Sitting of 5 March 1986

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  DEATH OF A MEMBER
  Mr. Speaker: I regret to have to inform the House of the death of John Deane Spence, esquire, Member for Ryedale, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.
Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Human Rights
    Mr. David Atkinsonasked the Secretary of State for Foreign and Commonwealth Affairs when he last met the Secretary-General of the Commonwealth to discuss the human rights situation in member states.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Eggar): My right hon. and learned Friend has not met the Commonwealth Secretary-General specifically to discuss the human rights situation in member states and has no present plans to do so.
    Mr. Atkinson: Can my hon. Friend confirm that at least a third of the member states of the Commonwealth do not satisfy the human rights criteria of the United Nations' declaration? If so, will he suggest to Sir Shridath Ramphal that the team of eminent persons currently investigating human rights in South Africa should also investigate and report on the situation in the member states of the Commonwealth?
    Mr. Eggar: At Nassau, we and other Governments welcomed the recent establishment of the human rights unit in the Commonwealth secretariat. We believe that this is the best instrument to assist in promoting understanding of and respect for human rights within the Commonwealth. Where specific human rights issues arise and have come to our attention, we have made representations, where appropriate, to the Government concerned.
    Mr. Tom Clarke: Does the Government's concern for human rights extend to Pakistan?
    Mr. Eggar: As the hon. Gentleman knows, Pakistan is not part of the Commonwealth.
    Mr. Sims: Is my hon. Friend aware that 12 months have elapsed since I visited Sri Lanka on behalf of the
    292
    parliamentary human rights group, together with the hon. Member for Knowsley, North (Mr. Kilroy-Silk)? Our report on our visit listed a number of ways in which human rights are violated in respect of many members of all the communities in Sri Lanka. As the efforts of the Secretary-General of the Commonwealth and the Prime Minister of India to resolve the problems in Sri Lanka do not seem to have borne fruit, are Her Majesty's Government, who are held in high regard in that country, prepared to offer their services as a mediator?
    Mr. Eggar: We see our role as continuing to support efforts by India and others to encourage direct talks between the Sri Lankan Government and Tamil representatives. India's contribution to the peace process is valuable and positive, and we believe that a negotiated settlement is the best route to a lasting peace.
    Mr. Nellist: As one who, with the hon. Member for Ealing, North (Mr. Greenway), was not acceptable to the Sri Lankan Government to make such a trip on behalf of the parliamentary human rights group, unlike the hon. Member for Chislehurst (Mr. Sims), may I ask the Minister whether, if he is so concerned about the abrogation of human rights in Sri Lanka, he will break off military and police training, economic links and the support that the Government continue to give to a Government who, on any examination of the facts, are clearly guilty of a serious attack on human rights in that country?
    Mr. Eggar: As we have repeatedly said, we deplore the continued violence within Sri Lanka. The Sri Lankan Government have taken steps to prevent undisciplined action by their security forces and have assured us that they continue to further those efforts.

    South Africa
    Mr. Litherlandasked the Secretary of State for Foreign and Commonwealth Affairs if he will give examples of specific responses made by the South African Government to Britain's diplomatic pressure over the past three years.
    Mr. Nellistasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about Her Majesty's Government's latest representations to the Government of South Africa.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): The full details of our representations and of the specific South African responses must naturally remain confidential. However, we believe that the many representations made during the past three years have helped in modifying actions and encouraging reforms. On 25 February Her Majesty's ambassador raised the enlargement and projected "independence" of KwaNdebele homeland; the shootings in Alexandra; the detentions of Venda community leaders and the case of the Sharpeville Six.
    Mr. Litherland: Has the right hon. and learned Gentleman seen the article in The Guardian today which states that the Prime Minister has personally blocked a move by the Bermudan Government to introduce limited sanctions against South Africa, even with respect to the import and sale of krugerrands? At the moment, our Government are considering barring the import and sale of

    293
    krugerrands. Does the right hon. and learned Gentleman not agree that that smacks of double standards and is a sop to apartheid?
    Sir Geoffrey Howe: No. It smacks of precisely the opposite — the perfectly rational conclusion that the Government's decisions on measures taken in relation to South Africa should be uniform not only in the United Kingdom but in colonial territories. That is why the position of krugerrands is under consideration in relation to Bermuda as with the United Kingdom.
    Mr. Nellist: Are not the attitude and reply of the right hon. and learned Gentleman to these questions mere finger wagging at apartheid? In view of the £11 billion of British investment in South Africa, do not the objections of the right hon. and learned Gentleman and the Prime Minister have more to do with the profits made by British firms because of apartheid than with these latecomers moralising about apartheid? When will Britain take serious economic action against a system that degrades the people over which it rules?
    Sir Geoffrey Howe: If it were left to the hon. Gentleman to judge these matters, the result would be more likely to promote the destruction of the South African economy and of the British economy, to the disadvantage of all the peoples living in both countries. I assure the hon. Gentleman that the balanced policy adopted by the Government of making it plain that we wish apartheid to be brought to an end quickly and of supporting that aim by policies and representations is far more likely to be effective in pursuit of the objectives shared by hon. Members on both sides of the House.
    Sir Peter Blaker: Is it not clear that many of those who call for a policy of serious economic sanctions have not thought through the implications? For example, would not a policy of compulsory divestment, for which I understand the hon. Member for Coventry, South-East (Mr. Nellist) is calling, in practice involve the confiscation of part of the property owned by British subjects and its free handover to South Africans?
    Sir Geoffrey Howe: That would be one of the many perverse effects of the measures advocated by the hon. Member for Coventry, South-East (Mr. Nellist). I entirely agree with the point made by my right hon. Friend.
    Dr. Owen: Has the right hon. and learned Gentleman made representations against the selective ban on television reporting? Does he accept that many of us find that quite unacceptable?
    Has the right hon. and learned Gentleman made representations about the decision to go ahead with United Nations supervised elections in Namibia in August and the fact that they should not be dependent upon and linked to the withdrawal of Cuban forces? Such action would be welcomed by both sides of the House, but I believe that the United Nations resolution should be undertaken anyhow.
    Sir Geoffrey Howe: We have already made representations expressing our regret at the curtailment of the rights of television and other reporters in South Africa. We have welcomed the reaffirmation by the South African Government of their commitment to implement Security Council resolution 435, because we believe that that would offer an opportunity to make early progress on the whole Namibian question and would reduce tension throughout
    294
    the region. The right hon. Gentleman knows perfectly well that we do not recognise any formal linkage with any requirement for Cuban withdrawal as part of that settlement. South Africa has made it clear, not only in yesterday's announcement, but many times in the past, that it will not agree to implementation of resolution 435 unless a satisfactory arrangement is found with respect to the Cubans. It is my judgment, having talked about this matter to a large number of people in that part of Africa, that the practical opportunity to implement resolution 435 is most likely to be fulfilled on the basis of United States-led negotiations in the context of the announcement which we now welcome.
    Mr. George Gardiner: Will my right hon. and learned Friend, in his dealings with the South African Government, bear in mind the wisdom of encouraging as well as censuring—using a carrot as well as a stick? To that end, would there not be some value in saying that steps to broaden the base of government in South Africa might be reflected in an early relaxation of some of the provisions of the Gleneagles agreement on boycotting sporting contacts?
    Sir Geoffrey Howe: I do not immediately see the connection between my hon. Friend's specific point, which is a matter for my right hon. Friend the Secretary of State for the Environment, and his more general point. However, I agree that we should be ready, not only to criticise where criticism is due, but to offer encouragement where that is due.
    In addition to welcoming the announcement about the implementation of resolution 435, I am also glad to welcome the announcement about the lifting of the state of emergency, which is a matter that has been addressed by hon. Members on both sides of the House. I hope that that action will help to ease the tension and assist the promotion of dialogue, which is so urgently needed. That is what we must all hope for.
    Mrs. Dunwoody: Has the Foreign Secretary read the remarks of Chief Johnathan, in which he makes it clear that it was the refusal of the British Government either to offer proper support to the state of Lesotho or to make adequate representations to the South African Government that led to the downfall of an elected Government in that state?
    Sir Geoffrey Howe: I have seen reports of certain remarks made by the deposed Prime Minister of Lesotho, Chief Johnathan. It is not true that Britain was in any way involved in his overthrow. In response to Chief Johnathan' s request for assistance, we immediately asked the South Africans to lift border restrictions and to talk to Lesotho.
    Sir Geoffrey Finsberg: Will my right hon. Friend confirm that British diplomats attended the funerals in Alexandra today? Will he also say whether diplomats have been similarly instructed to attend the funerals of black policemen murdered by fellow blacks?
    Sir Geoffrey Howe: I shall bear in mind the points made in the last part of my hon. Friend's question. It is true that our diplomatic post, together with the posts of other Western Governments, was represented at the funerals today.
    Mr. Healey: Will the Foreign Secretary tell the House why Her Majesty's Government have failed to carry out

    295
    the undertaking they gave nearly five months ago at the Commonwealth summit to ban the import of krugerrands, especially as the United States Administration have found no difficulty with the general agreement on tariffs and trade in banning krugerrands, even before the Commonwealth summit?
    Does the Foreign Secretary believe that there is something lacking in British influence when, according to Amnesty International, 8,000 persons have been detained—many of whom have been tortured and murdered in prison—and nearly 800 people have been murdered by the police as a result of South African policy? Of those detained and murdered, a quarter were children. How can the Foreign Secretary excuse breaking his commitment at the Commonwealth summit in the face of those facts?
    Sir Geoffrey Howe: The right hon. Gentleman knows perfectly well that one of the many reasons why we wish to see an end to apartheid is that that would help us to reduce the adverse impact on human rights in South Africa. The United Kingdom is not the only country that has found it necessary to consider the general agreement on tariffs and trade implications on the proposed ban of krugerrands.
    Sir Anthony Grant: Has it occurred to my right hon. and learned Friend that our relations with South Africa might perhaps have been much better, and certainly the whole beastly business of apartheid, which we all deplore, would perhaps have been avoided, if power had not been handed over to the Afrikaners in 1907 by the Liberal Government?
    Sir Geoffrey Howe: My hon. Friend has brought his characteristically penetrating rhetorical insight to the subject.
    Mr. Lofthouseasked the Secretary of State for Foreign and Commonwealth Affairs when the Council of Ministers will next discuss progress in South Africa on ending apartheid.
    Mr. Loydenasked the Secretary of State for Foreign and Commonwealth Affairs when the European Economic Community Council will next disucuss its policy towards South Africa.
    The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): Foreign Ministers of the Twelve have had frequent discussions about South Africa both in the Council of Ministers and in political co-operation. No date has been set for their next discussion.
    Mr. Lofthouse: Will the Minister of State make it clear to the South African authorities that the lifting of the state of emergency will be meaningless if all the detainees are not released and if the restrictions on media coverage and political meetings are not lifted?
    Mrs. Chalker: The hon. Gentleman heard the remarks of my right hon. and learned Friend the Foreign Secretary on the subject of the media refusals. He knows full well that we are opposed to detention without trial. We shall remind the South African Government of that when and as it becomes necessary to do so.
    Mr. Loyden: In September the Council of Ministers agreed to sanctions on oil exports to South Africa. When will it consider the regulations necessary to impose those sanctions?
    Mrs. Chalker: The question of oil was considered at a recent meeting. I cannot from memory say whether it was on 27 January or the following week. The United Kingdom has never sold oil to South Africa. Under the 1979 guidelines, the sale of North sea oil is confined to the European Community and certain other countries. The measure does not apply to petroleum products. The guidelines apply to indirect as well as to direct exports, so, in relation to this country and our partners, the hon. Gentleman need have no worries.
    Mr. Ian Lloyd: Will the Government seek to persuade the Council of Ministers, which has great influence in these matters, to distance itself from the anti-apartheid movement whose regard for the truth is becoming of almost legendary inaccuracy? Does my hon. Friend agree that the approach to apartheid should discriminate and distinguish between those features which are unique to aparthied and those, perhaps of an illiberal regime, which are shared by some 90 other member countries of the United Nations? Is there not a great danger that in relation to South Africa our attitude tends to sweep both aspects together so that we expect to impose standards of achievement in public life which in a sense are almost unattainable, or at least have not been attained, in 90 other countries of the United Nations?
    Mrs. Chalker: I think that my hon. Friend forgets why we totally oppose apartheid and favour its total elimination in that country. Many people there have no vote, and all black people are unfairly treated. I do not seek to teach my hon. Friend, but our concern about the denial of human rights is clearly shared by every one of the Twelve, and we must stand against that denial. In that situation, there is no way in which we can differentiate, as my hon. Friend seeks.
    Mr. Dykes: As a large number of South African citizens have been murdered by the South African police and army and the number of such murders is growing, will my hon. Friend make representations to her colleagues in the Council of Ministers to ensure that the Council repeatedly emphasises to the South African Government the need to discontinue that murderous policy and to release the detainees forthwith?
    Mrs. Chalker: That has already happened, and. I assume that it will come up again next time we discuss the matter.
    Mr. Anderson: On 1 July this country assumes the presidency of the Council of Ministers. Previous Presidents have met the African National Council at ministerial level. Will the Government, consistent with their present policy, continue to refuse to meet the ANC at that level after 1 July?
    Mrs. Chalker: We expect to maintain contact at official level at all times. We shall have to see what progress has been made before reaching a decision when we assume the presidency of the European Community.

    Nelson Mandela
    Mr. Altonasked the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has made to the Government of South Africa concerning the release of Nelson Mandela.
    Sir Geoffrey Howe: Our views about the release of Mr. Mandela are well known to the South African Government. I last raised Mr. Mandela's case when I saw the South African ambassador on 13 February.
    Mr. Alton: Will the Foreign Secretary take every opportunity to make it clear to the South African Government that the continued incarceration of Nelson Mandela is an affront to the people of South Africa and that his release is a prerequisite to reconciliation between black and white people there? Will he instruct our ambassador in South Africa to visit Nelson Mandela and to seek an interview to establish the present state of his health and wellbeing?
    Sir Geoffrey Howe: We have made clear on many occasions our belief that the unconditional release of Mr. Mandela would constitute a major act of reconciliation in South Africa and could provide the impetus for genuine dialogue and a peaceful settlement. We have stressed, and will continue to stress, the importance of that point to the South African Government.
    Mr. John Carlile: Does my right hon. and learned Friend accept that the prerequisite of the South African Government for the release of Nelson Madela, that he should renounce the use of violence, is reasonable? It is in the interests of the ANC that he remains incarcerated while it performs its own acts of violence in South Africa and outside.
    Sir Geoffrey Howe: I cannot accept my hon. Friend's conclusions about the situation, although I join him—and I am sure the whole House will join him — in condemning violence from any quarter. The ANC is clearly an important focus of black opinion in South Africa. Nevertheless, we thought it right to establish official contact with the ANC specifically to stress our commitment to dialogue and to impress upon it the need to bring an end to all violence in South Africa.

    Falkland Islands
    Mr. McKelveyasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current position with Argentina over the Falkland Islands.
    Sir Geoffrey Howe: We continue to stand by our commitments to the Falkland Islanders. At the same time, we are working for better relations between the United Kingdom and Argentina. The expressed wish of my hon. Friend the Parliamentary Under-Secretary to meet the Argentine parliamentarians who visited London was only the latest in a series of initiatives which we have taken since 1982. We were disappointed that they did not take up the offer, but we shall continue our efforts to promote better bilateral relations.
    Mr. McKelvey: Does the Secretary of State agree that it is now time to re-establish full diplomatic relations with Argentina and to discuss sovereignty with a view to reaching an honourable settlement? We could then reduce the staggering £654 million which is the average cost of maintaining Fortress Falklands at the moment.
    Sir Geoffrey Howe: I am afraid the hon. Gentleman offers a misguidedly simple insight into this problem. We want—and I emphasise it yet again—to move towards more normal relations with Argentina. It was for that
    298
    reason that my hon. Friend the Parliamentary Under-Secretary of State offered to meet the Argentine parliamentarians when they were here. My hon. Friend would have explained to them why we are unprepared to negotiate on sovereignty. My hon. Friend would have been prepared to listen to the Argentinians' position. He would also have made clear our wish to see more normal relations, towards which we have taken step after step, none of which has been met with a parallel response.
    Sir Anthony Meyer: Does my right hon. and learned Friend accept that the visit by the Argentine parliamentarians should be seen as part of a long, slow and necessarily patient progress towards the gradual normalisation of relations? Does he further accept that neither the expectation of the Argentine visitors nor the intention of Her Majesty's Government was that this visit should be used as an occasion for initiating negotiations of any kind?
    Sir Geoffrey Howe: I accept precisely the two points made by my hon. Friend. The intention of the meeting offered by my hon. Friend was not to undertake, launch or conduct negotiations, but to explain our position on sovereignty. That has been well and often stated to Argentina. My hon. Friend wished also to impress upon them the sincerity of our wishes in other respects to move towards more normal relations with Argentina. That is and must be a sensible position.
    Mr. Beith: Does the Secretary of State accept that many of us who met the Argentine delegation found them to be a constructive and courageous group of people? Does the right hon. and learned Gentleman recognise that their unwillingness to have a meeting with Ministers during their visit was quite understandable, considering the view that would have been taken in Argentina of accepting British terms as the basis on which such a meeting would be conducted? Will the Secretary of State recognise that he is dealing with a democracy, not a dictatorship? When the Government were dealing with a dictatorship, they were prepared to give away sovereignty. The Government should at least be prepared to have sovereignty on the agenda and not feel that their ability to negotiate is inhibited by opening the discussions.
    Sir Geoffrey Howe: The hon. Gentleman has not got it right. There were no strings attached to the offer made by my hon. Friend to meet the Argentine parliamentarians. He was prepared to meet them to explain why we will not negotiate sovereignty and to listen to their statement of their position on that matter.
    We have expressly welcomed the restoration of democracy in Argentina. My right hon. Friend the Prime Minister sent a message about that as soon as it happened. We have taken steps to support the Argentine economy and to help that democracy. It would be unhelpful to that democracy, however, to offer unrealistic goals on negotiations about sovereignty. Although, since 1982, democracy has returned to Argentina, the fact which makes a fundamental difference to the question is the invasion of the Falkland Islands by a main force at that time. Therefore, it is quite unreasonable to expect us to put the clock back to before the invasion, as though it had not happened.
    Mr. Key: Will my right hon. and learned Friend be certain to pursue current Government policy with regard to the Falklands and reject the calls made from a sedentary

    299
    position by Opposition Members to buy out the Falkland Islanders? Will he further ensure that hon. Members know that the major stumbling block in the gradual long-term solution to the problem is that Argentina has forfeited the trust of the Falkland Islanders and has to start building relations with them?
    Sir Geoffrey Howe: My hon. Friend is absolutely right. It is most important, as a matter of common humanity and democratic principle, that respect be paid to the wishes of the Falkland Islanders by this Parliament and by the democratic Parliament of Argentina.
    Mr. Foulkes: Does the Secretary of State not understand that all of us who were able to meet the Argentine delegation, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, found them extremely reasonable people and willing to talk positively about the guarantees that their Government will give the islanders about their way of life? In view of the crippling cost of Fortress Falklands and the lost opportunities in trade with the whole of Latin America, surely everything is to be gained and nothing to be lost by entering into direct discussions with the Argentine Government about all aspects of the future of the islands to try to find a solution which is acceptable to Britain and Argentina, and which protects the interests of the islanders?
    Sir Geoffrey Howe: The hon. Gentleman should not imagine that the fact that there is a difference between us and Argentina is now a significant factor affecting our trade with Latin America, or the rest of our relations. Of course we wish to go further to establish more normal relations with Argentina. We have taken step after step in that direction. It is simply not sensible to deceive ourselves into thinking that the issue of sovereignty can be disposed of as the hon. Gentleman suggests. The Argentine Government's stance was restated only a month or two ago. They reaffirmed their unswerving determination to re-establishing the territorial integrity of the republic. They are determined to do that regardless of the wishes of the people who live in those islands. That is not a basis that can sensibly commend itself to the House.
    Mr. Shersby: Is my right hon. and learned Friend aware that there is very strong support on the Tory Benches for the Government's unwillingness to consider negotiating the sovereignty of the Falkland Islands? Is he further aware that the people of the Falkland Islands pay great regard to their freedom and believe that the British Government will support it? What are the Government doing to normalise relations with Argentina with a view to their taking back their war dead? What discussions have there been with Argentina about that problem?
    Sir Geoffrey Howe: I am grateful for my hon. Friend's support. We have made clear to the Argentine Government more than once our willingness to accept a suitably prepared visit to the Falkland Islands under International Red Cross auspices by close relatives of Argentine service men who are buried there, and our willingness to consider any other sensible arrangements that might be proposed. It is one of the many human proposals that we have put forward. We are genuinely anxious to move towards the gradual restoration of normal relations between the people of this country and the people of Argentina.

    South Africa
    Mr. Fatchettasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Her Majesty's Government's policy on South Africa following the speech of President Botha to the South African Parliament in January.
    Mrs. Chalker: We welcome the positive proposals in President Botha's speech and hope that they will be speedily implemented. We now wish to see further movement towards the fundamental elimination of apartheid and the beginning of peaceful dialogue between the South African Government and genuine representatives of the black community.
    Mr. Fatchett: In that speech, President Botha once again made acceptance of resolution 435 conditional on the withdrawal of Cuban troops from Angola. In an earlier reply the Foreign Secretary seemed to acquiesce in that stance. Why? Would it not be in the interests of the Namibian people for the British Government to demand South Africa's unequivocal acceptance of United Nations' resolutions?
    Mrs. Chalker: I do not think that it would. We must ensure that the United States-led negotiations can continue and that the formal talks that were held earlier this year in Luanda continue. That is why we believe that the South African Government's reaffirmation of their formal commitment to Security Council resolution 435 is right. It could offer the opportunity to make the early progress that we all want. We want a reduction of tension in the region. I sincerely hope that the United States-led negotiations will now be intensified and that all parties will show flexibility and realism.
    Mr. Adley: Does my hon. Friend agree that the sporadic violence of the ANC is as nothing compared to the permanent state of attrition practised by the South African Government on the black and non-white population of South Africa? Is she aware that there is, albeit not always vocal, widespread support on the Tory Benches for the Government's determination to establish relations with the ANC? Will she please continue with the policy of "jaw-jaw", in the interests of trying to bring some influence to bear from Europe on the problems in South Africa?
    Mrs. Chalker: We know, sadly, that violence is not confined to one group. It happens on both sides of the border in Southern Africa and it also happens as a result of some activity by the South African Government. However, wherever violence occurs, whether it be from the ANC, the South African Government or any other body, we deplore it and we shall work to see that those who promote violence are dissuaded from doing so in whatever way we possibly can.
    Mr. Flannery: Is it not a fact that where there is no democracy in a country and where the officially enshrined policy of the Government is racialism and apartheid, there is bound to be, at some stage, a fight back from those who are being oppressed? In view of a question asked earlier by a well known racist on the Back Benches of the Tory party—[Interruption.]
    Mr. Speaker: Order. First, that is not parliamentary. Secondly, we cannot deal with questions that have been asked earlier.
    Mr. Flannery: I am sorry that this Chamber will not allow me to tell the truth but in view of that fact—
    Hon. Members: Withdraw.
    Mr. Speaker: I think that the hon. Gentleman, who is an experienced parliamentarian, is withdrawing that allegation.
    Mr. Flannery: In view of the fact that I am being forced to withdraw it, in order to continue with the rest of my question, I shall do so. Will the Minister make it clear, as the Foreign Secretary does not, that the policy of brutality against the vast democratic majority of the African people in South Africa is being maintained, and that we, as a Chamber, are totally opposed to the official violence of the South African Government against the vast majority of its people?
    Mrs. Chalker: The hon. Gentleman does my right hon. and learned Friend a gross disservice. He and this Government have consistently impressed upon South Africa the need fully to respect the independence and the territorial integrity of its neighbours, and we shall continue to do so.

    Middle East
    Sir John Biggs-Davisonasked the Secretary of State for Foreign and Commonwealth Affairs what part Her Majesty's Government are playing in international efforts to bring about pacification in the middle east.
    Sir Geoffrey Howe: We shall continue to support all realistic initiatives for peaceful solutions of the region's conflicts. I discussed the situation in the middle east with my European colleagues on 25 February and with the Syrian Foreign Minister on 3 March.
    Sir John Biggs-Davison: Did my right hon. and learned Friend discuss with the Syrian Foreign Minister the danger of conflict between Syria and Israel? Did he ask him to use his good offices for the release of British citizens imprisoned in Syria and in Lebanon, where Syria has so much influence?
    Sir Geoffrey Howe: I certainly impressed upon Mr. Shara the need for both sides, Syria as well as Israel, and the other states in the region, to sustain the search for a basis for long-term peace. I also raised with Mr. Shara, specifically, the case of Mr. Alec Collett, and enlisted his continuing help in trying to secure the release of that British citizen along with other hostages held in that country.
    Mr. Faulds: In view of the recent re-invasion of Lebanon by Israel—[Interruption.] It would be a benefit to the House if occasionally questions could be asked without interventions persistently made from a sedentary position.
    Mr. Speaker: Order. I am here to look after the hon. Gentleman.
    Mr. Faulds: Thank you, Sir. Elder statesmen should be treated with respect.
    In view of the recent re-invasion of Lebanon by Israel, which uses international terrorism as a continuing policy of state, is it not time that the Government took the initiative in the EEC to get it to abrogate, or at least suspend, its trading and financial agreements with Israel?
    Sir Geoffrey Howe: I am glad that the hon. Gentleman was able to make himself heard. I do not think that, even at his invitation, it would be right to take that step, but I join him in deploring the continuing residual presence of Israeli defence forces, and the security zone, in Lebanon, which is provocative and without justification. I agree that the recent Israeli incursion into Lebanon will not help to meet the legitimate concern expressed on both sides of the House about border security.
    Mr. Walters: While it is generally agreed that the failure of King Hussein's courageous initiative has been a grave setback to progress towards peace in the middle east, does my right hon. and learned Friend agree that as the essence of the conflict is about Palestine and Palestinian rights, it would be absurd to try to exclude the legitimate representatives of the Palestinians from any future negotiations?
    Sir Geoffrey Howe: I join my hon. Friend in regretting the fact that the initiative taken by King Hussein has, so far, led only to the statements that he made about it—quite understandably—in the past week or two. I agree that we must continue to support the Palestinians' right to self-determination. It is not for us to say by whom they should be represented. We do not accept that the Palestine Liberation Organisation is the sole legitimate representative of the Palestinian people, but it should play a part in negotiations. It is above all important—this is the point that King Hussein was pressing—that it should make plain its recognition of the importance of Security Council resolutions 242 and 338, and renounce violence.
    Mr. Janner: In talking to the Syrian Foreign Minister, did the right hon. and learned Gentleman raise with him the murder of the mayor of Nablus, for which credit was claimed by two Syrian-backed terrorist organisations? If so, what response did he receive?
    Sir Geoffrey Howe: I had already made plain—and I make plain again today—the serious view that we take of the tragic death of the mayor of Nablus, Mr. Zafer alMasri. That brutal murder of a moderate, courageous Palestinian must be seen as a setback to hopes of a just and lasting peace in the middle east. Of course we raised and discussed that matter with Mr. Shara and made plain our abhorrence of that act, which can only damage Palestinian interests. We urged him in that context, and more widely, to end Syrian support to terrorist groups. He made plain his Government's position of opposition to terrorism.
    Dr. Blackburn: Will my right hon. and learned Friend kindly take note of the historic, forthcoming Israeli visit of my right hon. Friend the Prime Minister, who will be the first British Prime Minister in office to visit Israel? Does my right hon. and learned Friend agree that the future key to peace in that part of the middle east lies in the full implementation and acceptance of the Camp David agreement?
    Sir Geoffrey Howe: I am glad to welcome what my hon. Friend has said about the forthcoming visit of my right hon. Friend the Prime Minister to Israel, which I know will be welcomed there and supported in this country. I do not think that it would be helpful at this point for me to support this, that or the other of the many principled plans put forward for the solution of the main Arab-Israel problem. The problem is not to define or

    303
    redefine principles, but to find effective representation that will bring both sides together in meaningful negotiations to that end.
    Mr. Donald Stewart: Is the Foreign Secretary aware that it is unrealistic to demand the renunciation of violence prior to any discussions with the PLO, because if they do that, there is not the slightest chance of getting the Israeli Government to pay any attention to the PLO's legitimate demands?
    Sir Geoffrey Howe: The right hon. Gentleman is entitled to take that view if he wishes. It is certainly necessary to acknowledge that the renunciation of violence in the context of seeking an end to a dispute of this kind cannot be secured easily. It is necessary to go on pressing the case for violence to be renounced and for the parties to come together on the basis of agreed objectives and principles.
    Mr. Cyril D. Townsend: In view of the Prime Minister's forthcoming visit to Israel, may I ask what arrangements will be made for her to be brought into contact with Palestinian viewpoints? What plans are there for her to visit the occupied territories? Is my right hon. and learned Friend aware that many people regard it as most important that the visit should be seen to be balanced in its approach?
    Sir Geoffrey Howe: Obviously I cannot comment at this stage on the precise details of the plans for my right hon. Friend's visit. I acknowledge, as does my right hon. Friend, the importance for our interest in the problems of the region to be balanced, not only in regard to the visit, but more widely. I remind my hon. Friend that it is only some six months since my right hon. Friend made a visit to Jordan and there saw another aspect of the same question.
    Mr. Ernie Ross: Will the Foreign Secretary take the opportunity of the visit of the Prime Minister to Israel to encourage the Palestinians to believe that Britain wants to play a role by ensuring that the Prime Minister makes it clear that when the Foreign Secretary assumes the presidency of the European Council on 1 July, he will continue the long-standing arrangement, which we broke in 1980, of meeting the chairman of the Palestine Liberation Organisation, Yasser Arafat?
    Sir Geoffrey Howe: I think I am right in saying that since 1976 there has been contact at official level with the Palestine Liberation Organisation. As I have already made clear, we recognise that it will have to be associated with any peace negotiations. Of course, the Palestinians and their interests will have to be taken account of at each stage of all our consideration of the question. That will not be absent from the mind of my right hon. Friend when she goes to Israel.
    Mr. Deakins: What views did the Syrian Foreign Minister express to the right hon. and learned Gentleman about the way forward in resolving the Palestinian problem? Did the right hon. and learned Gentleman agree with those views?
    Sir Geoffrey Howe: I do not think that I am in a position to offer a long exposition of the views of the Syrian Foreign Minister. He gave a long talk yesterday at Chatham House about the matter. The point that I sought to impress upon him is the need on the Arab side to try to
    304
    secure the involvement of all those countries which in different ways and at different times have expressed an interest in a peaceful solution. That is why we have given encouragement, not merely to the initiative of King Hussein, but to a possible and constructive interest by Israel and have also noted the important initiative by President Mubarak the other day. All the initiatives have to come together and meet a corresponding disposition from the Israeli side. Our effort is to try to promote all those things.
    Mr. Anderson: President Assad has recently again called for the tearing up of the Camp David accord and showed himself fundamentally opposed to the Hussein-Mubarak initiative. In view of that, and of the fact that it now seems certain that there will be a change of Prime Minister in Israel, does the Foreign Secretary realistically see any life left in the Hussein initiative? Does he not see the looming confrontation between Syria and Israel on the Golan as the major point of tension in the middle east?
    Sir Geoffrey Howe: I am not seeking from the Dispatch Box to give the impression that all is, or is about to be, sweetness and light. Of course, the House acknowledges, as does King Hussein himself, that his determined efforts to carry forward the peace process with Arafat and the PLO have received a setback. But he remains determined to continue his search for a peaceful settlement. I accept the point made by the hon. Gentleman that some of the observations of President Assad in his recent speech about the need for confrontation and a continued arms struggle are not likely to help that peace process forward. There are plenty of hazards in sight. Without unduly raising expectations, it must be our task to continue to encourage all those who are trying genuinely to advance the peace process.
    Mr. Beith: Did the Foreign Secretary find at his meeting with the Syrian Foreign Minister that the Syrians are keen to see British involvement in the peace process? Is that not a particularly useful context in which to stress again the need for Syria to play an active part in stamping out the terrorism which led to Mr. Zafer al-Masri's death, which was greeted with universal grief in the Palestinian community?
    Sir Geoffrey Howe: It is absolutely right that we should take this opportunity of stressing to the Syrian Government and the Syrian Foreign Minister not just our abhorrence of that senseless murder but our opposition to terrorism of all kinds from whichever quarter it may come in the Arab-Israeli dispute. We took the opportunity of pressing that point very clearly. The hon. Gentleman, like everyone else concerned, stresses the British role in helping to promote a solution to this problem. I must continually remind people that although we have a real interest, and are willing to play as full a part as we can, it must be essentially for the parties involved in the region to take the crucial steps that are necessary to bring about a solution.

    ANC and SWAPO
    Mr. Cohenasked the Secretary of State for Foreign and Commonwealth Affairs what arrangements he has made for the free passage into the United Kingdom of members of the African National Congress and the South-West Africa Peoples' Organisation conducting their business in the United Kingdom.
    Mrs. Chalker: Entry clearance visas are issued to representatives of the African National Congress and the South-West Africa Peoples's Organisation in accordance with the terms of the current immigration rules.
    Mr. Cohen: Will the Minister undertake to have talks with the Home Secretary to ensure that the Prevention of Terrorism Act is not abused, as it was on 22 September last year when the chief representative of SWAPO sought to enter Britain at Heathrow? Surely we should be supporting the ANC and SWAPO in their struggle against racist domination rather than putting spurious blocks in their way.
    Mrs. Chalker: I am aware of the difficulties that Mr. Shapua Kaukungua had in September last year, but what happened then was something that could happen under the prevention of terrorism order to anyone passing through that airport—[Interruption.] Hon. Members may laugh, but on one of my recent visits overseas I had all my baggage opened under the terms of that Act.
    Mr. Wilkinson: If the Government are sincere in their laudable determination to help to prevent terrorism, could they, as part of the five-nation Contact Group, do everything within their power to ensure that there is not free passage of SWAPO guerrillas—trained, supported and supplied by Cubans in Angola— into South-West Africa?
    Mrs. Chalker: We do our best to bring to bear all those influences that would avoid just the situation described by my hon. Friend.
    Mr. Meadowcroft: Is the Minister aware that the long progress of African countries towards freedom from white minority rule has often been impeded by the reluctance of the British Government to encourage representatives of the liberation movements to come here for talks on the diplomatic circuit? Will the Minister ensure that this mistake does not occur again in respect of the last remaining white-dominated countries such as Namibia and South Africa? Indeed, will the Government assist their representatives to come here so that they can make proper contacts to help in the process?
    Mrs. Chalker: As both my right hon. and learned Friend and I have said, on every occasion when we can promote dialogue we shall do so, but part of that process is the renunciation of violence by whosoever commits it. That is the other part of the balance that we are trying to create. I am quite determined that the dialogue shall continue wherever it can bring about peace.

    Human Rights (CSCE)
    Mr. David Sumbergasked the Secretary of State for Foreign and Commonwealth Affairs whether the United Kingdom delegation to the conference on security and co-operation in Europe meeting in Berne in April will raise the issue of the freedom of individuals to practise their chosen profession without being subjected to religious or racial discrimination.
    The Minister of State, Foreign and Commonwealth Office (Mr. Tim Renton): Although strictly speaking this issue is outside the mandate for the meeting, we are opposed to discrimination on the grounds of religion and race and will continue to raise this issue on all suitable occasions.
    Mr. Sumberg: I am grateful to my hon. Friend for his reply and also for the constant pressure that he and his colleagues in the Foreign Office have put on the Soviet Union, which has indirectly contributed to the release of Mr. Shcharansky. Will he make it clear to Mr. Gorbachev on as many occasions as possible that until the Soviet Union can be seen to be observing its own constitution on non-discrimination, it will be difficult for the West to believe that it will honour the agreements that it must enter into for real détente to come about?
    Mr. Renton: I thank my hon. Friend for what he has just said. Unfortunately, in the case of Mr. Shchransky, one swallow does not make a summer, and there is as yet very little sign that in its treatment of human rights the new Soviet leadership will be very different from the previous one. But we shall certainly continue to raise this issue on every possible occasion, and the Berne meeting gives us another opportunity to do so.
    Mr. James Lamond: If the Minister believes that our record is clean on this matter, will he raise with the West German Government the long-standing question of the berufsverbot— the law under which civil servants are prevented from holding professional positions because of what are usually Left-wing views—which is in my view a sign of Fascism creeping back into West Germany?
    Mr. Renton: That seems to be above all a matter for the German Government. However, the Berne meeting, to which the question refers, is specifically concerned with human contacts and such matters as family re-unification, about which we shall wish to raise some serious cases.
    Mr. Dickens: When my hon. Friend talks about racial and religious matters at the meeting, will he be sure to point out that where there are religious differences and customs, people will be expected to observe the laws of the country in which they reside?
    Mr. Renton: I return to the fact that the Berne meeting, about which the question is concerned, is about such matters as travel, emigration and family re-unification. It does not cover a wide area, but I hope that there will be useful contacts on the issues that are covered by basket 3 of the Helsinki final act.
    Mr. George Robertson: On the subject of the Berne meeting, may I draw the Minister's attention to the speech made by Mr. Gorbachev in Moscow last week—I had the distinction, and stamina, of listening to all five hours of it — and particularly the part about the interdependence of the world, which abandons the Soviet Government's previous position of irreconcilable camps in the world? Does he agree that that augurs well for continuing dialogue and discussion in the CSCE process? May we have some news about any progress that is being made in those talks?
    Mr. Renton: I congratulate the hon. Gentleman on his patience and ability to listen to all five hours of Mr. Gorbachev's speech at the party congress. There is often a sense of frustration about the CSCE process, but it is worth reminding the House that it is a forum at which the important question of human rights can be discussed. I often think that it is interesting that Labour Members, who are so trusting of the Soviet Government regarding arms control, put down early-day motions about Soviet abuse of human rights, although the same Soviet leaders are involved in both issues.

    African National Congress
    Mr. Cabornasked the Secretary of State for Foreign and Commonwealth Affairs if he will give an account of the circumstances appertaining to, and the discussion during recent meetings between, the African National Congress and representatives of Her Majesty's Government.
    Mrs. Chalker: We arranged the meeting in Lusaka on 3 February between a senior official of the Foreign and Commonwealth Office and representatives of the African National Congress to reinforce the urgent need for dialogue within South Africa, and the general suspension of violence called for in the Commonwealth accord.
    Mr. Caborn: I welcome that statement. I also welcome the hon. Lady's recent speech in which she called for the unconditional release of Nelson Mandela and said that that would show to the world that South Africa meant business. Does she not find a twinge of inconsistency in calling for that release, but being unwilling to meet representatives of the African National Congress in London?
    Mrs. Chalker: There is absolutely no inconsistency. We have always said that we believe that the unconditional release of Nelson Mandela would constitute a major act of national reconciliation in South Africa, and could provide the impetus for genuine dialogue for a peaceful settlement. We have stressed the importance of that move to the South African Government. In the same way, the official level contacts with the ANC are also to promote dialogue and to get it to renounce violence, and so to bring a peaceful end to the present awful position in South Africa.
    Mr. Forth: Will my hon. Friend confirm that meeting ANC representatives in no way condones or supports the techniques of terror that they are prone to use in South Africa? What would be her reaction if a foreign country approached Her Majesty's Government to make representations on the legitimate imprisonment of one of our citizens?
    Mrs. Chalker: My hon. Friend is right. In no way do we condone violent behaviour. However, I must tell him that when a foreign Government approach us, we consider each approach on the facts as they are known to us. One cannot give a blanket response to cover the wide variety of approaches with which we must deal from many different countries.

    Falkland Islands
    Dr. Marekasked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with European Economic Community partners concerning the United Kingdom's attitude to negotiations with Argentina over the Falkland Islands; and if he will make a statement.
    Mr. Eggar: As I explained to the House on 18 December 1985, our EC partners are briefed, as appropriate, on the international aspects of our Falklands policy, bilaterally and within the framework of European political co-operation. We have ensured that they are aware of our commitment to the Falkland Islanders, and of our desire for better relations with Argentina.
    Dr. Marek: Is the Minister aware that one step along the path towards normalising relations with Argentina would be to end the unprincipled and extremely damaging fishing free-for-all in the waters round the Falkland Islands? Is he aware that many hon. Members, the islanders and Argentina want it ended? If he cannot get anywhere at the Food and Agriculture Organisation talks in Rome, will he do something himself quickly?
    Mr. Eggar: We share the hon. Gentleman's anxiety about fishing off the Falklands. As he knows, we are actively pursuing efforts to achieve agreement on multilateral arrangements for fisheries under the auspices of the FAO. We have urged other Governments to cooperate with the FAO, and we were heartened by the signs that Argentina is ready to support the FAO initiative.

British Leyland
3.31 pm
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): With permission, Mr. Speaker, I wish to make a statement.
As I informed the House on 19 February, an invitation was extended to interested parties to declare by 4 March a firm intention to make a bid for one or more of the Land Rover, Freight Rover, Leyland Trucks and related businesses.
I can now report to the House that appropriate declarations have been made to BL's bankers by Schroder Ventures on behalf of some institutions and some members of BL management in respect of Land Rover, Range Rover and Freight Rover; by Lonrho in respect of Land Rover and Range Rover; and by Aveling Barford in respect of Land Rover only. General Motors has also confirmed its intention to make a bid for Land Rover, Range Rover, Freight Rover and Leyland Trucks.
The Laird Group and Aveling Barford are each in discussion with BL regarding the acquisition of Leyland Bus, for which proposals on behalf of some members of the management are also expected. Discussions in relation to Leyland Bus are taking place over a slightly different timescale from those concerning other Land Rover-Leyland businesses. I shall make a further statement to the House on these in due course.
The BL board is giving careful consideration to all the proposals received on or before 4 March and I hope to have its recommendations shortly. The board and the Government remain anxious to end the present uncertainty surrounding the businesses as soon as possible in the interests of the companies, management and work force and dealers and suppliers.
I take the opportunity to inform the House of a forthcoming change in the chairmanship of BL. Sir Austin Bide's appointment as chairman of BL was extended in late 1984 on the basis that he would continue as chairman until a convenient moment for his retirement was reached. Sir Austin has kindly agreed to remain as chairman until decisions have been made on the future of the main Land Rover-Leyland businesses. That will represent the start of a new phase in the development of BL and, on my nomination, the BL board proposes to invite Mr. Graham Day, at present chairman of British Shipbuilders, to join the board and to become full-time chairman of BL at a date to be determined. I express the Government's thanks, and add my warmest personal tribute, to Sir Austin, under whose leadership BL has achieved notable progress.
I am appointing Mr. Phillip Hares, the present deputy chief executive and board member for finance of the corporation, to succeed Mr. Graham Day as chairman of British Shipbuilders.
Mr. John Smith: As this tangled web becomes more and more confusing and complex, is it not clear that the Government should never have departed from the concept of British Leyland remaining a integrated and public sector operation strongly supported by the British Government?
Will the Secretary of State confirm that the Government approached General Motors as long ago as April 1984, and for 18 months General Motors has been able to consider
310
and negotiate its position, while all other bidders have been given little more than 20 days? Does that not show that the Government were already predisposed to sell the lot to General Motors? In view of the representations made to the Minister of State by my right hon. Friend the Member for Swansea, West (Mr. Williams) and my hon. Friends the Members for Blackburn (Mr. Straw) and for Preston (Mr. Thorne), why is it that Lancashire Enterprises Ltd. does not appear in the list of those permitted to make a bid for parts of the operation?
What will the time scale be? Is it correct, as is widely rumoured. that the Government will impose a time scale whereby the whole operation has to be completed by the end of this month? Given the fact that the Secretary of State confirms that the only bidder for Leyland Vehicles is General Motors, has that not put the Government in a hopeless position whereby General Motors will be able to insist on acquiring Land Rover as a condition for acquiring Leyland Vehicles? How do any sensible Government put themselves in such a hopeless bargaining position?
After this asset-stripping operation is completed, what will the new chairman be chairman of? Should he not be called chairman of Austin Rover? The Secretary of State will have seen a report on the back page of the Financial Times today, of a speech by Mr. Bob Lutz, chairman of Ford of Geneva. The article says:
"Ford was willing to restart talks about a possible takeover of Austin Rover … He said the Government had panicked recently when it told Ford to end the talks".
What is the Secretary of State's comment on that? In view of that ominous statement, will he give us a crystal-clear guarantee that, throughout the lifetime of this Government, there will be no talks by the Government, or by British Leyland at their instructions, with Ford about the Austin Rover Group?
Mr. Channon: I shall try to deal with the points that the right hon. and learned Gentleman has raised. What he said about selling is unreasonable. It has been known for many years that the Government had every intention of privatising British Leyland and its component parts. That has been known ever since the last general election. There is no question of reopening talks with Ford or Austin Rover; and any rumours to that effect I disown and reject. I am satisfied that bidders had adequate time to put in a firm indication of interests. We shall study them carefully on their merits, and there is no question of any member of the Government having made up their minds before these careful considerations have taken place. I assure the House that that is the case. [HON. MEMBERS: "That is not what the Prime Minister said."] That is indeed what my right hon. Friend said.
We shall consider carefully the indications of interest that have come in. As to Lancashire Enterprises Ltd., people from it had meetings with my hon. Friend the Minister of State early yesterday, and every assistance was given to it to try to get it into a position to make a firm indication of interest, but I understand that by last night it had not given any such indications.
Mr. Michael Grylls: Does my right hon. Friend agree that, whatever the outcome of the consideration of these different bids, parts of BL are now desirable packages and it is a good thing to have several different bidders so that one can choose from them? Does he accept that the Government are no longer a good owner because these businesses need considerable sums of capital

311
investment if they are to keep up with the international market, and the Government will always have more pressing demands on their money for things such as schools and hospitals, and industries in which they have an interest will always come bottom of the list? The sooner these firms are returned to the private sector, the better for the firms, the better for production and the better for the people who work in those firms.
Mr. Channon: I entirely agree with my hon. Friend. He has made three very important points. First, he draws attention to the fact that, under this Government, British Leyland is in a much better state than it was when the Opposition had control of it. Secondly, it is quite true that large sums of capital investment are required in various parts of British Leyland if they are to be in a position to compete in the long term. Thirdly, what we are trying to do and what we shall continue to try to do is to secure the long-term commercial future of these industries and the jobs of the people who work in them.
Mr. David Steel: Having talked yesterday to both the management and the shop stewards at Land Rover, may I put a question to the Secretary of State that I have asked repeatedly both of him and of the Prime Minister? What formal consultations will there be with the 8,000 employees of Land Rover about their future before decisions are made? We appreciate that in terms of making a fast buck or short-term employment the case for selling the whole organisation to General Motors must seem attractive to the Government, but in terms of the long run—the design, manufacturing and engineering capacity of this country—surely it is worth while to take a little longer and to try to find British-based solutions for each division of the company?
Mr. Channon: On the right hon. Gentleman's last question, I think I am right in saying that Mr. Andrews makes it clear in his letter that he is anxious for a quick solution because he thinks that it is very damaging if this uncertainty drags on. I cannot therefore agree with the right hon. Gentleman that we should take a long time. We want to have a reasonable period in which to consider the indications of interest that have been expressed and to put forward proposals that meet the best long-term interests of the companies concerned. There the right hon. Gentleman and I are at one. Consultation with the work force is a matter for the companies concerned. They tell me that they are keeping their work force informed continually and that they will continue to do so. My hon. Friend the Minister for Industry has received deputations from the work force and from the trade unions, and we shall be delighted to continue to do so.
Mr. Hal Miller: Will my right hon. Friend confirm that not only was it the long-standing policy of the Government to return these businesses to private ownership once they were profitable but that that was also the declared policy of the British Leyland board and of the subsidiary boards? Will he also confirm that we should welcome the fact that these enterprises have become successful, that a return to the private sector is now possible and that the Government's decision will be based upon the best interests of those who work for and supply those companies?
Mr. Channon: My hon. Friend is entirely right. As I have explained to the House on a number of occasions, the
312
BL board agrees with that policy. It is entirely right that these subsidiaries should be returned to the private sector. If the Opposition had been in power, the companies certainly would not be in a profitable state.
Mr. Terry Davis: Will the Secretary of State confirm that Freight Rover has consistently made a profit on the manufacture and sale of Sherpa vans in this country, whereas General Motors is making a loss on its van operations in this country? Will he also confirm that Freight Rover is now selling more vans than General Motors is selling in this country? Does he agree that for General Motors to take over Freight Rover would be for a loser to take over a winner?
Mr. Channon: I had better give the hon. Gentleman the figures for 1983 and 1984 for Land Rover (UK) Ltd. I can give him the published figures for the first half of 1985; I do not have the later figures. In 1983, Land Rover (UK) Ltd.—which includes Land Rover, Freight Rover and parts and equipment—made a loss of £14·5 million. In 1984 there was a small profit of £2·4 million. In the first half of 1985 the profit, before interest and tax, was £5·7 million.
Mr. Davis: Freight Rover.
Mr. Channon: Of course, one has to split the figures between Freight Rover and Land Rover. I agree with the hon. Gentleman to the extent that, in so far as one can appropriately work out the interest payments and apportion them correctly, Freight Rover is more profitable than Land Rover.
Mr. John Mark Taylor: In considering the options for the future of Land Rover, will my right hon. Friend take all factors into account and not merely the biggest bid?
Mr. Channon: Yes, I have explained to the House that we are trying to seek the best long-term future for the companies and, as my right hon. Friend the Prime Minister said yesterday, for the jobs of those concerned.
Mr. Tony Benn: May I ask the Secretary of State about the interests of the American Government in this sale? Have the Government been in touch with the United States Government and is it a fact that General Motors has been able to say to the British Government that, if it is allowed to acquire parts of British Leyland, the United States will place orders with British Leyland following the sale and that that is the real reason why the sale is going through?
Mr. Channon: No, Sir; I repudiate what the right hon. Gentleman says.
Mr. David Madel: In relation to the bid from General Motors, can my right hon. Friend assure me that the Government will be seeking clear and firm assurances from General Motors on the future of jobs and investment in the Bedford truck plant in Dunstable before deciding whether to accept GM's bid? There is great anxiety in Dunstable, for obvious reasons.
Mr. Channon: Yes, I understand my hon. Friend's concern, and naturally I shall want to discuss that matter before coming to any decision. Indeed, we should discuss what will happen in either eventuality — whether the General Motors bid goes through or whether it does not.
Mr. D. N. Campbell-Savours: Is it true that the chief executive of the Laird Group has written to

313
the chairman of British Leyland saying that the only basis on which Laird is willing to take over Leyland Bus is if the two plants at Workington and Lowestoft are closed and the Farington plant reduced but retained? Will the Secretary of State rule out that option today at the Dispatch Box? Will he also give me the assurance that in the event that the management buy-out is submitted and is fully funded, it will be given the maximum consideration by the Department, but that if it is not fully funded it will still be treated as a new corporate plan and an alternative option for a Leyland Bus reporting direct to the Leyland board and being retained in public ownership?
Mr. Channon: On the hon. Gentleman's last point, we shall naturally consider any properly funded management buy-out proposals from the management of Leyland Bus. Indeed, I say in my statement that we expect that proposals may come. We shall naturally consider them carefully.
I understand that Laird has given a preliminary view of its proposals to British Leyland. Nothing final has been proposed and we shall consider that on its merit on the same criteria — what will be best for the long-term commercial future of the company.
Mr. Anthony Beaumont-Dark: Will my right hon. Friend accept that, as my hon. Friend the Member for Solihull (Mr. Taylor) said, when we come to a solution as to how the Land Rover problem in particular is to be dealt with, we shall not be preoccupied with making a quick buck—the best sum—but what is in the best long-term interests of the motor manufacturing companies of Britain?
Bearing in mind the Government's preoccupation with those over the other side of the Atlantic solving our problems, was there no British industrialist who would have had the confidence of the manufacturing entities in Britain who could have been appointed instead of yet another person from across the Atlantic? There are good people in Britain who have the confidence of the manufacturing companies in the west midlands and the whole of Britain. Why always overseas?
Mr. Channon: I am rather surprised by my hon. Friend's last point. Mr. Day is a British citizen and he comes from Canada. That has not usually debarred people from appointment in Britain. As to my hon. Friend's first point, I can confirm that we are looking at the long-term interests of the companies concerned.
Mr. Andrew Faulds: As to the work forces and the managements of the various parts of BL, is it a question of management informing the work forces about developments or consulting the work forces about developments?
Mr. Channon: The management and the work force must carry out the normal procedures in cases of this kind. I am extremely anxious, as my hon. Friend the Minister of State has shown, to receive deputations, if they are appropriate, from any of the trade unions that wish to come and see me and make their case direct to the Government.
Mr. Richard Page: May I endorse the calls by my hon. Friends for a long-term solution and ask my right hon. Friend to ignore the siren voices for short-term expediency? Has not the way in which the Opposition have tangled the publicity on this
314
matter added to the time constraints faced by my right hon. Friend in finding the right solution and restoring market confidence to British Leyland as soon as possible?
Mr. Channon: My hon. Friend is entirely right. It is essential to bring these talks to a reasonably early conclusion after full consideration has been given to these matters. I repeat what I have told other hon. Members: we are anxious to achieve the solution that is best in the longterm interests of those in the company.
Mr. Stan Thorne: Is the right hon. Gentleman aware, following the meeting yesterday morning with the Minister, that Lancashire Enterprises Ltd. sent a telex to Hill Samuel stating its intention to make a bid? Will the right hon. Gentleman confirm that that has not happened?
Mr. Channon: My information is that the company had not, by the close of play, expressed a firm indication
Hon. Members: Play?
Mr. Dennis Skinner: Public schools coming out now.
Mr. Speaker: Order. The Secretary of State.
Mr. Skinner: The right hon. Gentleman should declare his innings.
Mr. Channon: I shall answer the question if I am allowed to do so. My hon. Friend the Minister saw a deputation yesterday led by the hon. Member for Blackburn (Mr. Straw). The deputation was given a full opportunity to declare a firm indication of interest but it did not do so.
Mr. John Carlisle: Will my right hon. Friend accept that there is some significance in the fact that only General Motors has bid for the whole package, including the loss-making aspect of Leyland Trucks? Will my right hon. Friend refute the allegations by the Opposition and by my right hon. Friends the Members for Old Bexley and Sidcup (Mr. Heath) and for Henley (Mr. Heseltine) that General Motors is not a good employer? We in Luton refute those allegations and look forward to the amalgamation of the two companies.
Mr. Channon: I am sure that General Motors has been an excellent employer in the Bedford region. I think that that is well recognised.
Mr. Skinner: What is the right hon. Gentleman's average?
Mr. Channon: Very bad, I would say. My hon. Friend the Member for Luton, North (Mr. Carlisle) is quite right. We must consider what will be best in the long-term interests of the truck industry.
Mr. Dave Nellist: Is the right hon. Gentleman aware of the overwhelming opposition of trade unionists inside Leyland and of working people in Coventry, the midlands and elsewhere to selling off to private profiteers, whether American or British, any part or all of Leyland? Will the right hon. Gentleman get in touch with the Leyland board and condemn its actions in the past two weeks in attempting to soften up the work force by dismissing two Transport and General Workers Union conveners at Land Rover, Solihull and Unipart, Coventry for their stated opposition to privatisation?
Mr. Channon: I regret that I am unlikely to be able to please the hon. Gentleman in conducting these negotiations. I think that an early-day motion has been tabled about the point he raised. That is another matter.
Mr. Patrick Cormack: Can my right hon. Friend give the House an unequivocal assurance that the Government would prefer a British solution?
Mr. Channon: We want a solution that is in the best long-term interests of those involved.
Mr. Norman Atkinson: If the bid from General Motors for the Leyland heavy vehicle division is rejected, what contingency plans have the Government made for heavy vehicle manufacture?
Mr. Channon: We must first of all consider all the indications of interest that have come in, and then decide what to do.
Mr. Den Dover: Will my right hon. Friend pay particular attention, if the truck division is separated from the bus division, to the 2,000 workers at Multipart, Chorley, which is a highly computerised, extremely efficient and profitable operation? The workers want to ensure that they can service both Leyland Bus and Leyland Trucks and other manufacturers in future.
Mr. Channon: I will certainly bear in mind what my hon. Friend has said in his important intervention.
Mr. Doug Hoyle: Will the Secretary of State accept that he is not playing a cricket match and that this matter affects people's livelihoods? The hon. Gentleman said that he wants a quick decision, so will he give us the actual timetable as that is very important? Will the right hon. Gentleman bear in mind that the employees of British Leyland have no confidence in being informed by a management that previously denied that any talks were taking place? It is not information but consultation that is needed. Can he say what wages will be paid to the employees? The employees should have a say in the matter when their jobs are at risk.
Mr. Channon: I have already answered the hon. Gentleman's last point in the reply that I gave to his hon. Friend the Member for Warley, East (Mr. Faulds). In reply to his point about the speed of the decision, I have tried to explain to the House on a number of occasions that we want the quickest conclusion possible that is consistent with arriving at a decision after a detailed examination of the indications of interest that have been put forward. It is in no one's interest that the matter should be dragged out. I cannot today say what the timetable is, as a detailed study has not yet been made of the indications that have come forward.
Mr. John Stokes: Is my right hon. Friend aware that the main concern among the hard-headed workers in BL is the security of their jobs? They do not like the politicking on the Opposition benches. Is my right hon. Friend further aware that not all BL employees and BL suppliers wish to remain pensioners of the taxpayer?
Mr. Channon: I am grateful for my hon. Friend's comments, and I agree with them.
Mr. Robin Corbett: What time scale has the Secretary of State given to the British Leyland board? Is the Secretary of State aware of the
316
complaints from bodies such as the West Midlands enterprise board that they were denied access to information from British Leyland? Will he ensure that all those who need information to which General Motors has had access for about 18 months, will now get that information?
Mr. Channon: I am assured that anyone who has asked for information has received it. I have already tried several times to answer the question about the time scale. We shall be as quick as we can but the matter will require some study and the House would expect that proper study would be made before proposals were put forward.
Mr. Robert Adley: On that last point, is my right hon. Friend aware that I was informed this morning that Lonhro was unable to have meetings with the management of BL, was unable to meet the work force and was not supplied with the information which it would have normally have expected to receive if it was to put in a bid? Will my right hon. Friend give the House a simple, straightforward assurance that what I have just said is wrong and that all the bidders were provided with precisely the same information as was available to General Motors?
Mr. Channon: Lonhro, and everyone else who asked, was given a packet of information which I am assured by my advisers, as well as by the advisers to BL, was normal practice. Lonhro has made a firm indication of interest and we shall treat that seriously and consider the proposals.
Mr. Ian Wrigglesworth: Does the Secretary of State accept that the motor industry plays a central and strategic role in manufacturing industry in any country in the western world? Will he therefore give us an assurance that at least one motor manufacturer in this country will remain under the control of people in this country so that that strategic role can be properly performed?
Mr. Channon: I have already told the House, in answer to the right hon. Member for Chesterfield (Mr. Benn), that there is no question of any talks going on in connection, for example, with Ausin Rover. I think that that answers the hon. Gentleman's point.
Mr. Alan Howarth: Does my right hon. Friend accept that those who are prepared to be rational on this subject are actually much more numerous than he may have supposed at times in recent weeks and today, that they agree with him that British Leyland ought to be in the private sector and that, if it is to be successful there, it will need access to substantial capital and to major markets? If British participants are credibly able to offer those benefits, so much the better. Would my right hon. Friend agree that last-ditch little Englander attitudes threaten jobs and the future prosperity of British Leyland?
Mr. Channon: I am sure that my hon. Friend is right. We must have a solution that takes account of the points that he has made and one that is in the interests of those who will work in the industries and so keep a viable industry in this country.
Mr. Harry Ewing: Is the Secretary of State aware that, under the chairmanship of Graham Day, more than 20,000 employees of British Shipbuilders lost their jobs and that, far from giving BL employees confidence in the future, Graham Day's appointment alone will strike fear into their hearts? Will the Secretary of State

317
confirm that the bid from General Motors includes a substantial sum for the immediate declaration of 1,000 redundancies in BL and that GM is on public record as saying that 1,000 people will lose their jobs almost on the day that it takes over BL
Mr. Channon: None of the indications of interest have been examined in detail, but that is clearly a point that one would wish to consider in detail with anyone who comes forward with suggestions. I am surprised at the hon. Gentleman's comments about Graham Day, as he was appointed by the Labour Government in the mid-1970s. The hon. Member for Liverpool, Walton (Mr. Heffer) said of Graham Day:
"He was well thought of on Merseyside, particularly in Cammell Laird. He did a first-class job."—[Official Report, 9 December 1976; Vol. 923, c. 629.]
I can give quotations from any number of Labour Members if the House wishes.
Several hon. Members rose—
Mr. Speaker: I will call those hon. Members who have been rising in their places.
Mr. Tony Favell: If the talks between Austin Rover and Ford are truly dead, will my right hon. Friend tell the board and workers of Austin Rover to get their fingers out because in the past 25 years British car manufacturers' share of the home market has dropped from 90 per cent. to 34 per cent.? Does he agree that if yesterday's prophecy by the chairman of Ford (UK) turns out to be right and the abandonment of the talks turns out to be a tragedy for Britain leading to widespread job losses and Austin Rover ends up in the lap of Honda of Japan, a lot of people will have a lot to answer for, including Members of Parliament who blocked that deal?
Mr. Channon: I agree to some extent with my hon. Friend—at least to the extent that it is exceedingly important for Austin Rover to increase its share of the United Kingdom and European car markets. It has under 4 per cent. of the European car market. I very much hope that it will achieve that increase. It has already made some improvement and I hope that that will continue.
Mr. Eddie Loyden: Will the Secretary of State resist making quick decisions on this matter and give careful consideration to the long-term future of the British car manufacturing industry? Will he now respond to the question asked by my hon. Friend the Member for Warrington, North (Mr. Hoyle) and say what weight he believes should be given to the opinion of the work force about the future of the industry in which they work?
Mr. Channon: We will, of course, give careful consideration. We must try to achieve reasonably speedy but careful consideration. The House must understand that the two aspects are not necessarily inconsistent. I hope that the closest talks will take place with the work force. Indeed, the companies concerned tell me that they are engaged in talking to the work force, and my colleagues and I are very happy to receive any further deputations.
Sir Paul Bryan (Boothferry): Can my right hon. Friend explain why Labour Members are happy to implore the Japanese Nissan company to set up in this country but will have nothing to do with co-operation with American companies which have already supplied far greater and better employment than BL in the past 20 years?
Mr. Channon: It is impossible for me to explain the workings of Labour Members' minds.
Mr. Bill Michie: Have BL workers and ex-BL workers who have a share interest in BL been properly and legally consulted in this matter?
Mr. Channon: I understand that all legal requirements are taking place. Now that the indications of interest are in, it is essential that the usual procedures be followed.
Mr. Frank Dobson: What interest has Aveling Barford shown in Leyland Bus and how is that company's interest connected with the Laird bid?
Mr. Channon: So far, we have had only preliminary indications from Aveling Barford. Subject to correction, I do not think that there is any connection with the Laird Group. I will certainly take advice on that, but I am not making a statement about Leyland Bus today.
Mr. Jeff Rooker: Just as BL came into the public sector largely by accident, are we not in danger of getting rid of it by accident? Is the Secretary of State bound to accept the views of the BL board, as he said in his statement? What is wrong with workers having a vote in their own and their families' future?
Lastly, will the Secretary of State place in the Library a copy of every statement made by Ministers since the last general election which could be taken by business men outside as an invitation to the effect that BL or parts of it were up for auction? Where is the evidence for that and can it be placed in the Library?
Mr. Channon: My own statements in the past month would fill a book, so anxious has the House been to hear from me in the past few weeks. The House knows that we have always made it clear that in our view the best future for the car industry and other industries is a return to the private sector, which is far better for them than the public sector.

