved to leave out some other lines as alternatives. We have debated the question of dishonesty before but here we are dealing with an explanatory definition, at any rate, of deductions and payments. They include anything in the contract—because that is in paragraph (b)—but more than is in the contract. As construed, prong one impales the worker on a contractual liability—that is subsection (6)(b)—and, prong two is:
"any dishonesty or other conduct … which resulted in any such shortage".
We are slightly puzzled about the contractual part and Amendment No. 50, to which I am also speaking, actually suggests leaving out lines 33 to 35. But more than that, there is another objectionable part of subsection (6). It has been mentioned earlier but since we are on the subsection it really must be mentioned explicitly. The final words of subsection (6) actually state that in either case in a sense it matters not whether the amount of the deduction or payment,
"is designed to reflect the exact amount of the shortage or deficiency".
One might have expected the Bill to say to the employer, "You really ought to make an effort to try to get it right". But what the Bill says,
"in each case whether the amount of the deduction or payment is designed to reflect the exact amount of the shortage or deficiency or not".
You do not have to design the deduction or payment to reflect the exact amount. Therefore, it may be that those are the three lines we should have proposed leaving out. However, we have moved the omission of the three lines that we have in a probing way to see why the Government have put in, first, this explanation instead of a definition; secondly, why the construction of (a) and (b) is as it is; and, thirdly, why the subsection says to the employer that it does not really matter whether the deduction reflects the exact amount of the shortage or deficiency.
The problems with which we are dealing are uncertain enough. We heard from my noble friend Lord Graham how the notional stock shortage on modern systems of stock control is so uncertain and how, in various other ways, there are stock deficiencies which can appear in a certain period on the computer-ised programmes and then, when other items are fed in and there is a final balancing out, it is seen that there is no deficiency; meanwhile, a deduction may have been made. Surely in all these clauses it ought to be said that the best efforts and endeavours of everyone concerned should be made to find a sum for deduction, if deduction is to be made, which reflects the amount of cash shortage or stock deficiency.
On the basis that these are probing amendments asking the Government why the subsection is worded as it is, I beg to move.
9.45 p.m.
Lord Trefgarne: I think the noble Lord has made it clear that the intention of these amendments is to make unlawful all deductions or payments in respect of shortages or stock deficiencies unless they arise as a result of a worker's dishonesty. However, they have the effect of removing all deductions or payments in these matters, other than those arising from dishonesty, from the protection of Clauses 2 and 3.
It may help the Committee if I explain the purpose of subsection (6). This subsection provides protection to workers against employers who attempt to avoid the provisions of the Bill by imposing deductions or requiring payments, perhaps of a standard amount, unrelated to the size of a cash shortage or stock deficiency on account of behaviour which results in a shortage or deficiency rather than on account of the
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shortage or deficiency itself. Protection is achieved by specifically stating that deductions and payments on account of behaviour of a worker which results in a shortage or deficiency is covered by Clauses 2 and 3, regardless of whether the amount deducted reflects the value of that shortage or deficiency. I am sure that the noble Lord would agree that we do not want to lose that protection.
However, turning to the intended effect of Amendments Nos. 49 and 50, I think there is a danger in banning all deductions or payments in respect of cash shortages or stock deficiencies unless they arise as a result of a worker's dishonesty; that is, the employers will seek to claim that all cash shortages or stock deficiencies have arisen as a result of a worker's dishonesty. It would also be undesirable to make wholly unlawful, deductions for certain other conduct such as negligence. I believe that the provisions as they stand give adequate protection to workers while enabling employers to recover amounts to which they are entitled.
I do not see that these amendments add anything except to preclude employers from recovering at all, in certain circumstances, amounts which they should be entitled to recover—for example, where negligence has led to a cash shortage. Therefore, I must resist these amendments.
Lord Campbell of Alloway: May I ask the noble Lord, Lord Wedderburn, why it is that in Amendment No. 50 he wants to excise the words,
"any other event in respect of which he (whether together with any other workers or not) has any contractual liability"?
Is this a sort of shade of the concept that the contract of employment is totally immaterial, which we had on Clause 1? What is the object? Is there any sanctity of contract in employment law or is there not? What is the object of it? Perhaps the noble Lord can assist on this point.
Lord Wedderburn of Charlton: I thank the noble Lord, Lord Campbell of Alloway, for his question. In a sense, to answer it fully would mean covering a lot of the ground that we have covered before and after dinner; but of course the short reply is that sancitity of contract for someone who has no bargaining power means something rather different than sanctity of contract means for someone who has a lot of bargaining power. The noble Lord will know this very well because at the time he was involved with the Unfair Contract Terms Act of 1977 (and I guess he would have supported it) which was based on that very concept.
Though we have not debated it on this occasion it may be that, in the light of what is said tonight, we shall want to come back at Report stage to that very Act, though it seemed to us to be wrong to include it in tonight's discussions until we were clear about a number of other matters. Sanctity of contract is something which one can understand in law, but in real life one has to look at the contract that is made. Most of the workers whom we have been discussing most of this afternoon and evening are not in the position of bargaining about their terms. They have

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terms imposed upon them. These are contracts of adhesion which reflect no consent in terms of choice. When, on top of that, there are 3.3 million persons unemployed, then there is even less choice.
So a contract must be looked at in the context of real life, and I have every confidence that the noble Lord will do so. As I explained, we propose the excision of these lines partly to try to limit the concept of deduction to that of dishonesty and other misconduct, as the noble Lord the Minister suggested. I appreciate that there are difficulties in terms of the protection of workers as regards those amendments actually being carried on the face of the Bill. I said that they were
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probing amendments and I take on board what the noble Lord the Minister has said. I do not think he replied on the question of the final lines, and indeed he had every right not to do so because I think I forgot to say that I was speaking to Amendment No. 51 as well, in order to make progress. I shall revoke any right to recover that ground by not moving that amendment, but we leave it on record that we wonder whether those final words are in exactly the right form. With those remarks I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 50 to 52 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 53:
Page 7, line 38, at end insert—
(" ( ) It shall not be lawful for an employer to make any deduction from payments to a worker employed by him which are not wages, whether by virtue of section 7(2) or otherwise, on account of any cash shortage or stock deficiency".).
The noble Lord said: Amendment No. 53 is moved at this point although those who constructed the Bill and know it intimately and have lived with it longer than I have may say that it should come at a different point. However that may be, it raises the following question. The Bill deals on its face with deductions from wages. All that we have been discussing deals with deductions from wages, but we only come to this, of course, when we have reached the definition of wages in Clause 7.
If I may advert to it briefly, Clause 7 first includes a number of matters within wages and then refers to a number of payments which are not within wages. I shall not go further than that, but those payments include advances for a loan, advances of wages, payments in respect of expenses, payments by way of pension allowance or gratuity, and so on. There is a wide variety of payments and they are not meant to be comprehensive.
It seemed to us that there ought to be no possibility of the worker suffering deduction in respect of cash shortage or stock deficiency, at any rate within the area of retail employment. I apprehend that the amendment as drafted does not in fact confine itself to that area, but we felt that at any rate within that area generally there should be no possibility of any employer—no doubt it would be a very bad employer and no doubt a minority employer but nevertheless a possible employer—making deductions for stock deficiency or cash shortage from other payments. We take that to be the intention of the Bill. The Bill would be nonsense if that were not so. If the Minister can show us where that is clearly included in the Bill, we shall be happy. We think that it is not.
As I say, the Bill is founded upon control—"control" is perhaps rather a large word—or at any rate some conditions for deductions from wages in Clause 1, except for the matters set out in subsection (5); a special control on retail employment in Clauses 2 and 3; and the matters that we have mentioned in Clause 4 in regard to final payment. What are to come are remedial matters, definitions and so on. It does not seem to us that there is anywhere stated clearly enough a prohibition on deductions from payments other than wages. Plainly it could be an extremely serious matter.
A rogue employer who did not like the Government's decision and who said "I hold no truck with this 10 per cent. I shall take the 10 per cent. from the wages, but in regard to those other expenses that were to be paid, that other pension payment that was to be paid or that other advance that was to be made, I shall take some of the rest from that". If that were allowed in any form, it would not be within the spirit of the Bill, even as it is drafted now, without any amendment whatever. On that basis, I beg to move.
Lord Trefgarne: As the noble Lord explained, this amendment prohibits deductions on account of cash shortages and stock deficiencies from sums which are not wages. This Bill is called the Wages Bill and gives protection against deductions from wages. We have to define the meaning of wages, not least because the employer has to know what are wages to establish the size of the 10 per cent. limit. In defining wages we have been concerned to exclude sums that might artificially inflate the 10 per cent. figure, such as a loan, and sums that are not commonly thought of as wages, such as a pension or payment of expenses.
As regards payments which are not wages, if employers fail to honour commitments to make such payments or make deductions from such payments in breach of contract, the remedy of the worker is to the ordinary courts for breach of contract. We do not want to ask industrial tribunals, for example, to decide whether an obligation to pay a pension has been properly discharged. The Bill concerns wages and it should not seek to deal with payments that are not wages. I hope that the noble Lord will agree with that proposition.
10 p.m.
Lord Wedderburn of Charlton: I certainly do not, and I should be very surprised if most of the other Members of the Committee did, especially if we take account, for example, of the cases that have been cited in the Committee today. As it is after dinner, we are perhaps getting a little too far away from the fact that many garage chains operate the most dreadful practices against young employees who come on an afternoon's training to work in petrol stations. There may not be so many cases, but that is matched by examples given from all over the country of workers who suffer such deductions in shops and in other places, including transport workers if they are unfortunate enough not to be properly protected by the TGWU.
I understand what the Minister says. He faces, as indeed does anyone who approaches this matter, the difficult question of what wages are. I have tried to be fair to the Bill. It makes a stab, at least in Clause 7, at describing those things that are within wages and the things that are without. We have already seen that wages may be calculated by reference to reductions before we even get to the question of deductions and payments. We saw that on a previous amendment.
Then we face the issue of whether the Bill is to allow an employer to go round the Bill where there are further payments to be made to the worker which are not wages and make deductions from them for the reasons which are so carefully protected in the Bill to 10 per cent. until the end of the employment.
The Minister says two things about that, He says that there will be a remedy for breach of contract, if it is a breach of any contract. We come back to the point again and again that that is no problem for the garage proprietors who do the type of things that have been explained to the Committee. They will make a contract that includes that provision. They will have a clause which says, "We shall deduct for cash shortages

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up to 10 per cent. except on final instalments for cash shortages, etc." Then there will be Clause 7, and certain payments will be made in a different way. I can think of how to begin on that clause. It may get by the first limb up to the Court of Appeal. It may even pass the noble and learned Lord, Lord Denning, if we manage to get him back to the Court of Appeal. One can see ways in which the clause could easily be drafted.
It will not do for the Minister to say wages is wages and this is a wages Bill. What he says three times wages are, is not necessarily right. There will be other payments. Deductions will come from them.
Why invite evasion of one's Bill if one believes in it, by rejecting on principle an amendment of this kind? I can see that one might say, "You have not given us a good enough definition" or "We want some further consideration of what kind of expenses and payments we should have to look at." To say that we cannot have the industrial tribunals looking at pensions, as though that were an answer to what is so obviously an evasion of the entire mechanism carefully put forward —I have to say this straightforwardly—suggests that the Government are not serious about the limits contained in the Bill. They do not care that much about the 10 per cent. and they are not really concerned with taking away an amendment which would cause them to look at the obvious way in which one could consider evading the Bill.
Consideration has already been given in a number of places on how to avoid the 10 per cent. The Minister must know that people who advise others in their professional capacity are already looking at the Bill. He suggests that I have not been fortunate enough to gain an insight into the practices of such parties. Were I to do other than hear about it at secondhand, I have no doubt it would be interesting. This is not the matter to which some people have been looking but of course they are looking for ways to get round the provision on the grounds that the Minister gives. The people who will evade the Bill will give the same reasons that the Government give for refusing to accept so many amendments. They are saying, "This is a terrible burden on business. It is a terrible way to tie the hands of the employer to say that he cannot take more than 10 per cent." They believe that. They are looking at ways around the provision.
This is a small amendment, and I should have hoped that the Minister would have looked at it. It is only a small amendment, but it matters. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 [Complaints to industrial tribunals in respect of unauthorised deductions etc.]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 54:
Page 8, line 10, after ("him") insert ("whether or not").
The noble Lord said: I shall move this amendment briefly and speak also to Amendments Nos. 55 and 57 which go to the same point. I have little more than a
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fairly simple question for the Minister. The issue relates to complaints with regard to payments. The worker is complaining about the payments demanded. Wherever that problem arises, it seems to us that the Bill speaks of him being allowed to complain about demands for payments made in accordance with Clause 3. Does that mean that if the employer makes a demand that is not in pursuance of, or in accordance with, Clause 3, there is no right to complain? That cannot be the intention of the Bill. It is a matter of wording. To put it the other way round, the employee or the worker surely has the right to complain about any type of demand for payment that offends the previous clause of the Bill, whether or not purportedly made in pursuance of Clause 3. If that is so, we are happy. If it is not so, we are not happy. I beg to move.
Lord Trefgarne: Clause 5 establishes procedures for workers to present complaints to industrial tribunals in respect of deductions from wages or receipt of payments that contravene the provisions of Clauses 1 to 3. Subsection (1) sets out the four grounds on which a worker can present a complaint to an industrial tribunal. The amendments seek to change subsection (1) (d) that enables a worker to present a complaint on the grounds that his employer has received a payment in respect of a cash shortage or stock deficiency that is in excess of the 10 per cent. limit set by Clause 3 (4). They seek to ensure that a worker has a right to complain on that ground whether or not the other requirements of Clause 3 concerning demand for payment and its timing have been satisfied.
I can understand the noble Lord's concern. I can assure him that subsection (1) (b) will cover occasions when an employer has failed to satisfy the provisions of Clause 3(1) giving a worker a right of complaint under that subsection in those circumstances. That means that these amendments are unnecessary. I hope that these observations will reassure the noble Lord.
Lord Wedderburn of Charlton: Left with the mere words of the Bill I would still be worried. I have, however, the assurance of the noble Lord the Minister. I can therefore more happily beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 55 to 57 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 58:
Page 9, line 7, at end insert ("and
(c) in any case, the tribunal may also make an award of compensation to the worker of such amount as the tribunal considers just and equitable and in all the circumstances having regard to any loss or detriment suffered by the worker and to the infringement of the workers' rights by reason of the failure of the employer to observe the requirements of this Part."
The noble Lord said: We now come to something rather serious. The Bill limits compensation to a worker in the sum of the unlawful deduction. In deduction I include unlawful payment. This is a worker who is at risk, who is highly vulnerable to dismissal, who probably does not have two years or,

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where he or she is a worker with short hours, the five years required before he or she can go to an industrial tribunal to complain of unfair dismissal. Certainly, if still in the employment, then that person is very courageous to go near the tribunal at all. Yet that person does and complains. He says that the employer, despite all the great powers in the Bill, got it wrong and kept the money from him and his family illegally, like the £50 deduction from the lorry driver whom we mentioned earlier this afternoon.
If the worker is lucky he will receive help from a trade union official, a law centre or a citizens' advice bureau, and eventually he will reach the tribunal. First, there will be the pre-hearing assessment and then he will be warned that he may not have a case. Then there is the conciliation session, and eventually, 12 or however many weeks later, he will reach the tribunal. At the hearing the worker may win. All this time the employer has retained the money. The worker's family debts have not been met by that amount at any rate, and life has been that much harder. I cannot emphasise too strongly how serious that is in regard to this Bill. The amounts that we are talking about would perhaps be chickenfeed to many Members of the Committee, but they are a very serious percentage for the families concerned.
Having reached the point, what do the Government say can be recovered? This is why we wish to insert an amendment at page 9, line 7. Basically, what is allowed is that the tribunal can pay to the worker the amount of the deduction or the payment illegally required, or it can order the employer to repay the worker the amount recovered or received in excess of any such limit, as was mentioned earlier in the Bill. That is not the normal measure of compensation in our employment protection law.
If we look at Section 26 of the Employment Protection (Consolidation) Act 1978, which is perhaps an analogous type of case, where you have a complaint of action short of dismissal which turns out to be wrongful, what does the statute say? In Section 26 we are told that:
"The amount of the compensation awarded by a tribunal on a complaint under section 24 shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the infringement of the complainant's right under section 23 by the employer's action complained of and to any loss sustained by the complainant which is attributable to that action."
We say that surely a parallel should be drawn here. Our amendment says that, in addition to the amount of the deduction or the payment which is illegal, the tribunal shall have a discretion—and we use the normal phrase in employment protection legislation—that the tribunal may also:
"make an award of compensation to the worker of such amount as the tribunal considers just and equitable in all the circumstances having regard to any loss or detriment suffered by the worker and to the infringement of the workers' rights by reason of the failure of the employer to observe the requirements of this Part".
Members of the Committee will notice that we have used the formula of Section 26 of the 1978 Act and indeed of certain other parts of our legislation because it has been acknowledged that that is not in the proper sense a penal provision. There are penal provisions elsewhere in the legislation, but they are not here. That is simply a recognition that a sum can be added because of the infringement of the worker's right.
However, much more serious than that is the question which I put to the Minister: surely when the employer has been in possession and the worker out of possession of the money, however much or however little, for the whole period since the deduction to up the tribunal's judgment (which is not likely to be less than three months and probably, in some cases, will be more), any loss suffered by reason of the lack of that money should also be measured in the compensation which can be awarded in accordance with what the tribunal thinks is just and equitable. I do not say that we should lay down any absolute rule. It is not normal to lay down an absolute rule in our legislation on matters of this kind. But is it normal to treat this as a debt when the employer has illegally possessed himself of the money—despite the ease with which he can lawfully do so under the Bill, as we see it—and to lay down that that shall be the full measure of compensation in every type of case?
Where illness in the family was made worse by lack of the money, is that enough? Where there has been some family problem because of the lack of the money, is that enough? We say that it is not, and we say that loss or detriment which the tribunal regards as just and equitable must be put into this Bill as something that the tribunal, where a worker proves his or her case in the end, at least has the jurisdiction to award. I beg to move.
10. 15 p.m.
Lord Rochester: At Second Reading of the Bill I said that it was questionable whether compensation to the employee should be limited to the deduction from his wages made by the employer, or on the other hand extended to cover loss of pay for time taken off work in preparing for the hearing of the case, attending the tribunal itself, and recovering expenses for travelling less than the distance of six miles, for which allowance may, as I understand it, presently be made. In this amendment the noble Lord, Lord Wedderburn, has instanced some other losses that the employee might sustain.
Having thought a little more about this since Second Reading, and having heard what the noble Lord, Lord Wedderburn, has had to say this evening. I incline to the view expressed in this amendment that the tribunal should be able to make an award which is just and equitable having regard to the total loss suffered by the employee. I hope therefore that the noble Lord the Minister will be able to make a positive response to this amendment.
Lord Trefgarne: Under the Bill, where a worker successfully complains to a tribunal about an unlawful deduction (or payment) the tribunal will order the employer to repay the sum of money in dispute to the worker. The amendment would give tribunals discretion to make an assessment of loss, detriment or infringement of rights suffered by the worker and to make an award of compensation. However, I believe that the most important outcome of tribunal proceedings must surely be to ensure that the worker gets the actual sum of money due to him. This is achieved by the provisions in their present form.
The procedures for settling complaints at tribunals are swift and simple, with most complaints being