Rate Support Grant
4.5 pm
The Parliamentary Under-Secretary of State for the Environment (Mrs. Angela Rumbold): With permission, Mr. Speaker, I should like to make a statement.
The House will be pleased to know that my right hon. Friend the Secretary of State for the Environment was yesterday able to tell the local authority associations that he could guarantee that £500 million of grant would be available to be recycled in 1986–87 and that authorities would be able to take this into account in fixing lower precepts and rates.
As the House will recall, in the rate support grant debate on 20 January my right hon. Friend explained that if local authorities budgeted to spend more next year than we allowed for in the RSG settlement the grant forfeited by overspenders would go into a pool which would then be recycled to all authorities. He illustrated the grant gains to authorities if the pool were £400 million. Those figures could only be illustrative at that stage, because they depended on authorities' budget decisions.
This week, in the light of the latest figures available, we are in a position to go much firmer than that. It is clear that the pool of grant to be recycled will be some £500 million. This means that the grant gains will be bigger than those illustrated in January and that authorities will get more grant than they have assumed. Moreover, to avoid all doubts the Government are prepared formally to guarantee that £500 million of grant will be recycled. My Department has written to all authorities telling them the amount of extra grant that they will receive from that amount of recycling in addition to their grant entitlement under the RSG settlement announced in December. I am placing a copy of the table in the Library.
Councils will now know the size of their grant entitlement more clearly and this will allow them to make a lower call on their ratepayers. Where the rate making has not been completed, I hope that hon. Members will urge their local authorities to revise their rating plans in the light of these figures.
My right hon. Friend wrote to the local authority associations as soon as he was in a position to confirm the level of recycled grant that would be available. Local authorities are now making their rating and precepting decisions, and it was essential to provide them with this information immediately. I am sure that all hon. Members will agree that rate increases should be no higher than absolutely necessary.
Mr. Jack Straw: Will the Minister confirm that no new extra money is involved in the statement, and that since the abolition of targets last July every local authority treasurer has been aware that a sum of this size would be available for recycling? If there is any substance in the statement, why have the Government waited until most shire counties have set rates for 1986–87?
Is the Minister aware that, so far, Conservative shire counties have increased their rates by far more than Labour shires have done? Is she aware that Kent is raising its rates by 13 per cent., East Sussex by 19·9 per cent., Dorset by 20 per cent., and Buckinghamshire by 30 per cent.? Does she expect any shire authority which has set its rate to change its decision now, and, if so, by how much?
320
As this is supposed to help lower spending authorities, will the Minister explain why, of the 21 authorities shown in the tables to receive absolutely nothing, nine are Conservative-controlled, including authorities such as Hillingdon, Westminster, South Bucks, Chiltern, Elmbridge, and Epsom and Ewell? Why are those authorities to receive nothing?
Will the Minister confirm that the sums specified in the tables are gross figures and take no account of what has already been lost? As the sums are supposed to be guaranteed, what happens if the authorities spend over the budget assumptions on which they are made? Will they get the money anyway?
Lastly, is the Minister aware that yesterday's announcement and today's statement are no more than a cheap and highly misleading public relations stunt by Ministers who have been panicked by high rate rises in Tory shires and by the financial uncertainty and chaos that they have created in Labour and Conservative authorities alike?
Mrs. Rumbold: I am surprised to hear the hon. Member speaking in such terms. I should have thought that he would have the grace to welcome the new announcement simply because it gives local authorities a greater certainty. That is a rather poor way to respond to news which is important to local councils, especially when they are about to go before their ratepayers to make this announcement.
The answer to the hon. Gentleman's question about the shire counties is that there is still time for them to reconsider their rate levels. In the light of this new information, one hopes that those shire counties which have taken a pessimistic view on what their grant entitlement, through recycling, might have been will reconsider the submissions that they have made. There is still time for the shire counties to do that.
I believe that many local authorities will welcome today's statement, and I trust that most will not share the pessimistic and uncharitable view of the hon. Member for Blackburn (Mr. Straw).
Several hon. Members rose—
Mr. Speaker: Order. I propose to give preference to those Members who were not called on 28 January. I said that I would do this.
Mr. Allan Roberts: Is the Minister aware that not only have some of the Tory shire counties set their rates without taking account of this flowback money, but that some local authorities decided to organise their budgets to take account of moneys which they thought they might get?
The Government have just come to the rescue of local authorities such as Sefton, which, until today's statement, have made a deficit budget. Sefton was set to "do a Liverpool" and break the law. Is the Minister aware that this miserly amount of money will not make a significant difference, because Sefton will still have a 26 to 30 per cent. rate increase? All the rates will go up by massive amounts on Merseyside, and that is a direct consequence of the cost of abolishing Merseyside county council.
Mrs. Rumbold: I am aware, and I think my right hon. Friend is aware, that some local authorities' treasurers were advising considerable caution about the money which my right hon. Friend said was recycled money. That is one

321
reason why some local authorities were taking a slightly pessimistic view. For those local authorities which were proposing to make a higher rate than they had hoped to make this announcement will make all the difference to what they do, and indeed it has been greatly welcomed by them.
Mr. Ian Gow: Is my hon. Friend aware that her statement will be widely welcomed on these Benches? The warm welcome that I give to her statement is coupled with a question: what will happen next year? The way in which the announcement has been made and the timing of it—the fact that we are told on 5 March that there is to be a change in the settlement for the coming year—is the reverse of perfect.
Mrs. Rumbold: I understand the difficulties with which some councils have been presented. My right hon. Friend had a greater awareness of the amount of money that he hoped to find in the recycling pool because of information sent in daily of budgets set and estimates announced. That is why we have been a little late. However, I understand the point that my hon. Friend has made. I shall relay that message and take note of it in the future.
Mr. Simon Hughes: First, will the Minister explain why the announcement was made outside the House before being made in the Chamber? Secondly, will the Minister explain how it is possible for those counties which have already set their rates to do anything to take into account the figures announced today? Thirdly, will the Minister explain how it is possible to justify the decision by her right hon. Friend only two months ago that the average rate increase would be 7 to 9 per cent. when we now know that many Conservative-controlled counties have set rate increases of 30 per cent.?
Lastly, will the Minister explain why the Government believe that they can change the rules of the game at this late stage? In January the Government did not suggest with any certainty that they would so so. Are the Government fully aware that it takes more than a matter of minutes for local authorities to recast their budgets, even if they have not set their rates by today?
Mrs. Rumbold: It was regarded as important that local authorities, many of which were last night in the process of starting to make their rate settlements, should have the information as quickly as possible. That was my right hon. Friend's decision. The information was given to the local authorities because of that decision, and was brought to the House as quickly as possible.
A number of shire counties are setting their rates to spend 10 per cent. more. That is not welcomed by my right hon. Friend or, indeed, by his colleagues. It is sad, and it is to be deprecated that these local authorities are setting their rates quite so high. As the deadline for authorities to set their precept is Monday, we hope that those authorities which have already set their rates will take the opportunity to reopen negotiations when they learn of the substantial sums of money that will come to them in grant. It is possible for them to do that.
I must reiterate to the hon. Member for Southwark and Bermondsey (Mr. Hughes) that this is information that
322
local authorities will welcome. If the information is a little late the Government regret that, but it is better for the local authorities to have this information at this stage than not at all.
Sir Ian Gilmour: Any increase in money is welcome, but will my hon. Friend clarify her statement? Will she confirm that the difference between what she has said today and what my right hon. Friend the Secretary of State said in January is £100 million? That will make a difference in Buckinghamshire of about £1 million, but, compared with the £26 million which the Government have already robbed from Buckinghamshire, that is not a large sum. As the shire counties must increase their rates because of Government policies, does not my hon. Friend think it wrong for her not to regret that?
Mrs. Rumbold: Buckinghamshire is now certain to receive £7,403,000, which will make a difference to the county's rate making. My right hon. Friend the Secretary of State has always taken the view that local authorities should take care to study the hopes and expectations of central Government expenditure plans when setting their rates. We had hoped that local authorities would be careful to ensure that they did not exceed the Government's expenditure plans.
Mr. Peter Bruinvels: I welcome the news that £8·5 million extra recycled grant will be given to the county of Leicestershire and hope that Leicestershire county council will reduce the 27 per cent. increase in its rate, but will my hon. Friend explain why Leicester city, which has increased its rates by 80 per cent., will be given an additional £431,000? It is the greatest candidate for being rate-capped.
Mrs. Rumbold: I understand my hon. Friend's position on his local authority of Leicester city. However, recycled grant has to be given even-handedly across the country, otherwise the system will collapse. I sympathise with my hon. Friend, but I hope that he will go back to his constituency and beseech the council to be far more responsible in its attitude towards its ratepayers. It is the business ratepayer who will suffer most because of the exorbitant 80 per cent. rate increase.
Sir Geoffrey Johnson Smith: I join my hon. Friend the Member for Eastbourne (Mr. Gow) in welcoming the Minister's statement. Will she tell us how much East Sussex will gain? What advice will she offer to the leader of the East Sussex county council, which has already made its budget?
Mrs. Rumbold: East Sussex will get £7·432 million. My advice to the leader of the East Sussex council, who is a friend and a well respected council leader, is that if he is so minded, he may like to call a council meeting before Monday and adjust the precept. That is perfectly possible.
Sir Peter Hordern: Does my hon. Friend agree that, although what she has announced is an improvement, there must be a better way in which to handle our rate support grant system? Would it not be a much better system if it allowed local authorities which spend less than their grant-related expenditure assessments to get more, and those who spend more than the Goverment think they should to get less grant?
Mrs. Rumbold: I understand the logic of what my hon. Friend says, but the system by which we allocate grant is national. GREAs are made on national expenditure notions, so it is rather difficult to adjust the figures as I suspect my hon. Friend would like, which is in essence to play balances against and for in such a way as would be inequitable across the country. We have to allocate grant as fairly as possible. We all agree that that is right.
Mr. Clement Freud: Does the Minister agree that, although she regrets the rate increases in the shire counties, it was the rate support grant legislation which caused an increase of more than 15 per cent. in Cambridgeshire? Is she aware that if one quantifies her statement, one finds that the Cambridgeshire rate, which is £1·94, can now go down to £1 ·92½—or could do had it not set a precept last week? Does she agree that good management in local government depends on planning, and that that is impossible if the goal posts are moved while the game is in action? Will she at least give the House a promise that West Derbyshire and Ryedale will not have an extra rate support change before the by-elections?
Mrs. Rumbold: I prefer to ignore the hon. Gentleman's latter remark, as I do not think that it is worth answering. Cambridgeshire is a Liberal-Social Democratic alliance-controlled council, and it has chosen to raise its rate by a disgraceful 33 per cent. this year. That is unnecessary. If the council had examined its expenditure carefully rather than played with figures and toyed with ratepayers, it could have kept its rates far lower. It has set a very high rate. I hope that it will take this opportunity to rethink the position, for the sake of all of its ratepayers.
Several Hon. Members rose—
Mr. Speaker: Order. I said earlier that I would try to call those hon. Members who had been rising regularly. I shall do my best to get everybody in.
Mr. Colin Shepherd: Does my hon. Friend agree that there will be a temptation for authorities which have set their precepts without taking account of the possibility of a recycling grant? For example, LiberalSDP-led shire counties such as Cambridgeshire, might be tempted to put that grant in the bank in balances and not reflect it in a reduction in the rate precept this year. Will my hon. Friend publish a list for each local authority which has set a precept showing what would be possible if it recycled the grant all the way into a reduced rate precept?
Mrs. Rumbold: My hon. Friend is absolutely right. There is likely to be a temptation for authorities which have already set the precept to bank the money. The information in the Library will enable my hon. Friend to see what the reduction could have been if authorities had taken a responsible attitude to their ratepayers and reduced their rates according to the amounts of money that are now guaranteed.
Mr. Richard Holt: My hon. Friend knows that Cleveland is the second smallest county, but that it is the second highest rated county, at 235p in the pound. Does she agree that it is highly unlikely that there will be any reduction for ratepayers, but that there will be a huge temptation for the Labour-controlled authority to spend the money without any regard for the national economy?
Mrs. Rumbold: I hope and trust that my hon. Friend will do his best to ensure that his constituents and others in Cleveland are well aware of the amount of money available to the local authority, so that they will be able to draw their own conclusions should the council's expenditure rise.
Sir Ian Percival: Is my hon. Friend aware that, despite the sour grapes of the hon. Member for Bootle (Mr. Roberts), what she said will be very welcome to the ratepayers of Sefton?
Mr. Allan Roberts: It will not make any difference.
Sir Ian Percival: The guarantee that she has given, together with other things in the pipeline, could enable Sefton council to fix a rate increase at a figure about 5 per cent. lower. That is to say that, instead of looking at an increase of 25 per cent.—or even 30 per cent. and upwards if the Labour and Liberal parties had had their way over increased spending by the passenger transport authority—we may now hope to be looking at 20 per cent. or less. Is my hon. Friend aware that, contrary to what the hon. Member for Bootle said, this is nothing to do with abolition, but that the main increase is due to the excessive spending of a body that is not abolished—the passenger transport authority? Is she aware that my constituents and I are conscious of the fact that only the efforts of the Government, in curbing the excesses of that authority and then guaranteeing this extra money, have saved us from a really high increase?
Mrs. Rumbold: I am delighted that my right hon. Friend the Secretary of State has been able to help my right hon. and learned Friend. I am also delighted to learn that Sefton council now feels much more able to set a reasonable rate.
Mr. Charles Morrison: Although I welcome the improvement in the grant, is my hon. Friend aware that the real solution lies in rather more generous treatment of shire counties right from the beginning? In that regard, is she aware that she would have full support for her arguments in trying to persuade a mean-minded, parsimonious and apolitical Treasury to be more generous with shire counties in future?
Mrs. Rumbold: I am certain that the Government's overall expenditure plans for the country are right. I am glad that Wiltshire will be a happy beneficiary of my right hon. Friend's guaranteeing the £500 million, but I believe that shire counties, like all other local authorities, should be exhorted to try to contain their expenditure in the interests of the national economy.
Mr. Michael Marshall: Will my hon. Friend give the figure for West Sussex? Will she confirm that, because of the scale that she has announced, the fact of West Sussex being the lowest-rating precept authority in the country cannot be taken into account? Will she reaffirm that she looks to fundamental changes in the system to begin to address the problem in the future?
Mrs. Rumbold: The figure for West Sussex is £7·656 million. I hope that that will be of some advantage to the council. The Green Paper "Paying for Local Government" is, we hope, the basis for a completely different way of paying for local government which I hope all hon. Members will consider.
Mr. Robin Squire: May I, on behalf of Havering, welcome my hon. Friend's announcement, believing that even the whisper of virtue being its own reward is welcome in the light of recent years' experience? Will she undertake to give the widest publicity to the comments of the hon. Member for Cambridgeshire, North-East (Mr. Freud) about the two areas that he mentioned, as the Liberals seem reluctant to see any support going to those areas?
Mrs. Rumbold: My hon. Friend knows that London as a whole has greatly welcomed my right hon. Friend's announcement, because most local authorities are about to make their rates. I note what my hon. Friend said, especially about Cambridgeshire and elsewhere.
Mr. David Sumberg: The metropolitan authority of Bury, which is by no means a rolling and wealthy shire county, will be extremely grateful for the announcement, which means nearly £1·5 million of additional resources. Does my hon. Friend agree that that Conservative-controlled authority has loyally followed the Government's plans for controlling local government expenditure, and that its ability to go further is now severely limited?
Mrs. Rumbold: I hope my hon. Friend will recognise that this announcement will greatly benefit the prudent and sensible authority in Bury, and I trust that this will serve to show that the Government recognise the difficulties under which the authority may have been labouring until now.
Mr. Robert C. Brown: Will the Minister concede that every prudent treasurer, including the city treasurer of Newcastle upon Tyne, will have already anticipated this recycling and built it into a recommendation for the finance committee? Is this not simply a vicious confidence trick on ratepayers up and down the country? Would she care to let the House know what percentage the £2·894 million which Newcastle is supposed to be getting back is of the money that the Government have pinched this year from the ratepayers of Newcastle upon Tyne?
Mrs. Rumbold: I think that that is rather a cheap remark. The treasurer of Newcastle upon Tyne and other treasurers may well have been cautious, but they did not need to be quite as cautious as they have been, because my right hon. Friend told them clearly in January that the money would be available. Although those treasurers may have prayed caution in aid and wanted to maintain their position, it is the councillors who should determine what a rate should be or should not be. It is the councillors who have been fully aware of the sums that have been available to them.
Mr. David Harris: Does my hon. Friend agree that the £3·665 million which is being given to Cornwall under these arrangements makes nonsense of the pathetic propaganda attempt by the Liberals on that council to put the whole of the blame for an unnecessary 20 per cent. increase in rates on the Government?
Mrs. Rumbold: I support what my hon. Friend has said, and I agree with his sentiments.
Mr. George Gardiner: Will my hon. Friend accept that her statement is good news to all those who have always supported prudent spending councils, as in
326
Surrey, and who resented it when they appeared to be penalised for so doing? Is it not obvious that there must be a better system for apportioning central Government funds among local authorities, which avoids taking with one hand and giving back with the other?
Mrs. Rumbold: I am grateful to my hon. Friend, and I am glad to know that the authorities which felt that they had not been as well served as they should have been feel much more secure in their position now. I refer my hon. Friend to the proposals which my right hon. Friend has made in his Green Paper, "Paying for Local Government".
Mr. Patrick Thompson: Will my hon. Friend be able to clarify what this statement means for a low-spending shire county such as Norfolk, which has followed careful budgeting over many years? Will she be able to explain to the leader of Norfolk county council, when she meets him later this week, what he will be able 'to advise for a change in the rate precept or spending levels?
Mrs. Rumbold: I have been trying to explain to the House that for Norfolk the amount that is now guaranteed as recycled money is £7·2 million. If the leader of Norfolk council is minded to look again at the precept that he is levying, he will see that it is possible for him to make adjustments accordingly to save money for the ratepayers.
Mr. Timothy Wood: I was one of those who were deeply disappointed in the reduction of rate support grant for the home counties in particular, and I am relieved that prudent councils may now get more rate support grant. In Hertfordshire the initial loss of rate support grant was £20 million, and I am not sure whether my hon. Friend is aware that Hertfordshire county council has already set a rate precept increase of 21 per cent. How will the proposals that we have heard today help Hertfordshire?
Mrs. Rumbold: The proposals will help Hertfordshire in that it is now assured of receiving almost £12 million of recycled money. Perhaps that will be of some assistance to it in looking at its rates.
Mr. D. N. Campbell-Savours: Is the Minister aware that when the Conservatives on the Conservative-controlled Cumbria county council were trying to fix a rate some weeks ago and realised the implications of the rate support grant settlement, like a bunch of municipal cowards they ran away because they realised that to set a reasonable rate and maintain services was impossible? Is it not equally fair to say that today's statement will effectively mean no more money? I have just spoken to the treasurer of Cumbria county council, and he says that the proposals will have a negligible effect on the precept. Is that not the truth?
Mrs. Rumbold: I think that it is difficult for someone to say that the proposals will have a negligible effect when it is certain that Cumbria will receive nearly £4 million extra. [Interruption.] Of course, it does have some effect. The treasurers who were being prudent and advising their authorities not to take the extra money into account may well have been able to influence the councillors whose decision it is, I have to reiterate, not the treasurers, to take the money into account. One hopes that now that they have a guarantee from the Secretary of State they will think again.

Bates Colliery (Judicial Review)
4.36 pm
Mr. John Ryman: On a point of order, Mr. Speaker. May I briefly draw to your attention a matter of which I have given you prior notice? It concerns a difficulty which may occur in relation to the business of the House on Friday, when you have kindly granted me an Adjournment debate on the monstrous decision of the National Coal Board to close Bates colliery. The difficulty has arisen because of a case which is starting in the High Court tomorrow on that matter.
I am instructed that tomorrow morning a High Court judge will begin the substantive hearing of an application for judicial review by the Northumberland area of the National Union of Mineworkers against the National Coal Board. My respectful submission is that on Friday it may arise that the matter will be sub judice because the hearing will still be continuing, the judgment will not have been given or a notice of appeal may have been entered by the party which lost the case. May I draw your attention to your powers in this matter, as set out on page 343 of the current edition of "Erskine May". The relevant portion says that you have a discretion in sub judice matters of this nature and can allow a debate to take place
"provided that there is no real and substantial danger of prejudice to the proceedings."
My respectful submission is that a Friday afternoon Adjournment debate will in no way influence a High Court judge hearing a complicated case for a judicial review on Thursday and Friday.
There are three reasons why the matter is urgent. First, at this colliery—
Mr. Speaker: Order. Is this not hypothetical? The hon. Gentleman gave me notice of his point of order, and I have looked up the reference in "Erskine May" which he has quoted. We do not yet know what the position will be. It would save the time of the House and of the hon. Gentleman if I were to say that I have this matter very much in mind and I shall give my ruling at the appropriate time.
Mr. Ryman: I am grateful, Mr. Speaker. I shall be able to shorten my remarks on the matter. I have to anticipate the events that will happen on Friday because it may be that the debate will not take place and I will then be in difficulty.
There are three reasons why the matter is urgent. The first is that preparatory salvage work is now taking place at that colliery—the seams are being heightened. Secondly, Mr. MacGregor, the chairman of the National Coal Board, is about to step down from his office. He spoke to the Prime Minister yesterday, so his departure is imminent. He conducted a personal vendetta against that colliery. The third and important reason is that this egg is impossible to unscramble. If the colliery closes, 29 million tonnes of workable high quality coal will be buried under the sea and lost for ever. It is on those three grounds that I submit that the matter is urgent. One has to anticipate the events which will take place the day after tomorrow.
Mr. Speaker: I have nothing to add to what I have already said. I shall bear the matter in mind. The hon. Gentleman has made a strong case.

Lambeth and Liverpool (Surcharge of Councillors)
4.39 pm
Mr. John Fraser: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the upholding of the surcharge on Lambeth and Liverpool councillors".
Just over an hour ago, the High Court upheld the surcharge on over 70 councillors in Lambeth and Liverpool; in consequence, subject to appeal, they could be disqualified from holding office. This latest episode in the Rates Act vendetta has been a sort of political St. Valentine's day massacre, with the possibility not only of 70 Lambeth and Liverpool councillors but of many others being disqualified. I hope that it is self-evident that the matter is specific and important. It means that an unacceptable price will be paid for dissent, and the loss of political rights is alien to our traditions.
The matter is very important because, depending upon the accidents of time, it is possible that the disqualification will take place in the middle of the campaign for the May elections, so it is not simply a matter of a penalty being imposed on those councillors; it also affects the conduct of municipal elections due to take place in May this year. Not only will those councillors be affected, but it is possible that hundreds of other councillors in about a dozen local authorities throughout the country will be similarly affected if the district auditor takes a similar view to them as he has taken to those in Lambeth and Liverpool.
If this were a matter that affected Ministers or civil servants, an Act of indemnity would be presented immediately to the House. The effect on individual councillors and on the conduct of the elections in May is such that the matter should take precedence over the Orders of the Day. I submit my application for your consideration, Mr. Speaker.
Mr. Speaker: The hon. Member for Norwood (Mr. Fraser) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration., namely,
"the upholding of the surcharge on Lambeth and Liverpool councillors".
I listened with care to what the hon. Gentleman said , but I regret that I do not consider that the matter that he raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House, but I am sure that he will find other parliamentary ways of bringing it into our discussions.

News International (Pensions)
4.42 pm
Mr. Frank Dobson: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the actions of News International in the current industrial dispute, which have resulted in pensions and other benefits not being paid to retired members of SOGAT '82".
This is a specific matter, because it refers to several retired members of SOGAT '82 and others entitled to benefits provided by that trade union, including an 80–year-old constituent of mine. He, like 1,500 pensioners, should receive payments from the London central branch of SOGAT '82. As a result of the court action brought by the American owners of News International, the sequestrator blocked their pension payments and the payments of pensions to SOGAT '82 pensioners from other branches of the union. He has also blocked payments of lump sums to 120 members of the branch who retired recently. The matter is important for them and their families. It is also important because it reveals how the Government's industrial relations policies are being exploited in every possible way by ruthless employers who in their pursuit of profits do not flinch from harming innocent pensioners. In the words used by the hon. Member for Devizes (Mr. Morrison) earlier, it is mean-minded and parsimonious.
The matter is urgent not just because the pensioners need the money but because the sequestrator stopped payments of funeral benefit to 60 widows of SOGAT '82 members. It is an urgent matter that merits consideration.
330
Therefore I hope, Mr. Speaker, that you will see your way to allowing the matter to be debated.
Mr. Speaker: The hon. Member for Holborn and St. Pancras (Mr. Dobson) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the actions of News International in the current industrial dispute, which have resulted in pensions and other benefits not being paid to retired members of SOGAT '82".
I regret that I have to give the hon. Gentleman the same answer as I gave to the hon. Member for Norwood (Mr. Fraser). I cannot submit his application to the House, but I hope that he will find other ways of bringing the matter before us.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 21 MARCH
Members successful in the ballot were:
Sir Philip Goodhart
Mr. Timothy Wood
Mr. John Watts

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: By leave of the House, I shall put together the Questions on the motions relating to Statutory Instruments.
Ordered,
That the draft Professions Supplementary to Medicine (Winding up of Remedial Gymnasts Board) Order of Council 1986 be referred to a Standing Committee on Statutory Instruments &c.
That the Legal Advice and Assistance (Financial Conditions) Regulations 1986 be referred to a Standing Committee on Statutory Instruments &c.—[Mr. Peter Lloyd.]

Right to Co-operate
4.45 pm
Mr. David Alton: I beg to move,
That leave be given to bring in a Bill to give tenants in the public and private sectors the guaranteed right to establish housing co-operatives.
The House may be tempted to wonder why such a Bill is necessary at all, but, as I described in an Adjournment debate on 20 December, council tenants in my city of Liverpool have been the victim of an interminable offensive calculated to destroy local housing co-operatives initiated there.
Vindictive and spiteful retaliatory measures have been taken against the leaders of the Eldonian co-operative in the Vauxhall area of the city and against other co-operatives. The city council was even prepared to turn away £6 million of public money, and the building jobs and new homes that were part and parcel of the Eldonians' plan for new dream homes on the site of the old Tate and Lyle factory, to support their own brand of dogma, became a nightmare as Labour Militants and fellow travellers such as councillor Tony Byrne set out to crush that group of mainly unemployed council tenants.
Sheer guts and tenacity saw the Eldonians through their fight, but other co-operatives without the determination and the inner strength of that group were ruthlessly smashed. Only today those Labour councillors have been disqualified from public office. For many people in Liverpool it is two years too late. The tragedy is that it has taken so long for the Labour leadership to wake up to the menace of the Militant Tendency. If Labour leaders had listened to the moderates in the Vauxhall ward Labour party, to the Liberals and to the housing co-operative movement, two years of tragedy for Liverpool could have been averted.
If we are to ensure that such things do not happen again, we must have a Bill to give tenants in the public sector the right to form housing co-operatives, a right guaranteed at law. It would also represent a realistic hope for ordinary people of becoming home owners, in a way that the Conservatives' right-to-buy legislation cannot, especially for the unemployed or less well off. The right to buy will never bring the most powerless people into a property-owning democracy, but the right to co-operate will. A Bill giving people the right to co-operate would break asunder the feudal vassal or serf-like status that so many tenants endure today.
However, this is a Bill for private tenants, too. For the Government, the right to become a home owner seems always to be reserved for the buyers' market, and for the sitting council tenant who can afford to buy, yet no such right to buy is given to sitting tenants in private accommodation. My Bill would give tenants in the private sector the right to take control over their homes, too. Far too often, the battle lines in the housing debate are drawn between the tenants' and the owners' camp. My Bill is based on a partnership between the two. It represents a genuine third choice for housing.
The Bill aims to give council and private tenants the automatic right to serve notice on their landlords that they wish to form housing co-operatives. The Bill will define clearly what constitutes a co-operative and what types of dwelling are suitable. It will ensure that landlords cannot
332
unreasonably withhold from tenants permission to form co-operatives where two thirds of the occupants wish to do so.
My Bill will do six specific things. First, it will define the types of tenancy to which the right to co-operate will apply. Secondly, it will identify the dwellings that the right to co-operate will embrace. Thirdly, it will set out the circumstances in which the right to co-operate may arise and certain tests that will have to be satisfied. Fourthly, it will set out the circumstances in which the right to co-operate may be refused by a landlord, but will state that consent to the right to co-operate may not be unreasonably withheld; there might be an appeal mechanism to the Secretary of State for the Environment. Fifthly, the Bill will set out an economic incentive or restrictions that would go hand in hand with the right to co-operate. Lastly, it will establish the means by which the right to co-operate may be promoted. That might take the form of enabling legislation, possibly extending or reinforcing the powers of the Housing Corporation with associated funding or it might establish a new mechanism to promote co-operatives. Present funding for co-operatives is inadequate—in fact, it is derisory—and must be re-examined in the context of the Bill.
My Bill recognises the desire of many ordinary people to take control of their own homes from the planners and from the "we know best" politicians who have maintained a vice-like grip on entire communities. The Bill will encourage and protect those who want to form housing co-operatives from recalcitrant local authorities and unco-operative private landlords alike. It is high time the House recognised that the existing monolithic housing structures no longer meet people's needs and that an entirely new approach is needed. All over Britain council tenants are getting a shocking repairs service. Estates are disintegrating, and public money is being poured away as an Elastoplast solution is administered to the ailing patient.
Commenting on the growth of housing co-operatives in Liverpool, the Architects' Journal said that the greatest housing revolution in 60 years had been taking place quietly and unnoticed. The real testimony to the spectacular success of schemes such as Hesketh street housing co-operative in my constituency, which Prince Charles visited last year, and others at Leta street, Claudia street, Prince Alfred gardens and Southern crescent, is that council tenants who moved into those housing co-operatives say that they would never go back to being council tenants. These oases in the middle of so much dereliction, decay and neglect exude pride and confidence.
The story does not end there. Liverpool city council spent over £250,000 last year on a team of glaziers whose entire time was taken up in replacing broken windows in council owned properties. Those windows did not wear out; they were vandalised. In housing co-operatives we do not find broken windows, because people care about the homes they are living in. They have a stake in the community and feel a real sense of responsibility for those areas. Nor would one find the £11 million of rent arrears currently owed on council properties in the city. Nor would one find empty properties, unlike the 6,000 vacant council properties which are boarded up and which are an affront to the thousands on the housing waiting list in Liverpool.
Liverpool tenants get a second-rate service in dreadfully managed estates. That will not improve until

333
the tenants are given responsibility for the ownership and management of their own estates and homes. Far too often the housing department behaves as if it is the master of the people instead of their servant. My Bill sets out to challenge that.
Liberalism is an enabling philosophy. That is why we do not see housing policy as simply a question of bricks and mortar or house building figures. The provision of homes is about so much more. It is the key to many people's aspirations. It is the solid result of years of effort. To have control of their homes rather than being beholden to municipal or private landlords can give people a tremendous boost in self-confidence and can lead to the removal of nagging fears about security. It can be the key to the successful creation of dynamic communities where people care about their neighbours and share in the decision making.
Housing co-operatives based on devolution of power, the creation of self-reliance and common concern and the widest possible extension of ownership are the epitome of all that my party stands for. Conservatives, too, should recognise in housing co-operatives the qualities of self-help which they admire. Socialists should rekindle the sharing spirit of the Rochdale pioneers. Housing cooperatives will enable communities to take power for themselves and to pull themselves up by their bootstraps. That is why I commend my Bill to the whole House and hope that I shall be given leave to bring it in.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Alton, Mr. John Cartwright, Mr. Simon Hughes, Mr. A. J. Beith, Mr. David Penhaligon, Mr. Geraint Howells, Mr. Clement Freud and Mr. Archy Kirkwood.

RIGHT TO CO-OPERATE
Mr. David Alton accordingly presented a Bill to give tenants in the public and private sectors the guaranteed right to establish housing co-operatives: And the same was read the First time: and ordered to be read a Second time upon Friday 2 May and to be printed. [Bill 101.]
Mr. Robert Parry: On a point of order, Mr. Deputy Speaker. I seek your guidance because the hon. Member for Liverpool, Mossley Hill (Mr. Alton) several times mentioned the people in the Vauxhall area of my constituency and also the Eldonians, whom I represent. I support housing co-operatives in principle. The hon. Member is always creeping around other constituencies and breaking the conventions of the House. He has even been to co-operatives in my constituency without giving me advance notice. As the hon. Member is recognised by all hon. Members as a political weasel and a guttersnipe, I seek your advice.
Mr. Alton: Withdraw that.
Mr. Parry: I will not. The hon. Member is a guttersnipe.
Mr. Deputy Speaker (Mr. Harold Walker): Order. I very much doubt whether I can give the hon. Gentleman the guidance he seeks. I hope that at all times hon. Members will observe the courtesies and conventions of the House.
Mr. Alton: Further to that point of order, Mr. Deputy Speaker. I should like to know what protection hon. Members can be given from such unparliamentary comments.
Mr. Parry: The hon. Member is a guttersnipe. He admitted that he had been to my constituency.
Mr. Deputy Speaker: Discourteous words may have been used, but I have not heard anything that was out of order.

European Community
4.57 pm
The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): I beg to move,
That this House takes note of the White Paper on Developments in the European Community January to June 1985 (Cmnd. 9627) and of European Community Document No. 8616/85, the Commission' s opinion on the Proposal for Amendments to the EEC Treaty.
Mr. Deputy Speaker (Mr. Harold Walker): I have to inform the House that Mr. Speaker has selected the amendment in the name of the Leader of the Opposition.
Mrs. Chalker: The period covered by the report saw the conclusion of the accession negotiations with Spain and Portugal, culminating in the signing of the treaty of accession and the start of the process which led to the signing of the Single European Act, whose provisions the House will soon have an opportunity to debate and approve.
Mr. George Foulkes: Hon. Members, including some Government Back Benchers, are anxious to know exactly when the House will be given an opportunity to debate the Single European Act. It is important that we have an indication of the time scale.
Mrs. Chalker: The hon. Gentleman knows that the timing of the debate is a matter for discussion within the usual channels, but it will take place as soon as we can bring it forward. I shall write to the hon. Gentleman as soon as I have an indication of the timing. I hope that it will be within the next three months.
It is on the intergovernmental conference, and the changes to which it will lead, that the House will wish to focus this afternoon. Hon. Members will have seen the special report prepared by the Select Committee on European Legislation. The House will be most grateful to the Chairman, the hon. Member for Newham, South (Mr. Spearing), and his Committee for the thoughtful and constructive report. The hon. Gentleman kindly wrote to me to explain that he is chairing a Committee upstairs and that he will join us as soon as he can.
The report of the Select Committee on European Legislation draws some preliminary conclusions about the scrutiny arrangements, which are of great importance to hon. Members. I assure the hon. Member for Newham, South that we shall consider carefully and positively the suggestions made by his Committee. I am glad to tell the House that I am happy, too, to accept the Opposition amendment which will be moved shortly.
The desire for reform which led to the intergovernmental conference set up last June was commonly felt throughout the Community. At Fontainebleau in 1984, we achieved a settlement of the long-standing issue of our contributions to the EC budget. We also set in hand the imposition of budgetary discipline, particularly over the common agricultural policy. After years in which price rises were the norm, we secured two price fixings in a row in which prices fell in real terms.
It was against that background that the Community turned its attention from problems to opportunities: to such pressing questions as how to make Europe competitive in the new technologies; how to create the large market that would give us economies of scale, prosperity and jobs; and how to ensure that decisions were taken more quickly.
336
As the House will know, we believed that those objectives could be achieved by political agreement. But many other member states argued that it was essential to entrench reforms in amendments to the treaty, both to give them binding effect and as a symbol of the Community's determination to tackle its problems.
In the period covered by the report that we are debating this afternoon, there was intensive discussion of a wide range of proposals which were put forward, including some that would have radically altered the balance of the Community institutions. We tabled ideas of our own, particularly on decision-making procedures, and how the European Parliament might be enabled to contribute more effectively. Our proposals were notable for their severely practical focus, which contrasted sharply with the severely impractical—though no doubt visionary—flavour of some of the other ideas in the field.
Yet as member states focused more and more closely on the implications of the various proposals under discussion, it became clear that there was no widespread support for sweeping changes. There was, however, support for measures which would deal with the Community's most pressing needs.
Sir Russell Johnston: When the Minister refers to impractical and visionary proposals, is she suggesting that the Italians—who 'were reluctant to sign the Luxembourg agreement unless it was approved by the European Parliament—were being impractical and visionary?
Mrs. Chalker: The hon. Gentleman knows that I meant nothing of the sort. He also knows that at certain stages a number of quite strange ideas appeared. I am glad to say that the view was taken that they would not be right in respect of the writing of the Single European Act.
It was on that basis that the intergovernmental conference, which is dealing with the Community's most pressing needs, was established, and it conducted and completed its work. That is now embodied in the Single European Act which incorporates the changes to the EEC treaty and the new treaty provisions on European cooperation in foreign policy.
The House will have a full opportunity to debate the treaty changes that were agreed at Luxembourg when it considers the forthcoming Bill to incorporate them into the European Communities Act, but it may be helpful if I describe the main features now.
It should be said, by way of preface, that the treaty changes agreed are modest in their legal scope, but they embody a political commitment which is practically significant.
Mr. George Robertson: Why is it called the Single European Act?
Mrs. Chalker: That is a very good question. I do not think that my colleagues have given me any good reason as to why it is called that, but I shall consult and see whether I can come up with the real reason. I think that the hon. Gentleman is having fun at my expense.
The first noteworthy feature of the Single European Act is that it contains a new commitment to create, by 31 December 1992 a genuinely free internal market, which is vital. Britain has long championed the achievement of the freedoms set out in the treaty of Rome: the free movement of goods, persons, services and capital. We

337
now have an important commitment to accelerate progress to that end; and to the extent that barriers have not been overcome by 1992, the Council may decide before the end of that year on the mutual recognition of national measures.
To enable progress to be made as quickly as this, the Single European Act introduces improved decision-making procedures. Qualified majority voting replaces unanimity for most internal market directives establishing common standards and procedures; for consideration of whether there should be policies for sea and air transport and how those policies should operate; for directives on co-ordination of policy on capital movements between member states and third countries; and for measures to remove obstacles to freedom of provision of services by nationals of third countries.
This extension of majority voting should make it harder for a few member states to block the adoption of measures liberalising air and sea transport, or the common standards for industrial products which help British firms export to Europe.
I should assure the House, however, that our special interests are fully safeguarded. Unanimity will still be required for tax measures; for the movement of persons across national frontiers, for example; and for the rights and interests of employees. We will also continue to be able to protect our high standards of animal and plant health. There has been no change whatsoever in the so-called Luxembourg compromise. It remains open to us, where necessary, to invoke that compromise to protect a very important national interest.
Mr. Foulkes: Why have the British Government insisted that unanimity should remain in respect of the rights and interests of employed persons? The hon. Lady will know that the British Government are blocking any agreement on parental leave, which would be of great help to people in this country and which the House of Lords Committee has indicated would cost nothing extra. Why are the Government blocking that? Why have we not moved towards majority agreement on this item?
Mrs. Chalker: When we talk of unanimity, we refer to the rights and interests of employees as a whole. So far as I am aware, parental leave is not at present being considered on that basis. That cannot be so, because we do not have the ratification by each of the 12 member states of the Single European Act. The matter may be resolved in the meantime, but we shall face it as it arises. At present, the unanimity rules will remain for all the matters to which I have referred because the Act will not have been ratified during the coming discussion on that issue. If I am in error, I shall come back to this when I reply to the debate.
Mr. Tony Marlow: Where majority voting takes place, can the veto still be applied?
Mrs. Chalker: That was the point of my last remark before I gave way to the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). Of course, it remains open to us, where necessary, to invoke the compromise. That is exactly what I said.
The second important area covered by the Single European Act is research and technological development.
338
The Community has long been concerned with research and development. The existing programme includes the exciting ESPRIT programme, in which more than 60 British companies are successfully participating, and which is playing a major role in helping to make our companies competitive in information technology. Up to now, the Community's R and D programme has lacked a sense of direction and purpose. It grew up in the 1970s, when energy needs dominated our thinking, and it has failed to adjust to Europe's industrial needs for the 1980s and 1990s. That will now change.
The purposes of Community research and development are clearly defined in the new Act in terms of practical application and the needs of industry. The Community will encourage research and technological development activities by companies, including small firms, as well as by research centres and universities. This will be supported by exploiting the potential of the internal market to the full, opening up public contracts and removing legal and fiscal barriers to co-operation.
The framework programme, which establishes the financial envelope for Community R and D over each five-year period, will in future define much more clearly the content, objectives and priorities of research and development programmes. That overall framework will remain subject to unanimity. The specific programmes to take place within it will subsequently be decided by qualified majority. In the early discussions on the next research and development framework programme we are already starting to see the benefits of the more industry-oriented approach which the Community is now adopting. There is much more emphasis on projects which will strengthen the foundations of European industry, such as RACE—research in advance communications in Europe —and BRITE—research to help modernise traditional industries, for example, through computer-aided design and manufacture. Those are the areas in which the Community needs to catch up in order to be able to compete. Those are the areas in which we shall now have the necessary legal framework in which to set Community activity.
The third major area covered by the new treaty amendments is the environment. Here, too, the Community has a long-standing involvement, as of necessity it must. Pollution knows no boundaries. Effective conservation requires an international effort. The Community has already taken many useful environmental initiatives, such as improving water quality, reducing pollution from motor vehicles, handling dangerous substances in industry and protecting the agricultural environment.
What we have now done is to establish the criteria for those activities. The criteria stipulate that the Community should take action relating to the environment only to the extent that environmental objectives can be better attained at Community level than at the level of individual member states; that the Community should weigh the potential benefits and costs of action before taking it; and that it should weigh the environmental conditions in the various regions of the Community. What is necessary in the Mediterranean may not be necessary in the North sea. We will be able to ensure that, where we wish, decisions continue to be taken by unanimity.
In reaching these decisions, the Heads of Government had to consider carefully the institutional balance within the Community. The European Parliament, directly

339
representing an electorate of 320 million people, has an important role to play in decision taking. As we said in our manifesto for the European elections last year, on a growing number of issues, the Community is regarded as the voice of Europe. Yet the existing institutional arrangements have not enabled the European Parliament to play the positive role that it could and should. What we have therefore sought is a means of maximising the European Parliament's contribution and influence without, however, any change in its formal powers.
That is the effect of the new co-operation procedure which is most usefully and clearly analysed in the Scrutiny Committee's report. The procedure provides that, in certain areas where qualified majority voting applies in the Council, the European Parliament will be able to propose amendments if a majority of its members agree. If the Parliament proposes amendments, the Commission has to decide whether or not to amend its proposal accordingly. But it should be emphasised—in the words of the Scrutiny Committee report—that
"at end of the day the European Parliament still has no power to insist and the last word remains with the Council."
Nor could any intervention by the Parliament lead to a vote which would normally be taken by unanimity in the Council being taken by qualified majority instead. That could not happen.
What we hope and expect, however, is that the potential of the European Parliament for constructive involvement in the development of Community policy can now be more fully realised. Too often in the past the European Parliament has used its negative powers to block proposals and delay decision-making when it has not—perhaps because it has not—been properly consulted, and when full weight has not been given to its opinions.
Sir Russell Johnston: I appreciate that the Minister has given way generously. It is not fair for her to attack the European Parliament on the ground of delaying decision-making when delaying decision-making lies firmly at the door of the Council.
Mrs. Chalker: I am sorry if the hon. Gentleman thought that I was making an unjustified attack on the European Parliament. There are times when there are delays in decision-making, as the hon. Gentleman knows. The point is that the whole of the Community has been bedevilled in much of the progress that it has sought to make by all sorts of delays. I was referring to a way of consultation through which we may minimise future delays.
Mrs. Elaine Kellett-Bowman: Will my hon. Friend give way?
Mrs. Chalker: I will give way for the last time.
Mrs. Kellett-Bowman: The European Parliament frequently introduces reports on minor subjects which may be of interest to a limited number of people but which clog up the works. If the minor reports were not introduced, the major crucial reports could go through faster and delay would be obviated.
Mrs. Chalker: I have a great deal of sympathy with what my hon. Friend says. She is referring to the whole of the management of Community business, not just in the European Parliament but in the Community institutions. I hope that it will be possible to improve the management so that the major issues can get the attention that they rightly deserve.
340
In discussing the Single European Act, in the sphere of foreign policy, an increasingly potent symbol of unity in European policy was vividly demonstrated last week in the Philippines. It was a major goal of the Government throughout the negotiations to secure treaty provision for such co-operation, and it was finally agreed in very much the form that we originally proposed before Milan. The new provisions consolidate for the first time in legal form the existing commitments of European political cooperation to consult and co-operate, although they remain juridically separate from the treaties establishing the Communities. The Twelve undertake to consult before adopting a position on foreign policy issues of general interest and to avoid any action particularly in international fora, such as the United Nations, which could undermine their cohesiveness and ability to act as a force internationally. The treaty also strengthens the commitment to consultation on certain aspects of security questions.
The treaty enshrines the general feeling that the time has come after 15 years to give formal recognition to political co-operation as an important component of the policies of the Community of Twelve. We do not expect dramatic overnight improvements in cohesion on foreign policy issues. But there is now a more serious commitment to move foward together, while the creation of a small secretariat will provide permanent small machinery to enable the Twelve to react to events with greater facility than hitherto. As my right hon. Friend the Prime Minister told the House on 5 December, we expect that there will continue to be differences between us, but the Twelve will in future try to work together as far as possible to ensure that their voice is more generally heard and better respected. That has already begun to happen.
I have discussed how, in the period covered by the report, we prepared the way for the changes which are being introduced into the treaty. I have discussed the main features of the Single European Act by which they are to be accomplished. We warmly welcome the outcome of the Danish referendum last week, and the signing of the Single European Act by Denmark, Italy and Greece. The way is now clear for national ratification procedures, and, as the House knows, we plan to introduce a Bill as soon as practicable to carry that through. From now on our focus must be on the implications of the Act.
Mr. Marlow: Will my hon. Friend give way?
Mrs. Chalker: I have already given way a considerable number of times, and I understand that many hon. Members wish to speak, so I must finish my remarks.
The excellent Scrutiny Committee report discusses the particular implications for scrutiny by the House. That is one important aspect at which we wish to look carefully.
However, there are also implications for the development of the Community, and for Britain within the Community. During the second half of this year, Britain will assume the presidency of the EC. It is my earnest hope that, before the end of the year, the Single European Act will take effect. The Community will then have a good opportunity to build for the future, and Britain, in the presidency, will have a special responsibility to direct that process.
I want a Community that is relevant and is seen to be relevant by its people, especially the British people. The completion of the Common Market is the most important

341
single step that we can take to achieve that aim. The treaty changes and other new procedures agreed in Europe will help us in taking that step. It is an important step for the future not only for Britain but for peace in the Western world. I commend the motion to the House.
5.20 pm
Mr. George Robertson: I beg to move, at the end of the Question to add,
'and, noting the First Special Report of the Select Committee on European Legislation (Session 1985–86), calls on the Government to undertake to co-operate in improved procedures so that the House can effectively scrutinise proposals under the Treaties as they would be amended by the Single European Act.'.
The Minister properly avoided the vast bulk of the White Paper that we are supposed to be debating and concentrated more on the future than on the past. Her peroration included memorable words about the importance of the EC being relevant to the people, and then invoked the internal market as the method by which the people should judge the effectiveness of the EC. If the people outside were consulted, they would consider the internal market, or the creation of Lord Cockfield's dream world, a most remarkable method of judging a Community of 12 nations in such a deep recession.
Such debates are, by definition, retrospective, but they are also an opportunity carefully to consider developments in the European Community and to look forward to what the Community could or should do for the people of Europe and for the people of Britain. All too often, our debates on the EC are dominated by its chronic budget problems. The Minister of State, Treasury, is here as an observer of the debate. No doubt he is relieved that the massed ranks of the Tory anti-marketeers are, surprisingly, absent today, leaving the Floor free — [Interruption.] The massed ranks are absent; only the hon. Member for Northampton, North (Mr. Marlow) is here to speak on their behalf. The Minister of State, Treasury, must wish that he could stand at the Dispatch Box today instead of on a later occasion, when his hon. Friends will be ready, knives in hand, to scalp him.
Our debates on the EEC budget usually degenerate into unintelligible, fairly negative and introspective seminars that do not enlighten the outside world about the potential of a 12-nation Community to contribute to solving Britain's and the European Community's problems.
As the Minister said, we are fortunate to have the first special report of the Select Committee on European Legislation. I am sorry that bad scheduling has meant that the Chairman and members of the Committee cannot be here for the beginning of the debate. The report includes an excellent analysis of the practical problems that we shall face because of the process of so-called reform, which started at the beginning of last year and therefore during the period that we are considering. The process has culminated in what is called the Single European Act. I look forward with interest to the Minister's explanation of that peculiar translation of a French phrase.
Mrs. Chalker: It seemed to be such an obvious phrase that I did not question how the Act came to have that name. However, I have thought about it and obtained a little help from my friends, and I can say that the changes to the European treaty and the new treaty on co-operation on
342
foreign policy are brought together in a single Act. It is European and it is an Act. Indeed, it is a surprisingly logical name to come from the EC stable.
Mr. Robertson: But the hon. Lady's friends had to explain it to her. We accept, with gratitude, that information, which makes the Single European Act seem all the brighter. No doubt the practical problems that will be thrown at us will be greater than the interpretation of the name.
Our scrutiny of European legislation should worry us greatly. In 1984, the Select Committee published a report which damned the Government's attitude to scrutiny in general and cited examples of major changes that went through the Council of Ministers before debate or discussion took place in the House. It gave the examples of the ESPRIT programme and the new arrangements for the regional development fund. Those examples and the report came long before the increase in majority voting, which has made the problem much more severe and which will increase when the Act comes into force.
The latest report of the Select Committee shows how much worse the position will be if the new Luxembourg system comes into effect. Of course, that depends upon the House and 11 other Parliaments ratifying it. It will pose a genuine dilemma to the House of Commons. We have tabled this amendment because of the complex problems of the scrutiny of European legislation and the likely increase in workload. We are grateful that the Government have taken on board our point and have accepted the amendment. I am probably the only Opposition Front-Bench spokesman who has managed to get not just one but two amendments accepted by the Government. No doubt the "Guinness Book of Parliamentary Records" will note that.
Sir Anthony Kershaw: On a point of order, Mr. Deputy Speaker. It is not the Government who accept amendments, but Mr. Speaker or the Chairman of Ways and Means.
Mr. Robertson: I must correct the hon. Gentleman. Mr. Speaker simply selects an amendment. It is for the Government—the parent of the original "take note" motion—to accept the Opposition's amendment. I hate to dance round on a pedantic pinhead, but, uncharacteristically, the hon. Gentleman is wrong in this case.
We must consider how best we can effectively monitor, supervise and scrutinise the mass of important detailed legislation affecting our people which is being enacted by the Community and as a consequence of section 2 of the European Communities Act 1972. It is not enough for the House to have debates such as this — considering a period that started 12 months ago—and pretend that we get to the heart of keeping tabs on developments in the EC.
Mr. Marlow: The hon. Gentleman knows that the House of Lords Select Committee is allowed to comment, and quite properly comments, on the merits of the proposals put before us, but the House of Commons Scrutiny Committee is allowed only to decide whether a matter should be put for debate either in Committee or before the House. Would the hon. Gentleman like to see the Scrutiny Committee have the powers to comment on the merits of a particular proposal with regard to the United Kingdom interest?
Mr. Robertson: The hon. Gentleman makes a valuable point. I have not put forward any conclusions, but my hon.

343
Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) will deal with a number of positive suggestions that are available to us about the way in which we deal with such scrutiny. The House continually turns for advice to the House of Lords Select Committee and it is an example at which we should be looking carefully, especially given the fact that the bulk of scrutiny will increase substantially should Parliament choose to ratify the Single European Act.
The debate concerns a six-month period a year ago. We are now only a few months away from this country's tenure of the Presidency of the Community, and the debate would have been an opportunity for the Minister to set out an agenda for that period. She could have inspired us with the vision of reform and revitalisation that will motivate the Government when they hold the steering wheel of Europe in July this year. We might have expected her to tell us how they will take on the challenge of fighting for jobs in a recession-hit Community, with over 14 million of its citizens out of work.
The Minister might also have enlightened us as to how the Government see Europe grasping the opportunities for technological and industrial co-operation across the Community. We might even have expected to hear how they intended to deal with the recurring problems of the European budget, and what they intend to do with the common agricultural policy, whose faults threaten not just budget discipline—that has gone out of the window—but the whole of the Community. We might have expected to hear all that, but we waited in vain, and we can reasonably conclude that, not surprisingly, the Government have as little idea of what to do in the European Presidency as they have of what to do with the economy of Britain. The economy of Europe and our country are at the heart of politics today.
Mrs. Chalker: It is not true.
Mr. Robertson: The hon. Lady may say that, and she may tell us that the litany of clichés that she brought out was a substitute for the agenda for the Presidency. The idea that reform of the internal market will inspire confidence among the 4 million unemployed in this country, never mind the 10 million others out of work across the Community, leaves me in mystification, and will give no hope to the people of Europe.
The European Commission, in its annual economic report and programme for 1986, has elevated the strengths and potential of a co-operative strategy for growth. In its opinion, there is now a unique opportunity to boost wealth and reduce unemployment by 30 to 40 per cent. over five years. Even without Spain and Portugal, there are 14 million unemployed in the European Community, and 45 per cent. of them are young people, a growing proportion of whom are now chronic long-term unemployed.
The President of the Commission, Mr. Jacques Delors, said at the beginning of 1985, when he presented the Commission's first programme:
"Faced with the uncertainties and worries of the future, what people are looking for above all else is not freedom of movement (of peoples and goods) … Pulling down the frontiers will not convince them of our resolve to do away with massive unemployment. Economic convergence will be meaningless to people if we have not reversed the tide of unemployment within the next 2 years."
We might reasonably have expected the British Government, who will take over the Presidency, at least to echo some of those heavily weighted sentiments.
344
Will the Government, during the Presidency, initiate talks to achieve a co-operative growth strategy to reduce unemployment by 1 million in the United Kingdom alone, as all the economic experts and the European Commission believe possible?
The Commission stressed in its 1986 programme that one of its strategic objectives will be
"the adoption of a framework programme for research and technological development … clear in form and content and attractive to firm and research centres encouraging them to cooperate."
The Minister touched on this matter in her speech, but the Government must give an answer both in the House and beyond it, because the Presidency has a wider responsibility. Are the Government willing to increase the funds for ESPRIT and meet the challenges that it faces, and will they commit themselves to future financing of EUREKA projects? We have had many fine words about technological co-operation, but will they be accompanied by the standard public parsimony that the Government inflict on every programme that could make a contribution?
How can a clear European framework conducive to cooperation develop, when the Government have agreed to participate in the strategic defence initiative research programme in the United States, and when they have not laid down any guidelines regarding intellectual property rights and the ability of British scientists to use their work in Europe? How can Europe hope to establish some kind of technological superiority if it allows the technology to flow to the United States?
What is most disturbing of all—the Minister's speech highlighted this only too well—is that the Government have now adopted, as the flavour of the month, the crusading zeal of Lord Cockfield in his drive to create a true common market by improving the internal market. The internal market—in this Eurospeak which reduces the meaning of everything that we say in these debates —is a more clear-cut free trade area, which will involve wide and sweeping changes. This will have fundamental and dramatic implications for Britain, and there is no sign that the Government have grasped any of the issues thrown up by what they are saying.
For example, do the Government know what the effect of these changes will be on the structure of British industry, on employment, on our balance of trade in manufacturing policy or our invisible earnings through the free exchange of services about which we so often hear? From the answer that the Minister for Trade gave my hon. Friend the Member for Carrick, Cumnock and Doon Valley, it would seem that they do not have the slightest clue as to the implications.
Either the Government have carried out detailed studies of the effects, in which case they have an obligation to present them to Parliament in the form of a White Paper so that we can all judge their merits, or we can conclude that they have no real idea of the effects of the changes, and are simply gambling with Britain's future for the sake of a free market ideology. A free market ideology is just as valid in the internal market of the United Kingdom as it is in the internal market of the European Community. As the Minister for Trade, who gave such a characteristically vague, almost useless and optimistic reply to my hon. Friend, is one of the high priests of the

345
free market, one can only conclude that the Government do not have the slightest clue about the implications of Lord Cockfield's dream on the structure of industry.
The evidence is clear. The Government's view of the internal market differs sharply from that of other European Community countries and from the view of the Commisson. The Government believe that the internal market will require the harmonisation of value added tax, which has been repeatedly stressed by both the President of the Commission, Jacques Delors, and by Lord Cockfield, but nobody except the Conservative party believes that on its own a free trade area will do anything for Europe and its problems. The Commission's programme for 1986 makes it clear that
"Completion of the internal market must not be allowed to compromise the Community's social priorities."
However, the British Government have expressed no view about that.
When he presented the Commission's programme in January, Jacques Delors said:
"The creation of a vast economic area based on the market and business co-operation is inconceivable, I would say unattainable, without some harmonisation of social legislation."
That criterion, which was quite right and proper, was laid down by the President of the Commission. There is no possibility of creating an internal market if the social obligations that accompany it are not recognised. However, this Government have not only stopped the people of Britain and the rest of the European Community from enjoying the benefits of directives on employee consultation and information, parental leave and worker participation by vetoing them every time they have been raised, but Lord Young of Graffham has presented a new programme of deregulation under which many of the benefits that are enjoyed in this country and in the European Community—for example, the benefit of equal opportunities—would be withdrawn.
In the letter last month of the Minister of State, Foreign and Commonwealth Office to my hon. Friend the Member for Carrick, Cumnock and Doon Valley—in his intervention the hon. Member for Northampton, North was getting, in his probing style, to the heart of the matter, although from a different direction from mine—she said that, despite the treaty changes which allow for majority voting in a number of other areas,
"Directives affecting the rights and interests of employed persons will remain subject to unanimity."
What is the point of majority voting if British industrial employees are still to be denied the best that the European social structures have been able to offer to European employees for some time?
The prime example is the draft directive on parental leave, which the Government are opposing on the simple ground that it would impose costs on industry. The report of the Select Committee of the House of Lords has already been mentioned. It favoured the directive and declared that it could find no reason to believe that industry would suffer from the introduction of that directive.
The Government talk about a "people's Europe". They go along with the idea of a common stamp, a common flag, a common passport and a European anthem. If, however, the European Community is to be credible, as the Minister of State has said that it should be, and is to benefit the people of the Community, surely it must be allowed to be used in these areas where it can be of use.
346
In recent months we have heard much about multinational companies that have the freedom to play off against each other the workers in their various subsidiaries, but many of these abuses can be curbed only by measures that can be applied on a European basis, such as those that are proposed in the directive on worker information. However, they have all been vetoed by this Government.
Mr. Marlow: If the hon. Gentleman wants more of these policies to be decided at the European level, does he consider that more powers should be given to the European Community? If so, will he say which powers he would give the Community?
Mr. Robertson: My point is that there are aspects of the European Community which would benefit the people of this country but that this Government, who pretend to be enthusiastic about Europe, choose to deny to the British people the opportunity to raise the level of benefits and increase the social infrastructure. They concentrate instead upon mealy-mouthed platitudes and upon reducing the standards that apply to British industrial workers.
The internal market will lead to a greater concentration of wealth and production. Even its advocates admit that any benefits will have to come through economies of large-scale production, in which case there is an even greater need for a European Community regional policy which is effective and which has sufficient resources to fulfil the demands that are caused by inequality in the European Community, especially on account of the greater disparities that accession have created. This will require a fundamental reform of the European Community's budget and, as a prerequisite, reform of the common agricultural policy. That is of major importance, in view of Britain's future Presidency of the European Community. The Minister of State chose not to deal with that point in her speech. My hon. Friend the Member for Carrick, Cumnock and Doon Valley will deal with it at some length and in devastating detail if he catches your eye, Mr. Deputy Speaker, at the end of the debate. Its importance should not be under-estimated.
Almost inevitably, our European Community debates tend to be over-critical—sometimes justifiably critical—and almost always pessimistic. The problems facing the Community always seem, to our eyes, never to exploit the opportunities that a huge community of nations provides for us. That is unfortunate. The House and the Community have a duty to offer the population of Europe and the British people more than just an eternal wrangle over incomprehensible details, or an endless financial crisis, or an agricultural policy which goes from the absurd to the obscene. Politicians, like our Government, who continually dodge all the real challenges and prefer playing with the sideshows of European politics are simply squandering the future of our continent.
5.46 pm
Sir Anthony Kershaw: A measure of the way in which European debates have almost become a part of our domestic scene can be gathered from the attendance this afternoon in the House of Commons. They rate slightly below Scottish housing debates.
The hon. Member for Hamilton (Mr. Robertson) made a very good and typical Opposition Front Bench speech. He railed against the Government. He criticised every kind of point and, luckily for him, he avoided making any

347
positive statement. He complained that in these debates we spend our time wrangling over details. Every debate about Europe cannot turn into a Second Reading debate on whether or not Britain ought to be in the European Community. Of course we are wrangling over details, in a sense, but we are addressing the points that are of importance to our electors and to this country.
The hon. Member for Hamilton slightly puzzled me when he said that a free trade area in Europe would be useless. I thought that that was the policy of the Labour party.
Mr. George Robertson: I did not say that.
Sir Anthony Kershaw: The hon. Gentleman went on to amend that statement by saying that there must be more use of the European dimension. My hon. Friend the Member for Northampton, North (Mr. Marlow) intervened on that point. However, the hon. Gentleman should be careful. Although his party is in favour of free trade in Europe, it is against the extension of the European dimension.
Mr. George Robertson: I do not want to take up the time of the House, but I must correct the hon. Gentleman. I did not say any of those things. I criticised the Government's lack of precision in measuring the effect that the changes in the internal market will have upon the British economy. A better internal market would create a more common market for Britain, but we must consider its effects upon industry and upon employment in Britain before we embark upon it.
Sir Anthony Kershaw: I regret that I did not understand that to be what the hon. Gentleman said. I am grateful to him for having given us another explanation.
We must choose only a few of the tasks in the White Paper with which the presidency will give us an opportunity to deal. The first that I want to mention is European political co-operation. Not since Roman times has Europe spoken with one voice, and more is the pity. If it were able to do so, its influence—
Mr. Eric Deakins: Charlemagne, Napoleon, Hitler.
Sir Anthony Kershaw: It depends on who is in charge. If the hon. Member for Walthamstow (Mr. Deakins) or I were in charge, that would be all right.
The influence that Europe could exert would surely be beneficent in the world, because Europe, considered as a whole, is a satisfied power. We have no claims on other continents or countries; none of the sorts of claims which so disturbed the world before 1939 and brought us nearly to ruin. Therefore, our political experience and weight applied together would be a beneficent influence for the peace of the world.
In trade, there can be no doubt whatever that unless Europe stands together we cannot possibly have any influence in the Western industrial and economic scene. As individual countries we are incapable of facing the might of Japan and the United States, so it is necessary for us to act together. Some problems obviously cannot be settled without Europe working together. The world debt problem is one. The problem of aid to developing countries can surely not even approach a solution, let alone have one, except by European co-operation.
In the White Paper mention is made of the European attitude towards South Africa. The weight which a
348
combined opinion in Europe can bring to bear upon the South African Government could be a great deal more useful than the specific sanctions that are urged by some. The influence that Europe has already exerted has caused the South African Government to shift their ground to some extent, and the attitude which the Foreign Ministers of the Twelve took at Lusaka was considerably more helpful to the South African scene than that which was taken at the Commonwealth conference in Bermuda.
We shall have to wait to see whether the recent speech of President Botha is implemented. On the face of it, he said that a great deal would change, but those who are close to him say that his words should not be so interpreted. It is a fact, and I am glad that it appears in the White Paper, that the Ministers were agreed that, unless desegregation is the objective at which the South African Government are ultimately aiming, no cosmetics short of that will cure the situation. I hope that the Foreign Ministers and the Prime Ministers of Europe will be able to continue to make that view clearly known to the South Africans.
Another matter which was discussed last year and which is in the White Paper is terrorism, on which the Government have taken a lead in putting the issue before the Ministers. Clearly that is another sphere which cannot be tackled usefully without general co-operation. I ask the Government to consider one thing, which I am sure they have done, but nevertheless 1 hope that they will consider it again if they have rejected it or been unable to persuade our allies—that to break off diplomatic relations is a weapon to use against states which harbour or encourage terrorists. If diplomatic relations are broken the diplomatic bag does not travel to and fro, and we all know that grave infractions of the law about diplomatic bags have occurred. It would be useful if we could make that easy transit of weapons, and apparently of people sometimes, more difficult. The more difficult terrorists find it to get weapons, and the more difficult they find it to move, the more difficult they will find their terrible tasks.
The White Paper also mentions the problem of overseas aid, and I want to single out one particular case where European co-operation could effect useful changes. Ethiopia is the largest recipient of European aid, mostly food aid. The amount of food aid that is promised, and doubtless will be delivered, at least to the ports of Ethiopia during the coming season will be enough to feed the people who need it to the extent that is considered essential. Unfortunately, whether it will reach them is another question. However, no doubt a lot of it will, and so the arrangements that have so far been made to. feed the starving Ethiopians are satisfactory.
What goes on inside Ethiopia is not satisfactory at all. The resettlement programme is a scandal. No doubt it is necessary, because it is impossible, especially during the late season before the rains start, for people to live in the arid regions from which they are being moved, but it is the way in which that is being done that is so reprehensible. It is said that the camps to which the people are moved have more casualties than the camps or areas from which they came. That is an unsatisfactory state of affairs which could be remedied by example and by our assistance.
The leadership of the Ethiopian Government is at fault. Mr. Mengistu seems to be a most unsatisfactory person. He has done his best to reduce his country to misery, and he does not stop intervening in the affairs of those round him. He sustains a civil war in the Sudan. He was active

349
in Aden when that civil war broke out, and he keeps his own civil war on the boil all the time. He has reduced his country to misery and seems to want to do it to his neighbours as well. We should get together with our allies. I know that Italy has a soft spot for, or a guilty conscience about, Ethiopia—I do not know which—but nevertheless something should be done to try to alter that Government's policies, and Europe working together could do so.
Mr. Colin Moynihan: Does my hon. Friend agree that the steps that have been taken by the international community in Ethiopia to encourage major reforms in the handling of the resettlement programme and the agreement by the Ethiopian Government to put an embargo on further resettlement as from 1 January this year are important moves and that we should monitor closely the success or otherwise of those proposals in assessing the effectiveness of the programme?
Sir Anthony Kershaw: I am grateful to my hon. Friend for that, because he has just come back from Ethiopia, having seen those camps. I am sure that what he says is wise and I hope that it is followed by the countries concerned and by ourselves.
Inside the EEC there is a long list of what at first sight may be thought comparative trivialities, although certainly the common agricultural policy cannot be classed as a triviality. I hope that it will be possible during our presidency to edge that policy along in the right direction. There are, however, one or two bad signs. For example, I notice that we are increasing the price of beet, which takes the place of cane sugar. Europe does not have to grow beet; it is unnecessary. I have a sneaking suspicion that most of the beet in northern Europe is grown only for the partridge shooting. If that were stopped, we would be able to take a great deal more cane sugar from countries which can export nothing else.
I notice also in the introduction to the White Paper that Portugal is being given an exemption to import 75,000 tonnes of cane sugar, but for only five years. What will happen after that? Will the Portuguese be condemned to buy French sugar or German sugar? It is absurd to increase the price of beet, which we do not want, at the expense of people who have nothing else to sell and are in dire straits.
I know that my hon. Friend the Minister of State, as a former Minister of State, Department of Transport, is very much aware of the ridiculous restrictions imposed at frontiers in the European Community. I am told—I may be a little out of date, but I am sure that my hon. Friend will correct me if I am—that it does not take a long time for a lorry to cross the German frontier. It takes about an hour of formality, but the driver must pay 45 deutschmarks—no one knows why.
Dr. Norman A. Godman: The Germans want it.
Sir Anthony Kershaw: Yes, but to what end?
The average lorry crossing the French frontier takes one and a half hours to go through the formalities and the driver has to pay a contribution towards the new computer which the French Customs has bought. I should have thought that the French could afford their own computer.
350
I do not understand why each lorry should pay. Occasionally it becomes a tremendous business, with a French Customs officer deciding that goods inside a sealed container are liable to VAT. How does one open a sealed container without destroying it? This causes delays.
The other day one of my constituents took two large lorries to France. A trivial part of the form filling had not been done correctly—a signature or some such detail was omitted—and the driver was allowed, by mistake, to go through the checkpoint at Le Havre. He was pursued by the gendarmerie, arrested and brought back to Le Havre police station. The trucks remained at the side of the road and, in the end, £150,000 worth of machinery was dumped in a wood and he returned to Gloucestershire. That is absurd and should not be allowed.
Getting into Italy is virtually impossible if one is a truck driver. If, by chance, the driver does get in, he has to pay a thumping tax, which is levied, believe it or not, by the local province to pay for the paperwork.
We all know about sheepmeat. We are not entirely without fault in these matters. Of course, we have to certify that French milk coming into Britain is fit to drink. Unfortunately, we take such a long time making up our minds about sending someone to see what is happening that by the time he gets there the milk is indeed not fit to drink. We should, of course, look at our own actions.
Paragraph 6.6 of the White Paper seems to show that there are now or will be opportunities for British coastal shipping to enter continental ports hitherto banned. I am glad to note from paragraph 5.19 that the European Court is considering insurance law, especially in Germany. We expect the decision to be made by the summer. This is a blatant example of discrimination. It is a bit of a cheek for the Germans to buy our insurance companies, yet we cannot buy theirs.
Paragraph 5 is full of points which I hope will be cleared from the agenda during our presidency. Taken one by one they may not look important, but, taken together, they will make Europe a much more economic area. This will enable us to tackle the unemployment problem, to which the hon. Member for Hamilton referred, and the many other difficulties in Europe.
6.3 pm
Mr. J. Enoch Powell: In this rather desultory and at times, it appeared, desolate debate, there were signs early on that discussion might centre on the results of the Luxembourg conference and that peculiarly named—it is still peculiar after the Minister's attempted explanation—Single European Act.
We have been assured by the Foreign and Commonwealth Office in its explanation memorandum on the second of the documents before the House:
"In the United Kingdom any such amendments"
that is, such amendments as the proposed amendments to the treaty by means of the Single European Act—
"would be submitted to the house for approval."
It is important at this stage that the Government should make it clear what sort of legislative approval this will be. The Minister used different and contradictory adjectives in different parts of her speech. She referred to it first as a "formal opportunity" and then referred to it as a "full opportunity". The difference between the two is crucial.
In 1972 the House made a comprehensive renunciation of its powers—legislative and financial—and of British judicial authority and of the control of the House over

351
policy. It did it on the then basis of the treaty to which we were acceding, but did it only after a most exhaustive examination of a Bill occupying some six months of a parliamentary Session. That Bill itself was limited because it presupposed the terms of the treaty and did not propound them to the House for examination. Nevertheless, the nature of the Bill was such — because of the comprehensive renunciation which it embodied — that during those debates the House was able to examine—or would have been able to examine but for the guillotine which the Liberal party enabled to be imposed—the major features and consequences of the treaty to which we were acceding.
That treaty is being profoundly altered by the proposed new treaty. Many of the aspects of that treaty which were taken for granted as the basis on which the House passed the legislation of 1972 are altered by the proposed Single European Act. It would be wrong if the House of Commons were to give its approval to the new treaty—that is what in effect it is—with a less comprehensive parliamentary procedure than that which was available to it in 1972.
I believe we should insist that the Government make clear in advance what kind of legislation they envisage, whether they are sincere in claiming that it is legislation that will give the House a "full opportunity" of addressing itself to the respects in which the treaty to which we acceded in 1972 is being altered by the Single European Act in matters which affect the House and Britain. I hope that, if we obtain nothing else either in, or as a result of, this debate, we shall bring home to the Government the necessity of being candid well in advance with the House about the nature of the legislative progress to which they will look before the new treaty can be ratified.
Every alteration proposed in the new treaty is an alteration which diminishes the powers of the House. The powers of the House were drastically diminished by the original treaty — that was why we had to have the renunciation embodied in the 1972 Act — but if we examine the changes which would be introduced by the Luxembourg conference, we shall find that in almost every case we confront a further erosion of the powers of the House, which means a further erosion of the opportunity for the British people to influence the policy and the laws under which they live.
Sir Russell Johnston: Does the right hon. Gentleman agree that if powers are eroded one's judgment of the consequences must rest on what the effect is? Does he agree that there is an argument for saying that as a consequence of our membership of the Community we have access to greater powers than if we were not in it?
Mr. Powell: That is the old trick of substituting one meaning of the word "we" for another meaning in successive sentences. I do not dispute that there are those, including the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston)—the hon. Gentleman has made no secret of this—who believe that we would take better decisions and be better off in this country if we in the House had less control and discretion over legislation and Government policies. That is a point of view which can be argued. It is not a point of view that I share, which is why I would like to draw the attention of the House to two specific areas in which the proposed treaty changes will limit in effect the legislative power and authority of the House.
Mr. Hugh Dykes: I am grateful to the right hon. Gentleman for giving way on a second occasion.
The right hon. Gentleman always uses the phrase the powers of this House." Would it not be more accurate and more helpful to the nation to describe them as the powers of the Executive within the House? Is this not, in all international comparisons, a parliamentary system in which Parliament is at its weakest in many respects, in comparison with the overriding powers of the Executive, which, in our system, is based on a simple majority system on a minority vote?
Mr. Powell: I am old-fashioned enough to think that one of the functions of this House is to criticise the manner in which the Executive exercises its powers and, by criticising, effectively to limit and control those powers. If the House does not do that, it is not exercising one at any rate of the functions for which it exists.
Another function of the House, which the hon. Member for Harrow, East (Mr. Dykes) may have had in mind, is to entrust the Executive with powers: part of the activity of hon. Members consists in defining the powers which we will concede for use by the Executive. Indeed, in the greatest periods of the power of this House—when it had real power—it was used by the Executive as an arm for creating law which the Executive would be able to use.
In both the respects to which I want to draw the attention of the House, the treaty which is by implication before us will limit the influence, the authority and the opportunities of the House.
The first is the legislative respect. Even with the assistance of the Select Committee on European Legislation chaired by the hon. Member for Newham, South (Mr. Spearing), whose presence we are glad to welcome at a late stage—not as a result of his fault, but because of an unhappy rearrangement of business—it is not easy to be certain as to the consequences of the change in the legislative process which the new treaty will embody. If I have understood it correctly—and there are those who will correct me if I have not—I believe that when the European Parliament—as we are to authorise it in future to be called — proposes amendments and those amendments are adopted by the Commission in a revised proposal submitted to the Council of Ministers, the proposal so submitted ceases to be a proposal requiring unanimity and becomes a proposal that can be dealt with by qualified majority.
Mr. Dykes indicated assent.
Mr. Powell: I am obliged to have the assurances of the hon. Member for Harrow, East, a careful student of these matters. I seem at any rate to have got it right so far.
Mr. Marlow rose—
Mr. Powell: I would like to continue without assistance from Northampton at this stage.
If that is so, the opportunity of this House through the Government as represented in the Council to influence and affect legislation is automatically diminished. That must be so as a consequence of the substitution of a qualified majority for unanimity as a result of the adoption by the Commission of amendments initiated by the European Parliament.
That is one of the consequences which were portended when we decided—mistakenly in my view and in the view of a considerable proportion of the House at the time

353
—to agree to a directly elected European Assembly. One could not in the end deny to that Assembly control over both finance and legislation. Of course a rearguard action is being fought, and the so-called co-operation mechanism embodied in the Luxembourg agreement is part of that rearguard action. However, the rearguard action has been lost to the extent that the European Parliament has gained an effective input into Community legislation which automatically reduces the extent to which the House through its scrutiny and other procedures can influence Community legislation.
Mr. Marlow: The right hon. Gentleman will agree with me that he heard the Minister of State say that even in circumstances where unanimity is no longer required Her Majesty's Government will still have a veto in the Council of Ministers.
Mr. Powell: It is true that the Luxembourg compromise is, if I understand it correctly, comprehensive in its application. Nevertheless—and this is relevant to the amendment which has been proposed and which the Government have said they will accept—the powers of scrutiny, of influence and of intervention by this House are necessarily diminished by the procedure which will be followed wherever the Commission accepts amendments put forward by the Parliament. A kind of co-operation is established between the Parliament and the Commission which to that extent aborts the input from this House. Therefore, in legislation, as in other matters, the new treaty will curtail the control of the House.
Mr. Dykes: Is the right hon. Gentleman not really indulging in monumental fantasies in his continuing reiteration of absurd theoretical arguments that have no relevance or reality to modern-day constitutional parliamentary practice? The right hon. Gentleman objects to the real majority, which has to come from a qualified majority system which is developing in the Community, but he accepts a minority—majority system which appears to obtain here. What does the right hon. Gentleman mean when he refers to the House making policy and inputs into the Government? The Executive decides policy, whichever Government are elected. The Executive then bestows that on the House and the Whipping system ensures that it gets through.
Mr. Powell: That is an interesting insight into the mind of one of the most vigorous supporters of the European Economic Community. The hon. Gentleman thinks that the Executive "bestows" on the House the fruits of the exercise of its authority. I believe that the processes of debate, backed by the processes of voting in the House, do influence the information and behaviour of Governments. We do not have to exercise our memories very severely in March 1986 to recall recent examples where the House has, by its reaction and criticism of Government behaviour, brought about alterations in the way in which the Executive behaves. No doubt the hon. Member for Harrow, East regrets that—the hon. Gentleman, after all, wants our Executive to be absorbed into a larger Executive which would be beyond even what he calls the nominal control of this House. However, I will not weary the House further by demonstrating, as I am
354
afraid he enables me progressively to do, how much I dislike and reject his view of the House of Commons and its function.
Another area in which authority—I shall continue to use that notion in the face of the hon. Member for Harrow, East—is effectively withdrawn from this House is that termed political co-operation. One can easily be mistaken about this because if one looks at the terminology it appears to be concerned with a desire for unanimity through consultation. For example, one of the subsections of a proposed clause says:
"In order to ensure the swift adoption of common positions and the implementation of joint action, the High Contracting Parties shall, as far as possible, refrain from impeding the formation of a consensus and the joint action which this could produce."
Of course, under that terminology one is still allowed to dissent; but by an international instrument we shall have bound ourselves as a nation to make every possible endeavour to arrive at common positions and to arrive at them by "swift adoption."
"Common positions" and "swift adoption" are significant terms. In the past 10 years we have had much experience of the operation of political co-operation. It means that the Foreign Secretary has joined his colleagues from the other member states of the European Community and produced a European policy which is promulgated as such and as subsuming the assent of all the member states. Precisely through this process of political co-operation, the Foreign Secretary's and the Government's relationship with the House is profoundly altered in reality. The Foreign Secretary comes to the House after the event and says, "As in duty bound to attempt, I have concurred with my colleagues in the rest of the Community to achieve a European consensus and here is the European policy that we have produced." It is far more difficult for Members of this House to criticise a foreign policy decision when it can be presented as part of a collective European decision.
Sir Anthony Kershaw: A short time ago the Danish Parliament did exactly that which the right hon. Gentleman says is impossible here.
Mr. Powell: The Danes have a different arrangement, which I do not necessarily commend, in relation to European legislation and policy. In any case, they recently found themselves overruled by a popular vote into compliance with the very procedures that I am criticising.
The mere fact that the process is consultative and voluntary rather than binding in form does not deprive it of the power to diminish the input of this Assembly and of public opinion in this country into the formation of our foreign policy. The foreign policy of the United Kingdom, adopted by the United Kingdom as such, has to rest, and be seen to rest, upon the consent of the House of Commons —if necessary emerging out of debate. When it is part of a European foreign policy under the political cooperation arrangements to which we are binding ourselves by treaty, it is possible for a Government effectively to escape from all those pressures and from the necessity to stand upon the common will of this House as representing the electorate of this country.
I therefore stress the necessity not to be distracted by the apparently voluntary and optional form of the wording. To bind oneself by international agreement to arrive if possible at a consensus with 11 or 12 other states is a major

355
derogation from the responsibility of the Executive to this House. In this context, it is right to draw attention to a fact to which the Select Committee referred in the context of the effect of this enlargement of the community on the relative position of the United Kingdom within the Community. On page 10 of its first special report the Select Committee made three points:

"(i) the position of the Big Four (France, Germany, Italy and the United Kingdom) has been reduced;

(ii) two members of the Big Four do not have, by themselves, a blocking power;

(iii) the new Mediterranean block (Greece, Italy, Portugal and Spain) can exercise a major influence."

In the past 12 months there has been a real shift of power inside the institutions of the European Economic Community. When deciding, as I hope that we shall be able to decide in due course in due legislative form, whether the House accepts the new treaty for a Single European Act, we must bear in mind the real invasion that it represents into the existing relationship between Parliament, the Executive and the institutions of the European Economic Community. I hope, at any rate, that this debate will not conclude until we have secured from the Government a specific undertaking that the legislative process will enable these matters to be separately explored, separately debated and separately decided.
6.25 pm
Mr. Michael Knowles: I was heartened—as, I suspect, were others although I doubt whether they included the right hon. Member for South Down (Mr. Powell)—to read the comment of my right hon. and learned Friend the Foreign Secretary that the Community is not just a forum in which to defend national interests but a forge in which to fashion the means of achieving common objectives. Those of us who support the Community will endorse that. Our only question is why we were not there 20 years ago saying exactly that and fashioning the means to carry out that policy.
I wish to address much the same problems as the right hon. Member for South Down addressed, although my views differ somewhat from his. The White Paper on developments in the European Community, like others before it, suggests that we are groping towards agreement but that there is no positive means of getting action. One can see both opportunities and dangers ahead for parliamentary scrutiny, particularly with the Single European Act. One of our problems as a national Parliament was created quite deliberately in a way that marks us out from, I believe, all other members of the Community, in that we have no institutional link between this House and the European Parliament. Whenever such a link is suggested, it is opposed in all parts of the House. Labour Members are always very much against it, but I suspect that many Conservatives who take the same view are content to hide behind the opposition put up by the Labour party.
There is no institutional link but we kid ourselves if we suppose that the process that we use in this House gives us any real influence. I am honoured to be a member of the Select Committee on European Legislation. The Chairman, too, is present in the Chamber. In fact, however, because we cannot consider anything until we actually receive a piece of paper, by the time we discuss an issue and it is debated in the House things have gone so far down the road that we cannot influence them. If we wish to influence matters in the European Community, we
356
must get in at an earlier stage, as a House and as a democratic institution. The bureaucratic link between the Commission and Whitehall is well built in, with constant contacts and plane flights, but if any Member of this House wishes to ring a Member of the European Parliament he has to pay for the call himself.
This House is effectively chopped off from the European Parliament, and that is no accident. The Select Committee therefore cannot act effectively. Indeed, it is designed not to act effectively. Yet any suggestion that its mandate should be widened is constantly resisted by the Executive because that would shrink the power of the Executive. That is the normal interplay of forces. We have a powerful bureaucratic link, but a democratic deficit between this Parliament and the European Parliament. We have been so jealous of our rights and prerogatives that democratic control of any kind over these decisions is being lost. This is a problem to which we must address ourselves—we need to be informed much earlier. The House of Lords is of more use to Parliament than are its Select Committees.
On 27 January, the House of Lords had an interesting debate on its report on the external competence of the European Communities. The debate contained serious implications which the House has not picked up. The fact that the Community can sign an external treaty means that, within the Community, the process, in terms of law, operates backwards. It overrides laws passed by this House or any other national legislature. The attention of the House was not drawn to that. There is no way in which this House can pick that fact up from the Select Committee procedure, and indeed it is not designed to pick it up. In this case the House of Lords is doing the job that we should be doing.
There is no point in our being jealous and moaning continuously about the European Parliament if we will not do the democratic job. It is my view that someone must do the job. If we fudge the job, then let the European Parliament do it. However, think we could and should do the job.
Mr. Nigel Spearing: I think there is a slight misunderstanding. Although I agree that the reports from another place are often informative, surely there is nothing to prevent the appropriate Committee— the Select Committee or departmental Committee—in the House from fulfilling that parallel objective on merit if it so wishes. For instance, the hon. Member for Stroud (Sir A. Kershaw) and his Committee could if they wished look at the merits of the Single European Act that we are discussing. Any hon. Member may take part in the debates of the Select Committee on European Legislation and Standing Committees considering European documents.
Mr. Knowles: We know that that does not happen. That is the theory, not the practice.
I believe we need a better system. Some people have suggested a Grand Committee system. I am not enough of a parliamentary expert to know whether that is the answer, but the present system does not work and certainly a job which needs to be done is not being done. We must find a way of doing it. If this is not done, the House will lose power not to the European Parliament but to the Executive —somewhere between Whitehall and the Commission. That is the reality and that is what I oppose.
We shall soon assume the Presidency and I suspect that it will pose certain problems for Ministers. With the

357
collapse of the dollar, there will be a great pressure on the CAP, to which an enormous part of the budget is still devoted. I suspect—I hope that I have to eat my words —that before the end of the year requests will be put before us for more money. It will be in some disguise, but it will be a request for money. The VAT increase of 1·4 per cent. will not take the strain.
We must address ourselves to the central problems and avoid fudging the issue. Is there a proper system of control? How is the Council of Ministers supposed to operate? The Council is sometimes treated as an intergovernmental conference or just as a sounding board for national disputes. At other times it is seen as the engine of the Community, which will push things along. It is sometimes viewed as a legislative body, but if it is I think it is the only one in the democratic world that meets in secret the whole time.
As we are debating the Single European Act, this is the right time to consider how the system operates. We are a member of the Community and we should stay a member and make it work effectively. That means that there must be great changes. There must be changes to the Council, to the Commission, and to the European Parliament. This House has to examine how it is carrying out its mandate of democratic control in this area. I do not believe that we are fulfilling that function.
6.34 pm
Mr. Eric Deakins: The importance of a parliamentary debate must not be measured by attendance at the debate. There have been many occasions in parliamentary history when there has been a low attendance at debates on matters of great importance.
I agree with a number of the comments made by the hon. Member for Nottingham, East (Mr. Knowles). Although we disagree fundamentally about progress in the EEC and Britain's role in it, I agree about the legislative role of the House. I applaud his work and the work of my hon. Friend the Member for Newham, South (Mr. Spearing) in the Select Committee on European Legislation.
This is an all-embracing debate. My hon. Friend the Member for Hamilton (Mr. Robertson) mentioned unemployment, social policy, and so on. The hon. Member for Stroud (Sir A. Kershaw) raised a number of issues which are mentioned in the six-monthly report. There is a danger that we shall ramble on from one subject to another without a coherent theme. I think that the theme pursued by the hon. Member for Nottingham, East is important, and I shall return to it later. However, I wish to concentrate on three areas where things are going wrong and which carry serious future implications for the House and the country. Those issues are mentioned in the six-monthly report. The first issue is the common agricultural policy, the second is the Single European Act and the third is the continuing dispute over finance between the Assembly and the Council.
With regard to the CAP, I draw the attention of the House to paragraph 1.10 of the six-monthly report. That paragraph relates to what was said by the Minister of Agriculture, Fisheries and Food in a written answer last year but which was never followed up. Last year, the House will recall that in the price fixing for agricultural commodities, in particular cereals, the Germans used the
358
veto in the Council of Ministers to prevent cereal prices to farmers being reduced. That veto stood. However, the Commission, in its wisdom, subsequently managing the market in the absence of the Council's agreement, reduced cereal prices to the level to which they would have been reduced had the veto not been applied. That is mentioned in paragraphs 1.10 and 4.1 of the report.
Thus, the Commission has allocated to itself powers which are only for the Council. The Commission has no authority to change agricultural prices once they have been agreed by the Council. In the absence of the Council's agreement to change the previous year's agricultural prices for a particular commodity, the previous year's prices apply. Therefore, the cereal prices should not have been reduced. I believe they should have been reduced, but that is a separate issue. It is a matter of principle as to which body has the power to reduce the prices. I am surprised that hon. Members have not pursued the Minister and the Government on this issue. We have agreed, in default, to give extra powers to the Commission which are not laid down in the treaty of Rome, nor are they to be laid down in the Single European Act or in any other legislative provision.
It is a fact, within the memories of all hon. Members, that in the past year the argument for increasing the VAT contribution to 1·4 per cent. and subsequently 1·6 per cent. rested on an assurance and undertaking by the Government that that was all very well, but as a quid pro quo there would be strict control over Community expenditure on the CAP by the budget mechanism of financial guidelines. That has gone ahead and everyone has accepted it. Some of us had doubts about the validity of the financial guidelines, but at least we were prepared to give them a chance. The Minister may not read every written answer in Hansard, but I do every weekend, and it is amazing what one learns. I have to inform the House that the Minister of Agriculture, Fisheries and Food, in a written answer on 26 February, when talking about the agricultural price proposals put forward for the current year by the European Commission and the Council, said:
"I commended the Commission's determination to place the main emphasis on action through price, but I expressed concern about the proposal to exceed the financial guideline for agricultural expenditure. I made clear my very strong objections in particular to those aspects of the proposals."—[Official Report, 26 February 1986; Vol. 92, c. 549.]
I shall not bore the House with those proposals, but I draw attention to the significance of the financial guideline. The Minister of Agriculture, Fisheries and Food is now telling the House that, although he disagrees with it, the Commission, which was supposed to have agreed to be the guardian of the financial guidelines, has now put forward price proposals for agricultural products for the current year which "exceed"—his own word—the financial guideline. If that is not a devastating admission on the part of the Government, I do not know what is. It should give us all cause for concern, whatever our views on the EEC.
The Minister "expressed concern" about the financial guideline being exceeded, but he used stronger language when talking about the possibility of income support for some small farmers—he strongly objected. Why did the Minister not object to the major issue of exceeding the financial guideline? He could have objected to other things —one has no objection to that—but he, or his civil servants, must have chosen the words of his answer very carefully. I hope that the answer does not mean that the

359
Government are now backtracking on their commitment to ensure that the Council of Ministers observes the financial guideline.
Paragraph 3.10 of the White Paper refers to the intergovernmental agreement which gave the Community extra money by way of non-repayable advances, which are outside the scope of the treaties. Those advances are not included in the treaty mechanism procedure; they are agreed by a special Council meeting.
I am sure that my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) will stress in his winding-up speech that more intergovernmental agreements will come this year. I challenge the Minister to deny that. My concern is not merely that more money will be allocated to the Community than was put forward in the budget discussion, but that it will weaken our case before the European Court later this year in the dispute between the Assembly and the Council. The prospect of further intergovernmental agreements to raise extra money to meet commitments and appropriations under the EEC budget will undermine our case.
If the Minister feels that there is some doubt about that, I refer her to the legal submission on behalf of the United Kingdom Government to the European Court, which was put in the Library at the end of January. It is an entirely legal submission. Paragraph 21 and following paragraphs give the view of the Assembly and say why it disagrees with the Council. One of the Assembly's arguments against the Council's budget and in favour of its own illegal budget is that the draft budget as adopted by the Council does not make adequate provision for existing commitments.
The Assembly's case for an illegal budget is likely to be supported by the Government having to come to the House later this year for extra money in 1986. I beg the Minister to take that point on board. I am glad to see the Minister of State, Treasury present as this matter is important for our future relations with the Community and for relations between the Assembly and the Council, which have a spin-off for the House.
The Single European Act represents a defeat for the Government. That is admitted in the White Paper, paragraph 2.7 of which says:
"[On the second and third points the European council decided by unprecedented majority vote to convene an intergovernmental conference to draw up a treaty]".
We know from what the Prime Minister has said that she did not want any treaty amendments or a Single European Act, and we must assume that she was speaking for the Government as a whole. The Act was therefore a defeat for the Government. Since June, the Government have been involved in a part public relations and part damage limitation exercise. Once the intergovernmental conference was convened, the federalists in Italy, Holland and elsewhere, the Commission and the Assembly tried to get real amendments to the basic treaties which moved in a federalist direction. The Select Committee has done the House a service by drawing attention to the fact that, although we have limited the damage, as the right hon. Member for South Down (Mr. Powell) said, there have been incursions into the sovereignty of the House as a result of that relatively modest—so its supporters would claim—Single European Act.
The conflict between the Assembly and the House about the Assembly's legislative powers is merely postponed, but the Assembly has been encouraged by the
360
Single European Act. The Assembly, thinking itself even more democratic than national Parliaments, will, given an inch, try to take much more. In due course, there will be further incursions into national sovereignty. The Assembly is being backed by the Commission. One of the safeguards mentioned in the final Act is removed by the fact that the Commission may accept amendments to a Council legislative proposal pushed through by the Assembly.
Of course, the Commission wants the Assembly to have more power and national Parliaments to have less, so it will always accept the Assembly's amendments. That will pose the dilemma, which the right hon. Member for South Down mentioned, about the powers of the House and those of the Council when it comes to rejecting, by qualified majority, the amended proposals put forward by the Assembly and the Commission. This is an additional power to the Assembly, courtesy of the Commission and of the Council having to work by qualified majority.
The major battle between the Assembly and this Parliament is still to be fought. These are preliminary skirmishes, but they are significant. If we do not stop the rot now, when considering the Single European Act, we shall have more incursions.
That brings me to the budget dispute, which has not received much publicity in the House or outside. assure the House that, as far as I can see, it is of the utmost significance in terms of relations between Community institutions and the House of Commons and the Government. The pretensions of the Assembly for financial control may not be all that well known. If not, I recommend hon. Members to read a publication of the European Assembly entitled "Effective Parliamentary Control of European Finances," which is basically a foreword from the President and an introduction by the Chairman of the Committee on Budgetary Control. There are many suggestions in it. From the foreword of this year's report—which may be an annual report, I do not know—the President, Pierre Pflimlin, says:
"The need for democratic control of Community revenue and expenditure underlies the increase in the European Parliament's budgetary powers brought about by the revisions of the Treaties of Paris and Rome in 1970 and 1975."
Therefore, it is quite clear that the Assembly is using this dispute over the 1986 budget as a test case for its powers. That is why we in this House must take it very seriously.
Sir Russell Johnston: Does the hon. Gentleman find it interesting that this view is expressed by the President of the Parliament, not as a party politician but as someone speaking for the whole Parliament? That is something we seldom get in the same way in this House.
Mr. Deakins: I accept that the President was purporting to speak, and may well have been speaking for all I know, on behalf of 100 per cent. of the members of the European Assembly. That does not surprise me in the least, as, with the possible exception of a few British Labour members—I am not making a party political point—the vast majority of members of the European Assembly are federalist at heart. They want to see the European Assembly in complete control of the legislative procedures in the Community and of the budgetary procedures and so on. It is their right to demand that and it is our right to resist—certainly those of us who have the interests of the House at heart.

361
I have quoted the President, but I now wish to point out two features of the 1986 budget dispute which have perhaps gone relatively unnoticed. The first is on expenditure. Fortunately, that is mentioned in the legal submission against the illegal budget made by this country to the European Court. On expenditure, the Assembly is now ignoring the maximum rate of increase on non-obligatory expenditure and, for the first time, it is also trying to increase obligatory expenditure. I ask hon. Members to think seriously about the implications of the second point, if it is upheld by the European Court. It will give the European Assembly the right to increase expenditure on the common agricultural policy. In the past year the Assembly has passed at least one resolution saying that not enough money was being spent on the common agricultural policy.
That is bad enough, but worse is to come. There is an issue that has gone unnoticed in the legal submission, and I should be grateful if the Minister would give us some assurance that it will at least be looked at. I cannot expect her to answer it in the space of a few hours because it may need to be looked at by legal experts. The Assembly has put forward a balanced budget for 1986. The budget which it had rejected by the Council, the November budget, was also a balanced budget. As the Assembly had increased expenditure in its illegal budget, I was at a loss to know what happened on the income side. Therefore, I tabled a question to the Chancellor of the Exchequer. The reply came from the Minister of State, Treasury, who is present. I will not bore the House by reading the details, but he was referring to the Assembly's budget. He said:
"Within the 1·4 per cent. VAT ceiling, the amount of VAT own resources at the uniform rate was increased in the adopted budget".—[Official Report, 27 February 1986; Vol. 92, c. 691.]
For the first time, the Assembly has sought to arrogate to itself the power to increase taxation. That has not happened before. I know that we are opposed to the illegal budget, and if it is thrown out by the European Court, as we hope, the issue will not arise. However, I want to put down a marker, and I think that the House would also want to do so, because until now the Assembly has been trying to increase expenditure but has done nothing about taxation. In the illegal budget — as we claim in the House — it has tried to increase, and has increased, expenditure. That expenditure will be financed by a revenue increase which will not have been approved by the Council of Ministers. I need hardly say what the implications of that will be if the illegal budget is upheld by the European Court towards the end of this year.
Mr. Spearing: I have been following what my hon. Friend says with great interest, particularly in relation to the question he asked the Chancellor of the Exchequer because it had escaped my attention. Is he saying that, irrespective of the court's judgment on the legality or otherwise of the Assembly's budget, the Assembly's motion will increase revenue? Surely in terms of the treaty of Rome, that was not within its competence. Had there been a Table Office, such a motion would have been ruled ultra vires.
Mr. Deakins: I hope that my hon. Friend will forgive me. I agree with his point and will come back to it.
On the national legal action which is now being taken by the Government against the Assembly—the Council
362
of Ministers is also taking action and the two actions are running in parallel—one has to accept that there is no machinery in the treaty of Rome to curb the actions or the pretensions of the Assembly. That is the fault of the founders of the treaty of Rome. I think that there is such machinery in article 37 of the European Coal and Steel Community treaty, which is now merged with the other two basic treaties into a single uniform treaty for the Community. The Assembly is trying something on. I am not convinced that the court will not try to help it along that particular path.
The Assembly is claiming increased budgetary powers, but in the treaty of Rome there does not seem to be any direct provision for the Court of Justice to get at the Assembly for exceeding powers which are granted to it in the treaty of Rome. I believe that that was a mistake by the EEC states in 1957 and that mistake has been repeated in the latest treaty amendments in the Single European Act. There is nothing in the Act which would give the Council a proper power to take the Assembly to the European Court for abusing or trying to exceed the new powers which have been given to it in the Single European Act.
I read with great interest the United Kingdom submission to the court. I think that it put a strong case. It is obviously cogent and well argued. However, I have two questions, if not for the Minister who will reply, to be taken on board by the appropriate Ministers. I have had correspondence with the Prime Minister about these issues. First, why are we not taking action, in addition to article 173 of the treaty of Rome—it does not directly mention the Assembly but there is at least a legal argument for saying that by analogy the Assembly is caught by that provision—under article 177, paragraphs (a) and (b)?
It might help the House if I quote briefly from article 177:
"The Court of Justice shall have jurisdiction to give preliminary rulings concerning:

(a) the interpretation of this Treaty;

(b) the validity and interpretation of Acts of the institutions of the Community".

Surely, an illegal budget by the Assembly is, at least in part, a matter of interpretation of the treaty. I am astonished that the Law Officers, the Government in their wisdom, and the legal advisers of the Foreign Office have not thought fit to ensure that our case runs on two lines, one under article 173 and the other under article 177. It is still not too late to put in a separate submission and I hope that the Government will consider that.
Why have we not put anything in the legal submission on the Assembly claim, which I mentioned earlier, to have tax-gathering powers — powers over increasing the revenue of the Communities by increasing the VAT contributions within the 1·4 per cent. ceiling? The Assembly has no such powers under any of the basic treaties, so where does it get the power from? As it does not have the power, it should be possible to undermine its position by an appropriate reference to the court.
I am not a legal expert, but in my view, if the Assembly had wanted to increase expenditure and there had been a disagreement, the illegal budget should have been returned to the Council, and if the Council agreed with the extra expenditure that the Assembly wanted, it would have had the right to say, "We shall increase the revenue to make sure that we have a balanced budget, which we have to do." That has not happened. The Council is at fault. I have

363
not seen its submission to the court yet, but I hope that it will also be made available to hon. Members. We might be able to offer some useful suggestions through our own Government as to the line that the Council might take, because, on the issue of authorising extra taxation, there cannot be any two ways about it. Either the Assembly or the Council will have that power. It cannot be shared between two institutions of the Community, both of which have democratic pretensions. I know which one most hon. Members will support—the Council.
We must shoot down the Assembly's case on that point by the end of the year. I am emphasising this point so much because I am not yet convinced that we have taken it on board in our legal submission. I do not expect a reply now on such an important matter, but I hope that the Minister will take it away and come back to the House with an answer in due course.
7.1 pm
Sir Anthony Meyer: I shall return to budgetary discipline, which was so exhaustively dealt with by the hon. Member for Walthamstow (Mr. Deakins). It well illustrates the difficulty that the Government will find themselves in through rash boasts of their ability to contain increases in budgetary expenditure.
Like every speech that the right hon. Member for South Down (Mr. Powell) makes in debates on these matters, his speech today was brilliant and lucid. It was, at every stage, introvertible. At the end he had succeeded in creating an impossible object, which one sometimes sees in ingenious drawings. It was an impossible object of great terror to him and to those who feel like him. an impossible object that I and those who feel like me may marvel at; it was an impossible object none the less. It was the impossible object of a Community that was so organised that it could control its own destiny, sweep aside the will of the House and vote itself the money that it wanted to create the things that it wanted. Alas, it does not exist. I am sure that the right hon. Gentleman, in his heart of hearts, knows that it does not exist and rejoices thereat.
On these occasions, I usually find myself defending the Government against hon. Members on both sides of the House who want to stop the world and get off and who never lack for plausible reasons why we should all do so. I should be particularly glad to be able to do so today, with my hon. Friend the Minister of State at the Dispatch Box, because I know that she, like her predecessor, my right hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) who was sitting in the Chamber a few moments ago, is more aware than almost any other Minister of the vital need for this country to exploit to the full the opportunities that membership of the Community offers.
However, it is not always too easy to defend a Government who, apart from four or five Ministers, are so half-hearted, so full of qualifications, reservations and withdrawals in their own defence, and who are so reluctant to proclaim the advantages that may arise for our country through a policy of full-hearted participation in a European Community that really works. The Government are far too ready to make concessions to their adversaries in that matter. So determined are they to avoid any charge of weakening in their defence of the right of national veto that they have, as the report on the activities of the six months in 1985 makes plain, contributed towards a further enfeeblement of the decision-making powers of the
364
Community which, now that it has grown to a Community of 12, urgently needs to strengthen its decision-making capacity if it is not to relapse into total paralysis.
So keen are the Government to parade their zeal for budget-cutting that they are raising a series of hopes of being able to contain increases in the European Community budget. The fall in the value of the dollar and the consequent huge gap, which is becoming wider, between Community food prices and food prices in the rest of the world will impose a colossal strain on the budget of the Community, and it will be increasingly difficult to contain the increases within the ceiling that has been set.
Of course, the merchants of gloom are right. They are nearly always right. It will not be possible to reform the common agricultural policy because those same merchants of gloom refuse to consent to the improvements in decision taking which alone would enable the reforms to be made. Budgetary discipline will break down precisely because the unreformable common agriculture policy will run out of control.
However, I do not want to speak on that matter. I want to talk about developments in industrial policy in Europe in the period under review. There were no developments in industrial policy in the period under review. Here at home there were two tremendous industrial issues. At any rate, they were tremendous in the political sense. Those two issues were Westland and British Leyland. If there is to be such a thing as European industrial policy—that is to say, at its very lowest, a conscious attempt by European Governments to ensure the survival of some part of their manufacturing industry and the jobs that go with it by encouraging closer co-operation among European firms to enable them to withstand United States and far east competition—surely there should have been a credible European alternative to an American takeover of Westland and British Leyland.
Even so, the American solution might very well have been the more attractive choice for workers, shareholders and even the nation. However, despite the efforts of my right hon. Friend the Member for Henley (Mr. Heseltine), there was no credible European alternative for Westland. The total lack of interest by Her Majesty's Government and the short-sighted greed of the European helicopter manufacturers saw to that.
As for British Leyland, successive Governments of both parties who for years propped it up with large subsidies have systematically neglected to use that leverage to push it into a European partnership of near-equals and have contented themselves with allowing British Leyland to become a broken-winded Trojan horse to smuggle Japanese cars into the Common Market.
I do not go all the way with those of my hon. Friends who say that Land Rover must remain British at all costs, still less the rest of BL. However, if Land Rover is to be used as a sweetener to get General Motors to swallow the other more gristly bits of BL, why on earth was no attempt made to put together a similar dowry to tempt a European bridegroom? Once again, the American solution may well turn out to be the best for all concerned in the end, but why was there no choice? Thus, the last British helicopter facility, and the last British motor manufacturer, are passing out of British hands and straight into American hands, with no attempt by the British Government, or, for that matter, the other Governments in the Community, to

365
devise a short or long-term policy to strengthen European helicopter capacity or consolidate European car manufacturing industry.
If what has happened in helicopters and motor cars has not happened in civil aircraft, it is precious little thanks to British Governments of either party, and no thanks whatever to British Airways. It is due solely to the foresight of Hawker Siddeley, which put its money into European Airbus, a family of aircraft that has been a big success, despite the British Government. Now, here too, continued British participation in further development is at risk because the Treasury is holding back on the launch aid that is necessary to keep British Aerospace in the later stages of the project.
There has been a series of sins of omission, each one excusable and possibly justifiable on its own but adding up to a culpable failure to have any coherent strategy to defend British industry and jobs. Such a strategy must have as its main element—I do not say its sole element because often there will be partnership legitimately with Japanese or American firms—the use of the vast economic potential of the European market.
The Government have two answers to the charges of negligence. The first is that each case should be judged on its merits. I am not saying that each industry needs to find a European solution to its problems. Nor can it make sense to ignore altogether the fact that we are a member of the European Community and that the mechanism of cooperation and the habit of working together on projects are already there, waning though they may be for lack of Government interest. To say that each case must be judged on its merits is another way of saying that we have no policy.
The other answer is to say that things must be left to the play of the free market, the judgment of the stock exchange and so on. That was the answer given in the Westland case. It is manifest piffle. What possible free market can there be in the technologically advanced industries which are defence-related when national Governments are the only purchasers?
Fortunately, the Government do not believe their own nonsense; they use their purchasing power to exert a British preference, very understandably, in arms purchases. All Governments in the European Community are in the same business of using their purchasing power to favour their own industry. In 1982, the last year for which figures are available, the United Kingdom spent no less than 98·3 per cent. of Government cash on equipment made within our own borders. The 1·7 per cent. left over is not much with which to encourage any joint European venture but it is at least better than the 0·3 per cent. left over by the Germans, the 0·09 per cent. left over by the French, or the nil per cent. left over by the Italians, every penny of whose procurement expenditure went on goods made within the Italian frontier.
All the political pressures in this Parliament, as in every other European national Parliament, will be exerted in support by a "buy national" policy. There are no votes in European co-operation; it just happens to be necessary for industrial survival. Not only do Governments vitiate, by blatantly protectionist policies in public procurement, the free markets to which they claim to be attached, but their attitude towards the completion of a single market in Europe, which in itself or by itself could do a lot to sustain
366
a competitive European industrial base, is all too reminiscent of Arthur Clough's version of the sixth commandment:
"Thou shalt not kill; but need'st not strive Officiously to keep alive."
We British complain about German, French and Italian frontier delays, with good reason, but we all know how effectively Her Majesty's Customs manages to hold things up at our sea ports and with what derision it treats the notion of a green customs channel. It looks as if it will shortly be transferring its energies to ensuring that after the Channel tunnel is built it will take longer to get from London to Paris by train than it does at present by ferry.
I hope that the Liberal party will not offer itself as the champion of effective European industrial policy. The only Liberal voices that we heard during the whole Westland affair were those of the two hon. Members who had a direct constituency interest in a quick sell-out to the Americans. I am still waiting to hear proposals from the Liberal party for a thought-out European solution for the future of British Leyland. We know that, with the sole exception of the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), who is an invariable attender at and participant in debates—he is the European policy of the Liberal party—the party is now giving all its attention to more electorally fashionable topics.
As for the Labour party, it is still officially committed to taking Britain out of the European Community.
Mr. Foulkes: No, we are not.
Sir Anthony Meyer: We are not sure about that. Although there may be legitimate doubts as to whether the Labour party means to take us out of the European Community, and whether it means that more than any of the other things it says, there is no doubt that the Labour party is still the same narrow, insular, suspicious party that it always has been. The hon. Member for Hamilton (Mr. Robertson) made a fair fist of something that sounded like a European speech. That was because none of his minders was present apart from the hon. Member for Walthamstow, but he is so amiable that I do not think he would strike fear into anyone's heart.
Only a Conservative Government can give the urgently needed new impulse to the evolution of an industrial policy which will enable Europe to remain an industrial society well into the next century.
Mr. Foulkes: The hon. Gentleman has said that only a Conservative Government can give such impetus. It is on public record that he wants a change in the leadership of the Government. Since we know that the Prime Minister is not the most enthusiastic European, is that one of the reasons why he wants a change in leadership? Does he want to make sure that the initiative he is talking about takes place?
Sir Anthony Meyer: I want to make sure that the policies of my right hon. Friend are successfully defended at the next general election. My right hon. Friend may be the person best qualified to defend her own great European achievements. As to my right hon. Friend's commitment to the European idea, I do not see how any impartial observer could question the depth of her attachment to the concept.
In the effort to ensure that Europe will remain an industrial society, we have a start of sorts in the EUREKA project—not, I fear, a British initiative, although it