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sorted out within three months of the complaint being made. Because the procedures will be quick the costs to the worker (such as interest on the sum not paid) will be small. Given that fact, we have to judge whether there should be a provision for compensation with all the difficulties that this will bring.
Aside from the practical difficulty for a tribunal in making the assessment, the introduction of compensation provisions would add a further complexity to tribunal procedures which is simply unnecessary in this context. We are determined to keep tribunal procedures as simple as possible. It is in fact hard to see what loss the worker can suffer other than the deduction itself and the inconvenience of bringing a complaint. There are, however, no tribunal jurisdictions which permit tribunals to award compensation for the inconvenience of bringing a complaint, and I am sure that this Bill is not the place to consider that question. I hope that the noble Lord will not press his amendment.
Lord Wedderburn of Charlton: I thank the Minister for his reply, but of many unsatisfactory replies that is about the most unsatisfactory. It does not come to grips with the problem. Tribunal proceedings may seem swift and simple to the noble Lord the Minister and maybe to myself if they get going and are finished within three months, but three months is a long time in a low-pay household. If the employer in retail employment has stopped a number of weeks' wages completely and the employee is lucky enough somehow to be continuing in the employment or somehow is able to bring an action in the tribunal, the suggestion is that there will not be any further consequential losses other than mere inconvenience. "Inconvenience" is rather a nice term—I had not thought of it—for being done out of your wages, for having the lot stopped for "shorts". The family will have to borrow money, and the interest is likely to be high. They will have to pawn things. They will have to get by. That is not an inconvenience: where someone has done this by reason of an unlawful stoppage, is an outrage. You should have the right to compensation for the loss you suffer.
We have not couched the amendment in some penal and punitive terms. The noble Lord the Minister makes me think that perhaps we are wrong to agree that it should be an end to criminal proceedings; I begin to wonder. Once you get into civil proceedings you have this sort of argument put to you—that all you have is a debt due and you cannot recover any more. What kind of incentive is that to the rogue employer to do his duty even under the contract? There is here absolutely no legal incentive. Nor is it true to say—I do not think this is exactly what the Minister said—that the industrial tribunals do not deal in this sort of matter. The Minister said that they do not give compensation for inconvenience. That is a proposition at which I should wish to look further with notice in regard to some elements of unfair dismissal compensation. It may be right, but we are not talking about that.
For the Government not to consider the right of workers in this circumstance to recover, where it is just and equitable, a sum in respect of loss caused to them
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and their family by illegal stoppages seems to me to show a thread of cynicism which hitherto at least had been concealed.
Lord Teviot: The noble Lord, Lord Wedderburn, is quite right and my noble friend is quite right, but I am afraid the argument has been terribly narrow. I have sat here listening to every word. Please may I ask a question? The worker has had deductions from his wages for several weeks, and I should like my noble friend to elaborate on this. Could it be as much as that? While he waits for his tribunal presumably he will be paid his wages. I know that there will be hideous inconvenience, but we have had no examples of this. When we read Hansard tomorrow morning there will be no colour in this debate at all. Can somebody give a few more examples of how this could happen? Are several wages likely to be deducted? How much privation will there be and how much will be suffered? Before we go for this I think we should hear a little more.
Lord Wedderburn of Charlton: The noble Lord and I will look with interest at Hansard for the earlier part of this afternoon. I am sure that we shall read of many examples given by my noble friends and myself which we found in the documents of the Citizens' Advice Bureaux. Bureau after bureau wrote in, and still write in, to the national body, giving examples of deductions from workers of various kinds, from lorry drivers to shopworkers. In particular, in the last three to four years there has been a spate of horrendous deductions from petrol station workers. If the noble Lord cannot find those cases, I shall be happy to send him copies of the details I have. There has been no challenge today regarding the Sealands garage case which went to the Divisional Court and the reaction to it. One does not doubt that these deductions are taking place at an increasing rate.
I understood the noble Lord to be saying: "Will they continue under this Bill when it is an Act?" One of the planks on which we find ourselves is that this Bill is so inadequate that there is no reason whatever to think that they will not continue; because all the circumstances which this Bill demands of the employer by which he may legitimately make a deduction which at the moment he may not legitimately make and which at the moment is a crime, are frequently satisfied. Many of the so-called, in law, contracts of the petrol station attendants are there and they would satisfy this Bill. What they are not satisfying at the moment is the requirement of the Truck Act 1896 that the deductions be fair and reasonable.
That links with the amendment I moved. The amendment says that having not been able to persuade the Government of the most elementary justice, as we see it, in regard to deductions, they should be not more than is reasonable or they should not apply over certain areas which the amendments have covered. Having traversed that ground and failed, we say to the Government, "Very well, we think that your conditions are inadequate. You say they are enough." But where the employer breaks them and where the tribunal says that the worker has suffered loss in consequence of the deductions over and beyond the

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nominal amount of the so-called debt due to the employer—which may well be a case where weeks have been stopped (there are at the moment many examples of that which do not happen to meet the conditions of the Bill)—in that case surely there must be some power and jurisdiction.
What the Government are doing is depriving the tribunal of jurisdiction to do what in good conscience it would wish to do as an ordinary body of industrial jurisdiction, as it is so often called—giving the worker not merely the amount which has been illegally detained by the employer, possibly over a long period, but also paying something. It will not be much, but it will mean a lot in terms of the loss which the family concerned may have suffered. The Government will not give the tribunal that jurisdiction. That is the issue between us.
Lord Teviot: I am grateful to the noble Lord for saying all that. I have done a bit of listening but there have been gaps and I shall do quite a lot of reading. There is one question that I should like to ask my noble friend. Will the worker, he or she, while waiting between then and the tribunal be gainfully employed by his or her employer? There will not be dismissal or suspension without pay?
Lord Trefgarne: If my noble friend will allow me to say so, that is very much a different question. But one of the features of this Bill is that very considerable constraints are imposed on the employer on the amount of deduction and the purpose of the deduction that he can make. This has been a matter which the noble Lord, Lord Wedderburn, and the noble Lord, Lord McCarthy, and others and I have been discussing the whole afternoon, if I may say so; so that I believe that my noble friend can sleep easy.
Lord Wedderburn of Charlton: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Supplementary provisions relating to complaints]:
10.30 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 59:
Page 10, line 7, after ("of) insert ("any provision of this Act").
The noble Lord said: It is necessary to move this amendment because there is something very funny going on at page 10, line 7. As we have got the noble Lord the Secretary of State with us now, we can be sure that we can get the right answer and we are very glad about that.
It is a legal point, so I shall put it very briefly because there is never really any problem about legal points. The real problem is that Clause 6(3) is not in the usual form. There is a usual form for these things and it is rather astonishing to find this Government not following the usual form. In Bills of the employment protection kind—and in a way I suppose that this is
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nominally so—you usually find that there is a clause which says that any provision in an agreement is void if it excludes or limits the operation of the Act or if it precludes a person from presenting complaints under the Act to a tribunal.
So there are two prongs. You cannot allow people to contract out of your Act and you must not allow them to put limitations on a person's rights to go to an industrial tribunal under the Act. That is the form, for example, of Section 140 of the Employment Protection (Consolidation) Act 1978, and it is matched in other statutes and has been for some time.
Of the two prongs, the second is effectively covered: that is to say, that in Clause 6(3) it is provided that agreements shall be void which limit or exclude the operation of Section 5 or preclude any person presenting a complaint under Section 5. That is the complaints section. In other words, you must not stop the worker going to the tribunal, although, as we have just seen, on the Government's view, what he can get is pretty limited. But where is the other prong? Where is the provision that says "You must not contract out of this Act"?
This is a curious matter, because in a way I suppose the Government might have been advised, "You don't need that because this Act depends on contract anyway and so for anyone making a contract to deal with the matters concerned with this Act, that's all right." That is all right for Clause 1, but it will not work for Clauses 2 and 3. Surely there must be a general provision which ties up the ends of preventing anyone attempting to make any type of agreement anywhere on any point to contract out of the mandatory provisions of this Act. If the Government say that all those loose ends are tied up internally and that their Bill is like a bundle of spaghetti instead of a neatly-tied parcel, then all I can say is that it would be very much better to have followed previous form and tied up the parcel properly by putting in the proper clause.
The serious point of course is that when the courts meet that clause they are bound to take notice of the fact—and I do mean "bound"—and they must say "This clause is different from Section 140, and so it must mean something different. And so we approach this Act with the expectation that unless it is made abundantly clear, you can contract out of things, or at least it is left rather wide open whether you can." That cannot be right. It would mean that the employer could induce a worker to contract out of certain provisions like Clauses 2 and 3. That cannot be the intention of the Government. There must be something more to it. On that basis, and in hushed expectation of the Minister's reply, I beg to move.
Lord Trefgarne: I am pretty sure that this Bill does not have the defect which the noble Lord suggests. However, I recognise that there may be more than one respectable view about that. Thus, if the noble Lord is willing to withdraw his amendment, I shall undertake to see that this matter is carefully examined between now and the next stage, and we shall come forward with an amendment, if that is thought appropriate.
Lord Wedderburn of Charlton: At no point of our proceedings in Committee have I begged leave to

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withdraw an amendment with more alacrity. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Lord McCarthy Lord McCarthy moved Amendment No. 60:
After Clause 6, insert the following new clause:
("Unfair dismissal

.—(1) The dismissal of an employee shall be regarded as unfair for the purposes of Part V of the 1978 Act if the reason (or if more than one, the principal reason) for it is that the employee has brought, or proposes to bring, a complaint under this Part of this Act.

(2) Section 64(1)(a) of the 1978 Act (qualifying period) shall not apply to a dismissal to which subsection (1) above applies.

(3) In section 71(2)(b) of the 1978 Act there shall be inserted after the words ("section 58 or 59(a)"), the words ("or by virtue of section 10A of the Wages Act 1968").

(4) An employee shall have the right not to have action (short of dismissal) taken against him as an individual by his employer for the purpose of preventing or deterring him from making, or proposing to make, a complaint under this Part of the Act.

(5) Sections 24 to 26 of the 1978 Act shall apply to action which contravenes subsection (4) above as they apply to section 23 of that Act.").