367
should have been. It covers only a tiny number of projects in the most advanced area of technology. It will not help us to keep our steel industry, our car industry or our aircraft industry, but we cannot keep those going by our own unaided efforts. We must work more closely with our European partners to create the conditions in which our industries can survive. I look to this Government to get on with it. It would be no use looking to any other.
7.17 pm
Sir Russell Johnston: It is a pleasure to follow the hon. Member for Clwyd, North-West (Sir A. Meyer) whose courageous consistency in defence of the ideals of the European Community through fair weather and foul must attract general respect. I say that despite the somewhat limp slap on the hand which he felt obliged to give to the Liberal party.
It is also a great pleasure to welcome to the six monthly "take note" debates the Minister of State, the hon. Member for Wallasey (Mrs. Chalker). If it is not an embarrassment to her in her absence, I must say that I have always found her an exceptionally fair-minded Minister, not given to being dogmatic, but willing to listen—which cannot be said of all Ministers. Her arrival on the European scene will enhance the Government's contribution. We could do with more people with her engaging, intelligent frankness. I say that unreservedly.
In these debates we ask ourselves where we are in the Community and where we are going. An optimistic view, which is becoming fashionable, is that not only the Government but the great official structures, such as the Foreign Office, the Treasury and the Department of Trade and Industry, think that we are making progress, that we must make more progress and that there is movement and a more positive attitude.
One gets a taste of this in the first paragraph of the White Paper, which states:
"The enlargement negotiations were completed and the Spanish and Portuguese Accession Treaty signed. Agreement was reached on the new own resources decision embodying the budgetary corrective mechanism for the United Kingdom. With these long-standing issues resolved the Community was able to give greater attention to its future development and in particular to institutional reform and better decision-making."
More than anything else, that changed attitude was enshrined in the paper presented by the Prime Minister to the Fontainebleau European Council in June 1984. Many of us felt that the hon. Member for Harrow, East (Mr. Dykes)—I am sorry that he has left the Chamber—had written that document in secret and that its publication was to be the precursor of his meteoric rise to office. Sadly, that did not happen.
It was certainly a positive document. I am surprised at how few hon. Members have read it. I strongly recommend it. It had the most positive tone of any document produced by any United Kingdom Government since the halcyon days of the right hon. Member for Old Bexley and Sidcup (Mr. Heath). Indeed, it will make an interesting speculation for future political historians whether, had the right hon. Gentleman won the 1974 election, our path into Europe would have been very different and whether we would have ridden the oil crisis that coincided with our entry quite differently. The pro-European mood was certainly there, as the 1975 referendum demonstrated, but thereafter it was steadily dissipated, first by an unenthusiastic Labour party and secondly by a very nationalistic lady.
368
What is now the status of the Fontainebleau paper? It was quite at variance with the spirit of the Fontainebleau paper—first, on institutions—that we should ally ourselves with Denmark and Greece in making reservations on the Dooge report. That is referred to in paragraph 2.6 of the White Paper, when the present Secretary of State for Scotland had the job of chumming up with Mr. Papandreou and the Danish representatives. It was also at variance with the spirit of Fontainebleau that, in making the argument for budgetary adjustment to take account of the United Kingdom's continuing economic decline and the GNP relative to other members, we should simply make a United Kingdom case without establishing this in a Community frame to take lasting account of the problems of other countries. For example, Portugal was in exactly the same position, but from an even lower economic base.
I also suggest that in our appointments to the Commission we gave no evidence of a wish to promote United Kingdom politicians of the first rank, far less those with enthusiasm for the institution that they were joining. In parenthesis, let me record that I very much regret the departure of Ivor Richard, who was beginning to do a very good job.
I again ask what the status now is of the Fontainebleau document, and I hope that the Minister will say something about it in his reply. I also hope that he has read it, studied it and agreed with it.
The Luxembourg meeting took place after the publication of the White Paper, but, even if the Government went along with the conclusions of the Luxembourg agreement and prised themselves apart from Denmark and Greece, their role was one of brake, not accelerator, and the vision one saw in the Fontainebleau agreement was surpressed.
In passing, I entirely agree with the Minister of State and am pleased with the result of the Danish referendum. I congratulate the various forces in Denmark on their success, particularly my political friends in Venstre.
Over the years, there have been a variety of approaches to reconciling the enthusiastic call of the Six with the others who joined later—who have always been a bit difficult, with the possible exception of Ireland, which has managed to get quite a bit out of it. In 1974, Socialist Willy Brandt coined the idea of a two-speed Community, and the Liberal Ralf Dahrendorf afterwards came up with the idea of an a la carte Community, although that had many federal connotations. The new French President of the Commission, Jacques Delors, was the variable geometry man. They have all been trying to find a way of reconciling those two problems.
Although the decision-making process was approved in Luxembourg, it must still be put to the test of vested interests. I was not terribly encouraged by what the Minister of State said. She said that our special interests were protected, and we all know the result of that. She also said that the Luxembourg compromise holds, but what happens then? The only direct thing that she said was that we will decide things for ourselves. That did not encourage me to think that the Government were of a mood to go in for majority decision making.
Even if all this works, we shall thereafter need stronger mechanisms for regional regeneration and for dealing with changing technology. The hon. Member for Hamilton (Mr. Robertson) spoke about this, and he was quite right.
Mr. William Cash: I take it that the hon. Gentleman is speaking on behalf of his party. Does the leader of the SDP agree with him on majority voting in all material respects?
Sir Russell Johnston: The leader of the SDP and myself have a very amicable relationship—
Mr. Cash: Will the hon. Gentleman answer my question? He will appreciate that this is central to the development of the European Parliament and the Community in the context of the aspirations of the alliance in a couple of years time. Therefore, it is important for the nation to know where the alliance stands on this very important question.
Sir Russell Johnston: If the hon. Gentleman wants me to answer his questions, he should oblige me by not interrupting before I have got through my preamble.
The Liberal and Social Democratic parties produced a joint programme for the European elections that dealt with majority voting. We stated our position quite clearly, and that is the position that I have just enunciated.
The Government's continued obstruction to an increase in the powers of the funding of the regional and social funds is difficult to understand. I have remarked before that I will never forget the enlightened first speech of my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) as President of the European Commission in Luxembourg, to which I listened as a member of the European Parliament. His central theme was the increasing divergence between the magic square of Hamburg, the Ruhr, Paris and London, and the peripheries, which include the highlands of Scotland, which I represent, a great swathe of the United Kingdom almost down to the midlands, and Mediterranean countries and Portugal. Incidentally, I must say to the right hon. Member for South Down (Mr. Powell) who referred to Portugal as a Mediterranean country that it is Atlantic and quite different in attitude.
My right hon. Friend the Member for Hillhead believed that the trend must be reversed. Because of the Council's resistance, he could not do much about it, and since then the position has worsened. In those days a great deal of hope centred on the enlargement of the non-quota section of the regional fund. Now it has been abolished, which is a bad thing. I am referring to section V, paragraph 5.1 of the White Paper. Did the Government support that, and if so why?
The non-quota section, which at one stage increased to 13 per cent., seemed to hold out the best chance for the neglected peripheries of the Community to obtain help. I greatly deplore that change. Most, if not all, of the peripheries suffer from neglect by their central Governments. The opportunity to involve people from outside, operating on agreed criteria, was immensely helpful. That was certainly the view of Mr. George Thomson, now Lord Thomson of Monifieth, the Commissioner who established the regional fund. Incidentally, we also continue to ignore additionality.
Do the Government accept that economic convergence will not work unless it is balanced by social and political mechanisms? When the hon. Member for Hamilton said that enlarging the market is not likely by itself to inspire the confidence of the unemployed, he was right, especially
370
regarding the peripheries. Nor will economic convergence work unless it is buttressed by an integrated financial system.
It is extraordinary that no hon. Member has yet uttered the three letters EMS. The hon. Member for Nottingham, East (Mr. Knowles) referred to the Foreign Secretary's speech which is reported in The Times of today, in which the Foreign Secretary said that perhaps we could not continue saying that the tide was not quite right. Shakespeare said:
"There is a tide in the affairs of men"
and in this matter the Government seem to be marooned on a tideless sea, unwilling to take any decision.
Jacques Delors, the President of the European Commission, said at the Luxembourg meeting:
"The Commission's proposal is for keeping on the idea of European Union. This resolve has been asserted by a number of heads of state and government. Now, it is hard to suppose European Union can come about without eventually operating on the basis of unified institutions. I freely admit this it is not feasible now. But we must nurture the feasibility of it in the future, given the close interdependence between foreign policy and security on the one hand and what may be called stewardship —economic, financial and monetary affairs—on the other. Again, stewardship involves the social side, the arts, the will to get along together."
The issue of will is fundamental.
I did not expect to find very much about the European Parliament on page 38 of the White Paper, largely because in the contents it states that the Court of Justice is dealt with on page 39. What a miserable report it is. I accept that the Minister expanded on it. The reports are interesting and useful, and record in careful bureaucratic fashion in the peculiarly neutral language of the Committee Clerk what has happened, but it would be of immense advantage and would give bite to these debates if they included the Government's forward views. They do not. What do the Government think of the European Parliament in the long term?
At Luxembourg Jacques Delors said of the European Parliament:
"I would stress that it is necessary to increase the powers of the European Parliament. Is the European Parliament a parliament of the same standing, and the same nature, as the national parliaments? We shall not settle that question: anyhow, the answer differs from country to country. I would, though, make the point that the heads of state and government decided the Parliament should be elected by universal suffrage; and, however much some of its debates may on occasion be ridiculed, its members are elected by universal suffrage …We could help it by making it more responsible and involving it more in Community decision-making."
That is not impractical or visionary, to use the Minister's phrase, but rational and positive. How do the Government respond to that question?
At the next European elections, the Parliament has responsibility for making proposals about a uniform electoral system. The Bocklet report is now before it as the successor to Seitlinger. What is the Government's view on Bocklet? We have not the faintest idea from the White Paper. After the 1979 European elections it was recognised, even by Mr. Angus Maude as was, that it was disgraceful that the Liberal party got 13 per cent. of the vote but no representation. In 1984 the alliance got 20 per cent. of the votes but no representation.
I do not know whether the Minister reads The Scotsman. He nods wisely, but that could mean anything because Ministers have a tendency to nod wisely when anything dangerous is in the offing. The Scots were asked what they thought about proportional representation, and

371
57 per cent. said that they would like to see it introduced. Even 50 per cent. of the Labour party thought that proportional representation would be more effective than the present system, and only 19 per cent. thought that it would be less effective. Those were the results for our present system of national government, and the argument for European elections is far greater because there is not the problem of direct accountability to constituencies.
If the Community is to move towards greater cohesion, even à la carte cohesion, there must be a democratic oversight, and the Council does not represent that. It is a compromise Council, negotiating inter-state disputes. It has none of the necessary supranational overview of a permanent commission of an elected parliament. What is the Government's view on that?
I began by asking about the Prime Minister's Fontainebleau paper. Since then the big change, or part of the change, is that British interests in the Community are now defined, not just by the Government, but by many other elements in the country, as lying in the reinforcement, rather than the erosion, of existing economic and commercial commitments and the strengthening of political co-operation. At last that is being recognised as the means to exercise greater influence, rather than a component in the reduction of our influence.
Mr. Foulkes: The hon. Gentleman's speech has been helpful and interesting, but he has not mentioned agricultural policy. As he knows, the CAP is a major part of Community expenditure. Recently, the other part of the alliance — the Social Democratic party — agreed that quotas are inevitable for all supported farm production. Does the Liberal party agree that quotas are inevitable in all those areas? Is that the policy of the alliance as a whole?
Sir Russell Johnston: It is true that I have not dealt with agricultural policy. One cannot deal with everything, and I have already spoken at some length. I have discussed the CAP previously. It must be evident to the hon. Gentleman that much discussion is necessary when two different parties work out policies—[Laughter.] It is all very well to laugh, but that is a fact. The same is true of any coalition on the continent. The hon. Gentleman asked what I think about quotas—
Mr. Foulkes: No, the Liberal party.
Sir Russell Johnston: The party is in negotiation. Personally, I accept that quotas are inevitable across the board, and that the SDP is correct.
The anti-Europeans have now mostly fled the Chamber. The only two Opposition Members who spoke before me were anti-Europeans—the right hon. Member for South Down who has a well-established and almost mythical record in this regard, and the hon. Member for Walthamstow (Mr. Deakins). Whatever criticisms they may have—I agree with some of them—they must begin to square up to the fact that the Community provides a bedrock of commitment and predictability to the United Kingdom. All of us must ask ourselves how best we can develop that, but they more than others.
The Liberal party and its alliance partners, the Social Democrats, are convinced that the only viable future for Britain — if it does not want to become a nation of hamburger salesmen, as my right hon. Friend the leader of the Liberal party remarked recently — is within the
372
European Community, with all its industrial and technological challenge, in which we play a part. The hon. Member for Clwyd, North-West mentioned that. We must give the citizens of Europe a say in the political future of the world, strung taut as it is between the United States and the Soviet Union.
7.42 pm
Sir Brandon Rhys Williams: I warmly welcome my hon. Friend the Minister of State, Foreign Office, who opened this broad-ranging debate so satisfactorily. She began her political career in Kensington, which gave her the background for an informed and penetrating weltanschauung, as she has already shown us in her new post. The debate has ranged widely, and I hope that the House will not think that I am straying too far if I deal with some fundamental issues which it is important to review in the light of Britain's assuming the presidency of the Community during the second half of this year.
We have heard the usual chorus of hon. Members expressing their anxieties—one might almost call them heebie-jeebies—about the way in which the European Parliament appears to be growing in importance and the budget is becoming a slightly heavier burden on our national economies. I could not help but wonder whether, if one turned back to the accounts of the debates in the early years of the state legislatures in the United States of America, one might have found people with an equally timid and provincial outlook in view of the growth in importance of Washington as a force in the development of the United States. We can all be glad that the federal forces in the United States won in the end; the world has been a better place as a result. It would be good if, in time, the federal forces gained the ascendancy over the national parliaments in the EC. However, I also believe in the inevitability of gradualism, which is attractive to Opposition Members. We do not wish to build our constitution too quickly, because trees that grow quickly tend to decay quickly too.
We have not made great progress in the European Community since the striking move forward in the Fontainebleau agreement in June 1984, which can be counted as a special success for my right hon. Friend the Prime Minister. Since then, we have been marking time after Europe began to recognise the force of my right hon. Friend's arguments, very persistently put, on the necessity to control the budget, to reform the agricultural policy and to improve the workings of our institutions.
Britain has had the difficulty since its late entry to the EC that it feels some reticence about its membership. We have been members of the Community since 1973, yet to some extent we still regard ourselves as outsiders. That is partly due to the continuing attractions of our Commonwealth links. It is also partly due to the English-speaking link with the United States of America, which gives us hope that we can still build on our special relationship with that country. In dealing with economic matters, we still cling to the idea and the tradition of sterling as a world currency and the most important medium of trade. Unfortunately, it is no longer that, although it is still an important international currency.
That reticence has caused us to cultivate in the House of Commons and elsewhere what one might call the "greater Switzerland" fallacy: that we can have a friendly relationship with the Common Market, but that we will

373
never be completely integrated into it. We think that somehow we can retain our independence and customs, look back on our independent history and never allow ourselves to be completely trapped in the clauses of the treaty of Rome. The difficulty with a "greater Switzerland" relationship with the Common Market, however, is that Britain is too big to become an appendix of a great continental economy, which is what happened to Switzerland. We cannot live in a marsupial relationship with the German economy; but, equally, we are too small to be a world power in our own right. Therefore, the greater Switzerland fallacy fails in both respects: Britain is too small in one way, and too large in another, to fit into that formula. If we are not careful we shall become a greater Iceland, because we shall have drifted away from the continent in business terms. We cannot afford to contemplate that.
The continent sees Britain as a timid child running to and fro at the edge of the swimming pool, but afraid to jump in and join the other children enjoying themselves in the water. We cannot afford to continue looking like timid members of the Common Market. Our half-hearted relationship with the Community has continued for too long.
However, Britain has lately been successful in persuading the other members to make the reforms which we believe are important if we are to participate more fully. That process must continue when Britain assumes the presidency. We must maintain the momentum for control of the budget, and we must continue the policy of agricultural reform while recognising that the agricultural vote is still an important factor affecting the democratic policies of the continental parties.
I hope that there will be some new, positive British initiatives while Britain has the presidency. The most important initiative will be the completion of the internal market. As a London Member, I believe it is vital that London should play the most active possible part in the development of a united European economy. We have set ourselves the target of creating an internal market by 1992, which is what one might call a six-year plan. Socialists usually love six-year plans, but they do not seem to be too enthusiastic about the six-year plan to complete the internal market. It must be the major British interest, since we are a nation that depends on trade. It is no good belonging to a so-called Common Market that maintains ridiculous frontier barriers and obstacles to the free movement of goods and services.
Lord Cockfield's excellent report on the subject is a tribute to what British thinking can offer to the Common Market, and it has been very widely supported on the continent. The British Government owe it to Lord Cockfield to give the maximum possible support now to his campaign for the completion of the internal market. We should also recognise the lead that has been given by Jacques Delors in this respect. He is a man of particular integrity and foresight, and the type of Frenchman upon whom one can rely to act in the interests of the Community and not just in the interests of France. This is an important matter, because we tend to be over-suspicious of prominent French individuals who take a lead in the Common Market, because we suspect that their first
374
loyalty is to France, and we retain a suspicion that it is bound to do us harm to become too closely involved in their initiatives.
I had the pleasure of working for Jacques Delors for three years when he was chairman of the Economic and Monetary Committee of the European Parliament, and I can say that he is a man to whom we can look for a first-class lead in the Community. He has thrown his weight of influence behind the creation of the internal market, and I am sure that he accepts the necessity for the internal market to be not just a matter of the exchange of goods and services, but, what is particularly important for London, the way to the complete integration of the European market for capital.
It is no good thinking that Europe is a Community that can live on current account alone. We are trying to build a capitalist society—a society in which people can take long-term decisions. We must build a context in which long-term decisions are likely to be taken in the most fruitful possible way. That is also vital for London's financial institutions, which are not concerned just with insurance, with which the Government seem to be preocccupied in dealing with this aspect of the internal market.
On the stock exchange, in house purchase finance, in the commodity markets, and in all the other activities in which London is pre-eminent and is capable of making an important contribution to the smooth operation of the Community, we still have formal and informal institutional barriers, barriers of tradition, and protective devices of all kinds, which prevent the operation of a genuinely effective integrated European market for capital.
One of the major difficulties is that we are still clinging to our national currencies, repeating the mistakes of the 1930s. The British Government should be seen to be taking a long-term approach to currency stabilisation. But we are waking up to the fact that we are facing a great decision. Do we want the world to be organised into two zones of time for the movement of capital, one based on Tokyo and one on New York, with London taking a subordinate and suburban position, related to both the great capitals, but not making any great contribution? Or do we insist that the world should be divided into three time zones, in which London, making its contribution as the pre-eminent financial centre of the Common Market, is able to hold its own for eight hours of each day and contribute to the success of a world economy that is founded on three great centres of excellence rather than two? The crucial decision whether we belong to a world with two time-zones of 12 hours or three time-zones of eight hours is likely to be made in the coming year. The Government must recognise the importance of their opportunity, with the presidency of the European Community, to do what is necessary to create an integrated European market for capital.
The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) complained that nobody had yet spoken about Britain and the European monetary system. I have spent a considerable amount of time on this subject, and I had the opportunity to study it for more than 10 years as a member of the Economic and Monetary Committee of the European Parliament.
At the moment the EMS can be regarded as a considerable success, but it is a solar system in which Frankfurt and the deutschmark constitute the sun around

375
which the other currencies revolve. If sterling were to join that solar system, we would face the danger of creating a solar system in which there were two suns which, from time to time, would be likely to move eccentrically. This could be disturbing for all concerned and eventually lead to what occurred when we tried to join the snake more than 10 years ago. After only a few weeks of membership, we had to withdraw. As I am committed to the necessity to achieve an integrated currency system in the Common Market, I do not want Britain to join the EMS and then have to withdraw prematurely.
We might create the conditions in which Frankfurt and London moved together, or sufficiently closely for the system to co-operate fruitfully, if we reintroduced capital controls. That is not only undesirable, but virtually impossible, and I would not support it under any circumstances. The other way that we can move is towards the complete integration of the capital market between London and Frankfurt, by the perfection of arbitrage and by broadening the relationship between London and Frankfurt, so that we achieve something approaching the stability and continuity that one sees between Chicago and New York.
If we do not achieve something like that, the pound and the deutschmark will inevitably drift apart. We need a single real underlying rate of interest under the currency values of the national currencies, and we need a single market for the distribution of savings into investment opportunities. The European market will have to be seen as an extension of our home market, or even as our home market itself. This means a great leap forward in the thinking of our business people.
Inevitably, the long-term currency relationships must be based on the purchasing power parities. Is that what we would achieve if we joined the EMS as it now is? We have to ask ourselves two questions when considering whether this is the right moment for Britain to join the EMS. The first is whether we have the currency relationships on a stable basis. Is the pound now facing the deutschmark on a rate of exchange that is likely to continue?
Until recently I had not felt that we had achieved purchasing power parity between the pound and the deutschmark; but now we have come a great deal closer to it. It has been achieved because of the movement in the price of oil, and nobody can predict what will happen next to that. However, I hope that it would be Treasury and Bank of England policy, if we joined the EMS, to retain a structure of currency relationships between sterling and the deutschmark and the other major currencies of the continent that corresponded as nearly as possible to the purchasing power parity. That is the right way to turn the Common Market into a real, genuine, home market for British goods and services.
The second question is whether we have gone far enough with the integration of the capital market to be able to regard London and Frankfurt as sufficiently closely bound to each other to be able to co-exist in the same monetary framework for a period not just of months but of years. The answer to that is yes, if our membership of the EMS permits us to adjust the pound to its purchasing power parity in an orderly way from time to time; but the answer has to be no if it means that we are obliged to gear ourselves to a system which inexorably brings sterling back to a condition of perpetual over-valuation.
Many people are waking up to the fact that the decline of British industry relative to the industries of other major
376
manufacturing economies, such as the United States, Germany and Japan, has been due to the Bank of England's persistent policy of maintaining the pound as an over-valued currency. This has been a wonderful background for the prestige of the City of London, but a disastrous background for manufacturing.
I would not want to see the deutschmark, with an inflation rate of less than 1 per cent. per annum, tied to sterling, with an inflation rate still of 4 or 5 per cent. per annum, if the relationship were regarded as so permanent that we were gradually dragged up and up again into overvaluation. But other currencies that are inflating faster than the deutschmark have belonged successfully to the EMS and have made occasional adjustments to the deutschmark without obstructing the system unduly. Therefore, I feel reasonably confident that we can now do that as well.
How do we define the most important target for our presidency, which we hope our Ministers will bring a great step nearer? It is not just joining the European monetary system, and it is not just having certain agreements for winding down controls at the frontiers or eliminating certain particular difficulties in the operation of the capital market. We must create the conditions for the most successful achievement in the creation of wealth by an international capitalist economy within a genuinely democratic framework. Of course, it is an enormous and very ambitious task. The conditions that we have to achieve must be clearly foreseeable over a long span of time so that business men can take ambitious investment decisions, in the confidence that they will prove to be right.
Capitalism is not working in western Europe in the way that we hoped, because many business men are unable to look ahead for even a few weeks.—[Interruption.] If the right hon. Member for South Down (Mr. Powell) were a business man—I know it is claimed that he is many things, but I do not think that anybody has ever claimed that he is that—he would understand a little bit better what I am saying. One needs to be able to have a reasonable degree of confidence that decisions based on knowledge of the market and on knowledge of one's product will prove to be right. They do not prove to be right if there is unpredictable Government interference, or central bank interference, or tax changes, or other incidental movements which mean that decisions proved to be wrong, through no fault of the original investors or the economic planners.
This does not require merely the free movement of goods and capital. It requires also continuity and a favourable policy in matters of taxation, about which I want to say a few words. When we refer to the harmonisation of goods and services in the internal market, we must not forget the vital importance of tax harmonisation and the harmonisation of policy in regard to changes in taxation that will also be necessary.
Looking towards this country's Budget, I should like to say a word in support of those who are campaigning for a reduction in the stamp duty on investment decisions. We want to create favourable tax conditions for the integrated capital market. We want to take off London the burden which we ourselves have imposed upon London. I do not want just a halving of stamp duty. There should be an end to stamp duty altogether on investment decisions on the London stock exchange. We should set London free to exert its strength for the benefit of the whole Community.

377
We should also seek out the best ways to end the artificial frontiers that are created by differences of taxation interpretation, such as the different treatment of particular classes of goods for value added tax. Next, we should make a serious effort to tackle the anomalies that are created by the different systems for the taxation of corporations in all of the member states. We made a considerable study in the Economic and Monetary Affairs Committee of the different systems of corporation tax which operate in the different member states. We tried to find a way in which we could work towards their eventual harmonisation so that we could end the tax frontiers created through the corporation taxes. We reached the conclusion that the only practical road to the harmonisation of corporation tax was the progressive abolition of corporation tax altogether.
This is not such a wild ambition when one realises that corporation tax is simply a tax on the eventual consumer of the goods or services that the company provides. But it is virtually a random system of tax, and it is very unfair and uneven in its operation, whereas value added tax, which is a similar tax, in that it puts the ultimate burden on the eventual consumer, operates in a much more comprehensible and more even and general way. It would be better even to have a slow increase in value added tax if it were accompanied by a step by step reduction in corporation tax, and eventually brought us to the total elimination of corporation tax throughout the European Community.
I realise that I have caused mirth on the Opposition Benches and that what I am saying constitutes ambitious objectives; but do we sincerely want to raise the level of the British economy in order to suck into profitable employment all the people who are looking for cash rewards for their work? Are the Government—and, for that matter, the Opposition—sincerely looking for a way to reduce the level of unemployment in this country? If so, we have only one road to follow. That is to make a success of our membership of the Common Market. If we continue to stay on the fringes of the Common Market and do not make a success of it, we shall waste the opportunity that is provided for us by the treaty of Rome to create a really successful economy and one which needs the services of all the people who are willing to work. We must help the other member states to do the same.
Our presidency offers us the opportunity to make important progress. The continental members of the Community have accepted the Prime Minister's lead in the control of the budget and the reform of the common agricultural policy. I believe that they would also welcome a major British initiative towards the creation of the internal market.
I should like to say a few words about preparing British opinion for the consequences of completing the internal market. This is a job for the British Government at home. We talk about the internal market, but we have not yet prepared ourselves for what it means. It means that economic nationalism will become an obsolete and impossible policy. It will bring much greater efficiency, far superior exploitation of capital and more rapid technical advances, but it will also mean the amalgamation and rationalisation of old established industries.
In recent weeks we have seen the excitement that has been caused by talk of the rationalisation of this country's
378
motor industry. We have seen manifestations of a movement of opinion which has been interpreted as anti-American sentiment, or as a determination to keep our industries British, and to rebut amalgamation with the car industries of other countries. I do not think that British sentiment is anti-American or, for that matter, anti-Japanese; but British workers do not want to be dominated by people whose decisions are taken far away in a totally different economic context. We do not want to be dominated from overseas by people who do not have a very close relationship with the particular interests of this country.
Public opinion polls have already begun to show that British workers do not feel the same degree of suspicion where Common Market enterprises are concerned. The reason for this must surely be that they are beginning to feel a sense of community with the Common Market countries which we do not generally feel to the same extent with the Japanese or with the dollar countries. This, at bottom, if we analyse it, must be because we have the protection of the Rome treaty. The treaty is a highly detailed device for creating a market in which its members work together, instead of against each other's interests in forms of competition, which is unfruitful. It is a relationship which is far more precise and much closer than we in Britain could ever hope to achieve either with yen area industries or with the industries of the dollar area.
I have spoken at length, and the House has been indulgent, but I should like to make one last point. I regard it as an important recommendation for our presidency. We should seek to make the most of the Lome convention, not just because it is a link with our former overseas territories, but because the accession of Spain and Portugal means that we have the opportunity to suggest a widening or a fresh development of the Lome convention, so that more formal relationships can be established with the Spanish and Portuguese-speaking territories that lie outside the European Community. We need to put Government enthusiasm into creating a better understanding of and better relationships with these important economic areas.
I have said before, and I should like to repeat it, that we must look ahead to the influence which satellite television will exercise before very long in the context of the world economy. We may not understand this, but the Americans and the Japanese already understand it. They are making progress which will either leave us behind or leave us out of the picture altogether. I should like to see, as a development of the Lome convention, the production of regular tapes for educational purposes. They could be shown in English, French, Spanish, Portuguese and, for that matter, in Russian on a world wide basis in order to give people at home in their own institutes of education what we used to try to give them by bringing them to this country for technical training, language practice and training in other subjects. Those services would be building on the success of the BBC overseas service and the Open University. We have taken the lead in those areas in an English-speaking context, but we have not yet grasped the idea of putting a world university of the air into effect as part of the EC's relationship with the outside world.
I should like to see a conscious, deliberate move by the Government during their presidency to take into account the influence that we can have, now that Spain and Portugal are members of the Community, on the Spanish

379
and Portuguese-speaking territories of the world. This is an important EC opportunity to teach other nations how to live.
Let me conclude by wishing all success to our Ministers, who now have the duty to take the lead for six months in the running of the European Community.
8.10 pm
Dr. Norman A. Godman: We have listened to some grand and formidable compositions tonight. I want to follow the advice offered by the hon. Member for Stroud (Sir A. Kershaw) that in these debates we should occasionally wrangle over details of EEC decision making. That is precisely what I would like to do vis-a-vis the fishing industry.
I want to make a comment or two on the common fisheries policy in the light of what the White Paper and the Official Journal of the European Communities have to say. The White Paper devotes all of one paragraph to fisheries, an industry that is important to Scotland, particularly its more remote maritime communities. In that single paragraph the White Paper says:
"Under the common fisheries policy the European Community logbooks and Landing Trans-shipment Declarations were introduced on 1 April 1985. Along with the European Community's Fisheries Inspectorate they will help ensure that the common fisheries policy is applied equally and fairly to all Community fishermen and that member states observe TACs and quotas."
It is that equal and fair treatment of fishermen on which I want to comment.
Given the present circumstances of the common fisheries policy and the approval, albeit qualified, that it engenders among fishermen, it is now time to strengthen some elements of it in order to ensure the continuing viability of the industry and—the industry is dependent upon it—the continuing viability of the commercially important stocks.
Last night, during the Second Reading of the Salmon Bill, harsh words were spoken about the devastation inflicted upon salmon by interceptory fishing methods employing monofilament nets. I have a great deal of sympathy for those views, but at the same time I have some concern for the villains in that drama—villains to some hon. Members. They are the fishermen of the northeast of Scotland drift net fishery. We need European Community-wide measures to deal with that and other problems.
In addition to what was said last night by the Under-Secretary of State for Scotland, a statutory instrument was laid this morning—the Inshore Fishing (Prohibition of Carriage of Monofilament Gill Nets) (Scotland) Order 1986. It says:
"The carriage of monofilament gill nets for any purpose in any British fishing boat in the specified sea area"—
that is Scottish waters—
"is prohibited."
Apart from the friction and anger that that order and the Government's proposals in the Salmon Bill will create for the drift net fishery, it will also create in the fishing ports on both sides of the border some considerable tension. These are piecemeal measures within the EEC framework. The Government should follow the advice contained in the report of the Select Committee on Scottish Affairs on the fisheries protection service which was published this morning. Paragraph 77 says:
"The ban on monofilament will apply to all British boats in Scottish inshore waters. The SFF,"—
380
the Scottish Fishermens Federation—
"when questioned on this point, said that there was no opposition amongst its members to a ban per se, but there was strong opposition to a ban that affected only Scottish fishermen."
That legislation affects British vessels in Scottish waters, not the vessels coming into Scottish waters from other member states.
The Committee went on to say:
"The Committee sympathises with the Scottish fishermen. In our view, the strongest possible representations should be made to MAFF and to the EEC for a total ban in EEC waters. The banning of monofilament nets could well be an important move to help protect salmon stocks; but it should not be selective."
I hope that the House is given the opportunity to debate that report; at the very least, the Scottish Grand Committee should take it on board.
The report also has a sensible word or two to say about the vexed question of by-catches and the level of by-catches is again determined under the auspices of the common fisheries policy. The report says:
"The problem of by-catches by industrial fishermen has several facets. The permitted by-catch level is itself a matter of dispute. The permitted level returned to 10 per cent. at the end of May 1985; we were told that there was pressure within the EEC to raise the level to 18 or 20 per cent. again. There is to be no derogation from the 10 per cent. limit during the 1985–86 pout fishery."
The members of the Committee go on to say:
"We commend the successful outcome of the negotiations by UK Fisheries Ministers to retain the 10 per cent by-catch limit, and we hope that no attempt will be made by the European Commission or Member States to raise the limit in future years."
Let us hope that those member states opposed to an increase in the by-catch pay heed to that sensible observation and resist any attempt by the Danish Government to shift the percentage upwards. Such a move would be disastrous for the commercially valuable stocks of fish in the North sea.
The report also says:
"DAFS"—
the Department of Agriculture and Fisheries, Scotland—
"told us that they had arrested boats carrying both a 16 min and 80 mm net and had not experienced any problem in securing a conviction, but that they had nevertheless taken up with the Commission the question of banning the carriage of 80 mm nets on industrial boats".
On that important issue, the Committee says:
"We support the efforts of the Government to secure a ban on the carriage of 80 mm nets by boats fishing for industrial species. It is our view that no fishing vessel should be permitted to carry both types of gear at one and the same time."
Again, I hope that the Government and the House remain vigilant on those matters.
Conservation measures of the kind introduced into Scottish and English waters need to be extended through our European Community seas. That should be the objective of the House and the Government. In the meantime, I commend to the House the report by the Select Committee on Scottish Affairs. I am a member of that Committee and—I hope the House will forgive my modesty—one of the authors of what some would call a commendable report.
Chapter 6 of the annual report by the Court of Auditors for the 1984 financial year deals with certain aspects of the common fisheries policy. Dealing with expenditure on biological studies carried out by institutions in the European Community, the annual report states:
"The appropriations for biological studies, entered in Article 412 of the 1984 budget and amounting to 640,000 ECU, are intended to enable the Commission to obtain, by means of

381
specialized studies commissioned from external bodies or experts, the scientific information needed for the implementation of the policy for the conservation and management of resources."
I am not sure that that work is being done well.
The report states:
"Up to the end of 1984, contracts for biological studies were mainly concluded on the basis of proposals submitted by research institutes in the Member States. These studies should meet needs identified in advance by the Commission and set out in clear and precise terms; this has not been the case up until the financial year in question."
Replying to that criticism, the Commission stated:
"The Commission has decided to introduce a system of checking and, as far as possible, competitive tendering. The requirements will depend on the amounts involved."
In its defence, the Commission stated:
"In the fisheries sector, however, the specialized nature of the studies to be taken plus the geographical constraints severely limits the number of research institutes potentially capable of satisfying the requirements. Consequently, the Commission's choice is inevitably restrictive from the outset."
I believe that that is a weak defence of this poor method of controlling research.
The Commission should take a leaf out of the report by the Comptroller and Auditor General, entitled "Achievements and Costs of the Common Agricultural Policy in the United Kingdom". In regard to the poorly commissioned and inefficiently controlled research studies, it is worth pointing out that paragraph 45 states:
"While recognising the political problems involved in having (and indeed arriving at) precisely defined objectives, it seems to me that if greater attention were concentrated on the settlement of criteria and targets associated with the objectives, the negotiation of cost-effective measures to achieve them would be made easier."
I commend that advice to those who seek to commission research within the European Community.
Paragraph 6 of the White Paper refers to the need for a more co-ordinated system of maritime transport. In paragraph 6.6 we are offered some hope of a more equitable system of cabotage. I suspect that that is a vain hope, given the reluctance of some member states to make any concessions. The Minister of State, with her experience in another Department, will perhaps agree. The British coastal trade suffers badly in this regard. When will there be an improvement in community maritime transport routes and practices?
The importance of the fishing industry cannot be over-emphasised. For many Scottish communities, it is the only industry that can provide employment not only for the present employed generation but for the youngsters who are still at school. In the long run, if it is managed properly and efficiently, it will provide employment and a first-class food for the consumer long after the offshore oil and gas industries have been shut down. The House has an important duty vigilantly to monitor the decisions taken in Brussels on fishing operations in United Kingdom waters.
8.26 pm
Mr. William Cash: I find debates of this kind somewhat disappointing, because so few hon. Members attend them, yet this debate concerns a matter of great importance to our constituents. It has oscillated frequently between the Euro-fanatics and the Euro-haters. The Government's position is made more difficult by this polarisation.
Legislative and harmonisation programmes and the problems of agriculture, commerce and competition policy
382
are all matters upon which our legislation is firmly hinged on the European Community. People in our manufacturing and service industries are greatly affected, yet so little attention is paid to what is happening all the time behind the scenes.
I am a member of the Select Committee on European Legislation. This afternoon, that Committee had the good fortune to see my right hon. Friend the Minister of Agriculture, Fisheries and Food. I thought that it was important to ask him, in relation to his policy on Europe, whether we should adopt a sector by sector approach. The common agricultural policy takes up an enormous proportion of the Community's budget and directly affects farmers, including those in my constituency. I believe that the Government would like to help them, as I would. Farmers are greatly affected by overproduction, but opportunities to make alternative use of the land and to reduce the amount of nitrogen fertiliser used in farming are not being taken up.
It is all very well for us to complain that there is massive overproduction of food, but, in trying genuinely to help the farmers concerned, we should look at what we are doing in the European Community to help them. We should look through the mass of verbiage at the complexities of the market mechanism and consider whether wheat is grown in Duisburg and whether all the other factors are taken into account in determining target and intervention prices. However, when we consider everything, we are really talking about overproduction.
Why is there overproduction? There is overproduction, in part, because, according to the experts, there is too much use of nitrogen fertiliser. Instead of overly concentrating on the elaborate legal framework set up in the Community, we should ask questions, the answers to which will be of practical help to the farmer.
At present the Agriculture Bill is approaching Report. New clause 1 of that Bill includes several useful provisions provided by the Government. They provide that the farmer shall have services and advice available to him. I am sure that farmers will be extremely keen to take up that offer. However, it is no good providing such services and advice if, when farmers ask what they should do about overproduction, there is no opportunity for them to take advantage of alternative use policies because they are constrained by planning requirements from putting the land to alternative use. I urge those responsible in agriculture to consider such practical questions and, through consultation with the Department of the Environment, to find ways and means to alter the planning guidelines which were tagged on to the policies pursued in the mid-1970s. That will enable us to improve the rural economy, provide alternative land uses, such as forestry and tourism, and enable the farmer to maintain his income in practical terms.
I urge that we do not maintain the co-responsibility levy in connection with milk or cereals as is now being proposed by the Commission. I hope that the Minister will fight hard for the British farmer in that respect. I also urge the Minister to keep the beef variable premium scheme for which he fought so successfully last year.
The White Paper covers the question of the internal market and competition law. All of our commercial policy—the rows in the City about mergers, whether the City is ripping people off and the extent to which huge companies are entering into relations with one another and causing difficulties for the small investor and British

383
industry as a whole—is dependent on our applying competition policy effectively. Our competition laws are based on the treaty of Rome. At the eighth European conference on competition law recently, the experts clearly stated that competition policy simply was not working. If that policy is not working and we cannot apply it, it is not surprising that criticisms are levelled against us about the difficulties that are cropping up through mergers and monopolies in the City.
The same problem could arise in connection with financial services. I am a member of the Committee on the Financial Services Bill. We have not so far reached the competition policy provisions in Committee, but they have a direct bearing on how our economy functions. We must recognise that there are problems and consider whether the provisions of the treaty of Rome are working effectively for the benefit of the people of this country.
I tabled a question to the Minister concerned, asking if he would be good enough to examine whether, for example, regulation 17 could be revised. One assumes a glazed expression as soon as the boring and technical subject of regulation 17 is mentioned. I find the whole thing very boring, but the fact is that it is upon such legal principles that so much of our commercial policy operates. There is no point in pretending that problems do not exist. The Civil Service operates upon such regulations and our courts make decisions based on them. In fact, all commercial policy is developed on the basis of such regulations. If they are not working effectively, we must seriously consider how to improve and reform them.
Reference is made to science and technological research in paragraph 5.13 of the White Paper. At the risk of trespassing on a subject in which I have been involved for the past few years, I would ask those concerned to consider whether, under headings such as science and research, policies are being developed and directives formulated on human genetic engineering. In its own way that topic is as important, if not more important, than the atomic bomb. We must consider whether, by developing policies along these lines at European level, we are storing up serious problems, which we will later regret, for ourselves and for future generations.
In connection with external relations, trade and aid, I sincerely hope that the proposals for the new general agreement on tariffs and trade are successful this time round. This matter brings me back to the central theme that I developed on the question of competition policy. I hope that the people responsible for negotiating the GATT will come up with a practical proposal which will deal effectively with the Japanese problem and whether the Japanese are importing a sufficient amount of manufacturing products from other countries.
I have been to Luxembourg and Brussels recently and had the opportunity to discuss overseas development in relation to food aid with people in the European Commission and with the Court of Auditors. I returned very depressed about the poor showing in providing food aid to the countries which needed it during the emergency. I appreciate that there are difficulties and that there are no magic wands. However, when one examines the way the process developed, the Court of Auditors' report is worth reading. The reality is that the European Commission, for some reason or another, did not respond effectively enough. If we place the responsibility for handling such
384
matters in the hands of the people in Brussels, then I hope that they will come up with something rather more effective than occurred on that occasion.
I am not by any means anti-European in terms of political co-operation. One of the mainsprings of the European Community has been a desire to move closer to a sensible degree of political co-operation. By that I emphatically do not mean political integration.
The ideas raised this evening by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) about majority voting and federalism are extremely dangerous for this House.
Paragraph 13 of the White Paper deals with Parliament, and in two paragraphs it disposes of the work of the two Select Committees on the European Communities. Legislation and harmonisation have an amazingly important impact on how we conduct our affairs in commerce and in industry. There is almost total ignorance of the principles of law upon which these operate. Those responsible for organising the examinations in the Law Society and in other colleges of law should give a higher priority to examinations in European law and legislation. We have been a member of the European Community since 1973, yet these subjects are not even part of the normal curriculum for law students. That is an extraordinary state of affairs, given the impact of that law and legislation on our daily lives.
I wish to touch briefly on the Single European Act, which has been deposited in this House, and the cooperation procedure that will operate under it. The Minister kindly wrote to me when I asked a question about this the other day. I appreciate that the nature of the Act makes it difficult to give a precise answer, but one is left with serious worries about the way in which it will operate in practice and about the apparently significant increase in the powers of the European Parliament which will accrue at the expense of this House. I appreciate that the Council of Ministers can have the final say, but that is not the real world.
In reality, constant accretions of power exercised within the Council, subject to the co-operation procedure as it develops, are gradually whittling away the powers of this House in relation both to scrutiny and to the mariner in which legislation is devised. The fact that so few Members are present for this debate shows the difficulty that we face in this respect. When matters of vital concern to our constituencies are debated at a late hour or come before the Select Committee on European Legislation for scrutiny, without in any sense being anti-European we must ask ourselves whether we examine these matters sufficiently carefully to ensure that the system of law being devised is genuinely in the interests of those whom we represent. Is it not possible for those with responsibility in these matters to ensure that the Select Committee is able to consider prospective legislation affecting our constituents at the earlier "avant-project" stage when the working groups of civil servants who go to Brussels are considering these matters?
There is no doubt that under the new procedures a number of things will occur. For example, there will be an increase in the number of matters subject to majority voting, which will undoubtedly reduce the power of individual member states to put a brake on progress. if they are so minded, the other member states can cut short

385
attempts at negotiation and proceed to a vote, and that will have a significant effect on the way in which legislation affecting this House goes through.
It is also clear that, following the accession of Spain and Portugal, the position of the "big four"—France, Germany, Italy and the United Kingdom—has been reduced. Two of those four states will no longer be able to exercise a blocking power and the new Mediterranean bloc of Greece, Italy, Portugal and Spain will be able to exercise a major influence.
The first special report of the Select Committee on European Legislation shows one uncertain element at the centre of the whole question—the extent to which the Luxembourg compromise will operate under the new arrangement. There has been pressure to require member states to identify the very important interests that they seek to protect by invoking the compromise, but none of that appeared on the face of the Single European Act—nor could it do so, because, as the Select Committee pointed out, the compromise is not legally binding. In reality, however, because the compromise currently lies at the root of the way in which voting takes place, which is the basis on which we determine whether to insist on unanimity or go to majority voting, the question of whether the arrangements under the Single European Act will necessarily be in the interests of our constituents is vital.
Finally, although some of us take a pragmatic and, I hope, practical view of progress in the European Community and are in no sense anti-European, we wish to ensure that when legislation goes through this House it is properly scrutinised so that, when we have to answer to our constituents for the decisions taken in their name, we can give reasonable answers to the questions that they reasonably ask about the legislation that goes through. I therefore ask that great care be taken to ensure that the procedures under the Single European Act are truly in the interests of our constituents and that, when making procedural changes in this House, we ensure that the scrutiny procedure really works in a way that is both fair and reasonable to those whom we represent.
8.46 pm
Mr. Nigel Spearing: The reference to "decisions taken in their name" was one of the most important aspects of the comments of the hon. Member for Stafford (Mr. Cash) because one such decision was taken in the name of the British people when the Minister of State signed the Single European Act on the royal prerogative. I do not think that the hon. Lady is yet a member of the Privy Council, but I make no complaint about that.
I am grateful to the Minister of State for her remarks about the Scrutiny Committee, of which I have the honour to be Chairman, and I apologise for not being present at that time. My absence was perhaps a symptom of things to come, in that it was the timetable of the European Council and of this House which prevented some Members from being present at that time as we were listening to evidence from the Minister of Agriculture, Fisheries and Food at a meeting arranged some weeks ago. But more of that anon. The Minister of Agriculture also take decisions for the people of this country, although he and the House have lost control over British agricultural policy— indeed, there is no longer any such policy.
386
I referred earlier to the prerogative of the Crown. We are now discussing, with other developments in the EEC, an Act which was signed by Her Majesty's Government unwillingly, as the Prime Minister told us when she went to Milan last June. I wonder when a Government last invited the House to ratify a treaty that the Government had signed unwillingly. I can think of no context in which that would have been possible in the past.
Mr. J. Enoch Powell: The Anglo-Irish agreement.
Mr. Spearing: That may be true, although there was a majority in the House for it, but the right hon. Gentleman will at least agree that that related to the British Isles and not to mainland Europe.
The assumption about the royal prerogative in signing treaties was, ever since the Labour Government of 1923, that nobody's Government would sign a treaty which could not command the majority of their own party. That was, as it were, taken as read.
When the Ponsonby rules were adumbrated, they said in effect that a treaty would lie on the Table, as a statutory instrument might, for some 40 days. If it was not prayed against or voted against it was deemed to be ratified. The Minister may go into greater detail on this but she and other Ministers have kindly said that our ratification procedure will not be of that type for this particular treaty. It will be subject to further legislation. We can be grateful to that extent. However, the right hon. Member for South Down (Mr. Powell) was right when he asked in what way we can actually scrutinise the terms of this treaty— which runs to 77 typewritten pages, some not full—and which is legislation by reference and changes the treaty of Rome.
In effect, that means changing the written constitution that exists in the United Kingdom. One might say that there is no written constitution; indeed, that is one of the things which people are taught in history. In practice, however, we know that it is not true. The written constitution of this country consists of a whole number of written documents. I believe that the Standing Orders of this House are one such document and the mysterious documents circulated by Prime Ministers inside the Executive may be another. It also includes a number of other Acts of Parliament such as the Representation of the People Acts, and the Quinquennial Act. These documents are all bound together by a series of understandings, custom and practice. That is our constitution plus the treaty of Rome.
The treaty of Rome is to be substantially amended by the treaty which has been the subject of discussion tonight. As the preamble has not been read this evening, I shall do so:
"Moved by the will to continue the work undertaken on the basis of the Treaties establishing the European Communities and to transform relations as a whole among their States into a European Union, in accordance with the Solemn Declaration of Stuttgart of 19 June 1983. Resolved to implement this European Union on the basis, firstly, of the Communities operating in accordance with their own rules and, secondly, of European Cooperation among the Signatory States in the sphere of foreign policy and to invest this Union with the necessary means of action".
That is the preamble to the treaty. It is important to study some of the facets because they will make a great deal of difference to how this House keeps track of legislation and other developments which are continually going through the European system.

387
That system is complex. Many hon. Members present will know that, when listening to informed speeches such as that of my hon. Friend the Member for Walthamstow (Mr. Deakins) it is difficult to follow the labyrinthine constitution which has arisen. Indeed, I would suggest —the Minister may know this for herself—that unless one has been involved with these issues for perhaps the past 10 years and has organically developed with this tangled mass of interlocking growth, it is almost impossible to understand it, no matter how many lectures one might attend.
The greatest change occurs in the way in which legislation is created. It means a change in the scrutiny and oversight of this House, of how Ministers behave or of how, to refer back to the text given by the hon. Member for Stafford, "decisions made in our realm" are carried out and the way Ministers are accountable. The work of the Scrutiny Committee—recently committed to the House —will probably be changed by the changes in the treaty, if they are effective. It is up to the House to decide whether changes in our constitution are made.
The Danish people had a referendum on this matter only six days ago. It is true that they decided—not by a big majority—to go ahead with these changes. However, the referendum showed that there was a major divison of opinion in that country, just as there has been a difference of opinion in Britain on the main question.
Mr. Deakins: Does not a difficulty face any country with a written constitution—how those changes should be put to the Parliament or assembly concerned to represent the opinions of the people? We are faced with a difficulty which does not face countries such as the United States which have a written constitution. In the United States they consider constitutional amendments individually and can discuss them in great detail. In Britain we have to consider amendments en bloc and have no opportunity to consider them in detail; nor are we able to accept this or reject that. We have to accept or reject them all at one stage.
Mr. Spearing: Yes, that is one of the disadvantages of the way in which our constitution has arisen. It is based on an assumption that the Crown would not give away power. It also assumed that nobody would go against the Act of Praernunire—that is to give prior allegiance to another sovereign power. They are the assumptions on which our constitution rests. Thus, in respect of EEC legislation, there are difficulties which have been pointed out by my hon. Friend.
I do not wish to be partisan. It is clear that there are different views about how the EEC should operate. The hon. Member for Kensington (Sir B. Rhys Williams) made it clear that he wants progress towards a United States of Europe. I do not think I am doing him any injustice.
Sir Brandon Rhys Williams indicated assent.
Mr. Spearing: Indeed, he nods his assent.
However, that is anathema to other hon. Members. In the discussion of this Act and the changes in the constitution there is a continual difference of emphasis between the people who take those views. I suggest to the Minister that even among people of differing views there is a fundamental common interest, that democracy, whether on a United Kingdom or pan-European level—which the hon. Member for Kensington wishes to see—
388
is effective, efficient and seen to be democratic and is understood by the people whom it seeks to sent. When "decisions" are made in their name, whether at national level or at pan-national level, as with the EEC—it is not federal—they are understood and there is a chain of accountability which commands confidence. That view will bridge all opinions in the House, including the hon. Member for Kensington and even the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). Public life and democracy demand confidence and transparency. Without them, the quality of democracy falls apart, just as rotting cement will cause a building to fall.
I should like to consider the change in the new article 149. At the moment, the House can examine documents and proposals on a proposal from the Commission, and anything to do with the internal market or harmonisation requires unanimity. As has been said, that will be changed to a qualified majority. We shall therefore get more harmonisation a la the Cockfield Green Paper, and it will come more quickly. Moreover, it will be more difficult for the Government to hold up 'those proposals if that is to the national advantage.
Of course, there is always the so-called Luxembourg agreement, but I think that, the Minister will agree that there are moves afoot—they may be right—to see that it is used in a less liberal way. Perhaps there are written orders. If one uses a dangerous weapon such as that agreement too often in the wrong way, it may become a little blunt. I suspect that we shall have more harmonisaiton, which it will be more difficult to keep track of.
Sir Anthony Meyer: This is all getting very muddling. I assume that the hon. Gentleman is talking about the traditional Luxembourg compromise and not the agreement that was recently reached there.
Mr. Spearing: The hon. Gentleman is quite right. I was referring to the historic non-agreement.
Sir Anthony Meyer: The agreement to disagree.
Mr. Spearing: The second feature of legislative change will be the insertion of a second round for some legislation. Hon. Members will be aware of what can happen. Instead of the Council trying to change a Commission proposal by sending it back, whence it will return in revised form, if the Council does not agree with what the Commission says, having obtained the opinion of the Assembly/Parliament, it has to produce what is called "a common position". That phrase appears in the treaty. The "common position" is passed to the Assembly/Parliament, which can amend it or reject it by simple majority. If the Commission receives an amended "common position", it puts a new proposal before the Council of Ministers, which can be passed by a qualified majority. If the Assembly/Parliament rejects the "common position", the Council can only insist by unanimity. That means that the House and the Scrutiny Committee will be faced with a second round, which I think I will call a second reading, for some legislation, including that relating to harmonisation and achievement of the internal market, which has aroused some of the greatest controversy.
The Select Committee said in its report that there could be difficulties, as there might be more, longer and possibly more acrimonious debates in the House. Moreover, the

389
decisions might be more difficult for the Government as the pace of harmonisation could well increase. There might not be a single proposal. We all know that, in the EEC—I shall not say that it does not happen elsewhere —there is linkage to produce a package proposition. One considers the whole and cannot distinguish between the parts. That is one of the least satisfactory features of what is going on.
If the EEC is to work properly in the next two or three years, we want proper partnership and co-operation. I am anxious to carry the hon. Member for Kensington with me. One of the distinguishing features of a healthy and proper partnership is that one of the partners can say no, knowing that it will not be penalised. I am afraid that, as I understand it, all too often in EEC affairs a partner says no at its peril, whatever the merits of the issue.
Sir Brandon Rhys Williams: Is not the great danger that some other member will say no and that Britain will be penalised? We need progress with the Community. If other member states can block it, we may suffer the worst.
Mr. Spearing: The hon. Gentleman may be correct. However, there is an opportunity for blocking—it will be reduced to some extent; although some people believe that a reduction in the power to block is progress, other people take a different view—which I think is one of the inherent problems in the EEC. Its ambitions in terms of integrated Common Market harmonisation, whatever their merits, are so politically ambitious when one is faced with the vested interests, proper or improper, spoken or unspoken, which will prevent that, the whole machinery, good or bad, falls into disrepute.
I suggest that we shall see a new phase in the life of the EEC if this treaty is agreed. It will make life more difficult for this House, particularly in keeping up with legislation, because there will be more of it, it will move faster and it will be further away from the control of this House, and therefore from the people. I will not dwell on this at length, but that includes the creation of what some people will dub a European foreign office, which is now a treaty obligation.
There will be an obligation for consultation at every level and an obligation to have an EEC party group, if I can put it like that, inside every international organisation or conference where members of the Community are present in any number.
Therefore, we will find that most of the features on which we have prided ourselves through the ages, such as being a sine qua non of a Parliament and parliamentary democracy, will be diminished. We know that those features are legislation—the power to appoint judges, the power to tax and the power to control expenditure. There are other criteria but those are the primary ones. In respect of legislation, we know that we will now share it more and more and, for the first time, an Assembly which is not of this country will have a hand in originating legislation which then becomes binding on every citizen.
We know only too well from some dramatic examples in the past fortnight and exchanges across the Floor of the House, indeed even in statements from the Government, that the ruling of the European Court, whatever its merits, will be of increasing importance in this country. We know that our own courts have increasingly, formally or otherwise, to refer cases to the court of the EEC.
390
We still have, just about, the power to determine maximum levels of taxation—1·4 per cent. of VAT and so on. However, I suggest that we have largely lost control of the EEC's expenditure. It is true that we may not be too great on that inside the United Kingdom, but the Government are accountable and may be broken by the House. Therefore, when we passed greater powers of taxation to the EEC we did it, did we not, on the understanding that there was budgetary discipline? Some hon. Members have already said tonight that all the signs are that it will not bite in the year when we thought it was going to bite. It is becoming increasingly clear that in 1986 there will not be the budgetary discipline which the House was promised as one of the conditions of its voting extra money.
Therefore, if all those factors come together and if the House approves the Single European Act, we will be in a completely new phase of the EEC where it will accelerate and widen the ambit of its competence, not only to help the environment and other things of that sort, but in terms of a European foreign policy.
About 12 years ago, at the time of the great debate on the subject, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) said that the position of the Queen would not be affected. I do not think that the right hon. Gentleman understood some of the basic constitutional principles on which the country has evolved. That is perhaps a charitable view, and it may be a startling view for someone who was then Prime Minister of our country. The position of the Queen, or the monarch, was not affected as much as the position of the Crown by the decision in 1973. It will be further affected if the Single European Act is approved by the House. Until that date, it was the Crown, in one form or another, which approved legislation, appointed the courts, and, in Parliament, was the highest point of appeal in the House of Lords. It also decided the level revenue of taxation.
That was not so on 1 January 1973. The power of the Crown in those matters, and so the power of the British people themselves, was diminished. I suggest to the House that if the Single European Act is ratified, it will be diminished further.
9.11 pm
Mr. George Foulkes: I join my hon. Friend the Member for Hamilton (Mr. Robertson) and the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) in congratulating and adding my welcome to the Minister of State, who has joined our debates as well as the foreign affairs Front Bench team. I was going to say that the British motorists' loss was the Europeans' gain, but I thought that it might be taken the wrong way, so I shall confine myself to welcoming the hon. Lady.
In my reply I shall have some difficulty in living up to the billing given to me by my hon. Friend the Member for Hamilton, but I shall do my best, because, unlike the hon. Member for Stafford (Mr. Cash), who was a bit disparaging about the debate, I thought that it was unexpectedly interesting in several ways, and quite worth while. I was not expecting some of the comments and contributions that we have had. I accept that it has not been an exciting debate, but it has been interesting.
I should like to ask the Minister some questions. I hope that I shall receive some answers tonight, but, realising that this is a complicated issue, I shall understand if I do

391
not. The Minister and I are becoming regular correspondents—[Interruption.] "Letter writers" might be a better phrase to use. Perhaps we can continue our letter writing on the points that the hon. Lady cannot answer tonight.
In the short time available to me, I hope to get down to the essentials of these complex matters. I sometimes think that the jargon, the Eurospeak and the gobbledegook that surround this area are designed as deliberate obfuscation by the Eurocrats, so that we know little about what is happening, and so that they can get on with things, and we remain without knowledge and understanding of what they are up to. I think that some of them like to keep the public and Parliament in ignorance of what is going on in the Community. I hope that part of our job is to try to sweep that away.
The right hon. Member for South Down (Mr. Powell), as usual, made some excellent points about the Single European Act. We now understand why it is called that. It is not a singular sensation for the House. However, it would be helpful for us to know how the Act will be considered by the House. I know that to some extent that is a matter for the usual channels and the Leader of the House, but obviously the Foreign Office is involved. When will we get it? Many Conservative Members, some of whom have not been here today, are anxious to know. The Minister said that it would be within three months. That is a fair leeway. I hope that it will be in the earlier part of that period. When we get it, what will the procedure be for its consideration? It is important to know whether we can amend it.
Many comments have been made about the useful report from the Scrutiny Committee. I should like to pay tribute here, as I do informally on other occasions, to my hon. Friend the Member for Newham, South (Mr. Spearing) for the work that he does. He is extremely valuable to my hon. Friend the Member for Hamilton and myself.
The major point that I want to make is to endorse on behalf of the Opposition the recommendations in the report on the need for greater parliamentary scrutiny of all the matters that come to us from Europe. As the hon. Member for Stafford said, whether they have been traditionally pro-European or anti-European, all lion. Members are anxious for greater accountability. Even in 1984 the Scrutiny Committee said that scrutiny was inadequate. It is clear from the present report that there will be more proposals to be examined. Because of majority voting, the House will have to debate major issues much earlier than it did in the past, and the British Government will not be able to hold up decisions of the Council of Ministers pending a debate in the House. For those reasons, scrutiny becomes even more important.
Even in 1984 the report of the Scrutiny Committee was already critical of the Government's attitude to scrutiny. As my hon. Friend the Member for Hamilton said, it pointed to major changes which had been agreed by the Council of Ministers before we had had the opportunity to debate them. I am thinking, for example, of ESPRIT and of the new arrangements for the regional development fund. Both those who are for and those who are against Europe think that it is wrong that changes should be made before we have had an opportunity to discuss them.
I hazard a guess that the United Kingdom is among the poorest, if it is not the worst, of the European Parliaments in its arrangements for scrutiny. It has already been said
392
that within this Parliament the House of Lords does a better job than we do. The House of Commons is woefully inadequate in carrying out scrutiny. My hon. Friend the Member for Hamilton said that I would try to put forward proposals. I shall not go that far, but I shall suggest some points which may be taken into account by the Government, especially as they have said that they will accept the Opposition amendment.
Statements to the House after meetings of Ministers have to be drawn from the Government like rotten teeth. My hon. Friend the Member for Hamilton is on the telephone regularly to the Foreign Office asking for statements. I am referring not just to Foreign Affairs Council meetings but to important meetings of the Energy Council and the Environment Council. When matters of importance are on the agenda when decisions are being made or when consideration is undertaken on our behalf, it should be a natural course to have regular reports to the House. If that means that time for other debates is squeezed, consideration must be given to another way of dealing with the statements. I shall come in a moment to the suggestion of a Grand Committee—
Mr. Deakins: Does my hon. Friend agree that, in addition to having more oral statements, we should revert to the procedure whereby there was a separate slot of 20 minutes in Foreign Office Question Time for oral questions on European Community matters?
Mr. Foulkes: I am grateful to my hon. Friend for mentioning that. That was to be my fourth point but I shall deal with it now.
I do not want to criticise anyone. We ought to look at the arrangements for European questions, but we should do so without taking any time away from foreign affairs. Today, for example, questions were raised about South Africa, the middle east and the Falkland Islands, and an hour a month is not a great deal of time. We should therefore consider the possibility of having a separate Question Time for European matters, because today there were no questions at all on the EEC.
Sir Anthony Meyer: Perhaps the hon. Gentleman will recall that when we did have EEC questions hon. Members were allowed to table only questions that related directly to the Foreign Office, whereas one wanted to table questions relating to all European activities. That was the great defect of that 20-minute slot.
Mr. Foulkes: I accept that. That is why I said that I would have difficulty in living up to my billing. I am not trying to be definitive. I am merely trying to point to the way in which the Government ought to examine this matter.
Sir Russell Johnston: I thought that the Labour party was active in taking Europe out of foreign affairs questions. In the negotiations, I was certainly opposed to the idea.
Mr. Foulkes: It was agreed as an experiment, and I am sure the hon. Gentleman agrees that foreign affairs questions require a lot of time. The subject covers the whole world, and quite often certain issues are not covered.
Our one Scrutiny Committee is overwhelmed by paper. I do not criticise it in any way, because it does a

393
marvellous job. Perhaps we should look at the House of Lords or at the possibility of having more Scrutiny Committees.
There is also the possibility of setting up a European Grand Committee, which might have a separate Question Time, to deal with statements and consider European business. I know that there are problems about that, and I am not advocating it. I am merely saying that these are some of the things at which the Government should be looking.
I also hope that we will look at other national Parliaments in Europe. I think that we can learn from our European partners and from their parliamentary set-ups. Having accepted the amendment, I hope that the Minister will tell us how the Government will consider this matter, and how Parliament will be allowed to consider any report that they make.
Having dealt with scrutiny as a principle, let me refer to some of the issues that we are scrutinising today. The Government keep stressing the blue-eyed concept of the internal market, about which they seem to be star struck, but the implications have not been spelt out. This is a very important development, but the House has not had the opportunity of dealing with it.
There is the proposed common market in banking and insurance and the liberalisation of financial services. What does that mean in relation to control over the City and Lloyd's? There will also be changes in public procurement policies. What does that mean in terms of safeguarding United Kingdom industries? There will be European directives on radio and television—not, I hasten to add, that that will mean "Coronation Strasse" for the Germans —[Interruption.] I thought that hon. Members might moan at that. The development of satellites raises some very important matters. What effect will that have on the Bill of the hon. Member for Davyhulme (Mr. Churchill)? There will also be the harmonisation of competition policy, including mergers. What effect will that have on the current merger mania that is under way in the City?
I have tried to obtain some answers from the Government. I tabled a question to the Secretary of State for Trade and Industry asking about the effects of the European internal market on the structure of British industry, the level of employment in the United Kingdom, the level of British exports to the EEC, the level of British imports from the EEC, the balance of payments and the rate of growth of the British economy. That gave the Minister for Trade an ideal opportunity to spell out what the internal market means. He said:
"Progress towards completing the internal market will be one of a number of factors influencing the development of the British economy. In general, removing barriers to trade within the Community should further increase our trade with other member states and reduce costs to business. It should, therefore, help to stimulate increased efficiency in the use of resources and accordingly encourage growth of the economy."—[Official Report, 24 February 1986; Vol. 92. c. 422.]
Where have we heard that before? It is not an answer to the question. I hope that the Minister will make the position clear.
The Government's views, as we understand them, seem to differ from those of other countries, which believe that the international market will require harmonisation of VAT, which causes us great anxiety. Does it mean that? The Minister shakes her head, but Jacques Delors, Lord
394
Cockfield, and others seem to think that. Why cannot we have a White Paper on the effects of some of the proposals? We get parliamentary papers of one kind and another on less important issues, yet these matters are not spelt out for Parliament and the people.
Another area for scrutiny is the budget and its overrun. During the six-month period that we are considering, a supplement of £120 million was requested, as my hon. Friend the Member for Thurrock (Dr. McDonald) will remember. We had to agree to pay our share of a £1·1 billion non-refundable advance. Soon the Community will run out of euphemisms for the money that it keeps asking us for. Although the limits on agricultural spending for 1986 were agreed only in June 1985 and the new budgetary discipline—that sounds good and rigid—was to be invoked in 1986, in the first year of their operation agricultural expenditure will break the limits. Yet the Government said that the great control was a major achievement and would be effective. Indeed, they said that they had agreed to the increase in own resources only because there was to be effective control and, preferably, legally binding control. They have now forgotten that, and the ceiling has been broken in the first year.
In The Scotsman recently, Mr. Andriessen, the farm Commissioner, is quoted as saying that surpluses are a time bomb. The headline was:
"EEC may seek £450 million supplement to budget."
The Council spokesman, Mr. Junker, said in December that there would be a supplementary budget by the end of the year. May we have a categorical assurance from the Government that they will make no further requests for loans, non-refundable advances, or whatever they are called? The Minister must answer that question, which Labour Members have asked previously. We have the discipline, and if it is effective, there is no need for additional funds. Indeed, if it is effective, the Ministers should be using it to effect and we should have no further requests.
We in the Labour party are demanding fundamental reform of the common agricultural policy. Price freezing is not enough, as Mr. Andriessen has made clear. The system itself must change. We must have an end to a system which allows the EC to dump subsidised produce on world markets, causing great harm to developing countries. The latest inequity is dumping under-priced sugar in Jamaica. The EC is undermining the economies of Third world countries and making it more difficult for them to pay their debts.
I have been fairly critical of some areas, but I should like to welcome one aspect. Perhaps some of my hon. Friends will disagree with me, but if they consider the matter and understand fully the implications, they should welcome co-operation on foreign policy. But we must know how the secretariat will operate and where it will be sited. I understand that it will move with the presidency. We would welcome joint foreign policy co-operation if it meant more effective co-operation on South Africa and if it forced the Government to impose stronger sanctions on South Africa, as our European partners wish. We would welcome it if it meant that the European Governments could persuade the British Government to join the condemnation of American aid to the Contras in Central America. Indeed, Congress is considering further aid to the Contras to undermine the duly elected Nicaraguan Government.