The noble Lord said: In rising to move this amendment in the names of my noble friends and myself, I, too, should like to welcome the Secretary of State to his place at this somewhat late stage in our proceedings. I should say that I would welcome him still more if he is there on Thursday, when we come to discuss Part II of the Bill, which I know he is so keen about. That is not to say of course that he need worry about the handling of the Bill so far by his noble friend the Minister. He has given very little away; and I should not like him to think that the very little that he gave away just now is typical of what he has been doing all day.
However, we come now to an amendment which builds on a precedent which was begun by this Government—one which the Government began with an amendment which they moved to the Shops Bill and which we sought to extend and develop by an amendment moved to the Sex Discrimination Act—that is to say, to create a special, additional, specific category of unfair dismissal right, where a Bill makes changes and introduces new laws which put employees in a position of some risk. This is a precedent which, as I say, has been accepted by the House and by the Government, and it is one which we want to extend in the case of this Bill.
The object of this amendment is to create a right of compensation for unfair dismissal or action short of dismissal. There should be a right of compensation where a worker is dismissed for seeking to bring a complaint under Part I of the Bill—for example, if some deduction is made which is not covered by contract, or if some deduction is made in respect of retailers at a rate which is not laid down in the Bill—irrespective (and this is very important from the point of view of the kind of workers who are covered by this Bill) of the present qualifying period of two years, in the case of full-time workers, and five years in the case of part-time workers who work for less than 16 hours. We want—and our amendment would ensure—the right of unfair dismissal protection to apply irrespective of any qualifying period. The reason
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for that is that, as we have been saying all afternoon, this Bill is particularly likely to affect those workers who have very little service, who may be part-time, who may have much too short a qualifying period to be covered by the present legislation. That is what we are trying to do in this Bill.
I want to make two very brief points about why we believe that such an amendment is required and, first, why we believe that it is likely that it will be needed as a result of action by employers. Here I would say to the Minister, who has been answering questions all afternoon, that we are trying to say something about the contemporary situation. He accused us a little while ago of thinking about things as they happened centuries ago. What we are talking about is ordinary workers on ordinary gas stations, in ordinary shops, in ordinary work, being ordinarily sacked by ordinary employers, none of which is confined to centuries ago.
Why should we need a Bill to prevent all employers from doing this? It is because we do not believe, as the Minister appeared to believe earlier today, that in respect of issues of this kind everything should be left to the parties. I must tell the Secretary of State that the argument that everything should be left to the parties is one that we have had all afternoon. As he knows, we have been told "Leave it to the parties", because in this Bill we are talking very largely about unorganised parties. Once the workers get organised, we are not told by this Government, "Leave it to the parties." We are told, "Leave it to the law." But while the workers are unorganised, we are told, "Leave it to the parties."
We are saying that you cannot leave this to the parties, and we are saying that the Government themselves say, and admit, that there is a precedent whereby there should be legal regulation. We have had quite a lot of discussion today of the kind of situation in which this kind of legal provision is necessary. We have been told about garage owners; we have been told about deductions. Even with this Bill, some of those deductions might not be covered by the contract, and a worker might take an employer to an industrial tribunal and win because they were not covered by the contract. Then the employer might very well decide either to dismiss him, or bring about a form of constructive dismissal, which is rather more likely in those circumstances.
We were told this afternoon, for example, about a lorry driver who had had deducted some lodging allowance which was in excess of that specified in the contract, or which he believed was in excess of that specified in the contract, or had had some deduction made, as many lorry drivers have had, because the employer had had to pay an excess insurance premium. In those circumstances, the lorry driver might go to the tribunal, which might uphold the employer, because as long as it is in the contract there is not much that the worker can do. Nevertheless, the employer might say, "My position was validated. My position was upheld. Basically, this individual had no right to take me to the tribunal and"—as the noble Lord the Minister frequently tells us—"waste my time in this way", and therefore either by dismissal or by-action short of dismissal or by constructive dismissal seek to rid himself of this troublesome worker. We are saying that in those circumstances there ought to be a right of unfair dismissal.
What is the defence which the Minister might make? I always try to imagine what is in the mind of Ministers opposite; I do not always succeed.
Lord Trefgarne: If the noble Lord will give me a chance, I shall tell him.
Lord McCarthy: I know what the Minister has in front of him, but he could always change it if I say it; but I shall say it all the same. He might say, "Well, it is all there in the 1978 Act. Why do we need a provision of this kind? After all, there is in the 1978 Act a provision which relates fairness or unfairness to conduct. Is this not conduct? Would not any decent tribunal say that you cannot dismiss someone for conduct of this kind?" Or if conduct does not fit, he might say, what about "some other substantial reason", which is there in the 1978 Act. Would that not cover it? "Surely no tribunal" he might say "would uphold such cases if it could get them by covering it with "some other substantial reason".
My answer to that is that we do not know precisely what a tribunal would say; and when the Government—any government; the previous government or this Government—want to mark something out as being unfair, as wanting certain types of conduct to be covered, as they did in the Shops Bill and as they have done in many other cases, they introduce a specific, prescribed, defined category of unfair dismissal. This is what this Government have done and indeed what previous governments have done in respect of workers who are dismissed because they refuse to join a union or are dismissed because they have joined a union. We do not say in that case, "Let the tribunals sort it out; some other substantial reason. It is an aspect of conduct".
We say this is an important issue. We specify that when he who joins a union is dismissed or when he who refuses to join a union is dismissed, he has a particular prescribed category of unfair dismissal; or if a woman becomes pregnant we specify under the legislation that dismissal on grounds of pregnancy is unfair dismissal; or if strike activity is involved, the circumstances in which people can be dismissed for being involved in strike activity are prescribed in the legislation. We prescribed in the legislation for unfair dismissal on sexist grounds, on racial grounds. We do not rely on "catch-alls" of the 1975 Act if in fact we believe that such a dismissal is essentially unfair. And of course in some of those cases—for example, in the case of refusing to join a union or being dismissed on grounds of trade union membership or on sexist grounds or on racial grounds—we do not insist on the qualification rules. That is what we are saying here.
We are saying that in this area this is a category of unfair dismissal which the Government should accept, which is too important and too significant to be left to the chance of individual tribunals working it in under one or another of their general criteria; that the Government should telegraph to employers, should demonstrate to employers, by putting it in the Bill that they would be against pressure of this kind. That is the case for the amendment. I beg to move.
Lord Rochester: At this time of night I shall use only a few words. I should not like the Secretary of State to
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feel that the welcome already extended to him by Members of the Labour Front Bench is not supported by me. I am equally glad to see him.
As regards the substance of this amendment, perhaps I may say that I am sympathetic to it. Many of the people we are here considering are low paid. They are largely unorganised and therefore unprotected by trade unions. They work in occupations in which there will be a high labour turnover and, as the noble Lord, Lord McCarthy, has already said, they will be either full-time workers who will have been employed for fewer than two years, or part-time workers working fewer than 16 hours a week who have been employed for less than five years. It does seem that there is a case for some special further protection against unfair dismissal of the kind proposed in the amendment. That suggestion carries weight and I therefore hope that the Minister will be able to respond constructively.
10.45 p.m.
Lord Trefgarne: The effect of this new clause would be that workers, irrespective of age, length of service or hours or work, would have new rights to complain to an industrial tribunal either on the gounds that they had been dismissed or that action short of dismissal had been taken against them for bringing complaints under the provisions of Part I of the Bill.
This new clause would apply some of the special compensation provisions which apply to dismissal, and action short of dismissal related to trade union membership, to dismissal for making a complaint under Part I of the Bill. However, the provisions of the Wages Bill do not concern fundamental rights such as those I have just mentioned or the right not to be discriminated against on the grounds of race or sex.
Part I of the Bill gives added protection to workers and provides a cheaper and simpler avenue of complaint about unlawful deductions from wages. We consider that right and proper. However, we do not consider that there is a need to go further. The new clause needs to be viewed in the light of the other protections conferred by the 1978 Act. In general, a worker has to work for two years for an employer before he acquires the right to make a complaint of unfair dismissal. As a matter of general policy we think that this strikes the right balance between the legitimate interests of workers and the burden that the legislation places on employers. We do not believe that there is any justification for special provisions of the sort advocated by the noble Lord. I hope, therefore, that he will not press the amendment.
Lord Wedderburn of Charlton: Before the noble Lord leaves that point may I ask this question? If the two years is about the right balance, and since we are dealing with so very many workers who work less than 16 hours and who therefore would have to serve five years before they had the right to approach the tribunal, does not the Minister consider that on the basis of his own arguments some special provision should be made?
Lord Trefgarne: I should have to take advice on that question. I cannot answer the noble Lord without doing so, but I certainly undertake to do that.
Lord McCarthy: May I develop that point because it is an interesting one? As far I understand the noble Lord, he is saying three things, and if I get it wrong I ask him not to say so now but to go away and think about it.
First, he is saying that he does not like the special compensation provision which we would introduce in subsection (3). I see his point although I do not agree with him. He thinks that special compensation is only there for non-unionists or workers who are sacked on the ground of trade unionism. Well, we could change the amendment or bring it back on Report or the noble Lord could introduce an amendment which is similar to our amendment but which does not make the special compensation provisions. That is a possibility.
Secondly, the noble Lord says that he does not like the two-year rule to be set aside. Once again, I take his point. He is saying that exemption from the two-year rule is only for non-unionists, or that it is only for sex or race but not for these people. That is the noble Lord's position and we have to put up with it. But suppose we were to come back and say that we will take out the special compensation and take out the two-year rule from the amendment, what would his attitude be to that? I ask that because I thought that the third point he made was that he was in favour of special provision and that he did not want to leave this to chance. That is the real cutting edge of what we are saying—that he did not want to leave it to the chance that industrial tribunals might or might not get it in under, for example, some other substantial reason—because they might not. Therefore, if we could meet him on special compensation and meet him on the two-year rule, then he might meet us on the idea of making special provision for this particular case. Is that what he is telling me?
Lord Trefgarne: I replied to the amendment which appears on the Marshalled List. If the noble Lord, having heard the shortcomings of that amendment, wishes to table another one at a later stage, I shall consider that too.
Lord McCarthy: In those circumstances and in the hope of a better morrow, I shall withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 [Meaning of "wages"]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton had given notice of his intention to move Amendment No. 61:
Page 10, line 14, leave out ("by his employer").
The noble Lord said: It is our intention not to move Amendments Nos. 61, 62 and 63, but it would seem courteous to say why in a sentence.
In the light of the previous discussions in Committee, it seemed to us that the problems relating to the concept of wages—which is a doubly ambivalent concept in the Bill: that is, it is a concept to which that which is permitted is related and a concept to which that which is controlled is related—as against the problem of evasion by way of deductions from non-wage payments, is rather more complex than we had
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realised. We are confident that it is more complex than the Government have realised. Therefore, if the Committee will allow it, we do not wish to move the amendments on the Marshalled List but would like to consider the matter further at a later stage.
[Amendment No. 61 not moved.]
[Amendments Nos. 62 and 63 not moved.]
Clause 7 agreed to.
Clause 8 [General interpretation of Part I]:
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 64:
Page 12, line 6, leave out from ("contract") to end of line 9 and insert ("who is not a professional client of his").
The noble Lord said: I beg to move Amendment No. 64 and for convenience I shall speak also to Amendment No. 65. These amendments relate to the definition of the persons covered by the Bill. The workers who are covered by the Bill are substantially persons who work or worked under one of the contracts referred to in Clause 8(2). It is to that subsection that our amendments are directed.
It is right that the subsection should be very wide. The contracts to which our amendments are directed are three in number: contracts of service, contracts of apprenticeship and other contracts for work or services. Everybody knows how difficult it is to define a contract of service, and the reason is that the fragmentation of the labour market into various kinds of atypical relationships, as we used to see them, has put such pressure on the legal concept of "the employee" or "the contract of service" that a defini-tion is difficult to achieve. Since there are so few apprentices—indeed the number has been falling for many years now—the third category becomes more important than it otherwise would have been in analysis, because of the social facts of the situation.
Under this third heading the term "worker" was previously given a well-known description. In the 1974 Trade Union and Labour Relations Act a "worker" was described as "a person who works …
"under any other contract [than a contract of employment] … whereby he undertakes to do or perform personally any work or services for another party to the contract who is not a professional client of his".
It is from that formula, which has been used elsewhere, that this Bill departs. In this Bill we have a contract for individual performance of:
"work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual".
In moving, as it were, the traditional formula in place of the new formula, we are asking certain questions of the Government. There are some ways in which, as I read it, this new formula could be narrower and some ways in which it might be wider than the old one. But it seems to me to be rather uncertain. Does it do anything to help, for example, with regard to home workers? It certainly cannot do so if there is held to be no contract, as is sometimes the case. Home workers, of course, play a part in Part II of the Bill, but are not specifically referred to in Part I. Would a home worker be carrying on a business, and would the employer