395
Finally, I should mention the "people's Europe". The people who I meet in Dalmellington high street do not think that the internal market is a major priority. They do not talk much about it when I meet them on the street. They do not say how marvellous it would be if United Kingdom banks and insurance companies could sell their wares to other European countries. However, they are worried about unemployment. In my constituency there is 28 per cent. unemployment. In the Community 14 million people are unemployed—nearly half of them young people—and their despair, despondency and anxiety cannot properly be understood by anyone in the House. School leavers have a less than 50 per cent. chance of obtaining jobs, although, to give it credit, the Commission is proposing joint reflation.
Will the Government take the opportunity of their presidency starting on 1 July to advance a strategy of cooperative growth to reduce unemployment? Will they give more money to ESPRIT, EUREKA, the social fund and the regional fund, which would also help to reduce unemployment? The Minister will not give us that answer tonight. I assure the House that, after the next election, when the Labour party is returned to office, we shall use the mechanisms of the Community to ensure joint reflation among the increasingly Socialist Governments of Europe. Our priority will be a reduction of the appalling unemployment.
9.32 pm
Mrs. Chalker: With the leave of the House, I thank hon. Members for their kind remarks and for their welcome to this maze of a Community debate. It has been a long debate covering more than the documents before us. There were many ideas and misconceptions, and I am sorry that I shall be unable to comment on everything that has been said in more than five hours of detailed debate, with questions from hon. Members on both sides of the House. A few moments ago, I thought that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) wanted, instead of a system of filibustering, a system of Eurobustering. That might be even less workable than the unsatisfactory system that we have now, but which we are trying to change for the better.
We have heard three sorts of contributions to the debate. Some hon. Members were highly critical, and we share some of their criticisms. Others were anxious, and some were forward-looking. My hon. Friend the Member for Kensington (Sir B. Rhys Williams) made some especially ambitious remarks. I should make two general points to those who were highly critical and anxious. In 1972, the House decided to join the Community. In 1975, the Labour Government conducted a referendum in which that decision was endorsed. Since then, we have been through a difficult process of accession—the most recent being that of Spain and Portugal. With two major allies making the decision to join us, we know that they, like us, consider the economic and political growth of the EC to be tremendously important.
Of course, there are problems with the essential workings of the Community. There is no way in which a Community of 10 or 12 would not have such problems, and we shall not be satisfied until we achieve better working methods and better scrutiny, as I have already told the hon. Member for Newham, South (Mr. Spearing), whose Select Committee has done such a good job.
396
Over a long time we have frequently experienced irrational results, but that must not mean that when things go wrong we should sit back and refuse to look at possible solutions to making the European Community a better and more workable institution. The length of time that it takes to consider many parts of European business is a problem. Coming to this matter from the Department of Transport, I am reminded of the average timetable from the inception of a road to putting the first vehicles on it, which is 13 years. There have been long-drawn out considerations but now, having had progress bedevilled for many years and after hard work in a number of Committees in past years, we have the Single European Act, which is an important step forward.
I shall try to go through the fears and anxietes expressed by a number of hon. Members, because I understand some of them. Other hon. Members have been more positive. I listened to the speech of the right hon. Member for South Down (Mr. Powell), as always, 'with respect. He is an authority on constitutional law, but I fear that his obsession with a narrow interpretation of national sovereignty is misguided. Every international treaty can be interpreted as a diminution of national power, in so far as it limits freedom of independent action, yet, inevitably and rightly, we have entered into treaties because we believed that the benefits of combined action at international level outweighed the theoretical limitations on our sovereignly. NATO is one such example, and political co-operation is another. We live in an international world, not a national environment that automatically seeks and abides by boundaries. The Single European Act acknowledges and gives form to the excellent and useful practices that have developed.
The hon. Member for Newham, South said that we were asking the House to approve an agreement that the Government had signed unwillingly. He rightly pointed out that in Milan we argued against an intergovernmental conference because we believed that the improvements that all member states recognised to be necessary could be achieved by other means. But once the decision was taken to hold a conference, the Government's main concern was to ensure that the outcome was one with which we could willingly agree. That is what happened, and that is why, on 17 February, I signed the initial stage in the process.
I have been asked about the nature of the legislation that follows from the Twelve having signed this agreement. The House will have a formal presentation—not going through on the nod—and a full opportunity to debate the matter. As my right hon. and learned Friend the Foreign Secretary made clear in the House several weeks ago, we shall introduce a Bill to amend the European Communities Act. The issues raised by hon. Members tonight can be aired on Second Reading and no doubt in Committee, on Report and on Third Reading.
Mr. Foulkes: When?
Mrs. Chalker: I wish that I knew the date on which the Bill will be introduced, for it would make my diary planning easier. I can say that it will come up within the next three months. The Bill will then pass on to the House of Lords.
The right hon. Member for South Down misunderstood what I said in my opening remarks about the co-operation procedure involving the European Parliament. There are no circumstances in which the European Parliament can

397
cause decisions to be taken by a qualified majority that would otherwise be taken by unanimity. It is true that if the Commission incorporates amendments to its proposals, they can be further amended only by unanimity. That, however, is a feature of the existing provisions of the treaty, under article 149. So no change in the existing constitutional balance is involved.
The hon. Member for Newham, South asked about the extension of European Community competence on foreign policy. The treaty provisions in the sphere of foreign policy are entirely separate from Community treaties. There is no extension of Community competence. The treaty leaves us free to maintain, where necessary, a separate position. That we shall do, where necessary.
The hon. Member for Walthamstow (Mr. Deakins) asked whether there would be further intergovernmental agreements. He knows that this is an own resource decision. It neither provides for nor excludes further intergovernmental agreements. Such an agreement would be proposed only if the 1·4 per cent. value added tax ceiling were found to be inadequate to meet proposed expenditure. That is not the position now. Unanimity in the Council would be required if a proposal for an intergovernmental agreement were to be put forward. We could not proceed without it.
Mr. Terence Higgins: Will my hon. Friend give way?
Mrs. Chalker: I apologise to my right hon. Friend, but I have many questions to answer.
Mr. Higgins: Could my hon. Friend just confirm—
Mrs. Chalker: No, I shall not give way, because the time in which I can respond to all the points that have been made in this debate has been very severely clipped.
I was asked about the breach of financial guidelines. The 1986 budget is within the financial guidelines. However, recent developments, particularly the decline in the dollar-ecu rate, have led the Commission to say that it will need to seek a provision within the supplementary budget, which will be needed later this year anyway to cater for the expected increase in the United Kingdom's abatement. If we cannot get our abatement without a supplementary budget, then, for the sake of Britain, I am in favour of a supplementary budget. It depends upon the outcome of the price fixing. It would be idle to pretend that we can insulate ourselves from the effects of exchange rate movements. That is not possible.
The hon. Member for Walthamstow also asked about the budgetary powers of the European Parliament. Since the call-up of revenue in the Community is the product of expenditure decisions, the actions of the European Parliament have revenue implications. One cannot get away from that; we are dealing with the two sides of the balance. That is one of the reasons why the Council has decided to take the European Parliament to the European Court of Justice. The point is therefore covered in the Council's challenge. Our national case is that we are challenging the European Parliament's power unilaterally to set the level of the budget as a whole. Other nations are doing the same. I shall look at what the hon. Gentleman said about taking up the matter in another way.
The hon. Member for Walthamstow also suggested that we should give consideration to a preliminary ruling from
398
the European Court of Justice under article 177 about the validity of the European Parliament's actions. I shall need to check that, but I understand that article 177 allows for preliminary rulings on points of European Community law that are raised in proceedings before national courts, not before the European Court of Justice. If that is the case, the proper way for us to challenge the European Parliament's decision is by direct action in the European Court of Justice. That is exactly what we are doing.
Several hon. Members referred to the budget. Of course we are concerned about the cost of the budget. However, it is unrealistic to expect there to be no net cost for member states such as Britain, which has an above average gross domestic product. We should expect to contribute to policies from which we benefit. Whereas, before Fontainebleau, we contributed at a level which did not reflect our relative prosperity, our contribution has now been established on a fair basis. Following Fontainebleau, the Federal Republic of Germany makes a net contribution three times as high as ours and France's net contribution is broadly on a par with ours. As a result of the two thirds abatement that was agreed at Fontainebleau, the rebate that we receive from the Community has doubled in two years from £440 million in 1984 to £605 million in 1985, and the estimate is that it will be £900 million, or more, in 1986.
In view of the remarks that have been made tonight, and also because I believe it to be vital, I need to address a fundamental problem that underlies so many of the Community's anxieties—the common agricultural policy. No one disputes the contention of several hon. Members that the costs of the CAP are too high. What is questionable is whether some of the simple solutions that have been suggested would have the effects that have been claimed for them.
The recent report of the Public Accounts Committee, House of Commons Paper No. 71, rightly pointed out that the objectives of the CAP are broadly the same as those of the Agriculture Act 1947 passed under the then Labour Government. The balance between achieving security of supply and reasonable prices to consumers has always been difficult to achieve, and the faults of the CAP are reproduced in most national schemes—not simply in Europe, but in other parts of the world as well.
There is no magic solution, save to those who would offer no support for agriculture, thereby putting at risk the security of supply, the working population involved in agriculture and the 80 per cent. of our land mass which is rural. The Community has not funked the issue of reform. Again, as the Public Accounts Committee reported, over the past four or five price fixings the price of wheat has been reduced in real terms by about 12 per cent. What makes the achievement of reforms at once necessary and difficult is the fact that technological improvements have led to a parallel growth in productivity. I shall be looking at the remarks made by my hon. Friend the Member for Stafford (Mr. Cash) who was obviously concerned about the productivity from the land today.
We cannot duck the fact that farmers have benefited from technological change, particularly in the cereal sector where one quarter of the surplus stocks in intervention are accounted for by United Kingdom production. We need no sudden about turns, but a sustained programme of reform. As a result of the Government's policies, we have achieved price reductions in real terms in six out of the last seven price fixings.

399
This year the Commission's price proposals are for a 4·1 per cent. reduction in real terms which, with its other reform measures, amount to savings of 408 million ecu in 1986 and 786 million ecu in 1987. That would be equivalent to a real terms price reduction of 7 per cent., and that is the direction in which we should be going.
The hon. Member for Walthamstow asked about the use of the German veto on the CAP and subsequent action by the Commission. There was no question of the Commission unilaterally implementing price cuts. Based on its own powers, the Commission managed the market arrangements and the timing of the intervention arrangements to achieve savings in costs, particularly in cereals. That is completely within its powers. I should have thought that the savings in costs were exactly what hon. Members wanted. Therefore, if it was possible by management, we should not decry it.
The hon. Member for Hamilton (Mr. Robertson) was worried about European Community White Paper debates. White Papers on Community developments have been a regular six-monthly feature since 1974. Debates on them in the House are usually held within three months of publication, but on this occasion that was not possible. The White Paper before us, as everyone knows, was published in September, but at the end of last year the House gave its attention to several major Community matters, including European Community Finance Bills and various EC budget documents, as well as the European Communities (Spanish and Portuguese Accession) Bill. That was all in the last two months of 1985.
Against that background I hope that hon. Members will agree that there was no lack of opportunity, but I assure Labour Members that I will do my level best to persuade my right hon. Friends that we should have debates within a reasonable time.
The hon. Member for Hamilton also asked about a White Paper on the projected benefits and implications of the internal market. It has not been the practice to publish White Papers on such matters. The proposals have been made available to the House and we have had several opportunities to debate them. However, it would be pointless to keep publishing projections. That is the sort of thing that centralised economies go in for. The hon. Gentleman gave us an interesting example earlier in the day when he told us that he had had a five-hour briefing in Moscow from President Gorbachev. We prefer results to hypotheses. It is clear to us that the liberalisation of the European market will be of benefit in its impact on jobs and prosperity.
Several comments were made on the need for a cooperative growth strategy. The Government's policies have led to the creation of more jobs than in any other European Community member state. We have a common strategy for growth. All the Heads of Government—Socialist as well as Conservative and other Governments—have agreed that jobs and prosperity can come about only by the continuation of the type of policies that we and all other European Community Governments are pressing. It is only the Labour party that has a different view—different even from its fellow Socialists in Europe. It is the only one that is out of step.
I want the benefits of the European internal market to be brought to the ordinary people of Britain. The Opposition are out of touch if they continue to claim that it is irrelevant to try to achieve a reduction in barriers to trade and an internal market. We have achieved cheaper
400
air fares for travellers. In the first year of the United Kingdom-Netherlands air agreement, we had 10 new services, a 16 per cent. increase in traffic growth between London and Amsterdam and 70,000 extra passengers who would not otherwise have travelled. The pattern is exactly the same between the United Kingdom and the Federal Republic of Germany.
We have opened new markets for British goods and services. We are doing away with the barriers and the delays which cost the United Kingdom and the rest of the Community £6 billion a year. We intend to create the prosperity and the jobs that a single large market can bring. The Opposition claim to see no connection between a single internal market and new employment in Europe. The connection is there. It is obvious and crucial. We shall continue to ensure that it works to the benefit of people seeking employment in Britain, because that is what the liberalisation of the internal market is all about.
The hon. Member for Greenock and Port Glasgow (Dr. Godman) asked whether we would make progress on maritime cabotage. That is probably a strange subject for many of my colleagues. I am happy to tell the hon. Gentleman that we are making real progesss. A package of measures to liberalise maritime transporting, including cabotage, is now before the Council. The Dutch presidency is pressing hard, and we shall continue to make this an important part of our work in the second half of this year. As time is short, I shall write to the hon. Member for Greenock and Port Glasgow about fisheries.
The hon. Member for Inverness, Nairn and Lochabar (Sir R. Johnston) asked about the regional fund and the abolition of non-quota measures. As I think he is already aware, the regional fund will make allowance for a quota range as well as for the Community programme. We believe that we shall have every opportunity to be a substantial beneficiary, as in the past. I remind the House that, in 1985, the United Kingdom received nearly 24 per cent. of the fund. We have not been doing badly, and we intend to continue to do our best to get that which is due.
My hon. Friend the Member for Stafford asked about the new GATT round. I very much share his view on the importance of the new round. Preparations are under way in Geneva. I believe that it is important that we reach agreement on the outstanding issues to enable the launch of the new round at the next GATT ministerial meeting in September. We are taking a positive attitude to the GATT round, and I hope that other member states will take a similar attitude.
Many hon. Members raised the issue of the scrutiny procedures. We are well aware of the unsatisfactory nature of the arrangements which have been pointed out by the hon. Member for Newham, South, who is Chairman of the Select Committee on European Legislation. The Select Committee considered the operation of the arrangements in 1984. That was spelt out in House of Commons Report No. 527. The Select Committee concluded that the Government should make greater efforts to ensure that debates on European Community documents were held in good time. We revised our guidelines in August 1985 with the aim of ensuring that debates should, as a rule, take place as soon as possible after the Committee makes a recommendation. We are committed to doing everything possible to make the new scrutiny procedure work effectively. I should like to examine the Select Committee

401
report. We must work within the new guidelines already accepted and consider other suggestions in the Select Committee's report.
It is sometimes very difficult to strike the right balance between debating a proposal at a very early stage, with the risk that it may be amended out of all recognition by the time that it goes to the Council of Ministers, and debating it late in the day when the debate may have to be hurried through at the eleventh hour. I give the hon. Member for Newham, South an undertaking that we will do our best to have the debate at the right time.
I should like to give further consideration to the suggestion about a Grand Committee. I do not believe that the House wishes to weigh itself down with yet more detailed debates, as some hon. Members already complain about the verbosity of other hon. Members on occasions when we discuss procedure.
My hon. Friend the Member for Stroud (Sir A. Kershaw), who unfortunately could not stay this evening as he had a prior engagement, made a number of remarks about political co-operation. It is helpful to be in firm political combination with our partners in Europe, as we have shown in the past two months in the statement on terrorism and the influence that Europe is having on the South African issue. My hon. Friend the Member for Stroud spoke about Ethiopia, and the views he expressed about resettlement are shared by the Government. I am glad to say that they are also shared by many of our partners in the Twelve.
Matters are frequently discussed and views exchanged. I am grateful for the welcome given by the hon. Member for Carrick, Cumnock and Doon Valley to the political co-operation part of the Single European Act.
It would be impossible to recount all the matters which have produced the present position. My right hon. Friend the Prime Minister's report, "Europe: the Future", is important, and we stand by it. It is positive and realistic. Equally, we have few reservations about the Dooge report. I pay tribute to my right hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), now Secretary of State for Scotland, for all that he did to bring that about and to ensure that Britain's views were thoroughly and well known by our European partners.
I should now like to emphasise the importance of the second six months of this year. We have heard both negative and positive comments tonight. I hope that we can cease living in the past, wake up to the present and
402
start working for a positive future. Although some hon. Members may not be reconciled to EEC membership, the negative comments and that lack of reconciliation have more to do with nostalgia than a realistic assessment of United Kingdom interest in many of the matters we have discussed.
We need the unity of the European market if our economy is to be competitive enough to provide prosperity and jobs. We need the strength of a united western Europe if collectively we are to counter Soviet foreign policy. We must also meet the commercial challenge of the United States and Japan rather than try to hang on as national champions. We need unity to fend off the growing threat of protectionism from whatever source.
The Community has achieved many things in the past few years. Some things, like Fontainebleau and the effective start of agricultural reform, are well known. Others, less well known, are none the less important to our prosperity. I was glad that the Community's research programme was mentioned by a number of hon. Members tonight, including research into information technology.
Environmental decisions are another important feature. These include exhaust emissions which protect the environment and preserve the unity of a single market. There has been a breakthrough on standards by the adoption of the 15 directives which had long been blocked, and agreements on future mutual recognition of standards. I mention toy safety because for many people that has been a major issue. How many families in this country do not have small children for whom they wish to buy a toy at Christmas?
There are many other areas in which we shall be working with our European partners. There are many objectives to be gained as well as interests to be defended. We shall do our best to achieve those objectives and to defend the interests of the United Kingdom and of the Community as a whole.
Amendment agreed to.
Main Question, as amended, put and agreed to.
Resolved,
That this House takes note of the White Paper on Developments in the European Community January to June 1985 (Cmnd. 9627) and of European Community Document No. 8616/85, the Commission's opinion on the Proposal for Amendments to the EEC Treaty and, noting the First Special Report of the Select Committee on European Legislation (Session 1985–86), calls on the Government to undertake to co-operate in improved procedures so that the House can effectively scrutinise proposals under the Treaties as they would be amended by the Single European Act.'.
10 pm
The Minister of State, Treasury (Mr. Peter Brooke): I beg to move,
That this House takes note of the Annual Report of the European Court of Auditors on the financial year 1984, together with the replies of the Institutions, and supports the Government's efforts to ensure implementation of the Court's recommendations where these would improve the Community's financial procedures.
The annual debate on the Court of Auditors report offers a valuable opportunity for the House to discuss expenditure planning and control within the Community. Our discussion tonight will be much helped by the lucid report from the Select Committee on European Legislation, which highlights important themes from the court's report, and I pay tribute to the Committee's work.
The role of the Court of Auditors report in the Community's budgetary procedure is set out in the explanatory memorandum which I submitted to the House on 17 January. As the House will recall, one of the functions of the European Parliament, after advice from the Council of Ministers, is to grant a discharge each year to the Commission in respect of the implementation of the Community budget. The Court of Auditors report is the main document which the Council takes into account when making its recommendations to the Parliament.
Last year, at the request of the Netherlands and the United Kingdom, the ECOFIN Council discussed the court's annual report for the first time. That report related to the 1983 budget. This year, at the meeting arranged for 10 March, the ECOFIN Council will discuss the court's report on the 1984 budget. For the first time, the president of the court will attend to present the report. These arrangements for discussion in the ECOFIN Council are a sign of the importance which the Council now attaches to the work of the Court of Auditors.
As the Select Committee acknowledges in its report, the court has a formidable task. The United Kingdom has always strongly supported the court's efforts to improve financial control in the Community and welcomes the Commission's statement in part 2 of the report that many of the court's recommendations are already being carried out. There is, however, no room for complacency. The latest report provides ample evidence that further improvement is both possible and necessary.
I do not propose to discuss the court's detailed recommendations. It may, however, be helpful to the House if I draw attention to half a dozen areas in which the Government warmly support what the court has said, and to a couple of issues of budgetary procedure on which we respectfully beg to differ.
First, we strongly support what the court has to say about the overhang of past commitments, notably in the structural funds. The court notes that outstanding commitments increased again in 1984. It is evident, as the court says, that a better balance has to be struck between payments and commitments, within the framework of the budget discipline arrangements. The Community needs to cut back on new commitments so as to leave sufficient room for meeting inescapable commitments from the past. In the Budget Council disussions on the 1986 Community budget, the United Kingdom strongly opposed the provision of additional budgetry resources outside budgetary discipline limits to deal with the so-called "cost of the past."
404
Secondly, the court has recommended that the commission should improve the accuracy of its revenue and expenditure forecasts with a view, among other things, to reducing the number of expenditure appropriations which turn out to be in excess of need. A related recommendation is that the Commission should give more attention to multi-annual forecasting of revenue and expenditure. These recommendations, too, the United Kingdom strongly supports.
Thirdly, the court makes the telling point that functions should be carried out at Community rather than national level only if benefits are likely to be superior to national programmes of a similar cast. this again echoes arguments which the United Kingdom has put forward on many occasions.
Fourthly, the court has paid special attention, as in previous years, to the administration of development cooperation and food aid. The report highlights the continuing difficulties of delivery and timing. It is a matter of concern that, as we suspected, emergency food aid was not arriving significantly faster in 1984 than non-emergency aid. In 1985, by using flexible procedures outside its normal food aid arrangements, the Community was able to arrange swift deliveries of food to the African countries worst affected by famine. We have left the Commission in no doubt that the current review of food aid procedures must produce arrangements which are more responsive to emergency needs.
Fifthly, the court is critical, rightly in our view, of some aspects of the administration of the European development funds. There is still some way to go. In the light of previous Court of Auditors' reports, however, the United Kingdom has succeeded in obtaining agreement to some useful changes. The Commission will now introduce a more systematic method for forecasting contributions by member states, together with procedures to avoid accumulation of excessive balances. It has also brought forward proposals to charge interest on late payments by member states.
The court also draws attention to the problem of fraud and irregularities in the agricultural guarantee section of the budget. The Government take a serious view of this matter. We are concerned to ensure that all reasonable steps are taken to prevent fraud and to ensure that any fraud which does occur is promptly identified and dealt with.
Mr. Terence Higgins: My hon. Friend said that the Government hope that there would be a better balance between revenue and expenditure. It is not clear from the Court of Auditors' report that the treaty requires that there should be an exact balance between the two? Do the Government agree with that view?
Mr. Brooke: Clearly there should be a balance between revenue and expenditure. If the budget is drawn up and the Commission asks us to pay a contribution towards that budget under the usual procedure, there may be occasions when, although expenditure is allowed for in the budget, it is not actually spent. That is what I think my right hon. Friend was referring to.
Mr. Higgins: I was thinking in the other direction, namely, when expenditure appears to exceed revenue. Does my hon. Friend agree that that situation is not allowed under the treaty?
Mr. Brooke: My right hon. Friend has anticipated the issue relating to the Court of Auditors' comment. I was intending to deal with that as one of the issues on which we disagree with the court.
There are two matters of budgetary procedure on which the Government do not agree with the Court's recommendations. The first concerns the legality of the intergovernmental agreement for 1984 the court argues that, by using this agreement to provide some 1 billion ecu to finance inescapable financial commitments in 1984, member states failed to fulfil their treaty obligation to ensure that revenue and expenditure balance.
As explained in a memorandum which the Treasury submitted to the Treasury and Civil Service Committee last month, the member states, including the United Kingdom, do not share this view. In our view, payments under the intergovernmental agreements for 1984 and 1985 were entirely consistent with article 4 of the Community's 1970 own resources decision. This referred to the budget as being financed out of own resources "irrespective of other revenue". The Community receives other revenue, such as gifts and bequests. The Government consider that contributions under the intergovernment agreements are likewise a form of "other revenue" and are therefore available to balance the budget in accordance with article 199 of the EEC treaty.
The second area of disagreement concerns the Commission's proposal, in its supplementary budget for 1984, to cancel certain expenditure appropriations which it was then clear would not be needed. These cancellations enabled the Commission to raise less extra revenue from member states than would otherwise have been needed to finance the supplementary budget. This has been criticised by the Court of Auditors, but in the Government's view the Commission was right to reduce the calls on taxpayers in member states in this way.
In conclusion, then, the Government respectfully take a different view from the court on two general issues of budgetary procedure, as well as on certain specific cases discussed in the court's report. But the areas of agreement are far more important than the differences, and we continue to support the court's efforts to ensure that the community's expenditure is properly managed and controlled. I commend the report to the House.
10.9 pm
Dr. Oonagh McDonald: I welcome some of the Minister's comments about the Court of Auditors' recommendations for stricter financial control at perhaps a lower level than overall budgetary discipline. There is much to be done in that regard if the Community is not to engage in wasteful expenditure. I am glad that the Government want some of the recommendations to be carried out.
I was anxious to note that the Government do not accept the Court of Auditors' strictures about the use of the intergovernmental agreement in 1984. The Minister's remarks lead us to expect a similar IGA in 1986. The Minister should make that absolutely clear. We have already heard that Mr. Andriessen, the farm Commissioner, talks about an extra £450 million being necessary to cover certain aspects of farm expenditure. If that is so, and the case is pressed, the Government will have to ask for another IGA.
406
I could not help smiling when the Minister referred to other forms of revenue such as gifts and bequests, as he merely suggested that the IGA was a form of gift. We shall probably find ourselves making a similar gift this year.
The Minister skipped rather lightly over some issues, such as the Court of Auditors' report for 1984, which made it clear that agricultural spending had increased by 16 per cent. over 1983. As is clear from my reference to Mr. Andriessen's demand for more money, nothing has been done to curb farm expenditure. We expect it to rise once again this financial year. It cannot be contained because the budget discipline is not strict enough, as the Minister of State, Foreign and Commonwealth Office said in winding up the previous debate. She said that the Community could not be isolated from changes in the exchange rate. That is true, and budgetary discipline is obliged to recognise it, but farm spending is bound to escape. We can expect a future Court of Auditors' report to show another large increase in agricultural spending this year.
The Minister should have drawn our attention to another feature of the Court of Auditors' report—the fact that a substantial proportion of farm spending in 1984 was squandered on storage. Storage accounted for almost half of farm spending and the losses on intervention stocks ran at 2·5 billion ecu. They are massive losses which affect dairy products, especially butter, skimmed milk powder and beef. It is plain that those substantial losses are about to occur again in 1986 and I think that the Minister should have referred to that. The whole design of the common agricultural policy leads to a continual growth in intervention stocks and as they decline in value, money is wasted, first in storage and secondly in further losses as the stock deteriorates.
The Minister referred to what had happened in food aid; that is a sorry story indeed. Not only were goods delivered late—cereals 14 weeks late, milk powder 23 weeks late and butter oil 19 weeks late— but even emergency consignments were late. He might also have mentioned that not only were many of the shipments made far too late, even when they were designed for emergency purposes, but they actually overran the date set by the mobilisation authority. Even worse, some of the food shipped out had to be rejected. For example, Indonesia had to reject over 1,000 tonnes of skimmed milk: its quality was unacceptable because of breakages of packets and excessive humidity during the voyage there.
The Court of Auditors once again draws the attention of member states to the disgraceful and sorry story of intervention stocks, the expense incurred by the Community in storing food and the further loss of value, as compared with what happens to food aid. Not only do we waste food by producing more than we need, but we cannot even manage to get food of decent quality to places which desperately need it on time. That is no record for a civilised community. We all ought to be ashamed and I hope that the Government will make the fiercest possible condemnation of such late deliveries and of the poor quality. More than that, I hope that the Government will take firm action within the Community to ensure that it does not happen again. It is something of which we are all thoroughly ashamed, but shame is not enough; action is what is necessary.
To cap that, millions of ecu—the Court of Auditors estimate 6 million—are lost in fraud. Unofficial estimates put the amount at 30 times the sum given in the

407
Court of Auditors' report. The report lays specific charges against member states. It states that they do not report fraud before payments to the Commission, they do not scrutinise subsidy claims adequately and they refuse to cooperate with the Commission in the investigation of fraud. Some member countries are particularly guilty in that regard.
Once again, within the Community we want the Government to ensure that money is not wasted in that way. It is bad enough pouring millions of pounds into a wasteful and expensive agricultural policy. To be subsidising fraud, particularly in other member countries, makes matters even worse. I want an assurance from the Minister that our own methods of investigation and control are entirely adequate, that we co-operate with the Commission and that we do everything in our power to ensure that other member countries do the same.
I am glad that the Minister recommended the Court of Auditors' report to the House, as indeed I do. However, it tells a sad tale of the behaviour of the Community over the management of its funds and its disgraceful agricultural policy and it should give hon. Members cause for thought.
10.19 pm
Mr. Terence Higgins: It is noticeable that the motion that the House is being asked to consider refers to the House taking note of rather than approving the annual report of the European Court of Auditors.
I found the speech by my hon. Friend the Minister of State, Treasury disappointing in several respects. In the memorandum that the Government submitted to the Select Committee on the Treasury and Civil Service this week, which is now in the Library, they say:
"The United Kingdom considers that the Court of Auditors has a key role to play in improving financial control within the European Community. The proposed discussion in the ECOFIN Council of the recommendation for discharge provides an opportunity to support the Court's work and to ensure that the Commission responds to the Council's comments."
The extraordinary thing about the speech by my hon. Friend the Minister of State is that he is projecting some of the points that the Court of Auditors made about the proper financial workings of the Community. He is in a similar position to a company chairman, who, having received qualification of his accounts from the auditors, stands up at the annual general meeting and says, "I do not agree with what the auditors said." Those who were investing in such an enterprise might react in a sensible way. Alas, the taxpayer is not in a position to do so. The plain fact is that the report of the Court of Auditors confirms all the misgivings that I have expressed on previous occasions and which, more particularly, the Treasury and Civil Service Select Commitee has expressed, about the way in which the Community has been conducting its finances.
The Court of Auditors' annual report comments on the practice of using reimbursable advances authorised by means of intergovernmental agreements to finance short falls in the European budget. The court is clear about that, as, indeed, the Select Committee has been on previous occasions. The court says:
"financing the budget by means of reimbursable advances does not fulfil the obligations placed on the Member States by the EEC Treaty".
The court is absolutely clear about that. In his remarks, my hon. Friend said that that was not the Government's view.
408
If there is a conflict between the auditors and the Government, how is the matter to be resolved? It is perhaps rather unfortunate that at a time when rightly, in my view, the Government are taking the European Parliament to the European Court, arguing that it has made an illegal budget, they are, at the same time, opposing the views expressed by the Court of Auditors that what they the Government have been doing is illegal. That does not seem to be a good arrangement, because the law should be indivisible.
The Court of Auditors is also critical of the introduction of article 302. That is an item in the accounts, the expected balance for the current year. It says:
"The Court considers that the introduction of this article into the budget of the current year was simply a device for disguising the fact that the budget expenditure exceeded available revenue, that is, own resources, plust the reimbursable advances, which is contrary to the provisions of Article 199 of the EEC."
The Court of Auditors expressed that view in very clear terms. I have great difficulty in understanding why my hon. Friend the Minister is not prepared to accept the view that the court expresses, and which the Select Committee has pointed out on previous occasions.
After the Fontainebleau summit, on 27 June 1984, at column 1003, the Prime Minister told the House that
"it is not right to raise loans for budgetary purposes because it is contrary"
to the treaty of Rome. The intergovernmental agreement substitutes the words "reimbursable advances" for "loans". The Select Committee, in its report on the special supplementary estimate in January 1985, said:
"A distinction was argued between 'loans' and 'reimbursable advances'. We are not convinced there is any real difference and the requirement now proposed would certainly seem to be contrary to the spirit of those who originally drafted the treaty".
I should be grateful for my hon. Friend's views on a more technical point. The Court of Auditors is there to audit; it is for it, not the Government, to audit. It says that the IGA does not come within the category of gifts and other bequests to which the Minister referred. The hon. Member for Thurrock (Dr. McDonald) rightly drew attention to the fact that that would be humorous if it were not so expensive.
My hon. Friend the Minister has not dealt with the point as to whether the Community is entitled to receive a reimbursable advance. Perhaps he would give his attention to that because it is separate from an advance which is not reimbursable. We may find that the two are indistinguishable because the advances which are said to be reimbursable do not come back to this country, as they are supposed to do. Perhaps my hon. Friend will be kind enough to tell us when he expects to get the advances back and whether they are likely to arrive back on time.
It is extraordinary that the 'Treasury, which is rightly stringent in many aspects of domestic expenditure, seems to be so profligate—that is the only word that I can use —in going along with such a proposal. It would be intolerable if the House were again asked to approve an intergovernmental agreement in the face of the clear view expressed by the Court of Auditors that intergovernmental agreements providing such advances are contrary to the treaty, not least because it means that once again, when we come up against the VAT limit—in this case 1·4 per cent. as against the previous 1 per cent.—we would be able to put off the evil day when the House had to be asked for an increase in that limit. We know all the consequences which would follow for the United Kingdom on rebates. After all, rebates do not continue indefinitely if the

409
conditions on which they were granted are no longer fulfilled. The problem now is very serious. It should not be subscribed to by the Treasury, the British taxpayer or by those who might otherwise have the money spent upon them at a domestic level.
Budgetary discipline is also mentioned in the report of the Court of Auditors. After the Select Committee took evidence from my hon. Friend and further evidence from Treasury officials this week, I cannot avoid the conclusion that the idea that there is any real budgetary discipline in the Community is a farce. The extent to which that is so is amply demonstrated by the fact that the Government themselves are taking the European Parliament to the European Court on the grounds that the budget that has been made by the Parliament is illegal. Clearly the European Parliament has not the slightest intention of subscribing to any system of budgetary discipline. That is immensely sad.
The House has been told by my right hon. Friend the Prime Minister:
"More EC member countries are becoming net contributors. Frankly, that is the best discipline we can possibly have."—[Official Report, 27 June 1984; Vol. 62, c. 1001.]
That has scarcely been borne out by the way in which some of the net contributors have been performing against the background of the European Assembly's own illegal budget; some of the net contributors are among those who have been less than forthright in taking the line that Her Majesty's Government have rightly taken on the issue.
If one goes into more detail on the report of the Court of Auditors, one should refer to paragraph 3.4 which says:
"Article 199 of the EEC Treaty provides that all items of revenue and expenditure of the Communities shall be included in estimates to be drawn up for each financial year and shall be shown in the budget".
It then takes particular exception to two items. It says:
"The amending and supplementary budget No. 1, adopted on 25 October 1984, increased the VAT own resources rate to the 1% ceiling. The shortfall was covered within the budget by two new budget lines."
The next words are very important:
"The Court"—
the Court of Auditors—
"considers that these do not comply with normal budgeting principles, nor with the requirement of Article 199 of the EEC Treaty that annual revenue and expenditure of the Communities should be in balance".
It is not good enough for my hon. Friend simply to say that the Government are sorry, that the auditors have qualified the accounts, but that they disagree with the qualification.
Article 820 relates to amounts to be financed by reimbursable advances granted by member states. It states:
"The Court adheres to the view which it expressed in its opinion No. 1/84, that financing the budget by means of reimbursable advances does not fulfil the obligations placed on the Member States."
The same can be said of article 302 relating to expected balances from the current year.
One can go along with the view expressed in the motion that we should support the court's recommendations where these would improve the Community's financial proceedings. The regrettable and sad fact is that, on the most crucial aspect of the Court of Auditors' findings, the Government are not prepared to go along with what it recommends.
This is all in the past, and in one sense we are shutting the door after the horse has bolted. That would be
410
worrying enough—and one accepts that it is difficult to claw back the money—but even more worrying—this was the point on which the Minister of State would not give way to me earlier—is that, having shut the door after the horse has bolted, they are opening the door again so that another horse can bolt. That is totally unsatisfactory.
It is deplorable that the Government should have taken such an attitude. They should stick firmly to the letter of the treaty. That is in the interests not only of United Kingdom taxpayers but of the future of the European Community itself. It cannot hope to get the support that it needs for the many other desirable objectives that have been mentioned if, when a report of this kind has been put before the House of Commons, the Council of Ministers and the Commission, those concerned are not prepared to face the true consequences of what it says.
10.33 pm
Mr. Nigel Spearing: The ninth report of the Select Committee on European Legislation—HOC 21-ix of the current Session—attempts to summarise the auditors' report which is the subject of this debate. It is proper to point out that the Committee is assisted in its task by Officers of the House, and our weekly reports and this special report are greatly enhanced by their skill. When people thank the Committee and its members—sometimes even its Chairmen—they should be aware of the fact that it is assisted by Officers of the House.
I use that phrase advisedly, because this House is responsible for the proper expenditure of taxpayers' money. When, some time ago, the EC was running out of money, people said, "Ah! Wait till it hits the ceiling. When the 1 per cent. ceiling is reached there will be some budgetary discipline," and we all stood by as the graph reached the ceiling. However, as the right hon. Member for Worthing (Mr. Higgins)—who is Chairman of the Treasury and Civil Service Select Committee—pointed out, instead of discipline being applied at that point, the ceiling was pierced, and all that we had were ecus falling around the wreckage. That was achieved through the intergovernmental agreement, to which the right hon. Gentleman properly referred, because it was thought to be the way in which the House and taxpayers throughout the Community would achieve discipline. The Government are extremely hot on that in domestic expenditure, but the right hon. Gentleman outlined why that did not work.
Will that view, which I suppose will be adhered to, feature in the meeting on 10 March when the ECOFIN Council meets to discuss the budget? It is a little ironic that the budgetary discipline mechanism applying now will also be on the agenda. I understand that Agriculture Ministers will request that budgetary discipline is put into abeyance for the present year. It will indeed be ironic if budgetary discipline is put in abeyance this year through some treaty let-out, while at the same time the Government will tell the president of the Court of Auditors, who will be present, that they disagree with the court's findings in respect of the intergovernmental agreement in paragraph 3.6 on page 30 of the Official Journal at column 326.
I hope that the Minister will not take that view, but if he does he should so inform the House. In effect he will be picking and choosing from the auditors' report. He will be saying, "We accept a great deal of what the auditors

411
say, but we do not agree with the part where the court says that we have been party to providing illegal funds." Indeed, that is implicit in the words of the motion. That may suit the Government politically, but it is novel for a Treasury Minister, or, indeed, any citizen, to pick and choose from an auditor's report. Indeed, it is a terrible thing to behold. But it appears that the Government will do that.
The position is even worse than the right hon. Gentleman suggested. He properly quoted the important paragraphs, in particular paragraph 3.6 of the report. I shall quote from the Commission's reply to those matters. Page 175, paragraph 3.6a states:
"In order therefore to ensure that Community obligations could be met and that Community policies could continue to be implemented, whilst respecting the requirement in Article 199 of the EEC Treaty, that the budget be in balance, the Commission made a proposal based on Article 235 of the EEC Treaty, for the Member States to make supplementary finance available to the Community in 1984 which would be repaid when new own resources became available."
That did not happen, because the Council decided that that would not be the right way to proceed. The paragraph continues:
"The Legal Service of the Council shared the Commission's opinion that Article 235 was an entirely proper basis for the regulation."
I do not think that the Council thought that, because the paragraph continues:
"In the event, the Council did not adopt such a regulation. The Member States decided rather to make an intergovernmental agreement to provide additional finance in 1984. The Commission regrets that this agreement was entered into outside the framework of the Community treaties."
The view of the Court of Auditors that this was ultra vires and outside the terms of the treaty was apparently shared by the Commission. How can that organisation get away with such activities when a Select Committee of the House, the Court of Auditors and the Commission—with which some of us do not always agree—interpret them to be outside the terms of reference?
The Minister quoted an article in relation to miscellaneous income, but article 199 provides:
"All items of revenue and expenditure of the Community … shall be included in estimates to be drawn up for each financial period."
The intergovernmental agreement did not feature in the estimates, or in the so-called budget. That is a bit dodgy, too.
The right hon. Member for Worthing said that no taxpayer could do anything about it. However, one taxpayer tried. The Government tried to get one intergovernmental agreement through by way of statutory instrument under section 1(3) of the Act, and we all know what happened. There was a court case; the Government withdrew from that route and, properly, introduced a new Consolidated Fund Bill, as they should have done from the start. The taxpayer lost his case because of the judge's view of the word "ancillary".
At that stage, we did not know that the Commission believed that the matter was outside the framework of the Community treaties. Mr. Smedley lost his case, and I understand that the Treasury is still asking him to pay its expenses. I do not expect a reply from the Minister tonight, but I put it to him that if the Court of Auditors, the Commission and another article of the treaty give at least some substance to Mr. Smedley's case on judicial review, it is a bit much for the Treasury, after picking and choosing whether to accept qualifications, to come down
412
on a British taxpayer, and an old-age pensioner to boot, and insist on his paying its expenses for the test case. I hope that the Minister will note that point, if nothing else.
The role of the Court of Auditors is fundamental to transparency and confidence in the financial operations of the Community. In many ways, it does a good job—so good a job that apparently the Government object to its drawing attention to payments which the Government consider to be legal. In some ways, that is an excellent testament to its work and a large question mark against the Treasury, which persists in picking and choosing between qualifications in an audit report.
10.43 pm
Mr. Dennis Skinner: As hon. Members have said many times, the Common Market has been riddled with fraud from the clay that it started. Although we have auditors in Britain who are supposed to examine malpractices and corruption, in the Common Market the British taxpayer has been paying heavily to be a member of the club. According to official answers, the total net cost to the British taxpayer during the first 10 years of membership, taking into account the barrowloads of money that the Prime Minister was supposed to bring back after all her well-publicised arguments with the Common Market, was £4,726 million. British taxpayers have had to pay a great deal of money for the United Kingdom to be a member of the club.
I read not so long ago that in Italy there were olive trees that existed on paper only and that the moneys claimed for them went to the Mafia. What would happen if a British local authority was involved in fraud to the extent of about 10 per cent. of its budget? That has been suggested of authorities in other countries on many occasions. That sort of money is not available in Britain to allow that degree of fraud to continue. I want to know why the Government have given the nod and the wink to others in the Common Market. Why have they allowed them to fiddle the British taxpayer at such an exorbitant level? A Minister told us the other day that there is not enough money to allow the Government to give pensioners another 40p a week. That was just about enough to allow pensioners to buy mustard plasters during the coldest February that we have had for 40 years. However, another Minister is accepting a report that details £600 million-worth of fraud.
As the right hon. Member for Worthing (Mr. Higgins) said, the Common Market was bailed out this Session by the British taxpayer to the tune of £252 million. Even then, it was still running an illegal budget. A stop must be put to all the money that is pouring out to all the gravy trains in the Common Market. The ex-leader of the Social Democratic Party is being paid a fat pension by the Common Market, and I notice that he is not in his place this evening. He is not present to defend the budget that is before us. I wonder where he has got to.
Where are all the other SDP Members who joined the then Conservative Prime Minister to drag an unwilling British nation into the Common Market without the issue having been put to the vote? Where are Dr. Death and all the rest of them? I suppose that they are in Fulham, but I bet that they are not telling the electors in Fulham of the extent of the fiddling within their beloved Common Market. I note that the hon. Member for Truro (Mr. Penhaligon) is in his place. He should be complaining

413
about the demise of the 500 tin miners in Cornwall instead of trying to defend the rotten system that prevails within the Common Market.
The stage has been reached when we should put an end to this carry-on. The right hon. Member for Worthing has talked about illegal budgets and they have been acknowledged by the Government, including the Prime Minister. However, nothing has been done. That can be said on a day when 80 of my colleagues in Liverpool and Lambeth have been surcharged and threatened with being kicked out of office and made bankrupt for expenditure of less than £250,000. At the same time, others are gallivanting around the world from the Common Market. They are using British taxpayers' money to do so. I read that 63 of them have gone on a trip somewhere. In doing so, they are said to have just about exhausted the moneys that are available for trips, but I do not believe that. I am sure that some more money will be found. Those whose responsibility it is will come rabbiting to the Government for more money. The 63 have taken with them their wives, mates, friends and God knows who else.
However, in the British High Court the judges have decided to hammer 80 councillors for expenditure of less than £250,000. Those who have come before them have not been involved in fraud and they have not rigged the market. They tried to stop the Government from crippling the ratepayers and others who depend on services in Lambeth and Liverpool. That is why it makes me sick.
I have in my hand an article that I saw towards the back end of last year. It is headed "EEC's £600 million fraud" and it says:
"The official auditors to the common market have uncovered evidence of wholesale fraud in the trade of farm produce. Exporters are claiming millions of pounds in subsidies for food which in many cases does not exist. As much as £600 million a year could be involved … Among the irregularities discoved were: Falsified documents. According to customs officials, a British company was caught trying to export non-subsidised vegetable oil as heavily subsidised butter."
There is another system of fiddling, called "the roundabout." The article says:
"Traders claim several subsidies by sending their produce repeatedly across the same frontier after smuggling it back into the country … At one stage Northern Irish farmers were sending the same cattle across the border so frequently that, in the words of one customs official, 'the cattle knew the way themselves'."
There is another fiddle, called exploiting levies. A trader inports a low-fat product which attracts a low import levy, adds oil and re-exports it, claiming subsidy at the full rate. We can laugh at it, but the trouble is that the British people are having to pay through the nose to be in the Common Market. It is time that the British people understood what is happening.
Today, after a £600 million fraud, this Tory Government are giving a nod and a wink to all this irregularity and corruption. If the Government were really concerned about the British taxpayer, the pensioners, the nigh on 5 million people who are in the Tory dole queues, the disabled and all the other people who need assistance, they would not be doing what they are doing tonight. They would be saying to the Common Market, as the right hon. Member for Worthing said earlier, "We are not going to wear this. Take it back. Sort it out. We are not going to take note. It is time that you cleaned up the Augean stables over there in the Common Market."
414
There has been too much of this Euro-fanaticism during the last decade. We were promised all kinds of wonderful things. The British people were told that the Common Market would get rid of the dole queues, that there would be economies of scale, that in this giant market of 250 million people the economies of scale would result in more efficiency and that all kinds of British goods would be produced. British cars would be sent across to this wonderful market on the Continent and we would have more car workers. Industries in the west midlands and everywhere else would be burgeoning and there would be jobs for everybody.
The whole system has been a fraud from beginning to end. This is the tail end of it—after all these years, after something like £4,700 million, net, has been paid by the British taxpayer, after an illegal budget, after £252 million has been handed out to bale out the Common Market in this parliamentary Session. Yet the Prime Minister is continually telling sections of our society, "Oh, the Government have got no money. It all belongs to the taxpayer." But the British taxpayer has had to foot the bill for this. It is time that we put an end to it.
I do not know what this Minister is going to do tonight. I suppose he hopes that at this late hour he can sneak it through and that we shall carry on again. Then next year the Mafia in Italy, and all the rest of them who have been engaged in these fiddles, will be able to say, "Well, it has gone through that Parliament. It has gone through the others. They had a little bit of a set-to late one night in the British Parliament but they managed to get it through. They've got a 160 majority. One or two people complained." And on and on they will go. Those fat cats in Europe will continue to ride on the gravy trains and to laugh at the British taxpayers who will have to foot this bill.
10.55 pm
Mr. Brooke: With the leave of the House, I should like to reply to the debate.
This has been a brief but interesting and lively debate, and I am grateful to my right hon. Friend the Member for Worthing (Mr. Higgins) and those Labour Members who have participated in it. They have underlined once again the importance which the House rightly attaches to the sound management of Community funds.
The views expressed here this evening will certainly be helpful to myself and other United Kingdom representatives as we prepare for the forthcoming Council discussion in Brussels. As in previous years, I intend to draw this debate to the attention of the Community's Budget Commissioner, Mr. Christophersen, and the Chairman of the European Parliament's Committee on Budgetary Control, Herr Aigner, by sending them a copy of the Official Report of today's proceedings.
I should like to deal briefly with some of the points which have been made. The hon. Member for Thurrock (Dr. McDonald), like myself, welcomed much of what is in the report and supported it, but she did have three worries. The first related to intervention stocks. The Government share the court's concern at the level of public intervention stocks and the costs involved, both in budgetary and economic terms, in their purchase and maintenance. We remain firmly of the view that the only satisfactory long-term solution to the problem of increasing intervention stocks lies in a rigorous price policy, enforced over a number of years, which will bring

415
the markets back into balance and enable existing stocks gradually to be sold off. That will restore intervention to its correct role as a seasonal or emergency support for agricultural production. The Court of Auditors has urged a more systematic approach to the depreciation of intervention stocks. That, however, can take place only after having regard to the availability of resources under the financial guidelines for agricultural expenditure.
The hon. Lady went on to talk about food aid, to which I also referred earlier. I said that the performance on the emergency side had been significantly better in 1985 than it had been in 1984. The average time taken to deliver most food aid which was given balance of payments support is not significant. Shipments may, for example, have to await the right market conditions in the recipient country. What concerns us is the fact that the emergency shipments have not moved significantly faster than non-emergency shipments. The Commission is now reviewing its food aid procedures, and we have left it in no doubt that we expect the review to produce more streamlined procedures for emergency aid.
The auditors do not suggest that their examples of badly packaged food aid, to which the hon. Lady referred, are typical of the programme as a whole. The Commission has spent more on quality control recently, and we have no reason to believe that the amounts of food aid from the Community unfit for consumption are higher than from other food aid donors, but of course we shall continue to pay attention to that.
The third subject mentioned by the hon. Lady was fraud, and in that she was supported by the hon. Member for Bolsover (Mr. Skinner). Of course the Government are concerned, as I stressed earlier, to ensure that all necessary steps are taken to eradicate fraud from the operation of the CAP.
Mr. William Cash: Paragraph 4.28, page 44 of the Official Journal of the European Communities says:
"The main thing the Court noted was a certain indifference on the part of the Member States to the financial interests of the Community and a more or less general lack of cooperation in a number of areas".
I should like to be sure that when it comes to investigating such matters, Britain will not fall into the category described in paragraph (c), which says:
"finally, the Member States have frequently shown little inclination to cooperate with the Commission's enquiries, particularly when frauds or irregularities within their territory were involved."
I want to be sure that that will not apply to Britain as a member state.
Mr. Brooke: I am grateful to my hon. Friend for raising that matter. I had intended to come to our position. We are generally satisfied with the current arrangements, but of course we are prepared to co-operate in any intensification of activity in that sphere, although naturally we would hope that controls and anti-fraud activities were cost-effective.
Reference has been made to the potential volume of undetected fraud and the fact that it might be larger than the figure that the Court of Auditors has quoted. It is easy to allege that there is a volume of undetected fraud, but if it is undetected it is, by definition, difficult to quantify.
The United Kingdom is active in the field in the prevention of fraud, with Ministry of Agriculture, Fisheries and Food and International Board for Agricultural Produce investigation units and Customs and
416
Excise co-operating, not only internally, but through the mutual assistance framework with the authorities of other member states.
Dr. McDonald: The hon. Gentleman has rightly explained what the British Government are doing. Nevertheless, as I stressed in my speech, the activities of other member states leave much to be desired, to put it mildly. Just what is Britain doing to ensure that other member states play their pant? There is no reason why the British consumer should subsidise the fraudulent activities of others, never mind the wasteful CAP.
Mr. Brooke: I sought to say, both in my first speech and just now, that we are supportive of the general attitude to these problems. I give the assurance that the hon. Lady seeks.
The hon. Member for Bolsover quoted from a newspaper report and was good enough to state that people were being caught and arrested. Nevertheless, I have to contest the language that he used.
The hon. Member for Thurrock generally approved the report by the Court of Auditors, and in that respect we share her view.
Mr. Spearing: The hon. Gentleman referred to my hon. Friend the Member for Bolsover (Mr. Skinner) and implied that his language was a little extravagant. On the issue of the Mafia and olives, will the hon. Gentleman at the meeting to which he referred, request the president of the Court of Auditors to state his view or, if not, to report in the succeeding year?
Mr. Brooke: I acknowledge that the level of control exercised in certain member states has been a cause for concern. Olive oil production is obviously one of the issues to which that applies. As the president of the Court of Auditors is coming to the Council's meeting, no doubt there will be an opportunity for a discussion on that matter. the Commission has been assiduous is pursuing the allegations, but has not yet been able to substantiate them. Clearly, the pursuit continues.
My right hon. Friend the Member for Worthing returned to the subject on which he intervened during my first speech. My right hon. Friend and the hon. Member for Newham, South (Mr. Spearing)—I pay tribute to the Select Committee on European legislation, of which the hon. Gentleman is Chairman—referred to the intergovernmental agreements. As I said in my opening speech, the Government do not share the court's views on this matter. I take the point made by my right hon. Friend the Member for Worthing that we are taking issue with an observation by the auditors. I must say, in passing, that disagreements between auditors and their clients are not unknown in the conduct of ordinary professional business.
Whatever one's opinion of the desirablilty or otherwise of such agreements, the Government have no doubt that the agreements for 1984–85 were perfectly compatible with the treaties and involved no infringement of them. All other member states shared the Government's view, as did the Master of the Rolls in our Court of Appeal, as the hon. Member for Newham, South said.
Mr. Higgins: Will my hon. Friend take up my point about reimbursable advances? I said that if extra money was obtained by way of gift, or whatever, that was legitimate, in his view. The Court of Auditors and I do not agree. What about what are effective loans or reimbursable advances? Under what paragraph of the treaty do they fall?
Mr. Brooke: In my first speech I went on to refer to gifts and bequests, but I specifically referred to the phrase in article 4 "irrespective of other revenue" meaning items embraced by the measure.
Mr. Higgins: A reimbursable advance is not revenue; it is a loan.
Mr. Brooke: Just as the Government are in conflict with the Court of Auditors, so it appears that on this subject there will be a continuing debate between us and my right hon. Friend the Member for Worthing.
My right hon. Friend continued to refer to budgetary discipline and correctly identified the dispute between the Council and the parliament, as a dispute which the council is undertaking both in the context of the legality of the budget and to ensure that budgetary discipline is maintained. The hon. Member for Newham, South also drew attention to this matter.
Mr. Higgins: I am grateful to my hon. Friend for giving way. He is always very courteous, and I apologise for intervening again. Under which provision of the treaty is the Community allowed to accept a loan?
Mr. Brooke: It is clear that there are outstanding issues on which, as I said a moment ago, my right hon. Friend the Member for Worthing and I must correspond. I should like to return to the point that all member states are in agreement with the view that we have taken.
Mr. Spearing: They are all wrong.
Mr. Brooke: My right hon. Friend went on to refer to the two new budget lines. The Commission entered in the supplementary budget a new article entitled "expected balance for the year". I referred to this in my opening speech as the cancellation of expenditure appropriations which it was clear would not be needed. By taking this action we will improve budget transparency and ensure that revenue and expenditure are more accurately matched.
The hon. Member for Newham, South referred to the ECOFIN meeting on 10 March. The next step, which will follow the court case which the Council and our Government have initiated, is to ensure that budget discipline is respected in 1987. The ECOFIN Council meeting next Monday is due to discuss the confirmation of the 1987 reference framework. In particular, we will consider the Commission's figures for calculation of the 1987 agricultural guideline, and that will be an important constraint on the 1987 price fixing negotiations.
Mr. Spearing: The point that I made was about the 1986 agricultural settlement and the proposal which I understand will be made, which would breach the framework to which the Minister referred. Will this matter be decided on 10 March and so settle this year's non-budgetary arrangements?
Mr. Brooke: The issue will come before the Council on 10 March, but the Council of Agriculture Ministers will not discuss the matter until 25 March. Preliminary discussions were held a short while ago.
418
The hon. Member for Bolsover referred to fraud and drew attention, as did my right hon. Friend the Member for Worthing, to the text of the motion. My right hon. Friend referred to the fact that we were taking note. That motion goes on to endorse the Government's efforts to ensure implementation of the Court of Auditors' recommendations where these would improve the Community's financial procedures. This reveals the Government's strong support for the report from the Court of Auditors and its contribution to the draft procedures. I ask all right hon. and hon. Members to support the motion.
Question put:—
The House divided: Ayes 67, Noes 8.

Division No. 93]

[11.08 pm

AYES

Alton, David

Mather, Carol

Amess, David

Merchant, Piers

Baker, Nicholas (Dorset N)

Nicholls, Patrick

Baldry, Tony

Osborn, Sir John

Brandon-Bravo, Martin

Peacock, Mrs Elizabeth

Brinton, Tim

Penhaligon, David

Brooke, Hon Peter

Portillo, Michael

Brown, M. (Brigg & CI'thpes)

Powley, John

Butcher, John

Proctor, K. Harvey

Butterfill, John

Raffan, Keith

Cash, William

Rathbone, Tim

Chalker, Mrs Lynda

Rhys Williams, Sir Brandon

Chope, Christopher

Roe, Mrs Marion

Clarke, Rt Hon K. (Rushcliffe)

Sainsbury, Hon Timothy

Cope, John

Sims, Roger

Dover, Den

Spencer, Derek

Durant, Tony

Stanbrook, Ivor

Dykes, Hugh

Steel, Rt Hon David

Eyre, Sir Reginald

Stern, Michael

Gregory, Conal

Stewart, Allan (Eastwood)

Griffiths, Sir Eldon

Stradling Thomas, Sir John

Grist, Ian

Thompson, Patrick (N'ich N)

Ground, Patrick

Thurnham, Peter

Hamilton, Hon A. (Epsom)

Wallace, James

Hargreaves, Kenneth

Waller, Gary

Higgins, Rt Hon Terence L.

Watson, John

Howells, Geraint

Watts, John

Hunt, David (Wirral W)

Wells, Bowen (Hertford)

Knight, Greg (Derby N)

Wheeler, John

Lennox-Boyd, Hon Mark

Whitney, Raymond

Lilley, Peter

Wood, Timothy

Livsey, Richard

Lloyd, Peter (Fareham)

Tellers for the Ayes:

Lyell, Nicholas

Mr. Donald Thompson and

Maclean, David John

Mr. Michael Neubert.

Malone, Gerald

NOES

Clwyd, Mrs Ann

Parry, Robert

Duffy, A. E. P.

Spearing, Nigel

Godman, Dr Norman

Leighton, Ronald

Tellers for the Noes:

Lloyd, Tony (Stretford)

Mr. Dennis Skinner and

Loyden, Edward

Mr. Harry Cohen.

Question accordingly agreed to.
Resolved,
That this House takes note of the Annual Report of the European Court of Auditors on the financial year 1984, together with the replies of the Institutions, and supports the Government's efforts to ensure implementation of the Court's recommendations where these would improve the Community's financial procedures.

PETITION

  Allied-Lyons (Takeover Bid)
  11.19 pm
  Mr. Roy Mason: With your permission, Mr. Deputy Speaker, and that of the House, I beg leave to present a petition from the joint trade union committee of the food division of Allied-Lyons plc, initially signed by Mr. Sam Vickers of the Bakers, Food and Allied Workers Union, Mr. Malcolm Self of the Association of Scientific, Technical and Managerial Staffs, and Mr. John Reed of the Electrical, Electronic Telecommunication and Plumbing Union—three senior shop stewards—backed by the signatures of 671 workers of the Barnsley bakery.
  The workers in Allied-Lyons are alarmed at the threat to their jobs because of the proposed takeover bid by Elders IXL Ltd. of Australia. They fear that if the bid is successful, Elders IXL will hive off the food division of Allied-Lyons and the 1,500 workers in the Barnsley bakery believe that they will lose their jobs, especially because of the asset-stripping history of Elders IXL and the nature of the bid. They also believe that this foreign firm will disregard any social consequences of such an act, which could be quite disastrous in an area of 20 per cent. unemployment in the Barnsley, Central constituency.
  The petition reads:
  Wherefore your petitioners humbly pray that your Honourable House will urge the Secretary of State for Trade and Industry to take into account these factors when considering the desirability of such bids for the economy of the United Kingdom.
  And your petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table.

PETITION

  Sunday Trading
  11.20 pm
  Mr. David Amess: With your permission, Mr. Deputy Speaker, and that of the House, I beg leave to present a petition which has been signed by more than 1,000 of my constituents who are deeply worried about proposals for unrestricted trading on Sundays. They very much wish to keep Sunday a special day, and I entirely share their sentiments.
  The petition reads:
  To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled. The humble petition of residents of Basildon constituency, sheweth that the undersigned are opposed to the provision for unlimited Sunday Trading in the Shops Bill currently before Parliament, recognising that Sunday has special characteristics as a day of rest, recreation and worship for the benefit of our family and community life.
  Wherefore your Petitioners play that your Honourable House do maintain legal limitations on Sunday Trading to ensure that the special character of Sunday is protected.
  And your Petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table.

Orsett Hospital
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Archie Hamilton.]
11.22 pm
Dr. Oonagh McDonald: I make no apology for talking about the plight of Orsett hospital, which serves the majority of my constituents.
The hospital's future has been under discussion in the Basildon and Thurrock district health authority area for the past few months. Because so many doubts have been raised about some of the services offered there, my constituents made their views felt by a petition, which 55,000 of them signed. That constitutes almost the whole electorate.
A poll of 500 residents showed unanimous opposition to the removal of any services from Orsett hospital. On 27 February, the district health authority again considered the future of services in the area and proposed this time that all maternity, gynaecological and children's surgery should go to Basildon hospital, subject to a three-month consultation period.
Before I continue, I want to say that I am deeply concerned about the possibility of any cuts in hospital provision in the Basildon and Thurrock district health authority area. Nevertheless, at the moment it is the future of Orsett hospital which is causing me and my constituents great concern.
Although Orsett hospital is situated in the east end of the borough and is in fact in the Billericay constituency, it largely serves my constituency from the west end of the borough. Although Orsett and Basildon hospitals might appear to be not too far apart geographically, the journey from Basildon, from the west end of my constituenly, is very difficult. Constituents—mothers-to-be—travelling from Grays, Purfleet, Tilbury, West Thurrock, Aveley and South Ockendon, find the journey to Basildon hospital even more difficult than the journey to Orsett hospital. If an ambulance had to bring an emergency patient to the hospital, the additional few miles could cause tremendous problems. Traffic in the area is very bad and it would be possible for an ambulance to be held up, perhaps a little too long, to the detriment, even death, of a patient.
The hospital has been described as an excellent hospital in which the maternity unit and antenatal care form a good service for my constituents. About 40 percent. of births in the area take place at Orsett hospital, and it has about 1,700 births per year. I asked the Department of Health and Social Security for figures and found that the number of births at Orsett hospital per year is about average when compared with other maternity units in England and Wales.
The maternity unit at Orsett hospital does not have a special care baby unit, which wouuld be desirable. However, there are about 60 other hospitals with maternity units which do not have special care baby units. If my constituents are to be provided with a full and proper service, not only should the maternity unit remain, but the hospital should be provided with a special care baby unit so that the needs of my constituents can be fully met.
The district health authority has problems of staffing, but it is difficult to be sure what form those problems take. For example, the district health authority suggests that it wishes to phase out a particular grade of specialist in the maternity and gynaecological unit, but when I questioned the Department on that matter, I found that it was not
422
Department policy for that particular grade to be phased out. Staffing problems are indicative of financial problems. Since 1982, the district health authority has had its budget reduced by £2·5 million—5 per cent. Some of that is due to the resource allocation working party formula and some is due to a reduction in efficiency.
Over the period 1984 to 1993 there is a planned reduction for the regional health authority in the long-term resource allocation. All of those cuts will mean not only the disappearance of the maternity unit at Orsett hospital, but the ear, nose and throat, children's services, pre-convalescent geriatric services, cuts in the family planning service and other general cuts. Those cuts are being made in an area which is growing. At present the need for maternity units at Basildon and Orsett hospitals is based on population figures that are somewhat out of date. In fact, the area is developing pretty rapidly. In Thurrock, my constituency, the number of houses has already increased substantially, and most of them are occupied by young families, many of whom will have children in future years. That feature of the area has been picked up by the local press. For example, the Basildon Evening Echo reported on 28 February:
"Essex, already one of the largest shire counties in the country, will be the centre of another massive population explosion between now and the year 2001."
The paper goes on to comment that the prospective baby boom is one of the main Problems·worrying county hall officials, and that possibility should be worrying the district health authority more than it appears to be at the moment.
I also wish to refer to the accident and emergency unit. I have, of course, discussed the matter with the district health authority, including the district manager, Mr. Taylor. He has given me assurances that the district health authority has committed itself to two-centre planning for accident and emergency units—one at Basildon and one at Orsett. In my view, those two units are essential not only because of the population, but because of the serious risks from the industry in the area. Thurrock, in particular, is noted for oil refineries, power stations, petrochemicals and the docks, and the M25 and the dualled A13 are extremely busy roads. As I fear we know all too well, traffic on such roads can mean serious injuries in accidents.
Although I have been given assurances, I am extremely concerned about the future of the two units in view of the cuts in the resources of the district health authority. Some of the savings that the district health authority expects to make will come from competitive tendering for cleaning services and so on. Other savings are supposed to come from increased efficiency. I am sure the Minister knows that, as few services in the Basildon and Thurrock district health authority area have been put out to competitive tendering, the prospective savings from that can be only guessed at, and cannot be regarded as certainties. I do not expect the Minister to admit that, but, on the other hand, the efficiency savings are to be found more on paper than in actuality.
Therefore, I am concerned about the future of those services, in spite of the fact that I believe that the district health authority does not want to see the two accident and emergency units disappear. That point was also covered in the Basildon Evening Echo in some detail on 3 March, just this week.
I referred to the maternity unit, and that of course is my prime concern. It is an efficient and attractive unit.

423
Patients readily turn to it. They value the services provided by Orsett hospital very much, and many of the older residents in Thurrock regard Orsett as their hospital. Let me give the Minister a little history. The original hospital for Thurrock was in Tilbury, in the docks area. It was brought into being by public subscription. Eventually that hospital became out of date and was transferred to a new building at Orsett. The hospital is very much the result of past community effort. Any cuts in services, particularly in maternity services, would be bitterly resented by the whole community.
The Minister and other hon. Members have had experience of dealing with petitions. They will know that the obtaining of 55,000 signatures on a petition in a very short time, without any real effort by the organisers, shows the depth of feeling in the constituency about any threat to the maternity services and the accident and emergency units at Orsett.
The number of live births, 1,771 in 1984, means that the maternity unit is about the same size as other maternity units throughout the country. In regard to the views of the medical profession, Professor Sorors, professor of paediatrics at University College hospital, commenting on a suitable and viable size for a maternity unit, said:
"Not less than 2,000 deliveries a year would be ideal … but it is not practicable, I do not suppose, for every woman in this country to be delivered in a unit of that size."
The West Midlands regional health authority has said that a minimal work load of 1,500 deliveries per year is acceptable for a maternity unit. The professor suggested that a large unit was ideal, but he recognised that other considerations were important besides the mere number of deliveries per year. The maternity unit must be acceptable and accessible. Patients must be able to reach it easily, should they find that the birth is more imminent than expected, or is risky. If a patient has to be rushed to hospital, the accessibility of the maternity unit is important.
Because of the antenatal care provided at Orsett, a mother has her baby in familiar and friendly surroundings. I have visited the maternity unit more than once for constituency, not personal, reasons. I have also visited the prenatal unit. I was most impressed by the care and concern shown by the staff, by the brightness and friendliness of the surroundings and by the way in which people are treated in the maternity unit.
The maternity unit is a valued part of the community to which the residents feel they have contributed in the past. They are determined that it should remain. If the petition is anything to go by, my constituents will not accept the closure of the maternity unit. They find the journey to Basildon long, difficult and expensive by public transport. They want their familiar and friendly hospital. The medical and financial reasons are not adequate justification for refusing to let the residents of Thurrock have the service that they need and desire.
The present population want the services. Mothers who are moving into my constituency in large numbers want a convenient maternity unit. If the number of births is to be a consideration, the growth of the population will remove that as a justification for closing the maternity unit. To close the maternity unit only to find that the growth in population necessitated its reopening would be a grave error that would cause unnecessary anxiety and suffering. It would simply be a financial mistake.
424
I hope that the Minister will take account of what I have said and begin the consultation period, which will be completed in May. I know that my constituents are relying on me to present their views tonight, and they will no doubt present their views very forcibly indeed during the consultation period.
We expect the Government to ensure that a good maternity service will remain at Orsett hospital to serve my constituency. We hope that the Basildon and Thurrock district health authority area will not experience cuts and loss of services.
11.41 pm
Mr. K. Harvey Proctor: rose—
Mr. Deputy Speaker (Sir Paul Dean): Do I understand that the hon. Gentleman has the agreement of the hon. Lady and the Minister to intervene?
Mr. Proctor: Yes, Mr. Deputy Speaker.
This is the third in a series of Adjournment debates on the reorganisation of health services by the Basildon and Thurrock health authority, and the hospital to which the hon. Member for Thurrock (Dr. McDonald) has referred is in my constituency. I ask the Minister to assure my constituents that Orsett hospital is quite safe. Such an assurance is needed for morale and recruitment reasons which my hon. Friend will readily understand.
Orsett hospital is a larger hospital than Basildon district hospital. It is providing substantially more general surgery and medicine than Basildon. It is the only ENT in-patient service in the Basildon and Thurrock district area. It is less than 15 years old, and in investment terms it is today worth between £30 million and £35 million. There is bound to be at least 60 years of life left in it, and it is needed to provide a substantial part of the acute services for my constituents.
I should be grateful for an assurance from my hon. Friend about the safety and the future of Orsett hospital, and I look forward to his response to the comments of the hon. Lady on the maternity and accident and emergency units.
11.42 pm
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Ray Whitney): I recognise that the subject that the hon. Member for Thurrock (Dr. McDonald) has chosen is of great importance and concern to her constituents and to the constituents of my hon. Friends the Members for Billericay (Mr. Proctor) and for Basildon (Mr. Amess), whose presence I also welcome.
As my hon. Friend the Member for Billericay said, this is the third debate in as many months on the organisation of NHS facilities within the Basildon and Thurrock health authority. The views of the constituents of my hon. Friends were represented in the debates in January and December. Following the earlier consultation— as the hon. Lady recognised—the district health authority decided not to proceed with its earlier proposals, but on reconsideration it has issued a further set of proposals relating solely to the provision of maternity services.
As in the previous debates, at the centre is the proposal that has been put out for public consultation by the health authority. I must emphasise that it is only for consultation. The proposal is for the centralisation of maternity, gynaecology and paediatric in-patient services on one site

425
in the district. If the community health council, which represents the views of the community, objects to the proposal, and if the regional health authority then supports the plans, it will come to Ministers for final decision.
The hon. Lady will well understand that it would not be appropriate for me to pronounce at this stage on the validity of the arguments either for or against the proposals that the district health authority put out only on 27 February for consultation. Therefore, as I hope the hon. Lady will understand, I cannot respond in favour or against her points. I achnowledge that she has properly used the procedures of the House to make clear her constituents' anxiety, which is shared by those of my hon. Friends, but I may not respond in a way that might prejudice the well established procedures for dealing with such important matters.
Comments on the consultation are required by 30 May 1986. All that is said in this debate, and all other relevant factors, will then be weighed carefully by the health authority to see what is best for the overall interests of all its patients. Therefore, the time for Ministers to play their part has not yet arrived, and there is no certainty that it will.
One issue is central to the proposal to relocate Basildon and Thurrock's in-patient maternity services upon which I can comment. It is not unique to this proposal, and it keeps cropping up wherever Health Service reorganisa-tions Are discussed. It is the question where best to locate services in a district with several large population centres. I reiterate the points made by my right hon. Friend the Minister for Health in the Adjournment debate in the House on 3 December, when my hon. Friend the Member for Basildon spoke so eloquently and movingly to express his great concern about the proposal at that time to withdraw in-patient maternity provision from Basildon hospital, and to concentrate maternity services at Orsett. Although the proposal now is to centralise these services at Basildon and not now at Orsett hospital, the points made then remain valid.
First, it would not make sense to provide all facilities come what may in every large town in a district. I hope that the House will accept that. It must be recognised that where it makes no medical or economic sense to preserve the status quo, change is essential and extremely difficult decisions must often be taken. That proposition finds wide agreement in principle, but in practice real and strongly held objections will arise when a town is chosen for a closure or major change of provision. But the health authority has a duty to make those difficult decisions, and to seek to get the balance and distribution of services right for the majority of its patients.
Secondly, I understand that the district health authority continues to believe that mothers and babies in the district will receive better and safer in-patient care, if they are cared for in a central unit where there is adequate
426
paediatric cover. I understand that it is proposed that outpatient ante-natal and post-natal clinics will continue at both Orsett and Basildon, as will accident and emergency services. The authority has also said that it is committed to maintaining the integrity of both hospitals as acute hospitals. I hope that my hon. Friend the Member for Billericay will accept that undertaking, which is not challenged.
I understand that there is also a genuine staffing resource problem over providing obstetric services at more than one hospital. The district reports an unstable and unsatisfactory medical staffing structure that would be brought up to standard by centralisation.
Those reasons together suggest to the district health authority that a safer, enhanced standard of service will be provided only if in-patient services for maternity, gynaecology and paediatrics are concentrated on one site. The future organisation of those services are now being considered on their own, and not, as previously, as part of a package covering other services. As a result, the district believes that the services should be centralised, not, as the hon. Member for Thurrock has argued, at Orsett, but at Basildon. I stress that that proposal is service-led and revenue-neutral and does not stem from a desire to save money.
In response to the hon. Lady's point about funding, I hope that she accepts that the issue here is how best to provide maternity cover of the highest quality for her constituents and those of my hon. Friends. It is not a matter of finances. Inevitably, there are financial problems, of which we are all aware, but I repeat—as I have done many times during debates on changes in health provision—that it is important to recognise that the proportion of resources, in real terms, devoted to our health services is steadily increasing. Next year, there will be an increase of no less than 6·7 per cent., with forecast inflation of 4·7 per cent. Of course, RAWP also has an impact here, but North-East Thames regional health authority will receive an increase of 5·7 per cent. —significantly above the forecast rate of inflation.
The district health authority has problems, but here, too, I hope that hon. Members will recognise and acknowledge the achievements of the district authority in treating more patients. For example, between 1982 and 1984, in-patient treatment increased by no less than 12 per cent., and the number of day cases treated increased by 24 per cent.
The district health authority is managing its resources well and is extremely sensitive to the needs of the community. It is seeking better provision, and I hope that the consultation exercise will achieve that. I assure the hon. Lady and my hon. Friend that their contributions to the debate will be taken carefully into account as part of the consultation exercise which an issue of this seriousness and importance merits.
Question put and agreed to.
Adjourned accordingly at nine minutes to Twelve o' clock.

TRADE AND INDUSTRY
  Vehicle Manufacturers (State Aid)
  Vehicle Manufacturers (State Aid)
  Multi-fibre Arrangement
  Multi-fibre Arrangement
  General Motors (Imports)
  General Motors (Imports)
  Footwear Exports
  Footwear Exports
  Kenya (Debt)
  Kenya (Debt)
  Private Mobile Radio
  Private Mobile Radio
  Potatoes
  Potatoes
EDUCATION AND SCIENCE
  Students (Fees)
  Students (Fees)
  Young Persons (Employment)
  Young Persons (Employment)
  Schools (Capital Allocations)
  Schools (Capital Allocations)
  Medical Research Council
  Medical Research Council
  Science Budget
  Science Budget
PRIME MINISTER
  Government Achievements
  Government Achievements
  EC (Budget)
  EC (Budget)
  "List of Ministerial Responsibilities"
  "List of Ministerial Responsibilities"
  Mr. Harvey Michael Ross
  Mr. Harvey Michael Ross
  Bullion Crimes (Israel)
  Bullion Crimes (Israel)
  Research and Development Budget
  Research and Development Budget
  Parliamentary Questions
  Parliamentary Questions
SOCIAL SERVICES
  Special Hospitals (Patient Abuse)
  Special Hospitals (Patient Abuse)
  Nuclear Installations (Cancer)
  Nuclear Installations (Cancer)
  Dental Charges
  Dental Charges
  War Pensions
  War Pensions
  Pensions and Benefits
  Pensions and Benefits
  Rape Crisis Centres
  Rape Crisis Centres
  NHS (Cleaning Contracts)
  NHS (Cleaning Contracts)
  Child Employees
  Child Employees
  Social Security Reform
  Social Security Reform
  Supplementary Benefit
  Supplementary Benefit
  Income Support
  Income Support
  Social Security Bill
  Social Security Bill
  Ophthalmology (Waiting Times)
  Ophthalmology (Waiting Times)
  Pharmaceuticals (Product Licences)
  Pharmaceuticals (Product Licences)
  Cookers (Single Payments)
  Cookers (Single Payments)
  Pensioners (Payments Overseas)
  Pensioners (Payments Overseas)
  Severe Weather Payments
  Severe Weather Payments
  Sickness Benefit
  Sickness Benefit
  Heart Disease
  Heart Disease
WALES
  NHS (Management)
  NHS (Management)
  Education (Capital Allocations)
  Education (Capital Allocations)
  Hypothermia
  Hypothermia
  North Wales Social Work Practice Centre
  North Wales Social Work Practice Centre
OVERSEAS DEVELOPMENT
  Aid Trade Provision Projects
  Aid Trade Provision Projects
  Antigua and Barbuda
  Antigua and Barbuda
TRANSPORT
  M4 (Service Stations)
  M4 (Service Stations)
  Commissioners of Irish Lights
  Commissioners of Irish Lights
  Okehampton Bypass
  Okehampton Bypass
ENERGY
  Electricity Industry (Privatisation)
  Electricity Industry (Privatisation)
SOLICITOR-GENERAL FOR SCOTLAND
  Salmon Poaching
  Salmon Poaching
EMPLOYMENT
  Training and Special Employment Schemes
  Training and Special Employment Schemes
  YTS
  YTS
  Labour Statistics
  Labour Statistics
  Sellafield
  Sellafield
  Training Credit Scheme
  Training Credit Scheme
  Darlington Jobcentre
  Darlington Jobcentre
  Enterprise Allowance Scheme
  Enterprise Allowance Scheme
  Factory Inspectors
  Factory Inspectors
HOME DEPARTMENT
  Durham Prison (H Wing)
  Durham Prison (H Wing)
  Fire Service Control Rooms
  Fire Service Control Rooms
  Police Control Rooms
  Police Control Rooms
NORTHERN IRELAND
  Nuclear Bunkers
  Nuclear Bunkers
DEFENCE
  Crown Liability
  Crown Liability
  Fulbeck Airfield
  Fulbeck Airfield
  Education (Capital Allowances)
  Education (Capital Allowances)
SCOTLAND
  Road Statistics
  Road Statistics
  Road Schemes
  Road Schemes
FOREIGN AND COMMONWEALTH AFFAIRS
  Philippines
  Philippines
  European Community
  European Community
  United Nations Relief and Works Agency
  United Nations Relief and Works Agency
  Lebanon (Israeli Action)
  Lebanon (Israeli Action)
  Chile
  Chile
  Disarmament Talks
  Disarmament Talks
  Falkland Islands
  Falkland Islands
  Syrian Foreign Affairs Minister
  Syrian Foreign Affairs Minister
  European Commission (UK Presidency)
  European Commission (UK Presidency)
  Central America
  Central America
  Argentine Politicians (UK Visit)
  Argentine Politicians (UK Visit)
  South Africa
  South Africa
  Israel (North Sea Oil Sales)
  Israel (North Sea Oil Sales)
  Philippine Ambassador
  Philippine Ambassador
  South African Military Attaches
  South African Military Attaches
  European Community (Procedural Reform)
  European Community (Procedural Reform)
  European Community (Policy Co-ordination)
  European Community (Policy Co-ordination)
  Soviet Jewry
  Soviet Jewry
  Pakistan
  Pakistan
  El Salvador (Officer Training)
  El Salvador (Officer Training)
  Soviet Union (Human Rights)
  Soviet Union (Human Rights)
  Syrian Foreign Affairs Minister
  Syrian Foreign Affairs Minister
  Palestine Liberation Organisation
  Palestine Liberation Organisation
  African National Congress
  African National Congress
  Soviet Foreign Minister
  Soviet Foreign Minister
  Anti-ballistic Missile Treaty
  Anti-ballistic Missile Treaty
  European Community (Majority Voting)
  European Community (Majority Voting)
  Libya
  Libya
  Saudi Arabia
  Saudi Arabia
  Mexico and Venezuela (Debt)
  Mexico and Venezuela (Debt)
  Nuclear Disarmament
  Nuclear Disarmament
  Nicaragua
  Nicaragua
  Latin America (Debt)
  Latin America (Debt)
  Human Contacts (Conference)
  Human Contacts (Conference)
  European Commission
  European Commission
  Turkey
  Turkey
  Middle East
  Middle East
  South Africa (North Sea Oil)
  South Africa (North Sea Oil)
  British Council
  British Council
  Iran-Iraq War
  Iran-Iraq War
  Palestine
  Palestine
  Uganda (Ministerial Visit)
  Uganda (Ministerial Visit)
  Nelson Mandela
  Nelson Mandela
  European Community (Policy Department)
  European Community (Policy Department)
  Strategic Defence Initiative
  Strategic Defence Initiative
  Mr. Adnan Mansour Ghanem
  Mr. Adnan Mansour Ghanem
  Embassy and Consulate Staff
  Embassy and Consulate Staff
ENVIRONMENT
  Companies (Blacklisting)
  Companies (Blacklisting)
  Written Question (Cost)
  Written Question (Cost)
  Binswood Hall Playing Fields, Leamington Spa
  Binswood Hall Playing Fields, Leamington Spa
  Industrial Technology Park, Warwick
  Industrial Technology Park, Warwick
  Nature Conservancy Council
  Nature Conservancy Council
  Woodlands
  Woodlands
  Local Authority Services
  Local Authority Services
  Rates
  Rates
  Radioactive Materials
  Radioactive Materials
  Haringey Direct Labour Organisation
  Haringey Direct Labour Organisation
  Local Government Reform
  Local Government Reform
  Nuclear Installations Inspectorate
  Nuclear Installations Inspectorate
  Rate Support Grant
  Rate Support Grant
AGRICULTURE, FISHERIES AND FOOD
  Outgoers Scheme
  Outgoers Scheme
  Milk Quotas
  Milk Quotas
  EC (Food Sales)
  EC (Food Sales)
  Liquid Skimmed Milk
  Liquid Skimmed Milk
  EC (Agricultural Expenditure)
  EC (Agricultural Expenditure)
NATIONAL FINANCE
  European Community Budget
  European Community Budget
  Government Departments (Costs)
  Government Departments (Costs)
  Car Tax
  Car Tax
  Tax Offices (Access)
  Tax Offices (Access)
  EC (Budgetary Controls)
  EC (Budgetary Controls)
  Gold Bullion Market
  Gold Bullion Market

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

HOTOL: Development Plans
Lord Campbell of Croy: 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 contributions they are making to research into a horizontal take-off space vehicle intended for intercontinental travel.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, Her Majesty's Government recently announced agreement to join industry in funding work on a pre-feasibility study on HOTOL, a single stage into orbit horizontal take-off vehicle. Initially this is intended to be an unmanned space satellite launch vehicle, but industry's proposals include man-rating for intercontinental travel at a later stage.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that information. Can he give any estimate of when approximately the vehicle is likely to come into service? Is it to be used by commercial airlines, if it does move towards passenger service?
Lord Lucas of Chilworth: My Lords, this particular phase—the pre-feasibility study—will take two to three years. If there is further progress then that will probably take another seven years. Therefore one is perhaps looking towards the end of this century or the beginning of the next century before one sees effective use made of it.
Lord Bruce of Donington: My Lords, is the Minister aware that if his reply to his noble friend may be taken as indicating that Her Majesty's Government are willing to make a contribution towards the project, then it is to be very much welcomed?
However, is it not the case that the Government are in a very embarrassing position in respect of that project? In the first place, when the appropriate industries were privatised it was to free them from the necessity of Government finance. Secondly, how can it be expected that private finance will be available for the project when, without any risk at all, money can be invested in industries that are being denationalised at a very low price?
Lord Lucas of Chilworth: My Lords, Her Majesty's Government are in no embarrassing position whatsoever. It is the Government's policy to support innovation in industry, and that is what is being done
172
at this pre-feasibility stage. We hope that industry will make sufficient progress to bring opportunities for collaboration with other partners. We hope very much that the British Government will be involved in future collaboration.
Lord Elwyn-Jones: My Lords, can the noble Lord say in which part of the next century we may hope to see the developments that he was indicating? Some of us, alas, may not be there to witness them.
Lord Lucas of Chilworth: My Lords, I am sufficiently optimistic about industry's endeavours in this matter and indeed about the longevity of the noble and learned Lord, Lord Elwyn-Jones, to assure him that he is likely to see much progress.
Lord Campbell of Croy: My Lords, can my noble friend, to reassure some of us, tell the House whether it will be possible for early warning systems in every part of the world to have a built-in and reliable method of identification, to make certain that such vehicles are correctly identified and are not mistaken for missiles?
Lord Lucas of Chilworth: My Lords, that is a very interesting point and I shall draw it to the attention of my right honourable friends. I am sure that my noble friend will recognise that we are at this time at a very early stage of development.

Arms Industries: Debtor Countries
2.40 p.m.
Lord Kennet: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they consider that the development of large-scale arms industries in debtor countries such as Brazil and Argentina, with the approval of the IMF, has any implications for world stability.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, we recognise the right of all countries to decide their own policy on arms production and procurement. Neither we nor the International Monetary Fund are in a position to dictate to a country its political priorities. At the same time, we welcomed the suggestion contained in the United Nations Study on Conventional Disarmament that negotiations be held between suppliers and recipient nations on the possible bases for agreements to restrain the transfer of arms, perhaps initially on a regional basis.
Lord Kennet: My Lords, will the Government do what they can to bridge the two parts of that Answer, to persuade the IMF to use its undoubted influence over the way in which recipient governments spend their moneys to that end? Is it not the case that of all the things that developing countries can do in order to try to reduce their debt by manufacturing and selling abroad, the manufacture of arms is the only one that is intrinsically destabilising and that destroys rather than creates wealth?
Baroness Young: My Lords, one has to be clear about the functions of the International Monetary Fund, which provides short-term balance of payments support. It does not specify particular uses of loans. Indeed, the conditions that are attached to loans are aimed at restoring the position of borrowers' balances of payments and their long-term economic growth.
Lord Cledwyn of Penrhos: My Lords, will the noble Baroness explain to the House what precisely is the policy of Her Majesty's Government on this issue? Do the Government approve of the sale of arms to countries whose economic affairs are in a complete shambles? Is a country's economic situation taken into account before the Government approve the sale of armaments to that country? Secondly, will the Minister say what system exists to monitor the sales of arms to other countries?
Baroness Young: My Lords, the position of the Government on the question of arms sales is that we consider each circumstance on a case-by-case basis wherever it may be; but we do not agree to the sale of any equipment which in our judgment is likely to be used for internal repression or in order to violate human rights.
Lord Williams of Elvel: My Lords, can the noble Baroness tell us how Brazil and Argentina, in those two cases, are going to pay for the arms, given their present financial situation?
Baroness Young: My Lords, I think this is a supplementary which is quite wide of the Question, which is really concerned with the development of the armaments industries within the countries themselves. But perhaps I may add for the noble Lord that Article 51 of the United Nations Charter stresses that independent states have the inherent right of individual or collective self-defence.
Lord Barnett: My Lords, surely even the Foreign Office must have some concern for the second half of the Question; namely, world stability? Does not even the Foreign Office have some discussion with the Treasury about the dangers to world stability, the effect on the banking systems of countries like these in the developing world and the effect on the banks in the Western world? Therefore, can the noble Baroness answer the second half of the Question about the Government's policy in relation to the implications to world stability?
Baroness Young: My Lords, as I have already indicated, all aspects of a debtor's economic performance are considered in debt negotiations. Of course, I recognise that the second half of the original Question is concerned with the very wide issue of world stability. Naturally the Government are concerned about peace in the world, which is a very large question; but as I have already indicated, it is an inherent right of any country to develop armaments for their own defence and security.

Space-based Ballistic Missile Defence
2.44 p.m.
Lord Kennet: My Lords, I had given notice of my intention to ask, as the second Question standing in my name on the Order Paper, the following:
To ask Her Majesty's Government whether they consider that the refusal by the Government of the USA to discuss space-based ballistic missile defence at Geneva is consistent with the aim, declared jointly by the USA and the Soviet Union, of preventing an arms race in space.
May I point out to the House, however, that there is a mistake in the wording of the Question, which is my fault and for which I apologise. Instead of referring to,
"the refusal … of the USA to discuss space-based ballistic missile defence at Geneva",
the Question should have spoken of,
"the refusal … of the USA to discuss restrictions on space-based ballistic missile defence".
Baroness Young: My Lords, the objective of the Geneva talks between the United States and the Soviet Union is to:
"work out effective agreements aimed at preventing an arms race in space and terminating it on earth, at limiting and reducing nuclear arms, and at strengthening strategic stability".
The communique issued after the talks between Secretary Shultz and Mr. Gromyko in January 1985 made clear that the complex of questions concerning space and nuclear arms would be considered and resolved in their inter-relationship. President Reagan has now put forward further proposals to this end. They have our full support. We hope the Soviet Union will now allow rapid progress in the talks.
Lord Kennet: My Lords, what is the purpose of the talks? Is it, or is it not, to restrict space-based strategic missile defence? If it is not to restrict space-based strategic missile defence, what is the point of discussing it? If it is to restrict it, what are the American proposals to restrict it, given their well-known insistence on blinding ahead with star wars?
Baroness Young: My Lords, President Reagan has responded to the proposals that have been made by Mr. Gorbachev and there has been close consultation about this response which has our full support. It is a practical step-by-step approach and we hope that the Soviet Union will now match its words with deeds and allow rapid progress, not just of the bilateral, nuclear and space talks at Geneva, but also of the multilateral negotiations at Stockholm, Vienna and Geneva on conventional and chemical arms control.
Lord Gladwyn: My Lords, can the noble Baroness tell the House what is the exact position regarding the discussions, or otherwise, at Geneva of ASAT—that is to say, anti-satellite activities—and the possibility that each side might shoot down the other's satellites? That is a very important aspect. What is the position? Is it being discussed?
Baroness Young: My Lords, on the question of anti-satellite weapons, we have welcomed President

175
Reagan's confirmation on 20th August 1985 that the United States is endeavouring, in good faith, to negotiate with the Soviet Union a mutual and verifiable agreement, with the strictest possible limitations on anti-satellite weapons consistent with the national security interest of the United States. We should recall that, unlike the Americans, the Russians possess a deployed ASAT system.
The Lord Bishop of Birmingham: My Lords, the noble Baroness tells us that the talks in Geneva have the full support of Her Majesty' Government. Can she also tell us whether Her Majesty's Government have any reservations at all about the money being spent on SDI in preventing a nuclear arms race in space?
Baroness Young: My Lords, the position of the Government on SDI is based on the four points which were set out following on the agreement between my right honourable friend the Prime Minister and President Reagan in December 1984. As the right reverend Prelate will know, we have agreed to take part in the research on SDI.
Lord Gladwyn: My Lords, do I understand from the noble Baroness that ASAT is now being discussed at Geneva?
Baroness Young: My Lords, I have quoted from the communication precisely what President Reagan said. The talks that are going on at Geneva cover a whole range of these space weapons.
Lord Jenkins of Putney: My Lords, does the noble Baroness appreciate that in following these exchanges it is very difficult to discover whether the Government agree or do not agree that there has been a refusal by the American Government to discuss space-based nuclear weapons? Could the noble Baroness at least clarify that point? Do the Government agree that the Americans have refused to discuss these matters in the sense that the Question poses?
Baroness Young: My Lords, the Russians have made much use in public of the statement that a condition of progress at Geneva is the abandonment by the United States of SDI. In practice this has not prevented the Russians from putting forward specific proposals, both in September 1985 and subsequently on 15th January this year. We believe that the immediate priority is the reduction by each side of offensive weapons, and we hope now that the Soviet Union will allow rapid progress to be made in the Geneva talks.
Lord Cledwyn of Penrhos: My Lords, may I refer to the Memorandum of Understanding which was signed recently? Can the noble Baroness say whether details of this memorandum are to be published by Her Majesty's Government? Can she also say how many contracts have resulted from this memorandum, and what are the value of the contracts?
Baroness Young: My Lords, without notice I could not give the noble Lord an answer to the second part of his question. If he would put down a Question on
176
that point I should be happy to answer it. So far as concerns the number of contracts, two have been signed since the MoU, one with Heriot-Watt University and one with Ferranti.
Lord Kennet: My Lords, the Minister of State has mentioned the operational Soviet ASAT system. Will she confirm to the House that 20 years ago the United States had an operational ASAT system and that no doubt this had some influence in causing the Soviet Union to decide to have one, too?
Baroness Young: My Lords, I was stating a fact about the Soviet operational ASAT system which I think is relevant to the whole discussion of this matter.
Lord Cledwyn of Penrhos: My Lords, I am very grateful to the noble Baroness for the information she has given about contracts. Could she say a little more about the contracts with Herriot-Watt University and with Ferranti? What is the nature of the contracts and what employment will flow from them?
Baroness Young: My Lords, the contracts concern optical computing. Again, I am afraid I cannot give the noble Lord an answer on the precise number of jobs that would be involved.

Share Dealing: Investor Protection
2.43 p.m.
Lord Pender: 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, in view of the effect of their privatisation policy in increasing the number of shareholders, whether they will encourage the Stock Exchange to make share dealing easier for the individual.
Lord Lucas of Chilworth: My Lords, Her Majesty's Government believe in a property-owning democracy in the widest sense. Ownership of shares is an effective mechanism available to spread ownership of economic activities and the rewards of economic success; hence the Government's privatisation programme, and the special measures they have taken, in pursuing it, to favour employees and small investors. The members of the Stock Exchange have a crucial part to play in the process of spreading share ownership.
Lord Pender: My Lords, I thank my noble friend the Minister for that reply. Would he consider that there is an urgent need to simplify the mechanism of share transactions in order to dispel the reservations of potential investors? Can the noble Lord state the precise number of individual shareholders in the United Kingdom compared with the total in 1979?
Lord Lucas of Chilworth: My Lords, the other place is currently considering legislation, through the Financial Services Bill, and also the Building Societies Bill, both of which are in part designed to strengthen investor protection and knowledge and thereby to

177
reduce one possible cause of hesitation to invest in shares. I think that there is an acknowledgment that members of the Stock Exchange are perceived as unapproachable. I think that is a psychological barrier which needs to be broken down, but the remedy is very much in their own hands. As regards the second part of my noble friend's supplementary question, there are no precise comparative figures available, but we believe that ownership of listed stocks has approximately doubled since 1979.
Lord Bruce of Donington: My Lords, is the noble Lord aware that his honourable friend in another place and his department have supplied an answer to his noble friend, in that the estimated number of shareholders in the United Kingdom is 2,700,000? Is the noble Lord further aware that that number has not been altered perceptibly by the Government's process of privatisation, in that large numbers of people have taken advantage of the bull market and realised a profit, as was indicated in the Economist on 21st February last—and perhaps the noble Lord would look at that issue? If the noble Lord wants to ease the way in which one obtains shares, will he take note of the fact that the easiest way of acquiring shares is to have the money to acquire them, when it becomes quite simple, and that over 60 per cent. of the population do not have the resources to buy shares at this time, because the rich are getting richer and the poor are getting poorer?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Bruce of Donington, reminds me of what my honourable friend said in another place. I know what my honourable friend said in another place, and the 2 million-plus figure that he mentioned represents 28 per cent. of listed equities directly owned by individuals, which is a reversal of the position that obtained in the 1950s. As regards the owners of shares selling in a bull market, that is exactly what the marketplace is about. I do not know why the noble Lord should mention it in such a condemnatory manner. However, in relation to his last point, I think it is interesting to appreciate that of the 2,130,000 applicants for BT shares there are today 1,650,000 of the original shareholders, and they represent some of the people who are not normally known to be dealing in shares and who have small stakes, which I think knocks on the head the inference contained in the noble Lord's last point.
Baroness Fisher of Rednal: My Lords, in such a property-owning democracy would the noble Lord consider the bid from the British Leyland consortium and allow that also to be a participant in the business which it has set up? I refer not only to the management but also to the employees in that organisation.
Lord Lucas of Chilworth: My Lords, I think that I have made it quite clear on a number of occasions that the Government welcome the participation of management and workers in all of industry, as they encourage wider share ownership throughout industry.
Lord Glenamara: My Lords, if the Government want the wider ownership of shares, does the noble
178
Lord think that the noble Lord, Lord Pender, is on to a very important point? He asked whether the dealing in shares—and perhaps I may add the cost of dealing in shares—should be simplified.
Lord Lucas of Chilworth: My Lords, of course my noble friend is concerned in this matter, which is indeed why he put down his Question. I believe that my original Answer, and indeed my answer to my noble friend's supplementary question, explain some of the measures which the Government have taken. To elaborate, perhaps I may add that over the years we have taken a number of very important fiscal measures—for example, the abolition of the investment surcharge in the Finance Act 1984; the continued uplifting of the capital gains tax threshold; the indexation provisions; the business expansion scheme through the Finance Act 1983 and the stamp duty reduction to 1 per cent. All of these measures have made the ownership of shares easier in both a financial and a mechanical manner.
Lord Morris: My Lords, is my noble friend aware that the simplest way to encourage further share ownership is to do everything to foster the correct environment for brokers to open local offices rather than insisting that their clients come to London?
Lord Lucas of Chilworth: My Lords, I agree with my noble friend. He will appreciate that a number of members of the Stock Exchange have changed the method by which they sell and deal. There is a growth in out-of-London membership and an increase in the number of what I might call share shops in departmental stores being opened by some of the leading stockbroking companies. One anticipates that the practice will gather momentum
Lord Kinnaird: My Lords, is my noble friend aware that it may not be wise to make share dealing too simple? Anyone who has been in the Stock Exchange—I was in it for 25 years—will know full well that it is far easier to lose money than to make it.
Lord Lucas of Chilworth: My Lords, I have a lot of sympathy for my noble friend. I think that the provisions in the financial services legislation on advising potential buyers will undoubtedly underline the losses as well as the profits that may accrue through dealing in shares.
Lord Mackie of Benshie: My Lords, is it not extraordinary that in spite of all the steps that the Minister has so triumphantly delineated the country continues to decline in the export of manufactured goods?
Lord Lucas of Chilworth: My Lords, the country is not declining in the export of manufactured goods. Total exports of manufactured goods in 1984–85 are at a record high and they are growing month by month.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Lucas of Chilworth will, with the leave of the House, repeat

179
a Statement that is to be made in another place on BL. That will be followed by my noble friend Lord Elton who, again with the leave of the House, will repeat a Statement on the rate support grant 1986–87: grants recycling.
Also with the leave of the House, I should like to say a word about the two short debates standing in the names of the noble Lords, Lord Allen of Abbeydale and Lord Annan. As the mover is customarily allowed approximately 15 minutes and the Minister should rise to reply not less than 20 minutes before the scheduled end of the debate, in the case of the short debate in the name of the noble Lord, Lord Allen of Abbeydale, all other speeches should be limited to a maximum of eight minutes, and in the case of the short debate standing in the name of the noble Lord, Lord Annan, 10 minutes. If any noble Lord should speak at greater length he would be doing so at the expense of subsequent speakers in that debate.

Charity Law
3.3 p.m.
Lord Allen of Abbeydale Lord Allen of Abbeydale rose to call attention to the operation of the law relating to charities, and in particular the responsibilities of the Charity Commission; and to move for Papers.
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper.
I think that I should begin by declaring an interest, in that I am a trustee of one or two charities, but it is certainly not a financial one. I should like at the outset to thank all those who have put down their names to speak. There are some 150,000 registered charities in England and Wales which among them receive from the public hundreds of millions of pounds. We are fortunate to have such a wealth of charitable effort, which is recognised by the state in the way of various tax concessions and exemptions, including improvements made by the present Government in regard to covenants and charitable gifts. But Mr. Bob Geldof has shown that there is still a great deal more money which could be found for the right objects.
I originally had it in mind to make a plea today for introducing a provision whereby charitable contributions would be made tax deductible; but then what happened? On 19th February The Times and the Telegraph both came out with the story that that was just what the Chancellor was proposing to do. With my background, I should naturally never suspect that information was disclosed about a Budget intention, but there was such a wealth of corroborative detail that it will be disappointing if nothing on those lines is announced later this month.
Will it be, I wonder, in the simple form of charities being able to recover tax as if all their donors were basic rate taxpayers? Will there be a maximum or a minimum? Will covenants continue?—please. Will the concession, disappointingly, be limited in the first place to companies, as has been suggested by one correspondent who writes as though he is privy to the Chancellor's innermost thinking? I realise that the noble Lord the Minister, when he speaks, will not be able to say much on the issue today and that we can
180
only wait and see and hope. But I must strike one note of warning. It would not be well received if greater generosity to charities were accompanied by a drawing back of the concern of government with social problems on the argument that the voluntary bodies would now be better equipped to take over. That would not do.
There is another financial aspect of great concern to charities—that is, liability to VAT. But I know that other noble Lords have it in mind to speak on that important topic.
Charity law has basically to do with protecting charitable trusts, but in practice it has come to take on this added role of providing the test against which fiscal benefits are judged. It is obviously very important that the sums which enjoy those benefits are not wasted and are not used for non-charitable purposes. I am led therefore to consider, first, the role of the Charity Commissioners, the chosen instrument for the supervision of charities, at any rate south of the Border; and, secondly, the law under which the Charity Commissioners operate.
Let me start with the Charity Commissioners. They have existed in their present form since the Charities Act 1960. They employ some 330 people and cost something like £5 million a year. They will be the very first to say that with their present resources they cannot do all that they would like to do, or anything near it. They register between 3,500 and 4,000 new charities each year. They advise trustees and help with legal schemes. They deal with abuses that come to their notice, and they keep a central register of charities. But, alas, the register is not nearly as informative or as up to date as is desirable, and so far as I am aware there is no immediate prospect of its being computerised. I gather that the commission has had enough trouble with the computer installed for the official custodian of charities.
Let us take accounts. Not all charities which should submit accounts do so, by a long chalk. Those that do come in may not be audited, and the commissioners can look at only a quite tiny number each year. If we look at the picture overall, credit must be given to the commissioners under their present chairman for doing their best, but complaints of serious delay persist and there is no getting away from the fact that the commissioners themselves see their role as purely reactive and they are simply not equipped to take initiatives. They are lacking in resources and it is not exactly comforting to hear rumours that the Treasury is seeking to cut down even that which they have.
Changes in the existing law might afford some slight relief. For example, charities with an income of not more than £15 a year are not required to register. That figure appears in the 1960 Act. If it could be amended and put up substantially, there could at least be a drastic reduction in the size of the register. There are one or two other candidates as well. But whatever was done, there would still remain the problems of charity law itself. It is to these that I now turn.
Charity law has rightly been described as a morass in which no government gladly tread. There is no statutory definition of a charity and the whole edifice rests on the preamble to an Elizabethan statute that has long since been repealed—a rather remarkable

181
example of life after death—and a series of legal judgments, notably one of Lord Macnaghten in 1891, well before the welfare state. That judgment classified charities in the four categories of trusts for the relief of poverty, for the advancement of education, for the advancement of religion (I must say that we have a number of religions that Lord Macnaghten would never have thought of) and for other purposes beneficial to the community. This last category is so wide that under it it has been possible to keep up in some measure with new social developments, as, for example, the fairly recent decision of the Charity Commissioners to change their policy and to accept for registration charities opposing racial discrimination.
In deciding whether or not to register a charity, with all its financial benefits, the commissioners are not making moral judgments or seeking to approve or disapprove particular policies. Their function basically is judicial. It is not surprising that their decisions, from time to time, arouse some slight controversy among those with strong views about the objects of a particular body, as, for example, over the decision of the commissioners to register the Moonies. It is also not surprising that when it is a question of exercising a discretion, the way ahead for the applicant is not always crystal clear. In 1981, the commissioners put out guidelines on how far charities can go in the field of political activities and advocacy. But, to judge from the correspondence that I have been receiving, there is still ample room for argument in individual cases.
There are other topics such as unemployment and job creation where those seeking registration find themselves engaged in something of an obstacle race. Although the relief of poverty is charitable, the prevention of its occurrence, especially overseas, seems not to be. I could go on for quite a time. But no one, so far—there have been various attempts—has come up with convincing ideas as to how the boundary lines of what is and what is not charitable might be clarified and defined by Act of Parliament.
There are, however, a few other, rather more promising, candidates for legislation. Could the easing of the cy-près doctrine in our modest Charities Act last year point the way to some more fundamental change? Should power be taken to enable the commissioners to register a charity provisionally on a kind of probationary basis for a period of years? Should the provisions banning advertising on television be looked at? Should the trustee investment legislation be overhauled? And, since the development of charity law depends upon the decisions of the courts, and since the expense of going there has reduced cases to a trickle, should a suitors' fund be established to enable the important issues to be taken to the courts at public expense on the near analogy of the race and sex discrimination legislation?
With my eye on the clock, I realise that I have skated only lightly over some of the issues. I have had to leave out large chunks altogether. Indeed, to do justice to the subject would require a speech of Gorbachev dimensions. I hope, however, that I have said enough to show why I believe that all is not well. What can be done? Should the Government set up a wide-ranging Royal Commission? There is certainly a case for doing this, but I personally feel a bit dubious. It would take
182
a long time, and my own rather bitter personal experience suggests that there would be no guarantee that the Government would even read the report when it was published.
Another possibility would be an unpretentious Bill dealing with some of the points that I have touched upon, perhaps after scrutiny by a Select Committee. We managed this last year, but I should be a shade surprised if the noble Lord, Lord Glenarthur, was encouraging about the prospects of finding a place for a reasonably early piece of legislation. Perhaps the most profitable and immediate course is to concentrate on the Charity Commissioners themselves. I hope that the noble Lord, when he speaks, will be able to reassure us to some extent about their resources. But, in addition, I would welcome his views on the possibility of calling in outside management consultants to advise on whether the available resources are being employed to the best advantage and to assess how extra resources might best be used. I hope that other ideas will emerge during the debate.
A great deal of money goes to charity with relief from taxation. A great deal more could go. It must be highly desirable to ensure, so far as is humanly possible, that this money is put to good use under provisions that take full and reasonably prompt account of changing social needs. I beg to move for Papers.
3.17 p.m.
Baroness Vickers: My Lords, all of us, I believe, would wish to thank the noble Lord for the excellent manner in which he opened the debate and for the information that he has given us. I wish to talk about one subject; that is, charity chests. These have been formed, and are being formed, in the United States, Canada, Australia, the West Indies, the Canal Zone, Cuba, Hong Kong, Singapore, Greece, Japan, Mexico and the Philippines. They were started originally in Denver, Colorado, nearly 100 years ago, in 1887. There are now 2,200 of them in Canada and the United States. They employ professional people who run them. They co-ordinate programmes and prevent duplication of services.
They were started—one has always to start in a small way—by canvassing from door to door. Nowadays most of the funds come from employee groups and from corporate gifts. I have personal experience of raising money, first, during the war, with the Red Cross penny-a-week fund which I ran for London. That brought in literally thousands a week. It was interesting to discover that Left-wing councils showed no wish to join until Mrs. Churchill introduced aid to Russia. We then received just as much money from those councils as we did from other people.
I also started social services in three states in Malaysia. Here, I was of course a civil servant. I had to think of ideas for raising money in these states to help add to the little money that I was receiving. A separate method had to be thought of for each one. In Negri Sembilan, mostly Chinese, who were gamblers, would come along and, given permission for a week to run a fair, they raised thousands of Malayan dollars. Other states had their own ways of raising money.