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then become the customer, so that the home worker would be excluded under paragraph (c)? It is not at all clear to us exactly in what way the new formula improves for the purpose of this Bill upon the old formula of the party who is not a professional client; by "improves" I mean includes more workers within the scope of the Bill.
Amendment No. 65 adds a further dimension to the same argument or set of questions. It is directed to the situation where the worker's only contract is with someone who is not an employer as far as he is concerned. It may be someone who provides him or her to work for a client of that person; it may be an agency situation of temporary workers or the like; or it may be the lump labour situation in the construction industry, which takes so many forms. But in the form of a labour supply contract it would not seem to us to be covered properly by the phrases that exist, but would, we suggest, be covered in certain forms by Amendment No. 65.
It is because of our concern that, even with those elementary and residual controls on deductions, the Bill should nevertheless cover as wide a scope as possible in its definition of "worker" that we have put down these amendments. I beg to move.
Lord Trefgarne: The intention of the Bill in defining a worker covered by Part I is to ensure that the Bill protects everyone who enters into a contract to do work himself other than someone genuinely operating a business or offering a professional service on his own account. Anyone who is employed by someone else should be protected. But if the person doing the work is doing it as part of a business that he is running, he should not be covered by the protections in the Bill. Then the law relating to commercial contracts should operate.
The amendments operate on the definition of "contract". Amendment No. 64 deletes a reference to:
"any other contract whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual".
It would change that to:
"any other contract whereby the individual undertakes to do or perform personally any work or services for another party to the contract who is not a professional client of his".
Unfortunately, that leaves us with a definition which does not clearly exclude those carrying on a business on their own account. A lawyer offers services to a professional client, but it is not clear that a self-employed plumber does so. As drafted, the Bill puts it beyond doubt that both the lawyer and the plumber are treated alike and are not workers. But this is only because of the reference in the definition to a customer of a business undertaking.
Lord Wedderburn of Charlton: I may have misheard, but I think that the noble Lord was suggesting that our second amendment, No. 65, also replaced part of the existing paragraph (c). In fact it is an addition. It is the first amendment which deletes and replaces; the second amendment is an addition.
11 p.m.
Lord Trefgarne: I was just coming to Amendment No. 65. Amendment No. 65 merely adds the words added by the second definition to the first definition. We believe that that is unnecessary. A person who undertakes to do or perform personally any work or services for another person who is not a professional client of his will be encompassed within the existing definition. I hope that I have reassured the noble Lord.
Lord Wedderburn of Charlton: With great respect, no. I rarely have the confidence to say that the noble Lord is wrong, but I think that he is wrong. The present paragraph (c) speaks of a contract,
"whereby the individual undertakes to do or perform personally any work or services for another party to the contract".
I do not go to the exception for the moment because I am not concerned with that in Amendment No. 65. Paragraph (c) does not cover the case which we cover in Amendment No. 65:
"whereby the individual undertakes to do or perform personally any work or services for any other person".
That is the whole point of the labour supply contract example. It is the person who is proffered by one person to do work for another. He is not doing work or services for another party to the contract. There may be no contract with the person for whom he does the work.
Lord Trefgarne: May I try to help the noble Lord further? A labour-only subcontractor is covered by Part I. A person who is genuinely self-employed and operating his own business is not a worker under the Bill. A plumber who does a job for the noble Lord as part of a business that he operates is not covered by Part I. If the noble Lord employs him to do the job personally, not as any part of a business he is operating, then he is covered.
Lord Wedderburn of Charlton: Curiouser and curiouser! May I make a point on the limited matter we are discussing so that the Committee can catch up with us? I am sure that the noble Lord and I know where we are. The point that the noble Lord made about labour-only supply is valid only if the person doing the work is under a contract of service, and in a limited number of cases he is not to anyone. That is not paragraph (a) or (b) and on the Government's case it is not (c), because he is not doing work or services for another party to the contract.
If the noble Lord says that all those cases are not intended to be covered by the Bill, and then links that, as in his last remarks he did, by saying that those are really people carrying on a business undertaking, what a cat is out of the bag and what sharp talons it has! Surely it is well known that in the labour market of today there is an increasing number of persons whose status is obscure.
On what we have been told so far, they are people who will be said to be carrying on some business undertaking which will not come within the definition of "worker". If I may go back to a simple point, the noble Lord says that the Bill protects those who are under the contracts described and not carrying out a professional service or a business of their own, and that

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it is not meant to cover those not in the employment of another. Such phrases are all very well in the textbooks. The noble Lord may be academic on this matter. Let us take the Ready Mixed Concrete case in 1968—
Lord Trefgarne: It is never far from my mind.
Lord Wedderburn of Charlton: —which is never far from the noble Lord's mind, as he says. There is a driver of a concrete mixing lorry. He looks as though he is an employee. He is dressed in the firm's livery, and the lorry and the drum are painted with the firm's colours. He takes orders as to what he is to do, and so on.
When the court unravelled the case, it found that the lorry had been leased to the driver and that the driver had a self-employed contract. The upshot of a complicated case was that he was held to be self-employed. In fact, however, he was part of the business. Ready Mixed Concrete is a basic authority which is adverted to in many such cases. One would have thought that the Bill would make an effort to deal with such a point. Surely there is an intention to control, at any rate by contract, the deductions from payments to such a person without too much regard to the legal categories.
I thought at first that I was giving the Government the benefit of the doubt. I considered that the new formula on business undertaking might be some way of improving on the old 1974 legislation. I am always willing to believe that that is possible. The Minister's remarks suggest, however, that this is not the case. I urge the Minister to consult on the matter. There will be many interested in seeing that cowboy enterprises are not necessarily released from such controls as the Bill contains and that the obscure nature of some of these categories of the self-employed does not invade the area of the Bill without any of its controls, however small they are.
It would be very undesirable if turning to the new formula meant that there were new categories of persons who would not fall within the Bill. It might be in pursuance of some philosophy of deregulation, but it would not really be in pursuance of what the Minister has explained today. I hope that he can look at the definition again in that respect. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 65 not moved.]
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 66:
Page 12, line 16, leave out ("except in so far as") and insert ("whether or not").
The noble Lord said: There are three crucial definitions: that of wages, which we have said we want to look at on Report; that of workers; and now the problem of the employer's error—a matter that in another place has changed its position in the Bill on a number of occasions. Subsection (3) on page 12 of the Bill begins sensibly enough by saying that when a worker is paid less than he should be, this counts as a deduction, but then goes on to state,
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"except in so far as the deficiency is attributable to an error of computation".
Subsection (4) says that,
"the reference to an error of computation is a reference to an error of any description on the part of the employer affecting the computation by him of the gross amount of wages properly payable by him to the worker".
The whole notion of error being a complete defence to the employer, the idea that error should be a defence, is rather novel. We would change that to read that a shortage in the wages is a deduction, whether or not attributable to an error, and allow the matter to go on from there. However, in Amendment No. 67 we suggest another more limited way of dealing with the matter by saying that if there must be an error clause, it should at least be an error for which the employer is not responsible. We have stated previously that the worker should not be liable for what he is not responsible for. We say that the employer should not be liable for what he is not responsible for, but where he is responsible he should be liable for the deduction, at any rate under the terms of the Bill.
One would have thought that, at its lowest, our second amendment, stating that errors for which the employer is not responsible are not deductions, would merit some consideration. It raises the whole question of computational error. It goes back to the problem of exactly when, in instances of notional stock shortages and deductions arising from an error in the computer-ised payroll set-up, the employer is to be regarded as responsible. This might well be a matter for further discussion. What we quesion is whether, as we understand it, the notion of error of any description is a concept that knocks out the low payment to the worker as a deduction. We find that remarkable. Unless there is any further description we would propose what is contained in the amendments. I beg to move.
Lord Trefgarne: Perhaps I may briefly explain what the definition of a deduction from wages in subsections (3) and (4) of Clause 8 achieves. The overall objective of Part I of the Bill is to provide protections against deductions from wages with a remedy before an industrial tribunal. The definition of deductions makes clear that a failure to pay the worker the amount of wages properly payable to him is a deduction from his wages, unless this arises from an error of computation by the employer as to the gross amount of wages properly payable.
Disputes as to whether the employer has correctly ascertained the gross amount of wages due, for example, in disputes over whether the worker worked as many hours as he claims or completed as much work as he claims, are not ordinarily thought of as disputes over deductions from wages. Such disputes should remain matters for the ordinary courts to deal with as breach of contract cases and should not be put to industrial tribunals; otherwise tribunals would be effectively arbitrating on all disputes over wages due, not just deductions from wages.
Therefore, if there is a failure to pay the worker the amount properly payable due to an error of computation as to the gross amount of wages payable, that is not a deduction. However, an employer should not be able to evade the protections by deliberately