183
One of the other aspects I have worked on was the Reader's Digest Panel. Many of your Lordships in this room will remember that remarkable man, George Haynes. He nominated me to go on this panel to help choose between the various voluntary organisations. We did that from 1972 to 1979. Now they have changed to another system and I therefore do not do that any more.
We also remember that the EC has a Social Fund which has proved very useful for many charities, particularly ones relating to young people. The only difficulty is that it is very slow in dealing with the projects. And one year they had as much as £200 million left over which they had not allocated.
I do not want these charity chests to be called "community" chests, because I think that "community" means something quite different from charity—it is far wider—and I should like to stick to the narrower definition. These will help a lot of the very small organisations which are now trying to get going. It is extremely expensive to start organisations. A PR person will want about £10,000 a year. I therefore think that it would be very much better if such organisations could get their information from a central area. I believe that there are a couple which are already considering doing something along those lines.
A number of people who have no family die without leaving a will. I have been going into the amounts of money they leave. The other day one such amount was £1.5 million. I should like to ask the Government—I shall probably not be very popular—if they would put this into the chests: that would be an excellent way of getting the money. I should like to follow what the noble Lord said on that, particularly about charity shops. Practically all the shops which are run sell second-hand goods. It seems very unfair that we should have to pay VAT on their sales.
I hope that the Charities Aid Foundation might be willing to help to sponsor a national charity chest which would amalgamate a collection of money, set up a panel of persons qualified to allocate the money, and so help to stop competition between various charities and lessen their overheads.
I am sure that all your Lordships have appeals coming in in great numbers, especially at Christmas time. There are generally one or two a week. If one lives in London one receives them in London; if one goes down to the country one finds another lot there waiting, and it is very distressing to have to refuse—or refuse a great number. As I mentioned, there are hundreds of trusts from whom we receive these letters. I think that a central organisation would obviate a great deal of this. I think a united funds payroll for community funds and staff charities might help in this situation. I should like to hear from any people interested in this suggestion. Perhaps they would like to give me any ideas on any form of co-operation.
To end, I should like to say that the United States of America gets £800 million a year through its charity chest. I think the Americans are doing a very good job. It appears to me, having looked into it, that they are being very fair about it. They also advise the new charities of the best way to start. I hope that we shall
184
take what the noble Lord has said to heart today and see that charities get a fair look in the future.
3.25 p.m.
Lord Grimond: My Lords, you may think from my exalted position on the batting list that I am speaking officially on behalf of the Alliance. That would be a mistake. I do not know whether the Alliance has a policy on charities. I hope that it has not. I have spent a great deal of my life trying to dissuade the Liberal Party from having policies on everything under the sun. All I am attempting to do this afternoon is to make one or two points which are purely my own idea.
We certainly all owe a great debt to the noble Lord, Lord Allen. Charities are now very big business, as he pointed out. The first point I want to raise is how far we can expect the Charity Commission to supervise them. As he said, at the moment it is finding it very difficult.
One of the things that the Charity Commissioner has to do, in theory, I understand, is to look at 150,000 balance sheets. This seems to be a quite impossible task and I have just asked whether it is necessary. I draw your Lordships' attention to the fact that the Charity Commission operates only in England and Wales. There is no Charity Commission in Scotland: the functions of the Charity Commission are carried out by the Treasury. I think it is very interesting to know whether the Government have made any comparisons between the results in Scotland and those in England and Wales, so that we may find out whether the Scottish experience has any relevance to possibly relieving the Charity Commission of some of its obligations.
The second matter to which I want to refer is the fact that one of the main features of charities is that they escape taxation. I consider taxation to be quite respectable. There is a growing feeling in the country that only fools pay tax, but somebody has to pay tax. Many good causes have to pay tax, and many admirable individuals also. I have been until lately what is usually called a trustee of an organisation called The Joseph Rowntree Social Service Trust. It is not a trust strictly speaking and I was not a trustee. It is a limited company and its objects are laid down in its Articles of Association. It pays tax. Out of an income of some £330,000 a year it pays £140,000 in tax. We would much rather not do that. Nevertheless, it gives us freedom to support any cause which we think is good and within the remit of the founder, whether it is charitable or not.
I think that we have a certain advantage in this. I do not think that many people would feel, for instance, that it was right to support political parties out of untaxed money. I think people would jib at the taxpayer virtually contributing, say, to the National Front and the Communist Party. But it may be a good thing to have in the system somewhere some organisations which are free to take a rather wider look at what may be called a good cause than can possibly be done by the Charity Commissioners.
Therefore, while I pass on the plea for some relaxation in taxation, I do not want it to be thought that I believe that the door can be opened indefinitely wide. I think that it is very reasonable that donations

185
to charity should be made tax deductible by individuals. I would go to the opposite of what I understand is sometimes the fashionable view of the Treasury that they should be made tax deductible by institutions. I think it is much better that they should be made tax deductible by individuals. Further, I would try to expand a little the present flexibility which is very sensibly exercised by the Charity Commission.
Here again, I want to say that even now it is not absolutely axiomatic that all charities necessarily do good. The largest landowner in Orkney is now the Royal Society for the Protection of Birds—a most excellent organisation, with whose objects we no doubt agree in general—but it is doubtful whether it should indefinitely buy up land and become an absentee landowner partly with the help of the taxpayer and in competition with local people who may wish to buy it. I personally have doubts as to whether it is good that infinitely large foundations should be set up for the acquisition of pictures and works of art. Certainly it is wonderful that the Sainsbury family are going to build a new wing for the National Gallery. However, when one thinks of Getty and the possibility of endless Gettys and practically all the major works of art being put into foundations and museums of one sort or another—again, largely because by this means they escape some tax—I at any rate think that the advantage is debatable. I do not go further than that; it is good in some ways, but it is not absolutely obvious that it will be good indefinitely.
However, I think that we might look at those cases where a charity exposes something which is quite clearly wrong. For many years I was, and I still am, connected with the Minority Rights Group. We could of course publish reports pointing out the parlous state and the grievances of minorities; but if we went further than that and suggested that something should be done about them, we would, quite properly, be liable to get into trouble with the Charity Commission. As noble Lords know, people who publish the facts of famine in Africa and go on to say that some action should be taken are also in danger of getting into similar trouble.
Lastly, I want to point to the case of Koeppler. He was someone who some noble Lords may have known well. He was a very remarkable German who was instrumental in setting up an organisation in this country and he tried to leave his money to it for the purpose of holding seminars and conferences about international affairs. However, the courts have held that it did not fall within the definition of "charity". I should have thought that its purposes were exactly the same as those of Chatham House, and it seems to me strange that the law—I have no doubt that it is perfectly properly administered—should have made void Koeppler's bequest for what I should have thought was a purpose which everyone would agree was highly to be encouraged.
Therefore, my own experience is that the Charity Commissioners do a wonderful job, but whether their job needs to be as wide as it is I do not know, and some comparison with Scotland would be interesting. But in general I think that we could make them a little more flexible. However, it is extremely difficult to find a line which is absolutely valid between the charitable and the non-charitable.
3.32 p.m.
Baroness Faithfull: My Lords, since the dissolution of the monasteries by Henry VIII, the development from Elizabethan times of charity law and the growth of charities have been the subjects of deep interest, both academic and practical. We are indebted to the noble Lord, Lord Allen of Abbeydale, for introducing this debate today, all the more so because charity law and the oversight of charities has not adapted from early times to the changing circumstances of this day and age.
Perhaps I may touch on three matters. The first is the anomalous position of the Charity Commission. While the Home Office answers for the commission, its relationship is a nebulous one. Being somewhat cynical, there is no political mileage in the Charity Commission, and therefore I would submit that no Home Secretary of any party has sought to update the work of the commission in order to see that it has the appropriate and adequate resources. I suspect that neither any Home Secretary nor the one or two staff in touch with the commission can possibly be aware of the dissatisfaction expressed throughout the country—indeed, they have no means of knowing.
I would recommend that there should be a council of three to speak for the commission and to act as advisers—a Member of the House of Commons, a Member of the House of Lords and perhaps a third person with knowledge of charities and charity law. I would recommend that such a council and the commission should look critically at the ethos and work of the commission and, based on these findings, ask for a survey to be carried out. This survey should on no account be carried out by the Treasury, whose only object, very understandably, is to cut expenditure regardless of the needs either of the commission or of the service required by the country. The Treasury cannot be expected to know of that.
The Charity Commission produces a good report each year; but, my Lords, what action is taken on it? As was stated by the noble Lords, Lord Allen of Abbeydale and Lord Grimond, there are 150,000 charities registered whose accounts should be submitted and scrutinised, but obviously that cannot be done. Last year there were 3,000 new applications for registration. Approximately 700 letters are received each working day. In all, there are 300 staff-200 in London and 100 in Liverpool. There are many complaints about work held up and registrations not being dealt with immediately. As has been said, the staff of the commission cannot be blamed because they do not have the resources and have no option but to play a passive role, and are not in a position to take initiatives.
My second point concerns the Charities Act 1985. This Act was passed on the recommendation of a Select Committee chaired by the noble and learned Lord, Lord Brightman. That Act deals with small charities and recommends the amalgamation into neighbourhood trusts of small parochial charities on a voluntary basis. I understand from the Charity Commissioner (the member of staff assigned to deal with the implementation of this Act) that much

187
interest is being shown throughout the country. However, there are some parishes which are unable to use their small parochial funds or which use them unwisely and are not prepared to help neighbouring parishes in need. It is profoundly to be hoped that this attitude will change. The commission is seeking to monitor and implement that Act.
The third point which I want to raise deals with value added tax. When will the Chancellor of the Exchequer listen to the pleas of over 200 leading charities which are paying £20 million a year in value added tax? Charities incur VAT on the goods and services that they purchase. One of the worst hit charities is Barnardo's, on whose council I have the privilege to serve. The total cost per year in value added tax is £600,000. This is hard on the splendid volunteers who in many different ways raise a large sum of money.
The policy of Her Majesty's Government is much to be applauded in the partnership as between the statutory and the voluntary sectors. For instance, Barnardo's, in partnership with the Department of Health and Social Security, has schemes for bringing mentally handicapped children out of mental hospitals into small units in the community. A central government grant is given towards this; but in the building or alteration of a building, in advertising, in medicine and drugs, VAT must be paid. But for VAT, more children could be brought out of the already burdened hospitals. The VAT paid by Barnardo's is therefore counterproductive to the statutory sector as well as to the voluntary sector.
In the year ending 1985 the NSPCC incurred £340,801.77 in VAT. If the NSPCC or Barnardo's opted out of the work which they do, it would have to be carried on by the local authorities, which do not pay VAT. If the Chancellor of the Exchequer cannot give VAT relief, would he consider perhaps giving relief in part? He has acknowledged the problem under the Value Added Tax (Welfare) Order 1985. Would he perhaps consider withdrawing VAT or making it zero-paid on buildings, alterations and extensions; or give relief for services comparable to the work done by local authorities, or alternatively for a specific area of concern, perhaps the relief of the poor, or families and children?
Voluntary organisations are able to provide a social and welfare service which is flexible, effective, and economic due to the involvement of the community and of volunteers. The people of this country are generous in their giving to charities. The wonderful effort of Bob Geldof did not diminish giving to the established charities. Surely those who give want their donations and covenants to go to the charitable work of their choice.
My Lords, I say again that if there was a Council for the Charities Commission all the points made by your Lordships today could, and I am sure would, be taken up by the Charities Commission, and they would be given the opportunity to meet the needs of the ever-growing charities section to which Her Majesty's Government are committed.

British Leyland Subsidiary Companies
3.41 p.m.
Lord Lucas of Chilworth: My Lords, it may now be for the convenience of the House if I repeat a Statement now being made in another place by my right honourable friend the Secretary of State for Trade and Industry on British Leyland. The Statement is as follows:
"As I informed the House on 19th February, an invitation was extended to interested parties to declare by 4th March a firm intention to make a bid for one or more of the Land Rover, Freight Rover, Leyland Trucks and related businesses.
"I can now report to the House that appropriate declarations have been made to British Leyland's bankers by Shroder Ventures on behalf of some institutions and certain members of British Leyland management in respect of Land Rover, Range Rover and Freight Rover; by Lonrho in respect of Land Rover and Range Rover; and by Aveling Barford in respect of Land Rover only. General Motors have also confirmed their intention to make a bid for Land Rover, Range Rover, Freight Rover and Leyland Trucks.
"The Laird Group and Aveling Barford are each in discussion with British Leyland regarding the acquisition of Leyland Bus for which proposals on behalf of certain members of the management are also expected. Discussions in relation to Leyland Bus are taking place over a slightly different timescale from those concerning other Land Rover-Leyland businesses. I shall make a further Statement to the House on these in due course.
"The British Leyland Board are giving careful consideration to all the proposals received on or before 4th March and I hope to have their recommendations shortly. The board and the Government remain anxious to end the present uncertainty surrounding these businesses as soon as possible in the interests of the companies, management and workforce and their dealers and suppliers.
"I should also like to take the opportunity to inform the House of a forthcoming change in the chairmanship of British Leyland. Sir Austin Bide's appointment as chairman of British Leyland was extended in late 1984 on the basis that he would continue as chairman until a convenient moment for his retirement was reached. Sir Austin has kindly agreed to remain as chairman until decisions have been made on the future of the main Land Rover-Leyland businesses. This will represent the start of a new phase in the development of British Leyland and, on my nomination, the British Leyland Board propose to invite Mr. Graham Day, at present chairman of British Shipbuilders, to join the board and to become full-time chairman of British Leyland at a date to be determined. I should like to express the Government's thanks, and to add my own warmest personal tribute, to Sir Austin under whose leadership British Leyland has achieved notable progress.
"I am appointing Mr. Phillip Hares, CBE, the present deputy chief executive and board member for finance of the corporation, to succeed Mr. Graham Day as chairman of British Shipbuilders." My Lords, that concludes the Statement.
3.45 p.m.
Lord Bruce of Donington: My Lords, we thank the noble Lord for repeating the Statement made in another place. We note with interest his tribute to the notable progress that British Leyland has made over the past years. The Statement he has made indicates precisely the degree of shambles into which the Government have now got the whole motor industry. On the basis of the Statement it is clear that every option presupposes a breakdown in the integrated BL system.
Is the noble Lord further aware that his listing of the various parties which have now put in their applications, when it is reduced to plain terms, amounts to a charade? The Government initiated conversations with General Motors some 18 months ago, in August 1984. The remaining bodies which have had an opportunity to bid have had exactly 20 days. There are complaints that they have not received all the co-operation to which they thought they were entitled, and certainly nothing like the comprehensive information that has been in the possession of GM for some time.
Will the noble Lord further note that, in view of the fact that GM are the only ones to incorporate Leyland Trucks within their offer (the remaining applicants have not included Leyland Trucks) the Government are already committed to GM because GM have so far—if we believe the statements that have been made—always insisted that their proposed acquisition of Land Rover must have Leyland Trucks with it, or vice versa? Is the noble Lord aware of that?
Could the noble Lord give some indication as to when these matters are to be brought to completion, if they are to be brought to completion at all? In view of the statments made by the Government over the last fortnight, will the noble Lord now give a Government undertaking that there will be no further conversations between the Government and Ford on any aspect of a proposed acquisition of Austin Rover during the lifetime of this Parliament? He ought to be able to give that undertaking on the basis of the statements made so far.
Is the noble Lord further aware that the easiest way of getting rid of the uncertainty which he professes to desire to avoid, or to minimise as far as possible, is to end the whole idea of disposing of BL, or any part of it, away from the public sector? Is he aware that the people of this country are now coming to think that the Government will do anything to raise money—to sell the family silver—in order to raise cash for the Chancellor? Is the noble Lord aware that what is required of the Government—as emphasised perhaps obliquely by the right honourable gentleman the Member for Bexley last night—is that they should start behaving like a British Government and encourage British industry, rather than to disintegrate it, which they propose to do at the present time?
Lord Diamond: My Lords, may I say on behalf of these Benches that we are grateful to the Government for making yet a further and important Statement on this matter, although they have by no means reached finality. It is a courtesy that we much appreciate. We on these Benches still have one or two anxieties. Our first anxiety is that the Government should give ample opportunity, whichever part of the undertakings they have in mind for privatisation, to management and workforce to join together in making whatever bids they are able to make within a reasonable time. Our anxiety is that the Government are not prepared to give them reasonable time and have not brought the workforce into consultation at all. They are not proposing to allow the workforce to participate in shareholding in the company, which I thought was accepted on all sides of the House to be a useful step forward. I say that because the Statement refers only to management. In relation to the Leyland Bus undertaking, for which it is said that the timescale is on a slightly different basis, it is not clear which members of the management and workforce are included. The Statement says:
"proposals on behalf of certain members of the management"
only. I hope that the Minister will clear up that anxiety.
That anxiety is based on a misconception by the Government that the uncertainty here is unique and damaging. The one thing that can be said about privatisation is that it is a very public procedure. Everybody knows all about it for months, on the Stock Exchange and elsewhere; customers, dealers, whoever is connected with the business knows all about it. They will know all about the privatisation of the water industry months, and possibly years, ahead of privatisation taking place. Is it not the case that the Government maintain that privatisation is in the interests of the nation and, in particular, in the interests of the companies concerned? If that is so, why do the company insist that it must be damaging for this news to get out? I thought its line would be that it is the best possible news, that it will improve the company, and improve the national interest; the sooner it is said the better for everybody concerned.
For those two reasons I find it very difficult to accept at its face value the company's statements about the need to remove anxieties by making a ridiculously short timescale in which management and workforce can get together, can inspect balance sheets, can discuss forward steps, interest backers and get the necessary finance, all in time to make a bid. Everything is happening within what I consider to be a ridiculously short period. It is because of that anxiety that one is driven to contemplate the alternative view, which has been so well expressed from the Front Bench just now, that the Government's main consideration is not to satisfy the best interests of the company and its employees, but to have regard to the slot which has arisen through the lack of progress on the British Airways privatisation. A slot has arisen in their budgeted receipts, and therefore they are trying to fill it up as fast as they can by selling off whatever assets they can put their hands to, an operation which has been so wisely described by both Opposition parties as selling off the family silver to pay for current

191
expenditure, to pay for the groceries. We wish to be reassured on those points.
The real final issue remains: Are the Government intending to find a purchaser or a partner? We have queried this matter every time and so far we have had no answer. It is an entirely different matter, and there would be total support for the Government coming from these Benches if they were anxious to find a partner with the markets, the know-how and all the necessary ingredients for a successful and improving business, which included a full measure of participation by management and workforce. I have no doubt that such a partnership would receive wide support in the country. It is an entirely different matter if the Government are seeking, for reasons which do not appear very clear, an immediate cash realisation.
Lord Lucas of Chilworth: My Lords, a number of points have been made by both noble Lords which I shall endeavour to answer. Let me say straightaway that the noble Lord, Lord Bruce of Donington, is wrong in his suggestion that there is a destruction of an integrated business, because the business of British Leyland is divided into four quite separate businesses, although they are subsidiaries of one holding company. Both noble Lords raised the matter of the timescale. The Government's intentions were well known as far back as 1983. There has been widespread reporting over many months about the interests of General Motors and others. To suggest that 20 days has been allowed, that is from 19th February until 4th March, is something of a travesty of the truth.
The Government are committed, as I hoped I have made clear on a number of occasions, only to the longterm viability of a United Kingdom-based commercial vehicle industry. It is important that we complete any change as quickly as possible because, as the noble Lord, Lord Diamond, recognises, there is an element of uncertainty. The uncertainty comes about because a number of people—the four that I have mentioned and the bus business—are interested in acquiring control of those businesses. It is in the interests of everybody concerned to know where this will end. That is where the uncertainty is, not in respect of the Government's intentions.
In response to both noble Lords may I say that there is no question of the Government—to quote somebody else—selling the family silver. There is no doubt whatsoever in the minds of the board of British Leyland as well as others that, in the very best interests of the company, its management and its workforce and the British-based commercial vehicle industry, parts of Leyland should be returned to the private sector as soon as possible.
It is wrong of the noble Lord, Lord Bruce of Donington, to suggest that we have not encouraged British industry. In this instance we have invested £2.3 billion of taxpayers' money, guaranteed a further £1.5 billion of British taxpayers' money, and it is now the turn of industry to invest its money, so relieving the British taxpayer of that burden and so that taxpayers' money can be spent in other areas for which the public are clamouring, and quite rightly and properly so.
I shall not give the noble Lord, Lord Bruce of Donington, any assurances whatsoever with regard to
192
the discussions that Her Majesty's Government are having, either on their own behalf or through companies in the public sector, with other parties—and so far as the term of this Government is concerned—neither now nor in the next term which we shall enjoy.
Our interest is the benefit to the company and the nation. There is no other reason for our engaging in this exercise. My right honourable friend will consider the advice he receives from the British Leyland Board as quickly as is commensurate with giving proper consideration to a matter as important as this.
4 p.m.
Lord Somers: My Lords, the noble Lord says that the interests of industry and the nation are paramount, and his figures certainly sound very convincing; but I think that most of us will feel faintly uneasy until we can get a definite statement from the Government that Land Rover and Range Rover are not going to be sold to a foreign country thereby damaging British industry by depriving it, for one thing, of one of the most important of its exports. There is scarcely a part of the world where one will not find a Land Rover. It is indeed a product of which we have every reason to be proud. If we are going to increase British industry then surely that is one of the first things that we should keep hold of.
The Lord Bishop of Birmingham: My Lords—
Lord Lucas of Chilworth: My Lords, perhaps I may first answer the noble Lord, Lord Somers. When I said that we have as one of the fundamental points in front of us the interests of the British-based motor industry and the nation, I meant exactly that. The point is that Land Rover and Range Rover have lost their predominance in world markets. The Japanese have encroached with about five different products. We have no United States representation of Land Rover and Range Rover at the present moment, and that is the fastest growing market for 4-by-4 vehicles. There is nothing wrong with the attraction of foreign investment to enhance our own capability in manufacturing, in technology and in the marketing of products made in this country.
I would not wish to give the noble Lord, Lord Somers, any feeling that we would do other than bear in mind the widest issues so far as the future of the company, its product and its workforce are concerned when giving consideration to the offers to acquire the parts of British Leyland to which I have referred in the Statement.
The Lord Bishop of Birmingham: My Lords, I apologise for my over-eagerness in rising to my feet, but this subject is very close to my see city of Birmingham in which there are very deep feelings indeed about this matter. I am grateful to the noble Lord for giving this Statement to the House, although I wish that I had its terms in front of me. I am grateful, too, for what he said about ending uncertainty; because there is grave anxiety in Birmingham and Solihull about this matter. I must point out that negotiations have been going on with General Motors for nine months and the so-called management buy-out has had to be organised within two or three weeks.

193
This hardly gives them time. In fact, I think it is a remarkable tribute to the way in which people have faith in the present management and in the ability of the firm to continue that they have raised sufficient funds not only for a buy-out but also in order to finance the new models which undoubtedly will be necessary.
Noble Lords may not realise, in the light of what was said on the other side of this House regarding participation, that 10 per cent. of the capital has been set aside in the management buy-out precisely for workers' participation. Also, the buy-out will see that there will still continue to be links with BL itself and with its agencies; and, as the noble Lord, Lord Diamond, mentioned, control will be in this country.
I am not sure whether noble Lords are aware of the great success of Freight Rover. Freight Rover must go with Land Rover and that is why I am so puzzled by one of the bids which, if I heard the noble Lord aright, seems to mention Land Rover only. That would mean the end of Freight Rover because they are inextricably mixed up together. Freight Rover, ever since it was put on its feet when Michael Edwardes was there, and with its workforce halved, has increased its production from 9,000 to 19,000 vehicles a year. That is a very remarkable performance indeed. This is a very adaptable truck, especially the Sherpa 300 which is used for Telecom and ambulance and police work.
But there is a deep feeling of unease. When I went down there last Friday—and I visited at the same time and on the same day as Mr. Kinnock, but in a somewhat quieter mode—I spoke to the workforce. There is deep apprehension that if General Motors gets hold of this, it will be closed and Bedford Vans will have the work instead. Indeed, one can understand how they feel. Not only is Freight Rover a success but it can generate enough money for new models. As for Land Rover, I would not wish to contradict what the noble Lord the Minister has said, but I think it is fair to say that it has hardly lost its predominance in the world markets. A new Japanese model of a lighter type has been produced which is more suitable in such built-up countries as the United States of America. Land Rover itself is sold in 100 countries and Range Rover in 80 countries.
The Earl of Swinton: My Lords, perhaps the right reverend Prelate is not quite accustomed to this House and to the fact that Statements are matters for short comments and questions to the Minister, and not matters on which to raise a debate. Perhaps he might very shortly put his question to the Minister.
The Lord Bishop of Birmingham: My Lords, I apologise to the House if I have used more time than I should. What I want to ask on behalf of the people of Birmingham is this. Can we be certain that due consideration will be given to the management buyout and that Birmingham, with redundancies in the area of 2,000 a month, will not be sacrificed to Leyland Trucks?
Lord Shepherd: My Lords, will the right reverend Prelate permit me—
Lord Lucas of Chilworth: My Lords—
Lord Shepherd: My Lords, I was about to raise a small matter, but I shall come back to it.
Lord Lucas of Chilworth: My Lords, I shall be delighted to answer the noble Lord, Lord Shepherd, in due course. I am grateful to the right reverend Prelate the Bishop of Birmingham, knowing, as I well do, of his deep and important interest in this area. I am sure that my noble friend the Deputy Chief Whip also recognises that. Let me say to him, as I said to him once before, that the Government's long-term interest is—and I use this phrase again—the long-term viability of a commercial vehicle industry based in this country and, with that, the long-term security of employment. I stress, "the long-term security of employment". But I have to say to the right reverend Prelate that he is not right when he suggests that Land Rover on its own has enjoyed a predominant world position in recent years. It is a fact that it is necessary to find further and very large investment in new models, productive capacity and the marketing network and that a private sector involvement is paramount. That, in its turn, will lead to the security in the long term of jobs within that important industry.
Lord Shepherd: My Lords, I would not wish to be critical of the right reverend Prelate in regard to the statement that he has made, but it is very clear that ministerial Statements are not a cause for debate. One of our great anxieties in this particular matter is that it is very difficult to deal with a subject of this kind without a debate. There are many questions and many explanations.
I wonder whether the noble Viscount the Leader of the House would consider that it would be very much in the interests of this House, and of the subject matter before us, if he could arrange for a short debate to be held? I think this is a subject which requires a debate, as opposed to the unsatisfactory way of seeking to deal with it by question and answer following the repeating of a Statement. Bearing in mind that we have now spent 29 minutes on this Statement, I doubt whether we very much further forward than we were at the beginning, and we are intervening in a major debate in the field of charities. Would the noble Viscount, without saying "yea" or "nay" today, give careful consideration to whether or not we should have a debate on this subject?
The Lord President of the Council (Viscount Whitelaw): My Lords, I must apologise to the House for the fact that another meeting kept me away until the last moment. I heard from just outside the House what the right reverend Prelate was saying and I appreciate very much the anxieties that he was stressing on behalf of many people in the Birmingham area.
It is fair to say that the Statement made by my noble friend is very much of an interim character, and I think that fact would be appreciated by the House. Of course I will consider the suggestion made by the noble Lord, Lord Shepherd. I cannot give any guarantees because I do not yet myself know how the whole matter will develop; but I will certainly take great care

195
to make sure that the House is kept fully informed, and on a matter of such importance it is my job, through the usual channels, to see what can be done to help.
Lord Ezra: My Lords, the noble Viscount the Leader of the House has told us that this is an interim Statement. Nevertheless the moment of decision is approaching on this very important issue for British industry. As I understand it from the Statement which has been repeated to us, the board of British Leyland have to make recommendations to the Government. I should like to ask the noble Lord whether he would agree that among the various criteria which should be taken into account in reaching a decision there should be the following. First, as regards local content, as I understand it, the vehicles which are in question use up to 80 or 90 per cent. of British supplies. Would it be a condition that this degree of local content should be maintained?
Secondly, would the British name for these vehicles which have earned world renown, be retained? Thirdly, would an adequate level of investment in future years be provided? Fourthly, would research and development, which so frequently in connection with businesses taken over by other enterprises could be changed to other countries, be retained in this country? Fifthly, in support of my noble friend Lord Diamond, I suggest not only that there should be full safeguards for the employees, both the management and the workforce, but that there should be adequate provision for participation. I would be most obliged to the noble Lord if he could tell us whether these conditions would be met under whatever decision is reached.
Lord Lucas of Chilworth: My Lords, I am quite happy to assure the noble Lord, Lord Ezra, that the list of criteria he has just read out will be among those to which the board of British Leyland will be giving the most careful consideration.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that it is quite clear that, whatever decision is arrived at, it will be destructively criticised by the Opposition Benches? They have made that perfectly clear. Further, while it is right to take into account any feelings that have been expressed, is this a decision for the Government, with the special knowledge that only the Government can have? Is my noble friend aware that it would not be appreciated throughout the country if, in order to appease and to obtain what the Government thought was a political consensus, they did not make firm and proper decisions according to the facts as they know them, rather than decisions based upon emotion or sentiment which would not last very long?
4.15 p.m.
Lord Lucas of Chilworth: My Lords, if my noble friend will forgive me, I am not quite sure whether I could agree entirely with his first comments, although I have some sympathy with him. Let me again repeat that it is the British Leyland board, together with the Government, who have the consideration to make and we will make our decision against the background which I have now, I think, given on five separate
196
occasions over the last five weeks. We are concerned with the long-term interest of a British-based motor industry and its viability and the long-term employment prospects for all those who are currently employed and those who potentially will be employed in this very important motor vehicle industry.
Baroness Fisher of Rednal: My Lords, may I ask the noble Lord to consider in addition the employee participation which has taken place in the British Leyland organisation since the last reorganisation? If he looks at the output record and at the days lost through strikes, he will see there is no cause for criticism against the employees themselves making their input into the prosperity of the British Leyland organisation. When the noble Lord speaks about "the public are clamouring" for a decision—the noble Lord demurs, but I wrote it down and with all due respect I put "the public are clamouring". If I am wrong, I apologise to the noble Lord; but the public in the West Midlands are clamouring for a decision which will obviously ensure that the employment prospects are still kept intact. That is most important, as the right reverend Prelate the Bishop of Birmingham has said. It is also important to recognise that the public are not only in London but in the West Midlands, where these firms are.
The other point I would ask the noble Lord to consider is this. The taxpayers have put money into British Leyland—one does not dispute that—but we should also recognise that they have put money into farm subsidies. That fact should not be isolated. We recognise that they have put money into this industry and now that investment is beginning to pay off. It is quite wrong for the British taxpayer, having invested his money, now that the money is beginning to bear fruit, to be faced with a selling off of the prospects to somebody who is coming in for a quick kill.
Lord Lucas of Chilworth: My Lords, on the noble Baroness's first point, I believe that I did answer her during our exchange at Question Time earlier this afternoon. I can only repeat that it is for British Leyland to assess all the points that the noble Baroness has made, together with many, many others, when they come to consider these four particular bids. But I do have to remind the noble Baroness that British Leyland Trucks have lost money over a number of years, and continue so to do. Leyland Buses have lost money over a number of years, and continue so to do. The Land Rover group have lost money up to this year—when I say "this year" I mean the 1985 financial year—when it is now anticipated they will turn in a modest profit. None of that is commensurate in any way whatsoever with a fair return on the capital that has been invested in those companies by the British taxpayer.
Viscount Trenchard: My Lords, would my noble friend care to consider that if the usual channels decide that we should have a debate on this matter he might have available some figures to show the degree to which foreign-owned multinational companies have increased employment in all areas, including research and development, compared with similar examples of British-owned companies? Certainly it is within my experience that this is not a set pattern one way or

197
another. Looking at the international motor industry at the moment, would my noble friend agree that there are strong arguments to suggest that the greatest security for employment and for research and development may well be in the huge multinational motor vehicle corporations?
Lord Lucas of Chilworth: My Lords, I am quite sure I could agree with my noble friend Lord Trenchard in the sense of what he is saying. This is a worldwide industry and it requires tremendous investment. The Government have never sought to suggest that overseas investment in this industry, as in others, is not welcome. There is no doubt that overseas investment in our industry has been to the great benefit of this country and those who work in the various industries.
Lady Saltoun of Abernethy: My Lords, we have now spent 38 minutes on this Statement. There is another Statement. I wonder whether we could perhaps move on to the next business.
Viscount Whitelaw: My Lords, in reply to the noble Lady, I was hoping that after the noble Lord, Lord Bruce of Donington, whose right to ask another queston I hope I recognised correctly, it would be possible to move on. Had not I interpreted some feelings in the House, I might have suggested earlier that we moved on. But I thought that the matter was of such vital importance, and there was such feeling in the House, that I should have been wrong to do so. I felt that was the feeling of the House. Perhaps after the noble Lord, Lord Bruce of Donington, has asked his question, the moment for bringing this matter to an end will have come.
Lord Bruce of Donington: My Lords, my question will be very short. The noble Lord, Lord Lucas, has said that whatever emphasis he may have given to the role of the BL management and board, it is the Government who will make the final decision. In view of that fact, and the importance of the decisions that are to be made, will the noble Lord give careful consideration to our having a full debate before the decision and any irrevocable steps are taken? Will he also bear in mind that, notwithstanding the preference of his noble friend Lord Harmar-Nicholls for a single party state, the Opposition will continue to exercise their constitutional function?
Viscount Whitelaw: My Lords, I note what the noble Lord has said. I think that it would be wrong for me to go any further than I did in answer to the noble Lord, Lord Shepherd, about the need to have the fullest discussion in the House. I cannot give a guarantee as to exactly when the debate might take place because I might be proved wrong. That is the last thing I would wish to do because I should have misled the House, and that I do not intend to do.

Rate Support Grant Recycling
4.23 p.m.
The Minister of State, Department of the Environment (Lord Elton): My Lords, by your Lordships' leave, I shall repeat a Statement being made in another
198
place by my honourable friend the Parliamentary Under-Secretary of State at the Department of the Environment.
"With permission, Mr. Speaker, I shall make a. Statement.
"The House will be pleased to know that my right honourable friend the Secretary of State for the Environment was yesterday able to tell the local authority associations that he would guarantee that £500 million of grant would be available to be recycled in 1986–87 and that authorities would be able to take this into account in fixing lower precepts and rates.
"As the House will recall, in the RSG debate on 20th January my right honourable friend explained that if local authorities budget to spend more next year than we allowed for in the RSG settlement, the grant forfeited by overspenders would go into a pool which would then be recycled to all authorities. He illustrated the grant gains to authorities if the pool were to be £400 million. Those figures could only be illustrative at that stage, because they depend on authorities' budget decisions.
"This week, in the light of the latest figures available, we are now in a position to go much firmer than that. It is clear that the pool of grant to be recycled is going to be some £500 million. That means the grant gains will be bigger than those illustrated in January and that authorities will get more grant than they have assumed. Moreover, to avoid all doubts, the Government are prepared formally to guarantee that £500 million of grant will be recycled. My department has written to all authorities telling them the amount of extra grant they will receive from that amount of recycling, in addition to their grant entitlement under the RSG settlement announced in December. I am placing a copy of the table in the Library.
"Councils will now know the size of their grant entitlement more clearly and this will allow them to make a lower call on their ratepayers. Where the rate making has not been completed, I hope that honourable Members will urge their local authorities to revise their rating plans in the light of these figures.
"My right honourable friend wrote to the local authorities' associations as soon as he was in a position to confirm the level of recycled grant that would be available. Local authorities are now making their rating and precepting decisions and it was essential to provide them with this information immediately. I am sure that all honourable Members will agree that rate increases should be no higher than is absolutely necessary."
My Lords, that concludes the Statement.
Baroness David: My Lords, I am grateful to the Minister for repeating the Statement even if we look on it a trifle cynically. I have a number of questions to ask. Have not a great many of the local authorities already fixed their precepts and rates? There was a list of recommended and approved precepts published in the Local Government Chronicle just the other day. Paragraph 4 of the Statement referred to those authorities not having completed their rate making.

199
Have not most authorities already gone through that exercise? How many block grant claim forms have been received from local authorities? May I ask what expenditure assumptions have been made for the remainder of the authorities to lead the Government to believe that £500 million will be available from overspend to redistribute? May I ask which local authorities will benefit from that redistribution? Will it be the shire counties, where there has been a great deal of anxiety and feeling expressed by Conservative Members of Parliament? My Lords, those are the questions that I wish to ask.
Baroness Stedman: My Lords, I am grateful to the Minister for repeating the Statement, to which we give a rather cautious welcome now, having in mind that the original rate support grant settlement was a bad one, especially with regard to the shire counties which had a reduction in grant because of the switch to the metropolitan boroughs, the London districts and the inner cities. I hasten to say that we are not against more resources going to the inner cities but we think that that should have been a national charge and not done at the expense of the shire counties. The recycling that is proposed today does not seem to be affecting that.
What is offered is welcomed. Councils will have some firm guarantee of what they will receive even if it is still within the framework of that original bad settlement. Is the Minister aware, as the noble Baroness, Lady David, said, that most of the shire rate precepts have now been fixed—some of them on the optimistic basis that they might receive a share of the £400 million that was originally talked about, and others on a pessimistic basis because of the state of local government finance generally? My own county fixed its very high rate optimistically on the basis that it was likely to receive about £5 million on the original estimate. It is now, I understand, to receive some £6·4 million. The difference is small compared with its total budget.
Other authorities may find that they have a windfall if they fix their rate more pessimistically; but as 21 days' notice must be given for a special council meeting to reconsider the precept, that will be difficult. I believe that few, if any, rates are likely to be reduced as a result of the recycling. Does the Minister accept that this points once again to the general muddle and confusion that surrounds local government finance? It is imperative that the problem is tackled because local authorities cannot continue to flounder from one financial crisis to another. The uncertainty about local authority finance must be removed. The good thing about the Statement is that authorities seem to have a guarantee about the sums that they will receive. The notice says that they are formally prepared to agree the amounts. May we have the Minister's assurance that that is so? The Government's press statement yesterday detailed the amounts that would be available. What happens if those supposedly high-spending authorities do not eventually overspend and less money is available? Is the Statement really implying that the Treasury will underwrite the amount promised today whatever happens?
4.30 p.m.
Lord Elton: My Lords, I am grateful to the noble Baronesses, Lady David and Lady Stedman, for their reception of the Statement—one of them cynical and the other cautious.
Both noble Baronesses said that they felt that many authorities had already fixed their rates. It is true that a number have. First, those which have not are in a position to take advantage forthwith of this new information for the benefit of their ratepayers. Secondly, in some cases it is possible to reconvene meetings and refix the budget before it has to be set, which in the shires is earlier than it is in the boroughs and districts. I accept that. But there is a route there for a number of authorities. The noble Baroness, Lady Stedman, suggested that the system was not perfect, and she will remember the vigorous debate that we had on the Green Paper with which we seek to come one step closer to a very distant perfection. It is the case that the Secretary of State could not give his Statement until he knew what were the intentions of most local authorities, and I have to say that information as to that has been coming in on a day-to-day basis. As to what will happen if the £500 million overspend does not take place, it was the purpose of the Statement to say that the £500 million will nevertheless be available. But your Lordships will readily understand that that undertaking would not have been given had we not been pretty sure that at least that amount of money would come to hand, and that is indeed the position.
As to the basis of the assumptions and calculations that we made, the answer to that is the one I have already given—that we have had a steady stream of information. Some of it relates to budgets already made, some of it to information about budgets in view, and it was sufficient for us to make the Statement in the terms in which I have made it. As to the purpose of recycling, I am not sure that the noble Baroness, Lady Stedman, is altogether fair even in the terms of her own philosophy of rate support, because the effect of recycling is to take money that has been forfeited by overspenders and to redistribute it to all spenders. It will be subject to the effects of being out of grant, so the very highest spenders will not benefit whereas the lowest spenders will benefit, so it has a redistributive effect. As to which particular authorities will benefit I commend to the noble Baroness, Lady David, the table which is now in the Library and which sets out both the gross amounts and the effect on actual rate levels.
Lord Boyd-Carpenter: My Lords, being neither cynical nor cautious, may I ask my noble friend a couple of questions on his interesting and, in many ways, welcome Statement? Can he first amplify what he has just said about the likely beneficiaries from this Statement? Are the shire counties, which, understandably, thought they had rather a raw deal under the original arrangements, among the substantial beneficiaries? Secondly, can he explain to your Lordships what happens in cases where the rate has been fixed and it is technically impossible to alter it? Will it be the result that ratepayers will be called upon to pay more by way of rates than, in the outcome, there is any financial justification for?

201
Thirdly, is my noble friend aware of the fact that, however welcome the Statement, it really indicates a good deal of confusion over the rate support grant? Can he hold out hopes to us that in future this will be determined on a more businesslike and efficient basis?
Lord Elton: My Lords, as to my noble friend's first question, I have to say that the shire counties will be beneficiaries under this scheme—some of them substantially so. Where an authority has already arrived at its budget and cannot, for one reason or another, revise it, the ratepayers will not lose but the money will go to balances and be available for effect against the following year's rates. So the benefit will be there. As to the question of confusion, I can do little beyond repeat what I said to the noble Baroness, Lady Stedman: that we are aware of the imperfections of the system and that is why we have brought in the Green Paper which your Lordships have already looked at with great interest. As to the local authorities which have not yet fixed their rates, I should say that there are very many of them in the urban areas which warmly welcome this and will be able to make immediate use of the information, as well as many in the shires. I believe that was the full tally of the questions that my noble friend asked me.
Lord Dean of Beswick: My Lords, naturally I, too, am grateful that more money is being found than the Secretary of State mentioned in his original Statement on the rate support grant. The Minister has indicated, in answer to a question by the noble Lord, Lord Boyd-Carpenter, that the shire counties, possibly quite genuinely, grumbled earlier and they will now benefit. But is it not a fact that there will be a difference in the degree of benefit even to those shire counties? Can the Minister tell us what the shire counties originally contributed towards the £500 million surplus that has been found?
It is not often that I find myself in agreement with the noble Lord, Lord Boyd-Carpenter, but does the Minister not understand that those of us with a local government background know that those authorities which have not yet fixed their rates will find it extremely hard work to start recalculating the funds that are available? In the tight budgetary situation in which local authorities find themselves, even with the redistribution of this £500 million, does he not understand the chaos and the confusion over this type of policy, which is being pursued by the Government in regard to rate support grant, caused by making one Statement a few weeks ago and then altering it now? Does he not understand the difficulty in which that places local authorities in their forward planning schemes?
Lord Elton: My Lords, I am most reluctant to do anything to disturb the new found accord between the noble Lord, Lord Dean of Beswick, and my noble friend Lord Boyd-Carpenter. But I must tell the noble Lord, Lord Dean of Beswick, that we are not talking about a surplus and nor are we talking about an alteration to a recent Statement. We are talking about an exemplification of a recent Statement. The money in question is all money that was originally provided in aggregate Exchequer grant, and local authorities who
202
spend above their rateable provision on a sliding scale get less and less out of grant in proportion to what they spend. The result of that is that less money comes out of the Exchequer for the local authorities. That money is recycled. Under the old system, and under targets, the money was taken out of the system and there was a marginal amount of recycling.
We now have a simpler system where this amount can be predicted with a certain amount of security at the beginning of the system, and we are making things more efficient and simple by telling local authorities that they will get at least x, and x is a named figure. It is not a matter of chaos and confusion. It is a simple piece of arithmetic for the executive of the local authority to convert that into the equivalent of the rate. It is helpful, it is efficient, it is an advance, it is widely welcomed by local authorities and it is of benefit to the ratepayers.
Lord Dean of Beswick: My Lords, so what the Minister is saying is that some of the local authorities that have already had financial penalties inflicted on to them under the previous Statement will get some of it back under this Statement, but they will not get all of it back? They will receive financial penalties under the original Statement.
Lord Elton: No, my Lords. I am saying nothing of the sort. The previous Statement described the system as I have just described it. This Statement says how it will work.
Lord Diamond: My Lords, in view of the anxiety which has clearly been expressed from both sides of the Chamber, can we have the Minister's assurance that this will not happen again next year?
Lord Elton: No, my Lords. I am afraid that I cannot predict anything about next year. I have already said that the only way this information can be obtained is from the local authorities themselves. As soon as it is available, the Secretary of State has made the position clear to them with the greatest speed and efficiency. If the alternative is not to tell them at all, I think the noble Lord would not like that.
Lord Diamond: My Lords, the alternative is to have a system which does not lead to chaos.
Lord Elton: My Lords, I am mindful of the strictures of my noble friend the Deputy Chief Whip on the last Statement that we had, that it should not turn into a debate. I am not in the business of defending the present system. We have not yet described the future system. I know that I shall have all your Lordships' eager assistance in trying to make the future system better than the present, so perhaps I had better leave it at that.
Baroness David: My Lords, I have one question to ask out of regrettable ignorance. I believe that I am correct in thinking that local authorities cannot now raise a supplementary rate. I understand that the Minister agrees that some authorities have already fixed their rate. If they are now to receive some form of benefit from this handout, then can they raise—I do not know what one might call it—a reduced rate?
Lord Stoddart of Swindon: Perhaps, my Lords, a supplementary rebate?
Baroness David: Yes, my Lords; perhaps a supplementary rebate would be the correct phrase. I will be very interested if the Minister can tell me about that aspect.
Lord Elton: My Lords, if a local authority has passed the point at which, for technical reasons, it is not possible to have another budget, then as I understand it the money will go to balances. It will then be very welcome indeed next year for this process, and the local authority will have had 13 months to think about the matter.

Charity Law
4.40 p.m.
Debate resumed.
Lord Houghton of Sowerby: My Lords, after more than 50 minutes of injury time, it is a little difficult to get the ball back into play. Whether or not your Lordships can remember it, we were debating charities. I am following the noble Baroness, Lady Faithfull, after her most interesting speech. I agreed with most of it—particularly in regard to the ineffectiveness of the institution of the Charity Commissioners and the need for a charities board offering guidance and counsel to overlook the vast and growing industry of charity.
I may be the only Member of your Lordships' House who has any really hard bullets to fire. I have been in the voluntary movement for so long and have worked in it so much that I have very respectful criticism to make of it. I shall disagree immediately with my noble friend Lord Allen of Abbeydale in the introductory remarks he made regarding the extension of indirect aid to charities through the taxation system. That kite is being flown all over the place, and my noble friend who introduced this Motion has brought it into your Lordships' House. I want to shoot it down.
There is too much needed of reform and improvement in the charity world, and there is far too great a crisis of present and future work in the Inland Revenue, to open up fresh avenues of tax avoidance and more indiscriminate tax relief and finance for charities at public expense. Reference has been made to our present system of covenants. The present Government introduced two concessions in regard to covenants. They reduced the minimum period of commitment and raised the amount of tax relief to the top marginal rate of the donor. In reply to a Written Question in another place on 4th April 1985, it was stated that there was a 93 per cent. growth in covenant repayments after those two concessions were made. In all, covenants were rising year by year at a rate of something like 16 per cent.
The proposal that is now being mooted is that single gift donations should be a deductible expense from the tax liability of the donor. The covenant gives the tax benefit to the charity. The new proposal is that the tax benefit should go to the donor although the charity would still have the benefit of the gross amount. The
204
third party in that transaction—no sleeping partner he—would foot the bill of the tax concession made to the donor, which could be anything from 30 per cent. to 60 per cent.
Nobody has yet said whether it is desired that the new system of single gift tax relief should run alongside the existing system of covenants. Mr. Chataway wrote a letter published in The Times yesterday suggesting that many charities would suffer grievously if covenants were to be discontinued and the single gift system introduced. So we shall now be asked to keep the two systems in double harness.
What about companies? They already have the benefit of covenants and of a very liberal tax policy in regard to sponsorship expenses. Apparently it is now proposed that companies shall have the benefit of corporation tax relief on single gift donations to charities. The charities hope to obtain more money in that way, yet the Government want to reduce public expenditure. The Government are accused of cutting grants to voluntary societies. Is the idea of a single gift tax concession meant to replace direct grants? Is the tax system to bear indirect aid to charities in order to replace direct aid to charities?
What of the principle of the matter? In my opinion, the proposal reaches one of the fundamental principles of taxation. I do not have time to argue that point now, but I ask whether our charitable work is to depend upon donors who want to gain something for themselves and who cannot be charitable unless they do. If we are to adopt the American pattern of expenses deductible against tax then we shall import a racket—there is no doubt at all about that. The Inland Revenue would have a new area of tax avoidance to keep clean. There would be many administrative restrictions and complexities in order to do that.
Charities already enjoy large tax concessions: no income tax, no corporation tax, no capital taxes, important though limited relief from value added tax, and the benefit of repayments on covenants. Not mentioned so far is their substantial relief from local rates; mandatory at 50 per cent. and optional for another 50 per cent. I have tried to obtain some estimate of the total state aid that is given through those various channels to charitable bodies. The nearest that I can get to it is £500 million a year. In the reply to a Question in another place last year, it was stated that direct tax relief to charities could not be much less than £400 million. I would say that by now that figure must be more than £500 million. I believe that the new scheme will send that figure much higher still.
I ask this question: where might some of that money go? Do we not read the newspapers? Have we not been reading only this week about certain matters relating to charitable bodies? The point about a covenant is that it is a deliberate commitment. It is a commitment to separate for other purposes a part of one's income. Do we wish to encourage the single gift donation on a moral impulse, under undue persuasion, or even to satisfy the concept of charity without tears—all at tax relief of 30 per cent. to 60 per cent? How long will it be before the backlash? How long will it be before the scandals begin to appear? I ask that everyone should approach this matter with extreme caution.

205
I am sorry that nobody appears to have referred to the report of the noble Lord, Lord Goodman, of more than 10 years ago. Nearly everything so far mentioned in this debate was referred to in the Goodman Report. However, my time is up. My noble friend Lord Allen of Abbeydale has enumerated the many respects in which reforms and changes are made. My message to the Chancellor is that he should not drag the tax man further into the funding of the noble work of charities. That work will be downgraded if he does.
Viscount Massereene and Ferrard: My Lords, before the noble Lord sits down, may I ask a question?
Lord Houghton of Sowerby: No, my Lords, I have had my time so I cannot rise again.
Lord Airedale: Before the noble Lord sits down may I ask whether he does not agree that the covenant system is not entirely appropriate for a sudden crisis such as a famine in Ethiopia?
Viscount Davidson: My Lords, may I remind your Lordships that this is a timed debate?
4.50 p.m.
Lord Mancroft: My Lords, would it be all right for me to get in a few words now? As time is obviously even more valuable than it was when we started this debate, what seems to be light years ago, I shall confine myself to one point only. What can we do to relieve the burden on the Charity Commissioners? We saw this very clearly and it was brought to our attention in the Brightman Committee, on which the noble Lord, Lord Allen, and I and many others served. They have far more work than they can possibly do. The committee's report, which I have here, is quite frank that the Charity Commissioners have far too much work and they do not know what they can do about it. The burden will increase. The noble Lord, Lord Houghton, has mentioned one new tax arrangement which he does not understand; and if he does not understand it I should not think the Charity Commissioners will either. I certainly do not.
We all thought that the welfare state would reduce the amount of charity, but not at all. People are much more charitable now than they were before the welfare state was invented. Since the noble Lord, Lord Allen, tabled his Motion on the Order Paper I have had no less than seven appeals through my letter box, all of them genuine and all of which I should have liked to support; and I expect that your Lordships have all had the same.
I have one suggestion that we might take to help them. Obviously we cannot have more Charity Commissioners with more space, more microchips and more computers. I suggest that we set up a body of assistant Charity Commissioners to deal with the lighter work and to deal with the easier stuff. They could be amateurs, volunteers and people with qualifications. Before your Lordships throw up your hands in horror, just think about the magistrates. About 90 per cent. of the cases coming before the courts in this country are tried by magistrates—amateurs, enthusiasts, appointed with
206
great care, trained to a certain degree, and given refresher courses. They are unpaid but a thundering good job of work they do, too. Could we not find the same sort of people who are anxious to serve and who could act as assistant Charity Commissioners—retired bankers, retired merchant bankers, retired solicitors, retired charity workers of any sort? And they need not necessarily be retired. I say retired only because, unlike magistrates, the age factor does not come into it. They could be given the easier jobs to do, with a limit after which they must pass matters to the Charity Commissioners if need be. I believe that they would do the job extremely well; digging out dormant charities, digging out dormant trustees and looking at the simpler trustee accounts which have gone by default.
I believe they would do a great deal if they bore in mind one thing, and one thing only, which too often is forgotten; that is, the beneficiaries. Too often in the world of charity we get involved in all the legal niceties and we forget the one person who matters most of all—the beneficiary. I say that because I served for seven or eight years on the charity of my regiment, the Royal Artillery. I found it most interesting and rewarding work. I remember trying to impress upon my brother officers, all of whom were extremely senior to me, the story of the old Chancery barrister at the equity courts where I first started my legal career. He was appearing in a charitable case and suddenly to his horror heard that it had been settled. He threw up his hands and said, "What, do you mean to tell me that all this wonderful estate is going to be frittered away on the beneficiaries?" That is an attitude we do not want our assistant Charity Commissioners to adopt.
There are three sorts of people, to give your Lordships an example. There is the widow who does not know that she is entitled to any charity. There are plenty of those. There are the widows, the orphans, the lame, the sick, the halt and the blind who know they are entitled to some sort of charity but do not know how to set about getting it. Then there are those who know they are entitled to charity and know how to set about it but are too proud to ask for it. Those are very frequently found and those are the people I should like my assistant Charity Commissioners to be looking at.
That is the one point I want to make. I do not, of course, ask my noble friend the Minister to give an immediate reply to my suggestion, which I am quite certain will cause horror in the bosoms of all civil servants. However, perhaps he will be kind and offer to give my idea his mental hospitality for a short time. What the noble Lord, Lord Allen of Abbeydale, who so eloquently moved this Motion will say, I dare not think.
The noble Baroness, Lady Faithfull, said that the Home Office has some slight connection with the Charity Commissioners. Twenty-five years ago I was Under-Secretary of State at the Home Office. Twenty-five years ago Philip Allen, as he then was, was a very senior civil servant at the Home Office. We had several amiable discussions, but I confess that I cannot remember ever leaving his room and hearing the words "Yes, Minister" pass his lips. Indeed, on second thoughts I too often left his room seeing an expression pass across his customarily amiable features which, being interpreted, meant, "This young Minister should go and have his head examined." If I can come

207
in between the two categories of initiatory genius and palpable nut case, I shall at least not have raised this matter in vain.
I can only say that, if there are any successful answers, I should be only too happy to be the first volunteer as an assistant Charity Commissioner; and I cannot say more than that, can I?
4.55 p.m.
Lord Denning: My Lords, I am glad that my noble friend Lord Allen of Abbeydale has put down this Motion. It seems to me that there is an urgent need today for reform in the law on charities and in its administration. The law as it stands at the moment is quite uncertain. It started in the days of the first Elizabeth when there was no income tax at all. It was re-enunciated in 1891 by Lord Macnaghten when income tax was small. Now in 1986 we have huge taxes and the elimination, evasion or avoidance of tax is a growth industry. That is the situation with which we are faced and the reform of the law is necessary.
We do not have much time available so I take only one illustration where the law of charity is at the moment most defective. My noble friend mentioned the Moonies. I take it wider. I take all those religious cults, as they are called, which at the moment have charitable status when they ought not to have it. They get tax relief. Your Lordships will remember the case of the Moonies. It was tried for six months before a judge and jury after the Daily Mail had exposed the Moonies and said what a pernicious cult it was and how young people were seduced from their parents, families were broken up, and the like. The Moonies, the Unification Church, brought an action for libel. The jury dismissed it and found for the Daily Mail and added a rider to the verdict saying that the tax-free status of the Unification Church should be investigated by the Inland Revenue department on the ground that it was a political organisation. The jury wanted an investigation but I am afraid that afterwards the Charity Commissioners went into the matter and considered that the law, as they saw it, was that the Unification Church still had charitable status and was entitled to the tax relief.
I need hardly mention that all these religious cults are imported from the United States of America. There are thousands of them in that country and there are hundreds of them here. The founders make great fortunes, like Mr. Ron Hubbard, who recently died, of the Church of Scientology; and like Mr. Moon of the Unification Church who made a fortune. He had tax troubles in the United States and was sent to prison but that did not affect his church. We have had the Exclusive Brethren in our courts. It was severely criticised by Queen's Counsel, Mr. Hugh Francis, a friend of mine. But the Exclusive Brethren apparently still has charitable status. As to the Church of Scientology, Mr. Justice Latey criticised it. It is corrupt, immoral, sinister and dangerous. Those are the cults which are coming before our courts and which are doing great damage, in many cases to family life. They get hold of well-educated youngsters of 18, 19 or 20 who are at university or the like. They get them into the organisation and brainwash them. They bend their minds and seduce them from their parents.
208
I have had numbers of letters—I think they come to hundreds—from distressed parents whose children have been taken away into these cults.
The Earl of Longford: My Lords, if I may interrupt the noble Lord, may I ask a question?
Viscount Davidson: My Lords, I must remind the noble Lord that this is a timed debate.
The Earl of Longford: My Lords, is the Leader of the House going to say that that rules out any question, however brief?
Viscount Davidson: My Lords, I am not the Leader of the House. Questions at this time mean that other speakers may not have as much time as they would otherwise.
Lord Airedale: My Lords, perhaps we can have this matter looked into. I do not think it is a satisfactory situation.
Lord Denning: To come back to my point, my Lords, the question of charitable status was considered by the Charity Commissioners and their view of the law, as set out in their letter, is that:
"Any organisation professing belief in a deity or deities will be presumed by the Court to be for the advancement of religion and therefore charitable and that the presumption can be displaced only on grounds of public policy. Whether a particular religious group is contrary to public benefit and public policy involves fundamental questions of religious toleration which we believe can be determined only by the Courts, the Government or Parliament".
Applying that principle, the Charity Commissioners think it right to grant charitable status in these cases. I suggest that that view is erroneous. At all events, it should be reconsidered by Parliament or by a committee so as to get the law in a position where these religious cults are not given charitable status with all the immense tax benefits that this implies.
Indeed, I could go further. The Charity Commissioner gave an interview, which was reported in the press, in which he said that he would like this question of the advancement of religion to be reconsidered. He said that they had to go by the application which the trust, organisation or whatever it was had put down on paper and consider whether those purposes were charitable or not; and of course they could be framed by lawyers in such a way as to appear charitable. He said that he would have liked to go into the intention of the promoters to see whether or not it was in good faith. I would go further. I should like the charitable purposes of such an organisation to be judged not by their paper applications for registration but by the way that they carry out their work. By their deeds shall ye know them! So that is another ground on which I suggest that charitable status should be reconsidered and reformed.
The other matter, on which I should like to end, concerns the investigation of all the accounts of the charities. I have had letters too. In those organisations which collect money on the basis of charity—and I know of one case where there was a dear old lady who altered her will and gave £20,000 to a charity—where does the money go? There is no accounting and no check by any independent body. I am afraid that in many cases the majority of it goes into expenses,

209
salaries and all the other rewards of the organisation, and very little goes to the good purposes which it should serve. Ought there not to be an administration which would inquire into all the accounts of these so-called charities, so as to ensure that all the funds are not used up in administration, promoters' expenses and so forth? That is another reform which I should like to see. Indeed, is the time not ripe for this matter to be reconsidered not only as to tax, which is very important, but as to the law itself and indeed its administration?
5.5 p.m.
Baroness Lane-Fox: My Lords, when the noble Lord, Lord Allen of Abbeydale, told me of today's engagement I silently congratulated him on his well-known sagacity for giving us an opportunity to bring together the views formed during the lifetime of the Select Committee. As its most humble member I shall be very brief in my remarks.
I joined the committee with background knowledge gained only from a few days when I was privileged to work in the offices of the Charity Commissioners researching some information. That experience of some years earlier was unforgettable because of the cobwebby and dusty state of the files and the lack of indexation to help me extract the information. I found this not only very bad for my asthma but also very surprising because it in no way corresponded with the polished image implied by the information which had been circulated about the commission. Theirs seemed to be a remote, still world, away from the real rough and tumble of life. No doubt all these things have changed.
However, more lately, the commissioners, and correspondence through various charities with which I have had connections, have emphasised the apparent timelessness of the work; so it was a relief to hear evidence that shed light on the reasons for these delays. It appears from the facts given by my noble friend Lady Faithfull that, with the best will in the world, in their present situation the commissioners could not bring to light immediately facts about selected charities.
The instruction to charities that accounts be submitted annually could almost be disregarded because if the accounts do not reach the commissioners there is no machinery to chase them up. This implies a very different outlook from that held by most organisers of charities, who feel in honour bound to submit their accounts. It also gives a somewhat different complexion to the charities who proudly assert for fund-raising purposes that they are a registered charity, the inference being that therefore they are of exemplary behaviour. Now we know that registration means precious little.
The inadequacy of the establishment of the Charity Commissioners as it is at the present time is especially notable because of the increasing number of charities which more and more need to make use of them. Surely the commission should be given the most modern equipment in order to cope with this new situation. The fact that the kind of money which is at stake is other people's money which is often
210
contributed at great sacrifice, as was made clear by the noble and learned Lord, Lord Denning, must make the necessity to improve the facilities very strong indeed. The onus is upon the Government.
Last year brought news of the wonderful generosity of the public in contributing to appeals such as Bob Geldof's. When causes touch their hearts, people wish to give. But we have also been assailed by stories of most urgent need—the need for funds for scanners and kidney machines and different aspects of the AIDS problem, let alone the plight of many London hospitals. I am surprised that the Government do not now take the opportunity to devise a method to marry up these two very different aspects: the one aspect which is the wish to give and the other which is the need for giving; and to do it in a way which will attract those who wish to have a gamble. The aim should somehow be to prime the pump and not to forget that today very many funds go both to the pools and to bingo.
Surely through a co-ordinated effort this could somehow be done. My noble friend Lady Vickers has suggested a means. The success of premium bonds has shown that good prizes can promote the wish to give. Therefore is it not time to devise some up-to-date method to encapsulate these circumstances? Is it not just the time? Nevertheless, in my recent Question, asking that a national lottery be considered, I was shot down by my noble friend Lady Trumpington.
I very much hope that my aim and object will be seriously looked at. While the public at large are loath to pay their taxes, they very much want to find cast iron channels through which to support important and immediate needs. It was the results of a national lottery which provided the funds to build the National Opera House in Sydney, Australia. Over 30 countries operate such a scheme. Can we really afford to turn our back on it? Obviously the collection and redistribution of funds voluntarily given deserve the utmost care. It is towards that end that I wholeheartedly support the noble Lord's case for close and scrupulous examination and scrutiny of the law relating to charities.
5.10 p.m.
Lord Rathcreedan: My Lords, I am loath to take up the time of your Lordships on this matter, but I was a member of the Select Committee that sat on the small charities legislation. My speech will be exceedingly short, as there is only one point that I wish to make and it has been made by other speakers, in particular by the noble Lord, Lord Allen of Abbeydale, who introduced the Motion. It is the total inadequacy of the Charity Commissioners to be able to fulfil their duties.
Let me read from the Charity Commissioners' annual report for 1982, which says:
"Like other public departments the Commission is affected by cash limits and reduction in staff numbers, and inevitably the standard of work must suffer and delays occur. While we recognise the need to keep expenditure down, to keep a tight control and to obtain value for money, we are conscious of the fact that we are prevented from doing as much as we should like to do and are required to do by our judicial and other statutory functions and to do it as speedily as we should like".
It is clear that the Charity Commissioners are unable to carry out the statutory duties that they have to perform at the moment.