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withholding wages and claiming that this is not a deduction. So the Bill says that failure to pay the amount properly payable is a deduction, unless it arises from an error of computation as to the gross amount properly payable.
Amendment No. 66 would make all disputes over wages payable matters for industrial tribunals, removing disputes over the method of calculating gross wages from the ordinary courts. In our view, we should be careful to ensure that, in enabling complaints about deductions to be taken to tribunals, we do not remove from the ordinary courts their function of deciding disputes over the calculation of gross wages. An error in calculating gross wages is not a deduction as the ordinary man understands it.
Amendment No. 67 would require tribunals to consider whether the employer was responsible for any failure to calculate gross wages correctly and determine the case if he was. This would give rise to complex tribunal cases, but our main objection remains that, in our view, the ordinary courts should deal with disputes over errors in calculating gross wages due. If we make a further distinction—errors caused by the employer going to tribunals; errors caused by someone else going to the courts—we have a recipe for great confusion and complexity. I am sorry, therefore, that I do not find either amendment very helpful.
Lord Wedderburn of Charlton: I hear what the noble Lord the Minister says. The next time I meet someone coming back from the shop or the garage and he says, "I thought that I was going to be paid £64 this week and they have only paid me £59—I think that is a rotten deduction", I shall say, "George, that is just an error in computation; it is not a deduction as the ordinary man would see it." I shall then run very fast and get away as soon as I can.
Prima facie is not someone who is paid less, and straightforwardly and intentionally less—"I assume that the matter has been raised somewhere but I thought I was getting £64"; "No, you are getting £59 this week and that is it"—entitled to say, in a calm moment and after taking some good advice, when he catches up with me, "It should be £64, so there has been a deduction"? If he goes back to the works and they say, "Sorry about that, we deducted £5 from your pay wrongly on the computation"—which is what they would say—he will say, "Don't say that to me; that was just an error in computation". The ordinary book-keeper would regard it as something totally different.
There are two real points here. The Government have been under intense pressure from employers to have an error clause somewhere in the Bill. I think I am right in saying that it used to be partly covered by something in the original Clause 1, but I stand to be corrected if that is not so. It has been floating around in discussions in the other place. Now it has turned up here in this form, partly because of that pressure. They justify it by saying, "We must not have these matters go to the industrial tribunals".
I happened to be one of those who was slow to support the general extension of the industrial tribunal jurisdiction over all forms of employment disputes. I
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have reasons for that but they relate to collective labour relations which form very little part—and it is interesting how little—in this Bill, because the union presence is not in any way strong in many of these areas. But I do not see that reasoning apply to the question of wage disputes that the Minister described. Have the Government no confidence in industrial tribunals that they can allow them to deal with all the other matters they deal with but cannot, at any rate within a certain limit of jurisdiction in monetary terms, allow them to deal with errors of computation as well as deductions, when it is quite obvious that the line between the two is going to be difficult to draw in real life?
"No", says the Minister, "you must go to the county court or the High Court". It is usually more expensive. Some procedures of the county court might get you by, but certainly it is slower, and said at any rate not to be so simple and informal or so cheap. Why? What reason is there except to say that the jurisdiction of these other courts must be preserved? It sounds like a battle between the solicitors and the Bar, translated into a battle between the industrial tribunals and the ordinary courts. Not many of the judges would see it that way. I do not think there would be much opposition on either side to this matter.
I do not see that the Minister has done anything but rehearse a theorem there about jurisdiction. He and the Government have responded to pressure, because employers want a get-out for computational error described in some fashion and here it is "error of any description of a computational kind". We think that goes too far. It does not seem to be right. It will not be understood by ordinary workers in the way that the Minister described in the majority of cases, and it will cause a great deal of ill-feeling when people are told, "You don't have any rights in what we say is a computational error", rather than getting around a table and trying to sort out what went wrong for what looks like a deduction to the worker, and the employer then to have the onus of explaining the matter to the worker involved. It is sad that the Government should, on such curiously formalistic grounds (at least overtly) press these clauses in this form. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 67 not moved.]
Clause 8 agreed to.
Clauses 9 and 10 agreed to.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 68:
After Clause 10, insert the following new clause:
("Cashless wages.

.—(1) An employer shall not make any payment of wages to any worker employed by him otherwise than in current coin of this realm unless on the occasion of each payment the conditions of subsection (2) are satisfied.

(2) The conditions are—

(a) the employer and the worker have agreed on such payment in a relevant provision of the worker's contract, or the worker has previously signified to his employer his consent to it in a signed written document, within the meaning of section I above; and

(b) where payment is to be made by the employer into an account of a bank, deposit-taking or financial institution or other body, the employer has agreed to make the payment

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into the account notified to him by the worker at least seven days before the date on which the wages are payable.

(3) Where an employer fails to make a payment to the worker in accordance with, or contravenes any condition of, subsection (2) above, the amount of the wages payable shall be treated for the purposes of section 5 above as a deduction which contravenes section 1(1) of this Act.").

The noble Lord said: Amendments Nos. 68 and 69 deal with a completely new matter. It is the matter that most people think of as the Truck Acts. I shall move Amendment No. 68 briefly in order to put on record, and for the Minister to respond to, what is a serious matter but which can be dealt with much more quickly.
Cashless pay is a serious issue. It is true that the Truck Act 1831 and its amending statutes over the years have stood as a kind of obstacle to the payment to manual workers, or workmen as they were described, in anything other than coin of the realm, except for the list of permitted deductions and some other exceptions in the statutes. But there was one thing which happened in 1960 which is often forgotten if one looks at the Government's presentation of this Bill in another place. That is the Payment of Wages Act 1960, which allowed for the payment to manual workers, and everybody else alike, of wages by way of cheque, or payments into an account, or bank money order, or postal order, and so on, where that was requested by the worker concerned.
It is true that less use has been made of that Act than was expected in some circles. It is true that a smaller number of manual workers in this country appear to be paid by means other than cash than in some—indeed most—western European countries. So there is a case for action in terms of the legislation. There is a case for loosening up the Payment of Wages Act 1960; but in our view it does not follow that one should—to use the expression of my noble friend Lord McCarthy, his repetition of the Minister's phrase used so often today—"Leave it to the parties"; not in every case at least. We say that there should be some conditions.
In the amendment we suggest they should be the agreement of the employer and the worker and that should be clearly evidenced, as we suggest. We suggest too that there should be some minimum condition. The minimum condition that we put here is that where the payment is to be made into an account then the employer will agree to pay it into an account notified by the worker at reasonable notice beforehand. We say too that where there is an infringement of either of those principles that should count as a matter for complaint under Section 5 in the industrial tribunal.
In saying those things that is what we think the law should do as a step forward. We cannot see the objection to that way forward. But we also say that far more attention should be given to the question of banking hours, to the facilities in various areas for cashing cheques or orders or for using cashless methods. Attention should be given also to bank charges. It is true that some accounts now operate which did not operate and which workers might not have used 10 years ago without so many charges. Bank charges are not dead, as I am sure many Members of the Committee will testify. The issue of exactly when and how such payments should be made seems to us
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to be something which is far more than simply to sweep away the Truck Acts.
The Government say that they would not—this is from their Paper of 1983—seek to impose any obligation upon employees to accept cashless pay. Not imposing obligations on employees to accept cashless pay is, we think, something slightly more than merely allowing the matter to be put in a contract, although we think that should be so and we think it must be done with very clear evidence. We ourselves believe that it is much better to move on this area by way of collective bargaining than by way of action with individual employees because it seems to us that then various other social considerations can be taken into account.
The mere repeal of the Truck Acts 1831 to 1887 in this case is not perhaps enough without supporting social policies and without a few further legal conditions. I beg to move.
Lord Rochester: I feel obliged to speak briefly to this amendment. As I explained at Second Reading, my noble friends and I are very much in favour of repealing the Truck Acts and extending cashless pay. In our view that will bring about greater security, savings in manufacturing costs and, most important, will make a substantial contribution towards the elimination of differences between the employment conditions of manual workers and those of white-collar staff based on social distinctions which became outdated long ago. Against that background, I am reluctant to see any restrictions placed on the extent to which cashless pay may be made.
There is one exception which in my view should be made to that general rule. It is that an employee should have the right to choose the particular financial institution through which he receives non-cash pay. In those circumstances, I am rather hoping that the noble Lord, Lord Wedderburn, will not press this particular amendment, for on the next one I think he may find me more supportive.
Lord Trefgarne: This amendment brings us to what we have to recognise is a fundamental difference between the Government and noble Lords opposite. In the reign of William IV, in 1831, Parliament passed the first Truck Act to give artificers, who today we broadly regard as manual workers, the right to insist on being paid in coin of the realm. The abuse that was thus outlawed was the device of paying labourers in truck, that is, in tokens exchangeable only at the company shop.
Today, this is an unheard-of abuse although the Truck Acts do not apply to any of the non-manual workers who today probably make up, depending on how you define them, over half of the employees in employment. Given this fact and the advances in the banking system over the last 150 years or so and, particularly, in the last 10 years or so, the Government propose that the method of wage payment should, for manual workers, join such issues as hours of work, holidays, bonuses, overtime arrangements, etc., as a matter to be agreed contractually between employer and worker. This has always been the position for non-manual workers.

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By contrast, one effect of the amendment would extend to all workers, including non-manuals, the right to insist on payment in cash unless certain conditions are satisfied. This introduces consistency but is moving entirely in the wrong direction. In our view, the method of wage payment should be entirely for contractual agreement. That is right in principle. We recognise that this will probably lead to a gradual acceleration of the trend towards cashless methods of wage payment since many employers have held back from such a move due to the fear that a handful of manual workers, by insisting on continuing to be paid in cash, could put them to the expense of having to run two payment systems side by side. For two main reasons, business efficiency and the reduction in opportunities for crime, we believe that a gradual shift to non-cash methods of wage payment is to be encouraged.
Another effect of the amendment would be to require employers to pay wages into a financial institution of the workers' choosing. This suggests that noble Lords opposite fear that employers will press workers into opening accounts at particular banks. I have to say that we are unconvinced that this is a well founded fear. In general, there is no advantage to employers in having their workers all banking with the same bank. The main point again is that the Truck Acts have never applied to non-manual workers and there is no evidence that significant problems have arisen for non-manuals in being dragooned reluctantly into particular banks. The Government would be very reluctant indeed to reintroduce new and different statutory controls and would only do so if there was some clear evidence of potential abuse; and there is none of that.
Will things be any different for manual workers? We can surely put aside the stereotyped view that sees non-manual workers as educated, well-paid and able to cope with the banking system while manual workers are low-paid, poorly educated and in need of greater protection. Many non-manual jobs, particularly clerical jobs, are neither skilled nor highly paid while many manual jobs are both highly skilled and well paid. If there is no evidence that the absence of statutory protection has caused problems for non-manuals, we are surely not entitled to assume that it will cause problems for manuals.
Finally, to give the worker a right to recover as a deduction an amount which he has actually been paid, although not in the way provided for in Subsection (2), is to distort totally the meaning of the word "deduction".
Given that the amendment imports statutory controls into an area where they are not needed, I am afraid that I could not agree to it.
11.30 p.m.
Lord Wedderburn of Charlton: I am grateful to the Minister for what he has said, but I do not understand the differences between us to be as great as he thought. It seemed to me that the only difference between us really was that I did not mention William IV and artificers. We want contracts. There is a difference in regard to what should be counted as a deduction and there is the other difference that we reach in the next amendment, which perhaps should be dealt with then.
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That there should be progress towards cashless pay is a truism. The question concerns the conditions. It may be that, as the months go on, the Government will think a little more about the need to consider the conditions under which this spread is encouraged, rather than merely repealing the Truck Acts. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 69:
After Clause 11, insert the following new clause:
("Payment of wages otherwise than by cash.
Where an employer agrees to pay wages to a worker under his contract by way of payment to an account at a bank or other institution, there shall be an implied term in the worker's contract, whether made before or after this Act, conferring on the worker the right to stipulate on reasonable notice the account to which payment shall be made.").
The noble Lord said: I beg to move Amendment No. 69, standing in the names of my noble friends. The Minister and others who spoke in the immediately preceding amendment touched upon the point that we are trying to make in this amendment. The Minister in fact said he could not believe there would be many, if any, employers who would seek to dragoon their employees into receiving their payments through a bank unacceptable to the employee. I think that is right.
However, for a variety of reasons, there may be employees who do wish to choose to have their moneys paid into a form of institution, whether a bank, a building society or Giro, which is different from that chosen by the employer. I am not making a big thing about the employer who says, "Take it or leave it: this is what you want." I genuinely believe that the Government can accept this amendment because it will do little harm. The Minister has already made the point that there cannot be very many divergences between that which the employer thinks is good business, convenient to his business and satisfactory to the employee.
However, there are illustrations that have been brought to my attention where, for instance, a very large employer of labour in the retail sector had made arrangements to pay wages of employees through a certain bank. Where an employee said "That's not the way I want my money to be paid", arrangements were made for those employees to receive a cheque on the Tuesday, before the Friday; and they then had to make arrangements to pay into the bank or building society of their choice their employer's cheque, so that it would be cleared by the Friday. In other words, the employer said, "It's easy for me to make all my payments through my bank and I will pay them into everyone's individual account. For those who do not like that arrangement, I will arrange to pay a cheque which you must collect and which you must then arrange to pay into your institution." I do not think that employees ought to be put to that trouble.
I accept that it puts a little bit of trouble on to the shoulders of the employer: he has to make arrangements to make payments into more than one institution. But I do not think there are going to be very many illustrations; and in order to get this enormous change

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in the payment of wages off the ground, it is not asking too much for the worker to be able to opt to stipulate to his employer, in a reasonable form, as the amendment suggests, and on reasonable notice, how he wishes to have his wages paid.
I think this is sensible. It is modern, and I am absolutely certain that it can cut out any question of a big stick being wielded by the employer. I beg to move.
Lord Rochester: This proposed new clause has the same objective as one which was moved by my honourable friend the Member for Colne Valley in discussion of the Bill by the Standing Committee in another place. As I began to say on the last amendment, it seems to me important, particularly in the early stage of the operation of this legislation—a point made by the noble Lord, Lord Graham, in moving the amendment—that an employee should have the statutory right to choose the particular financial institution to which his cashless pay is paid to him.
Earlier application of this form of pay to white collar staff should not, in my view, be regarded as an indication of what will necessarily happen when Part I of this Bill is introduced. The move to cashless pay for non-manual workers occurred gradually. It was not the result of legislation such as this. In general, it affected people who were already familiar with the operation of a bank account. Moreover, its introduction took place over a period when there was much less unemployment than there is now.
There is nothing in the Bill as it stands to stop an unscrupulous employer from pressing one of his employees to have his cashless pay paid to him through an institution nominated by the employer, on what would amount to a take-it-or-leave-it basis. May I say that I was impressed also by the instance quoted by the noble Lord, Lord Graham, of other problems that can arise in this connection.
In saying what I have done, I realise that only the employee himself can open a bank account, but in the circumstances I have outlined he or she should, in my view, have a right to choose the particular institution through which payment is made. I was hoping, therefore, that in reply the Minister would be able to say more than merely that no great difficulties had arisen in the past in regard to this matter. I think I may be disappointed in that hope, but I await his reply with interest.
Lord Trefgarne: We carefully considered this proposal, which was of course, as the noble Lord, Lord Rochester, has already said, debated in another place. The Government's view is that the time has come to make the method of wage payment entirely a contractual matter and we are consequently very reluctant to reimport new and unnecessary statutory controls.
The fear that underlies this amendment is, frankly, unrealistic. It appears to be based on a belief that employers will seek to force workers to open bank accounts at banks of their choosing. There are a number of reasons for saying that that is unrealistic. First, non-manual workers have never had the right to insist on payment in cash provided by the Truck Acts.
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For them, the method of wage payment has always been a contractual matter. There is just no evidence of non-manual workers having problems with employers who insist on paying wages to accounts at particular banks of the employer's choice. Indeed, given the way the banking system operates, there is unlikely to be any advantage to an employer in asking the worker to bank at one bank rather than another.
Secondly, it is unlikely that an employer could force a worker to open an account at a particular bank if the worker did not want to. No bank is obliged to accept any individual as a customer. A bank requires a signature and information on the standing of the person applying to open an account. The employer has contractually to pay wages by some means. He cannot insist on only paying it by direct debit transfer to a particular bank account or branch, as the worker may not even be able to open an account at that branch. I see no advantage in giving workers a statutory right to stipulate the account to which payment shall be made, if payment is to be made by direct debit. Any worker could enforce such a right, in any case, by simply closing his existing account and opening another one, giving the employer the choice of paying by direct debit to the new account or paying the worker in some other way. The noble Lord, Lord Graham, will therefore not be surprised to hear that I do not see much merit in his amendment.
Lord Graham of Edmonton: I am disappointed because the illustration I gave of what is going on at this moment is well founded. It is not in my interests or in the interests of the Committee to be more specific. The Minister must understand that it is more administratively convenient for some employers not to force their employees to open bank accounts but simply to say, "We wish to draw your wages on the bank of our choice. If you do not have an account with that bank into which that cheque can be paid we are going to issue you a cheque". Issuing them a cheque means that they have to make arrangements. If they do not have a bank account but their banking is done through some other institution, such as a building society, they have to go to the trouble of making those arrangements.
It strikes me that where on the margin the Minister and his advisers see the possibility of irritation or inconvenience to the employer or a burden of irritation or inconvenience to the employee they invariably come down on the side of avoiding inconvenience to the employer. We think that that is rather sad but not surprising. I do not intend to press this amendment at this stage but I am certain that my colleagues will find some other means of bringing this matter back, because it is unfair and unjust even if it is only a handful of employees. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 70 not moved. ]
Schedule 1 agreed to.
Viscount Long: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Port of Fosdyke Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.
House adjourned at seventeen minutes before midnight.

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