211
I was also rather amazed to find, certainly at the time when the committee was sitting, that they said that they did not have a computer. I do not know a great deal about computers or how effective they are, but I believe that if there is one institution that should have one it is the Charity Commissioners. They could not tell us how many charities which should have been registered were not registered, nor the amount of the various charities. They admitted that they did not know which charities had made an annual return of their accounts. Further, they said that they had been having reductions in staff over the past few years, whereas the number of charities that have been registered has increased. One would imagine that in order to keep up the standard, let alone improve it, there must be an increase in staff.
The deputy commissioner was asked whether there were any procedures for identifying the charities which had failed over a number of years to submit returns, as bound by statute. Her reply was that there was no longer any procedure for doing so. There had been one, but it had had to be dropped a few years ago owing to cuts in staff. I feel that the Government have made an error in cutting the staff of the Charity Commission. It should either be substantially increased or the Charity Commissioners should be given an effective computer. In getting a computer I fear that they would have to get properly qualified people to programme it. That would cost money, and the Government will therefore say that they cannot do that.
There have been two suggestions, one by the noble Baroness, Lady Faithfull, and one by the noble Lord, Lord Mancroft, as to how the burden on the Charity Commission might be relieved. I hope that the Government will consider the two proposals. Finally, to my mind it is no good bringing in legislation to tidy up and improve the law on charities unless we are prepared to spend money to make more effective the work of the Charity Commissioners. Every new piece of charity legislation puts a further burden on them. Unless they are given the ability to carry out their tasks, it is pointless to introduce further legislation.
5.17 p.m.
Lord Auckland: My Lords, the House will be much indebted to the noble Lord, Lord Allen of Abbeydale, for enabling us to discuss this important matter. As my noble friend Lord Mancroft said in his speech, which was as usual most erudite, we all receive a multiplicity of appeals for well-meaning charities. That brings one to the question of whether there may not be too many registered charities. I instance two aspects. One is mental health, in which I have a particular interest, and the other is cancer research. I want to make it quite clear that I believe those involved in the charities, even in the multiplicity of appeals, are dedicated people. But such multiplicity makes the work of the Charity Commissioners much harder. It also makes it much more difficult for the general public, be it individuals or corporate bodies, who receive the appeals, to make up their minds as to where to subscribe.
Having said that, always in a subject of this kind there is a great deal of special pleading. My noble
212
friend Lord Mancroft, for example, mentioned his old regiment. I make, very briefly, an oblique special plea for the Royal British Legion. Late last year, I had down a Starred Question about value added tax and the Royal British Legion. Obviously, I do not expect my noble friend the Minister, or any other Minister, so near the Budget, to be in a position to answer questions on value added tax. There is, however, an interesting paragraph in Appendix E, subsection 3, of the 1984 report of the Charity Commissioners, on the question of buildings.
As your Lordships will know, the Royal British Legion—I happen to be president of the Surrey county branch—has a number of buildings in which disabled ex-servicemen and women are housed. There is the anomaly, I understand, of a new building and extensions to a new building being zero-rated but of value added tax having to be paid if one wishes to build a recreation hall or even possibly a chapel where an existing building is concerned. I realise that this is a technical matter. It is, however, one that I hope that my right honourable friend the Chancellor of the Exchequer will view with some sympathy in two or three weeks' time.
The question of charities brings to mind another issue. Are there, among the multiplicity of charities—for example, in connection with cancer research—some which should consult far more with the medical profession? The technicalities of some of these charities must make it difficult for the Charity Commissioners to decide. I should like to conclude by saying that this has been a worthwhile debate. Those who operate the charities are providing a valuable service. I hope that the Government will be able to give some sympathetic thought to the points that have been raised.
5.22 p.m.
The Earl of Longford: My Lords, I gather that there are eight minutes available to me. I do not intend to take that long, unless I am interrupted. In that case, I shall look to the noble Viscount, Lord Davidson, to protect me as effectively as he protected the noble and learned Lord, Lord Denning. I should like to say, in passing, that it would be a bad day for this House if, in the course of a two-and-a-half-hour debate, no questions could be asked at any time. I should like to take up that ruling later with the Leader of the House.
We are grateful to the noble Lord, Lord Allen, for raising this question. The noble Lord speaks with great authority. I do not believe that he spoke today in his capacity of chairman of MENCAP. It is one of the most important and most valuable charitable bodies in the country. This is rather a relevant point when we are trying to ask ourselves how much liberty should be permitted to charities to try to change government policy. Certainly, spokesmen of MENCAP, at times—and this also applies to myself when I was chairman of the National Society for the Mentally Handicapped, a predecessor of MENCAP—have never hesitated to try to bring pressure on governments for a more friendly interpretation of the rules or, if necessary, a change of legislation.
All of us are connected with charitable bodies of one kind or another. I have been concerned with the

213
founding of two and I am involved today in the founding of a third. I say at once that I have no complaints. I had better be careful because we charitable people are in the power of the commissioners. If we antagonise them, we are sunk. I shall certainly therefore say nothing critical of the charity commissioners. I wonder nevertheless whether they themselves would like clearer guidelines. It is a difficult subject. The more that you look into it, the harder it becomes, as the noble Lord, Lord Allen, will, I am sure, agree. I wish, however, to concentrate on the one issue of whether the guidelines for the charity commissioners could be clearer.
I should like to mention one charitable body that I was not concerned in starting but on whose council I sit. I refer to the Matthew Trust founded by that remarkable man, Peter Thompson, concerned with mental health in all its aspects, particularly the special hospitals, and also with victims of crime. Can one expect a body of that sort to do nothing to try to improve the attitude of the authorities towards the various beneficiaries that it is trying to help? It is inevitable as everyone knows, that those who run such a body want to see improvements in practice and possibly in the law of the country.
Without going into the merits of a particular argument, the Matthew Trust launched a campaign about three years ago to have nursing staff in the four special hospitals represented by nursing unions instead of by the Prison Officers' Association. The reasons should be obvious. I hope that, in saying this, I do not reflect in any way on the Prison Officers' Association. However, one could not expect the Prison Officers' Association to like the argument brought forward by the Matthew Trust. The association duly protested to the Charity Commissioners. The commissioners, at first, warned the Matthew Trust that, in adopting this line, it was not acting within the terms of charitable behaviour. Later, following some argument and various submissions, they changed their attitude and gave the trust the all-clear. I mention the case only to show how difficult it is in many instances to ascertain that what one is trying to do to influence policy comes within the terms of the Charity Commissioners.
In any group of people dedicated, as are all people, whether paid staff or volunteers, who run charities, to helping sections of the community who need help, the question arises as to whether or not it is their duty to bring whatever influence they can to bear on local authorities, the Government or whoever else seems to be in a position to improve the lot of the beneficiaries. In all cases that I can think of, not least in relation to MENCAP, a certain campaigning element creeps into the activities of those who care most for the people they are trying to help. At the moment, it is unclear how far that is permissible. I do not want anything too definite said about this. I might receive the wrong answer. One has to be extremely careful. The situation is far from clear. I am asking the Government whether it is possible to consider the idea of trying to provide the Charity Commissioners with clearer and more liberal guidelines.
5.29 p.m.
Lord Campbell of Croy: My Lords, I am glad to follow the noble Earl, Lord Longford. I commend the
214
points that he has raised on the need for guidelines and their application to mental health. I shall not, however, pursue those subjects because I wish to raise one particular matter. First, however, I should like to congratulate the noble Lord, Lord Allen of Abbeydale, upon his admirable introduction to the subject. He has drawn attention to the untidy state of the law and practice in regard to charities. In particular he pointed out the difficulty in drawing a clear and equitable boundary between what is a charity and what is not.
The matter I wish to raise and on which I wish to ask some questions is this. The Charity Commission does not operate in Scotland. The commissioners' writ does not run north of the Border. In Scotland one deals directly with the Inland Revenue on all matters concerning which the Charity Commission would be consulted in England and Wales. My noble friend the Minister, Lord Glenarthur, will no doubt speak at the end of this debate about the responsibilities of the Charity Commission. I ask him whether, if he has time, he could add an explanation of how the Inland Revenue operate in Scotland in decisions on granting of charitable status to bodies who apply, in dealing with charities which are registered in Scotland, and in keeping under review the activities of those charities; because it certainly should be part of the system that changes in the aims or practices of charitable bodies should be monitored.
I have understood that the Inland Revenue have aimed in Scotland to follow the same principles and criteria that the Charity Commission follow in England and Wales. I would therefore first ask my noble friend whether that is correct. If it is correct, how do they co-ordinate and compare practice and cases? What is the degree of supervision? We have been told that there are 150,000 charities registered in England and Wales who are the responsibility of the Charity Commission. I assume because the population of Scotland is about one-tenth of that in England and Wales that we are dealing with about 15,000 or possibly less in Scotland.
We heard from the noble Lord, Lord Rathcreedan, just now that there is considerable doubt whether the Charity Commission have access to computers. The Inland Revenue have many computers so there is no difficulty as far as they are concerned, I am sure, in dealing with the Scottish charities in the way in which they deal with taxpayers. They have, if I may say so, a great reputation for thoroughness. I am not complaining; I am merely inquiring.
However, it seems to me that the charities registered in Scotland may be being put through the mill rather more than those in England and Wales and it could be that reputable charities in Scotland are being supervised and their accounts examined very much more closely. I cannot imagine the Inland Revenue in the normal way not examining the accounts submitted to them, but we understand that the Charity Commission have time to look at only a small proportion of theirs. I am a little sad to think that bodies such as the Moonies and other strange cults which the noble and learned Lord, Lord Denning, mentioned, are in the Charity Commission's field, whereas reputable charities in Scotland are being examined, it seems, much more closely.

215
I have been involved with, and have advised, a number of charities based in Scotland over the years, especially at times when they are being founded and are starting up. I was chairman for Scotland of the International Year of Disabled People and from that, for example, a number of projects arose which sought charitable status.
It is important that the qualifications for charitable status should be made clearer because it makes a great deal of difference to the applicants whether or not they will receive various tax concessions. I am not complaining about the Inland Revenue in Scotland. They have processed without undue delay the applications with which I have been involved. But the requirements to qualify for charitable status appear to be very vague.
I do not ask my noble friend the Minister to describe them in detail. I was once privileged to hear, I believe, the best account available, which was given by the noble Lord, Lord Nathan, who had just been vice-chairman of a committee, about 10 years ago, looking into the law of charities. I was then chairman of a charity in Scotland. I invited him to address that charity at its annual general meeting and to give an account of the criteria which operated so far as the Charity Commission are concerned. He gave an absolutely excellent account, but it is clear that this is not an exact science. However, the decisions made mean a lot to the organisations which apply.
My noble friend will probably tell us when he comes to reply that the criteria are general and that the decisions are left to the good judgment of the Charity Commissioners. My inquiries are directed to whether the Inland Revenue try to apply the same process observing the same four categories to which the noble Lord, Lord Allen, referred in his opening speech, and whether they do this with a similar degree of vagueness and discretion when they are dealing with the cases from Scotland.
5.37 p.m.
Viscount Brentford: My Lords, I should like to thank the noble Lord, Lord Allen of Abbeydale, for introducing this debate at what seems to me to be an appropriate moment, when this Government have already taken steps to encourage charitable activities; and when there are leaks—true or not—that they are intending to take further steps along that path. It seems therefore a most appropriate moment.
I should like to make a couple of comments about the Charity Commission from my personal experience. Reference has been made by a number of your Lordships to delays through lack of resources. While that is undoubtedly true, I should like to record my appreciation of the way in which the staff of the Charity Commission can deal with matters of importance with both thoroughness and efficiency, and also with great speed when that is required. I personally appreciate this very much. It seems that they exercise good judgment on that matter when it is required.
I should like to make another point with regard to a remark of the noble and learned Lord, Lord Denning, on the question of further investigation when charities come up for registration. Again, I am impressed with
216
the thoroughness with which the Charity Commission look not only at the paper work submitted to them, but require to know how the trust of the charity will be implemented by the trustees after it is formed and registered. I do not see what further steps they can take before registration than looking at the practical way in which the trusts will be implemented. I feel that that is highly commendable.
The main point which I should like to make is again touching on the very grey area which is the borderline between what a charity can do and what another organisation can do in the political field. The noble and learned Lord, Lord Denning, again touched on this, and if he were present I should like to ask him whether he has been able to work out a legal definition on how to separate a genuine religious charity from the cults about which he was talking. I have not been able to decide how to distinguish in this field which has been exercising the minds of people for some time. But I should be interested to know whether he has a legal definition to cover that.
The point I should like to make is on the problem that a charity—which exists to promote the Christian religion—finds when the political sphere is impinging on its charitable objects. Imagine, my Lords, a religious charity, which also has the power to teach and uphold Christian values in family life. The problem faces the charity when the law is going to be changed, or the law is being flouted, which impinges against its objectives. At the risk of being slightly technical I should like to make four points which it can do in this field. My basis for this is not my own understanding of the law but an admirable memorandum provided by the Charity Commission.
A charity such as this can comment to the Government after the Government have invited comments or suggestions from charities. A charity can comment on a Government Green Paper; a charity can supply information and arguments to Members of this House or another place after a Government Bill has been published; and, lastly, a charity can support or oppose a Private Member's Bill. This means that there are two things in particular which it cannot do which I should like to draw your Lordships' attention. A charity cannot support or oppose a Government Bill. It seems to me that there is nowadays a fairly fine line between a Private Member's Bill and a Government Bill. Again, there is a grey area between the two. A number of topics may be dealt with in either one way or the other.
Secondly, a charity cannot supply information and arguments to Members of this House or another place after a Government have expressed an intention to change the law but before they have published their Bill, unless they have actually requested comments. I suggest to your Lordships that it is beneficial for a charity to express its view on a Government's intention of changing law affecting charities prior to publishing their Bill.
This Government are committed to strengthening family life, but if a Bill were ever to come before your Lordships' House which negatively affected family life, the charity which I have suggested to your Lordships would not be able to oppose it before the Government published a Bill. I believe that that is an anomaly. It could do so if a change was being effected

217
by a Private Member's Bill alone. I suggest that this is a grey area, an anomalous area, that could be tidied up by the law.
However, may I emphasise, first, that a charity should never be allowed to act beyond the scope of its charitable objects and, secondly, that it should never be allowed in any way to enter into a party political field. Therefore, I conclude by saying that I believe that there are anomalies in the law in this area which could usefully be tidied up by legislation. However, I am worried because last time I told my noble friend the Minister that there were anomalies in the law, he replied that the only way was to sweep away all regulations affecting it and have a free-for-all. That is not at all what I would advocate in this case. I believe that there is scope for tidying up the law in this context.
5.43 p.m.
Lord Prys-Davies: My Lords, we are immensely indebted to the noble Lord, Lord Allen of Abbeydale, for having initiated this important debate. I, too, should like to congratulate the noble Lord on his opening address. Our hope must be that some of his words and the words of other contributors to the debate will carry weight with the Government, because they are the words of men and women who are well qualified to speak about the initiatives which they consider to be necessary.
The statistics to which we have been referred this afternoon demonstrate that the charities sector is very large business indeed, and that it is growing. The statistics also show that the resources of charities are insufficient to enable them to cope with the demands made on them. I am sure that some of us who served on the Select Committee will recall the notable words of a witness who appeared before the committee. His charity could, without lifting a finger, disburse 10 times as much as it was disbursing to the poor, and it was disbursing £80,000. So the shortfall in that particular case was enormous. That is some of the backcloth against which Government policies of support for charities need to be considered.
However, there is another factor, and that is the generous response of the British public to fund-raising campaigns by charities. I believe that there is ample evidence that members of the public are willing to accept a heavy share of the financial burden of the ills of our society where they are satisfied that a charity reaches out effectively to its beneficiaries, and where the responsibility is not perceived to be that of the Government. I believe that those are the preconditions. However, there is a great response and this indeed is detailed in the Directory of Self Help and Community Support published by the Mental Health Foundation. We have heard that during the last few years there has been a growing demand for greater tax incentives to encourage companies and individuals to give to charities. Clearly, there are two views about the merit of this initiative, but I happen to believe that it is an initiative which ought to be considered with care and in the light of the American experience.
I should also like to refer to a paragraph in the last edition of The Sunday Times, where it was reported that:
"The Treasury is looking for incentives to encourage individuals and companies to make donations to charities to set them against
218
tax. But the law on charities may have to be reformed first and Lawson may suggest the changes in a green paper."
Yet the case for reform does not rely on Treasury involvement in tax loss resulting from possible tax changes. It seems to me that reform is not simply a quid pro quo for tax incentives, and I suggest that the proper inference to be drawn from The Sunday Times report is that there is a need for reform of the law on charities and the procedures related to its administration.
To call for the reform of the law on charities is a pretty sweeping statement; it is almost as sweeping as calling for the reform of the criminal law. I think it is accepted that there is no single grandiose plan to be imposed from on high. Indeed, your Lordships have tabled a large number of proposals to tackle actual problems, but in the interest of the whole field of charities.
I should like to refer to the five or six proposals which appear to me to have won considerable support in the course of the debate this afternoon. First, the point has repeatedly been made that charities must be made more accountable to the Charity Commission and that accountability starts with the filing of annual returns. Yet, as we have heard, nine out of 10 registered charities fail to lodge their returns. Therefore, while it is a duty which is set out in the Act, it is a duty which is unfulfilled and unenforced.
It is suggested that trustees should be subject to penalties if they fail, or fail over a number of years, to file accounts. After all, why should the trustees of a charity be exempt from a legal duty enforceable by a penalty, when the same duty is imposed on a registered friendly society? Again it should not be beyond the wit of the Charity Commission to devise a system of identifying those charities which fail persistently to file their annual accounts.
Secondly, the Charity Commission should give a higher priority to the systematic examination of a limited number of the annual accounts, and ensuring that the accounts of every charity will be audited not less than once in a period of 10 years. Unless the accounts are examined and are audited, how can the commissioners put their finger on abuse before too much damage is done?
Considering that there are 150,000 registered charities, it would not be surprising if in fact occasionally there was evidence of abuse. But I should not have thought that there is widespread evidence of scandal and abuse. I think I should say that in fairness to the trustees of charities who try to undertake a difficult task. This possibility that the accounts may be audited is just as important as the filing of an annual return. Individuals are ready to comply with Customs' regulations at a port or airport of entry to a country because they know that there is a risk that their luggage will be examined.
Thirdly—I do not think this point has been made in the course of the debate, but it has been made outside the House—should it still be necessary to obtain the consent of the Charity Commission before trustees can sell or mortgage land? Would it not be possible to dispense with such a consent if the trustees were unanimous, if they certified that they were acting in accordance with independent professional advice, that

219
the terms were the best available, and that in the case of a sale they had given notice in a local newspaper of their intention to sell and inviting higher offers?
If this proposal were to commend itself it would enable about 35 members of the staff of the commission to be redeployed to undertake more important tasks, such as the inspection of the accounts, examination possibly in greater detail of applications for registration of new charities, and in general to cut down delays.
Fourthly, the Government should consider what changes are necessary in order to help trustees who wish to appeal against a decision of the Charity Commission. We have heard, and we know, that to pursue an appeal in the courts is a difficult and an expensive task. It has been suggested that a suitors' fund should be made available to trustees who wish to appeal a decision and who have reasonable grounds for so appealing. There is another alternative. An alternative appeals procedure could be set up which would probably be both cheaper and quicker; and there is a precedent in other legislation where certain disputes can be referred to an appointed hearing officer.
Fifthly, there is a view that the commission itself is by today's standards, based on an inappropriate model; it is a model inherited from the last century. But there is some reason to suppose that in the present system the quality of management skills available to it may be more at fault than the structure itself. I believe that the noble Lord, Lord Allen of Abbeydale, hinted at this; that in common with all other public sectors the commission requires its share of good managers. If this is so, the problem should not be shirked. There may also be a case for a Council of the Charity Commission, as has been proposed, or again for assistant Charity Commissioners. But there is unease about the machinery of the commission, and a high priority should be given to getting the machinery right.
Finally, there is a collection of other important proposals which would require changes in the law. Thus, charities should be enabled to make a more direct contribution to the cure of, rather than merely the alleviation of, unemployment. There is a need to have another look at the fine boundary line between charitable purposes and political purposes. There should be a relaxation of the complex cy-près doctrine, possibly along the lines pointed out by the noble and learned Lord, Lord Brightman, and which has been incorporated in the Charities Act 1985.
It may be said that many of these proposals are not new; that they have been about a long time, and that many of them can be traced to the noble Lord, Lord Goodman. We are sorry that he is unable to be in the House today. If that suggestion is true, I can only suggest that that is a sad commentary on the state of affairs.
The speeches have drawn together a collection of worthwhile proposals. The debate has been a worthwhile debate. But all the speeches and the contributors call for change, and we look forward to the Minister's reply. I hope that he can say that the Government accept in principle that the time is ripe to consider a fresh advance, and that careful consideration will be given by the Government to the proposals which have been placed on the table.
5.58 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, before I respond in detail to this interesting and enlightening debate, it may be useful to set our discussions briefly in context. As the noble Lord, Lord Allen of Abbeydale, said there are in England and Wales over 150,000 registered charities. Estimates of the total income of the charity sector vary. A recent study of a sample of charities suggested that it might be in the range of £4·8 to £7·3 billion—perhaps 2 or 3 per cent. of gross national product.
The range of organisations which fall within the definition of charity is far wider than is commonly believed. Many people, perhaps, if asked to name a charity would mention one whose work lies broadly in the field of social welfare—whether at home, or since the African famine has made such an impact on the public's awareness of need, overseas. But universities, churches, the arts, training, research, conservation, the national heritage, all have their place in the charitable sector. That is why I join with all those who have paid tribute to the noble Lord, Lord Allen of Abbeydale, for initiating this debate today.
The charity world is an important and dynamic part of our community life and it is right that your Lordships should bring direct knowledge and considerable experience to bear on issues which affect the operation of charity law and the charitable world. The noble Lord, Lord Allen, has with his customary clarity set out his concerns about the operation of the law on charity. I am sure he will understand if I respond to the matters he has raised with varying degrees of precision, since one or two of those matters I shall, as he would expect, need to pass on to my right honourable and honourable friends with a responsibility for these matters.
The noble Lord, Lord Allen, my noble friend Lady Faithfull and my noble friend Lord Auckland raised the question of VAT on charities. My noble friend Lady Faithfull has a keen interest and enthusiasm for this topic, and my noble friend Lord Auckland brings to it his personal long experience with the Royal British Legion. He has shown an active interest in charities and VAT and, in particular, as it applies to residential homes. I am aware of the proposals made recently by the Charities VAT Reform Group for VAT relief in certain areas, and I know that there has been strong interest in another place in these proposals. I have listened with great care to what has been said. Having said that, I must immediately dodge the issue a little by saying, as your Lordships would expect me to say at this time of year, that these are matters exclusively for my right honourable friend the Chancellor of the Exchequer, although I will of course make sure that he is aware of the remarks made in today's debate.
On the question of tax the noble Lord, Lord Allen, made suggestions, the noble Lord, Lord Grimond, made others and the noble Lord, Lord Houghton, disagreed with both. But as the noble Lord, Lord Allen, said much has already been done on tax benefits, but improvements have been made in the last five years which are not so widely known as I would wish. Many small charities could do more to help potential donors take advantage of these reliefs, so that

221
what they do can add to the benefit received by the charity of their choice. The freeing of gifts to charity from capital gains tax and capital transfer tax; the four year covenant and associated tax relief for higher rate taxpayers; the possibility of covenanted giving through payroll deductions; the extensions in the range of special VAT reliefs; all these are helping to strengthen charities. Publicity may help—the Customs and Excise have helpful explanatory leaflets on VAT and a more general leaflet. And a leaflet published by the Home Office Voluntary Services Unit has been widely distributed and is still in demand. On the general point on tax, as your Lordships would expect, I can say nothing more today.
Much of what the noble Lord, Lord Allen, and the noble Lord, Lord Rathcreedan, had to say today has focussed on the Charity Commission and its operation, and I should like now to turn to that. The Government are aware of the constraints under which the Charity Commission has to work. We recognise, too, the enormous efforts being made at the commission to respond to the demands being made on it. The noble Lord, Lord Allen, suggested that management consultants might be helpful in assessing the use of resources within the Charity Commission. Certainly this is an option worthy of consideration, but consultants are not always the best method of finding answers to the management of resources within the public sector. We are not concerned solely with a management exercise in the normal sense. We have to consider whether society expects and requires certain functions of the commission and to what extent those functions might assist or inhibit a healthy charitable sector. It is a delicate balance, it requires careful checks which are not always easy to assess in strict financial terms. The suggestion made by my noble friend Lady Faithfull that a council be appointed is again a matter that is worthy of consideration, but I am not sure that it would be desirable to distance my right honourable friend the Home Secretary further.
My noble friend Lord Mancroft suggested an assistant charity commissioner. This is another characteristically creative view to take and one that is worth considering. I hope my noble friend will forgive me if I do not follow him further down that road now.
Towards the end of the debate the noble Lord, Lord Prys-Davies, raised the question of accounts. I am sure that your Lordships will recognise that it is simply not realistic to expect the Charity Commission to inspect annually the accounts of every one of 150,000 registered charities. Indeed the noble Lord made that plain. The cost of simply calling in the accounts was estimated some years ago at about £0·5 million a year.
The commissioners have decided, sensibly in our view, to establish a unit to scrutinise the accounts of particular charities or categories of charities that are or could be of concern. I have to say that this unit is only now beginning its work and it is therefore too soon to give your Lordships an account of its acitivities, or to say to what extent its surveillance should be extended, but I believe that this selective approach is the right one. The noble Lord, Lord Prys-Davies, suggested that all charity accounts should be professionally audited. That is an interesting idea. It is worthy of further consideration, especially for the larger charities.
222
My noble friend Lady Lane-Fox referred to the dusty files contained in the Charity Commission when she worked there. Both the noble Lord, Lord Allen, and the noble Lord, Lord Rathcreedan, pointed to computerisation. I understand that the commissioners will shortly undertake a study to identify the needs of all those who use the register of charities to establish a system which can best meet those needs. They are very conscious of the advantages of computerisation and of the need to update the information contained in the index. But it is a formidable task and it may well take some time to implement fully.
I have noted the suggestions made for the saving of resources, and I can assure your Lordships that these have been under consideration since the National Council for Voluntary Organisations made similar suggestions. I think it is fair to say that on the subject of consents to the sale of charitable property raised by the noble Lord, Lord Prys-Davies, under Section 29 of the Charities Act, 1960, the arguments are finely balanced. The Government appreciate the view that having to obtain the consent of the commissioners to sell land and buildings is seen by some charities as an unnecessary hindrance. On the other hand, there is concern that charitable property does not realise its full value on sale and that trustees are not acting in the best interests of their charity.
The noble Lord, Lord Allen of Abbeydale, suggests there could also be a saving on staff resources from raising the threshold of income for charities required to register. I understand, however, that the practical effect on the workload at the commission of such a proposal would be negligible since a great many charities seek registration voluntarily, presumably because of the public recognition and confidence they feel this will give their work. The absence of registration does not in itself remove the commissioners' jurisdiction over a charity.
I understand also the concern expressed by the noble Lord, Lord Allen, that the definition of what is "a charitable purpose" leaves something to be desired, and is out of line with today's views of public benefit. It is tempting to look towards a statutory definition, but is it a sensible or practicable way forward? Apart from the formidable difficulty of drafting a definition which would command widespread acceptance, would this not lead to a rigidity—which is part of the concern today—or (if open to any form of amendment by subordinate legislation) endless debate and confusion?
I can understand the concern of the noble and learned Lord, Lord Denning, that certain religious organisations have charitable status. That is why my right honourable and learned friend the Attorney General is challenging the commissioners' view in the courts. I noted the critical comments made by the noble Lord, Lord Allen of Abbeydale, on the charitable status of the Unification Church (the "Moonies"), and I will ensure that these are brought also to the attention of my right honourable and learned friend.
I can assure the noble Lord that we are considering seriously the suggestion that appeals in some circumstances against the Charity Commission's decision on charitable status should be publicly financed. The potential benefits are clear but what are not so clear, but are the subject of consideration, are

223
the desirability of the concept of public funds being used to challenge decisions by the Charity Commission (whose actions are funded by public money and governed by statute), the potential consequences of such a precedent and the resource implications.
Reference has been made to the Charities Act 1985, which was the product of so much hard work in your Lordships' House over the last two years. I know that my noble friend Lady Trumpington was asked then to ensure that the Act she was piloting was given maximum publicity. The Act came into effect on 1st January of this year. The Home Office circulated detailed guidance on the Act to all local authorities concerned at county, borough and district level, and we believe that it was drawn to the attention of parish councils through their associations.
I am told that to the commissioner's knowledge the provisions of the Act have been publicised in at least 21 appropriate magazines and journals, so I do not think that we overlooked our obligation. It is of course very early days, but it would seem that there has been a great deal of interest in the Act. The commission have sent out over 14,000 leaflets on the Act's provisions. Several charity information bureaux and rural community councils, among others, have held seminars on the Act to which commissioners have contributed. About 100 resolutions or proposals for action have been received by the commission. Considering that the Act has only been in effect for two months, this is an encouraging level of reaction and I can assure my noble friend Lady Faithfull that there will be no difficulty in monitoring the effects of the Act. I understand that the chief Charity Commissioner has undertaken to report on this.
Perhaps I may deal more briefly with a few of the other points raised today. The noble Lord, Lord Allen, has raised the issue of political guidelines for charities, as did—and I shall come to him in a moment—the noble Earl, Lord Longford. I know that this is a matter which exercises some noble Lords. It seems to me that this is an area in which it is difficult to deal in abstract terms, and therefore I wonder whether there would be much to be gained from prolonged consideration and revision of the Charity Commissioner's guidelines. I know that the Charity Commissioners are quite ready to discuss and give advice on the activities of charities in real and not hypothetical terms. I think that this is the right way forward.
My noble friend Lord Brentford raised a specific problem. I believe that it is one that he perhaps could discuss directly with the commissioners as it is possible that his understanding of the commissioners' guidelines is a little narrow. I am sure that my noble friend will do that. I will convey to those concerned the view of the noble Earl, Lord Longford, that what is needed is clearer guidelines by the Government. So much depends on the tone and the context of a charity's political activities and its relation to the objects of that particular charity. The issue of charity advertising on television was not raised. It is in general one of interest and it is a matter which has been discussed with the IBA.
My noble friend Lord Campbell of Croy and the noble Lord, Lord Grimond, raised the matter of
224
charities north of the Border. I am grateful to my noble friend Lord Campbell for giving me notice of his interest, which I welcome. There have been from time to time proposals that there should be a body in Scotland with responsibilities for the registration, investigation and supervision of charities similar to that which exists in England and Wales; although the noble Lord, Lord Grimond, seemed to suggest that England and Wales might have something to learn from Scotland. I am not sure that my noble friend Lord Campbell did not to some extent follow that as well. I understand that one such proposal from the Scottish Council for Community and Voluntary Organisations is currently under consideration.
In seeking information on whether the same principles apply north and south of the Border, I do not think that my noble friend drew sufficient distinction between a body registered with the Charity Commission and one seeking charitable status for tax purposes. So far as obtaining charitable status for tax purposes is concerned, I can say to my noble friend that the Inland Revenue apply the same principles—that is, the provisions of Section 360 of the Income and Corporation Taxes Act 1970—north and south of the Border. The level of supervision by the Inland Revenue, as I understand it, is the same for charities north and south of the Border. Their work, of course, is limited to ensuring what income has been applied to charitable purposes and not, for example, how well the charities are administered. Perhaps I may say to the noble Lord, Lord Grimond, that I hope he will be pleased to know that the court has held that Coeppler's bequest is charitable.
The noble Lord, Lord Allen, specifically mentioned the Trustee Investments Act. I can say to him that the Government are considering recommendations for reform of the Trustee Investments Act 1961 by the Law Reform Commission.
I am glad that my noble friend Lady Vickers raised the matter of what she referred to as charity chests. If I occasionally lapse into language which she does not like and call them "community trusts", perhaps she will forgive me; because of course the Government recognise the important role that these have to play. The Government have committed £100,000 a year for three years to help develop a number of local community trusts in England. These are to be independent charitable trusts which seek and distribute funds from a wide range of sources to help meet the needs of their local communities. We believe that they will increase the scope of partnership in tackling local problems between statutory agencies, private businesses, and other charitable donors and local voluntary organisations.
My noble friend went on in her speech to talk about experience in the United States and I noted with great interest what she said. My noble friend also raised the question of those who die intestate. Most of those who die intestate have families or relations with a claim on their estate; but the idea that the assets of those who die in that position and without relations might be transferred to a community trust is a new one about which I shall write, if I may, to my noble friend. I certainly hope, however, that community trusts will receive legacies from those who wish to benefit their local charities.

225
I acknowledge that there is concern that the Charity Commission's resources are not adequate for the task they are asked to perform. As with all government expenditure, it is necessary to strike a balance between what is desirable and what is practicable, bearing in mind other demands. I note that some of your Lordships consider that the balance needs adjustment and I will convey this concern to my right honourable friend the Home Secretary. Try as I might, I do not think I could find a way of drawing together such a diverse and far-reaching debate into a neat conclusion. I shall therefore not attempt to do so but all of us are grateful, as I certainly am, to the noble Lord, Lord Allen, for focusing our attention today on the need to be aware of developments in the charitable world and their effects on the operation of the law on charity and the functioning of the commission.
I must say that I think—and indeed it has been expressed by others today—that all of us owe a great debt of gratitude to those who work so tirelessly and so persuasively on behalf of charities and raise so much money for so many very worthwhile causes. What they do fills all of us with a great deal of admiration. Another group of people who fill us with admiration are those who contribute so exceedingly generously to so many worthwhile charities, a point made by my noble friend Lady Lane-Fox and by the noble Lord, Lord Prys-Davies. We shall of course study with care all that has been said and I hope that I have been able to give your Lordships some reassurance that the Government are very much alive to the concerns which have been expressed in this useful debate this afternoon.
6.18 p.m.
Lord Allen of Abbeydale: My Lords, I calculate that I still have 14 minutes left and I hastily reassure my neighbours that I do not propose to use all of it. There are just one or two points to make. I think we have had a very valuable debate in such parts of the afternoon as have been spared to us by British Leyland and the rate support grant. As I said at the outset, I could not hope to cover all the points, and the debate has amply demonstrated that there was a great deal that I did not touch on. I should like to say that I was taken to task for not mentioning the report by the noble Lord, Lord Goodman. As it was I who persuaded him to take on that particular inquiry, it was very much present in my mind; but it had a rather narrower remit than the discussions today.
I am tempted to follow the noble Lord, Lord Mancroft, in reminiscences of life in the Home Office, but I had better resist that temptation; just as I am tempted to follow a discussion with the noble Baroness, Lady Lane-Fox, about the possibility of a national lottery. I must make one comment on the points made by the noble Lord, Lord Houghton. I am a very simple-minded and unsophisticated sort of individual. When I read in The Times an account by a Lobby reporter that charities are set to receive a multi-million pound Budget-day boost as the result of a radical change to the tax laws and I read a similar account by a Lobby reporter in the Telegraph, I do wonder whether it is entirely imaginary. But there it is. In my opening speech I implied that I very much hoped that covenants would remain.
226
May I make just one or two other points. In response to something the noble Lord the Minister said in his very interesting speech, may I say that I myself shied away from attempting any statutory definition of a charity. I very much go along with the question which the noble Viscount, Lord Brentford, posed. If, for example, you are to distinguish between religions and religions, what sort of criteria do you apply? We had understood that the Attorney General was going to appeal over the decision of the Charity Commission to register the Moonies. All I can say is that I wish he would get on with it.
There has been some misunderstanding about accounts, I think. The statutory obligation to submit accounts is only upon the charities with a permanent endowment; the Charity Commission allow some of those to come in only every five years. But the Charity Commission can also ask any other charity to put in accounts at any time. The fact remains, as several others have said, that those accounts which do come in are not looked at.
Then, on the point about the care which the Charity Commission take in drawing up instruments, to which the noble Viscount referred, I am glad he said that. But the real trouble is that once the instrument is drawn up, with infinite care and complexity, no attempt is made to ensure that the charity keeps to its obligations.
Finally, as regards the computer, my only point was that if you raise the limit from £15 you would at any rate get rid of some thousands of entries on the register, which would simplify the preparation of computerisation—on which I am afraid my information is slightly less optimistic than that given by the Minister; but I am sure he knows better.
As the number of speakers today has shown, there is a great deal of interest in this subject. May I just say that the noble and learned Lord, Lord Brightman, did ask me to express his particular regret that he could not take part. He was chairman of the Select Committee which led to the Act last year and he was good enough to say that he was in general agreement with the points I have tried to put.
We have a great deal to think about when we come to read Hansard and I hope that some of the points that have been made will be found of value to the Government. In view of the widespread interest shown by members of this House on all sides, I could not help thinking of the familiar quotation from Pope:
"In faith and hope the world will disagree,
But all mankind's concern is charity:".
My Lords, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Housing (Scotland) Bill
Bill read a first time, and to be printed.

Higher Education: Institutional Framework
6.24 p.m.
Lord Annan Lord Annan rose to call attention to the case for a new structure for the governance and funding of the universities and polytechnics; and to move for Papers.
The noble Lord said: My Lords, in moving this Motion I want to put a case to your Lordships. The case is this. The present system of higher education must be changed. It must be changed if we are to give the present number of 18 year-olds higher education and to increase that number. It must be changed if we are to retrain key men and women in industry and business, and also the long-term unemployed. It must be changed if we are to keep in a few institutions the level of research that has made British scientists and scholars famous—research that has often helped industry, business and medicine to lead the world in developing new lines.
I am sure we shall hear from every part of the House this evening pleas to spend more on higher education but, with respect, I ask those who do so to reflect whether any government of any persuasion could sustain the system that was created between 1958 and 1968. In that decade we created eight new universities, turned the 10 CATS into universities, founded business schools and the Open University, extended postgraduate support and services for student health, sport, counselling and careers. A Social Science Research Council was added to other such councils, all of whose budgets were greatly increased. Then 32 polytechnics were created and the teacher training colleges were upgraded. That finally broke the bank.
Individually each of those acts was defensible, but together they were indefensible; and it was typical of the time that when Lord Todd's Royal Commission on Medical Education reported, the cost of purchasing sites and erecting buildings that they recommended was so astronomical that most of the proposed reorganisation was never carried out.
The expansion was not wrong. What was wrong were the principles on which it was financed and organised. That was our first mistake. We were right to expand the numbers of students and academic staff. We were wrong to think we could give all students a Rolls-Royce higher education. No country could do what we tried to do. Every Western country differentiates between its institutions. In America, colleges differ enormously in their aims and levels of funding. In France, the Grandes Écoles are elite institutions, whereas in the universities the staff-student ratios (as they are in Germany and Italy) seem to us preposterously bad. But even in American universities the ratio is far worse than ours at undergraduate level.
I think we got the finance wrong because the organisation of the system was wrong. With the wisdom of hindsight, I wonder whether Mr. Macmillan (as he then was) was well advised to appoint as chairman of the committee a celebrated professor, Lord Robbins, and, as his henchman, the wiliest of vice-chancellors, Sir Philip Morris. Was it wise to have university academics in the majority on the Robbins Committee? No one can doubt the idealism of those men, but they had such a respect for the academic model they knew that they showed little understanding or sympathy for any other model. They were wrong to accept without examination that all universities should be treated exactly alike. The trouble was that they wanted their recommendations to be acceptable to their colleagues, their fellow dons
228
in the common room. That was not what happened in 1853, when the dons were outraged by the proposals of the Royal Commission on Oxford and Cambridge. But Lord John Russell stood firm and insisted on reform.
It was much to Mr. Crosland's credit that the Labour Government rejected the proposals for organising higher education on the lines advocated in the Robbins Report. Instead, Mr. Crosland set up the binary system—and I remember Lord Boyle saying to me that he, too, had he still been Secretary of State, would never have allowed the whole of higher education to move out of public control. But Mr. Crosland, too, made his mistakes. The binary system was inflexible and he insisted that the 32 "polys" he created should have parity of esteem with the universities and give three-year degrees. What was as bad was that he allowed the polys to slip out of his grasp and into that of the local authorities. The local authorities gave them so much freedom to develop as they wished that the polytechnics became arty-technics.
We have ended up with a system incapable of reforming itself—with autonomous universities and local authority-controlled polytechnics. Everyone in the universities blames Sir Keith Joseph for their present plight. That is unfair. The Secretary of State has no powers over them. He cannot tell individual universities how to change themselves. He cannot modify the polytechnics. His only sanction is financial.
Over the years, the universities have shown that they are deaf to any hint from Government on how to change their habits. In 1969, they rubbished Mrs. Shirley Williams's 14 points. In 1981, when they were forced to cut staff, they inflicted the maximum damage on themselves by failing to cut out whole departments and by encouraging some of the best of their staff to retire. Lord Melbourne once said in this House:
"Universities never reform themselves. Everyone knows there is too much competition and jealousy."
That was why our forefathers set up no fewer than three Royal Commissions on Oxford and Cambridge and several committees of inquiry on London. Just such a fundamental inquiry is needed today to find remedies for our present discontents.
What could those remedies be? One could be to designate certain places as centres of excellence and remunerate the staff and fund the research at a level higher than that at other institutions. Another is to designate numbers of universities as centres for liberal studies—scientific as well as the humanities—in which no postgraduate work is done. Hundreds of such universities exist in North America, and excellent many of them are. Another is to make the staff ratios in most institutions less opulent. Lord Robbins argued for years that that should be done. Another is to recognise that in all institutions it is perfectly natural for senior scientists and technologists, whose best creative work is behind them, to spend a considerable part of their time in raising funds for research. That is what Nobel prizemen in physics in America do. It is what the vice-chancellors of Aston and Salford have done with conspicuous success.
There is another possibility, which is to make the polytechnic degree a two-year course, or to admit all

229
students in universities and polytechnics to read for a two-year course and give a third year only to the most proficient in examinations or to those who, in the judgment of their teachers, have the greatest promise. We could give students at all institutions a two-year course leading to a degree, with a further two years for the few who need specialised professional training, most probably at another institution.
Another line to pursue is to differentiate between classes of students for eligibility of grant. For instance, all students should receive some grant, but only the poorest should receive a full grant. I fear that under the present Government that does not seem to be much of a starter. We should make the students in all but a few universities and subjects pay higher fees if they come from a different region, as is done in each state of the United States.
Have we ever asked ourselves why all academic staff in universities or in polytechnics should be paid on the same scale? Why nearly all universities offer a spread of subjects from mathematics to languages? Some of your Lordships may be saying, "What do the University Grants Committee and the National Advisory Board for the Polytechnics exist for if not to consider such matters?" There is a limit to the kind of advice that they can give at present. For instance, the chairman of the UGC has said that his committee cannot recommend the closure of a university. As the UGC is composed largely of academic staff from the spectrum of universities, is it likely to recommend the drastic changes needed to reform higher education? Should the UGC be composed mainly of university staff! Perhaps we need to do what has been done for broadcasting—a review on the state of higher education by an independent body every 10 years or so.
I hesitate to ask for another inquiry to be set up. Universities probably feel that over the past few years they have been inquired into to death. I hestitate for only one reason—there is already a committee in existence under Lord Croham that is studying whether any change is needed in the powers of the UGC. May I therefore ask the noble Earl, Lord Swinton, whether the committee's remit is wide enough to take into account the problem that I am raising this evening? If it is not, will his right honourable friend the Secretary of State consider widening its terms of reference? Furthermore, does the Secretary of State envisage setting up a similar committee to advise him on the powers of the NAB and whether the polytechnics should continue to be funded from the rates and governed by local government?
The Secretary of State has already said that he intends to take powers to alter the statutes of universities so that academic staff can be made redundant. Can he not seize this moment and do what many of his predecessors have hinted that they wanted—fundamentally to alter the organisation of higher education so as to make it a less crushing financial burden for the taxpayer? If we are to have—I hope to hear no voice opposing this tonight—higher education of the many, a great deal of it must be much cheaper. Equality of opportunity to obtain higher education, yes. Equality of funding, esteem and purpose for all institutions, no. That is a dream, and not even a pleasant dream. If we leave our institutions
230
with exactly the same roles as they now have and financed on the principle of equal misery for all, we shall irrevocably destroy our reputation for education, learning and research.
Lord Boothby: My Lords, may I ask the noble Lord one question before he sits down? Does he agree that Lord Wolfenden was a good chairman of the University Grants Committee and that he proved that the system could be made to work well? I had personal experience as rector of the University of St. Andrews.
Lord Annan: I take note of the noble Lord's point. My Lords, I beg to move for Papers.
6.38 p.m.
Lord Flowers: My Lords, the noble Lord, Lord Annan, has proposed his Motion at a time when a great deal is happening in higher education and we are grateful to him. When he was vice-chancellor of the University of London, he asked me to help him a bit with the medical schools. Shortly after I finished my work he had the good sense to retire. Rumour has it that he presented the university with two ceremonial urns—one to bear his ashes and the other a notice which reads, "No Flowers by request".
Noble Lords will have observed, I hope with approval, that both urns so far remain empty. I hope that your Lordships have also observed that the London medical schools mostly flourish under their new arrangements. The remaining difficulties have more to do with the hospitals than the schools. That will remain the case until the University Grants Committee and the Department of Education and Science, which provide for the schools, and the National Health Service and the Department of Health and Social Security, which provide for the hospitals, can bring themselves to have a common policy for medical education. That is a subject which deserves a debate for itself, but it is an example of the need for reform.
The noble Lord has raised a great wealth of issues tonight. However, the main point that I wish to make is that the University Grants Committee should be a body respected by the universities and heeded by the Government, through which the universities should be accountable for the expenditure of public money and for the quality of their management of matters, both financial and academic, and which considers the universities as entire institutions, not merely as summations of their parts, which nobody else can do. That used to be the case throughout the great expansion of the 'fifties and 'sixties. Alas! it is no longer so. That should be a matter of great concern to the committee of inquiry at present being chaired by the noble Lord, Lord Croham.
The reasons are not far to seek. During the 'seventies, and even more during the 'eighties, the UGC has had to administer financial cuts of increasing severity, but has not been structured or staffed to do so in a convincing manner with adequate explanations given. And, no doubt partly for that reason too, its advice, quite clearly and repeatedly given to government, that the cuts were being imposed too fast for orderly application, was ignored.

231
Instead of reforming the UGC to suit the task in hand, the Government began to push about behind the scenes, undermining still further the precarious authority of the UGC. They wanted independent studies of the efficiency with which universities used their resources, and they wanted an inquiry of some sort into academic standards. Both studies were, in fact, set up by the Committee of Vice-Chancellors and Principals. That is the kind of role that will increasingly fall to the CVCP so long as the UGC is treated by government in the way that it is because both studies could—and not many years ago would—have been mounted by the UGC itself.
Thus it was that we had Jarratt on efficiency and Reynolds on academic standards. And let it not be forgotten that the first recommendations of Jarratt were addressed to the Government, and they were along the lines that through the UGC the universities should be given financial indications for the medium term in which they could have some confidence, for otherwise there was no basis on which they could be expected to take and put into effect sensible management decisions.
There were numerous other recommendations to the UGC, to the CVCP and to the universities themselves. So far as I know, they are being vigorously pursued in all the universities and taken further, not least into the academic field forbidden to Jarratt and into governance more generally. They certainly are in my university where for many years we have had a high-level body of the kind recommended by Jarratt with a mixed membership, some academic, some lay, which takes into account the resource implications of academic developments and serves as a link between senate and council.
But the Jarratt recommendations addressed to the Government themselves have been studiously, even arrogantly, ignored. I am not today asking for more money for the universities, even though, Heaven knows! I could with justice do so. It was Mr. Peter Brooke, then Under-Secretary at the Department of Education and Science, who told the House of Commons on 23rd April last year that during the period from 1980 to 1987 he expected university recurrent grant to decrease by about 11 per cent. in real terms. During that same period, public expenditure is expected to increase in total by about 7 per cent.
The Government are perfectly within their rights to demand that the higher education budget be reduced, absolutely and relatively, if that is what they think will benefit the country, and in spite of the need for more and more specialised manpower—and, in these days, womanpower, too—and with no thought for the contrasting views and actions of those countries with whom we are in direct competition as a trading nation. What they really must not think themselves entitled to do is to demand faultless management on our part, when they so abjectly decline to provide the conditions under which good management becomes possible. Those conditions are mostly spelled out by Jarratt, but are totally ignored by government.
The UGC is in need of reform, but so is the Government's heeding of it and the respect of the universities for it. The UGC did well enough in times
232
of expansion. Why has it started to fail in times of contraction? The membership and staffing of the UGC are no longer appropriate—that is why. The committee mostly consists, as the noble Lord has said, of hard-working academics able to judge the worth of teaching and research as well as anyone, but few ever having had to learn the skills of management. There are, I think, only three people from outside the sphere of education among the whole membership of the UGC.
The UGC is in fact much less expert managerially than many individual universities, which have upon their councils men and women from many walks of life, who share a tremendous experience of managing business of all kinds, who give unstintingly of their time and energy, and who provide a background of managerial realism against which academic battles are necessarily fought. And the UGC is also less well staffed in terms of managerial expertise than the universities which are accountable to them.
We have done more in London than possibly anywhere else in the university world to try to bring order back where senseless cuts have caused endless anxiety and confusion. We are reforming ourselves, as the noble Lord well knows. But without the wisdom and experience of the lay members of the university, I am clear that the task would have been beyond us. They have been in the forefront of trying to find solutions which strengthened the best we had to offer at the expense of those activities which could be spared or which could fit in better somewhere else. Full rein has been given to their initiative; and of course the London experience is by no means unique. The UGC needs men and women like that—not three out of 20-odd, but 10 at least and in the majority. Then they might be respected by the universities and heeded by government because of the quality of the decisions they would take and the advice they would give.
I have devoted most of my remarks to the reform of the UGC because I believe it to be the key to the whole problem which has been raised by the noble Lord, Lord Annan, tonight, even to the madness of the continuing cuts. But I do not expect to return to the plenteous days of the 'sixties, and a way therefore has to be found to conserve what is best in higher education as a whole, while meeting in some reasonable fashion the needs for increasing participation. Most of the nation's fundamental research is done by the universities, and the applied research and development that is done by others depends upon it. We have the word of the Confederation of British Industry for that in their own response to the Green Paper—and a very cheering and timely testimonial it is.
At the present time there is a fairly wide spectrum of institutions in terms of the mix of teaching and research. There are some universities that are extremely strong in research, and they can prove it by the number of research grants and contracts that they win on their own merits from external agencies, both public and private. There are some polytechnics which should probably be allowed to do more research than their resources allow, if similar criteria prevailed. And there are some institutions where little research of real distinction seems to get done. It has the virtue of being not a static system but a dynamic one. There are

233
universities now strong in research that once were not; there are others which seem to have lost their once notable position. If as a nation we want some research of the highest international standards, as I am sure all your Lordships would desire, and if money is short, then we have to be selective; perhaps more selective than we really like to be, as the noble Lord has advocated. Otherwise, it is mediocrity all round, and I agree with him.
Of course, it is necessary to be selective about the right things, and in considering the institutions of higher education, research is only one of those things. It is also necessary to be selective about how one supports teaching. Here the UGC is I think in danger of making a capital mistake. Saying that they do not know how to measure quantitatively the quality of teaching, they have concluded that no selectivity is possible, and that we must all be paid the same for a given amount of teaching, however good or bad it may be. But quantitatively measured or not, we all of us can distinguish good from bad teaching, and regularly have to mark the results of it.
That was in parenthesis. The question raised by the noble Lord, Lord Annan, is essentially whether the selection of institutions where research should be allowed to flourish can be settled once and for all by some external agency or as the result of some powerful inquiry or whether—as is usually the case in human affairs—one achieves better results through evolution (guided evolution, if you like, my Lords, in response to clearly-enunciated national need and indications of performance, but evolution for all that), in which the successful are rewarded by being funded to do more, and the less successful are funded less, but nobody is forbidden to better themselves, because that way there is no incentive to improve.
If the UGC is reformed and restaffed in the fashion that I have tried to indicate and uses sensible criteria, and if there continue to be research councils that select proposals for research grant on the basis of timeliness and promise, then I would be content to leave the evolution of the university system in their hands.
6.51 p.m.
Lord Beloff: My Lords, the House is privileged in discussing so important a subject as this to have heard first from the exponent of radicalism where higher education is concerned, and then a reply by one of the most notable representatives of the academic establishment. So your Lordships have had both the case for radical change and the case for evolution.
My own sympathies, as might well be guessed, are, on the whole, on the radical side. However, I should like to put the argument in a slightly different fashion from that of the noble Lord, Lord Annan. I myself believe that the position in respect of higher education in this country is worse than even noble Lords who have spoken have indicated. We are really in a situation of crisis in which the Government do not understand the universities, the universities clearly do not understand the Government, and the tax-paying public do not understand either of them.
That is not surprising, because we have inherited a system of university governance and finance devised in a very different situation—and I would go back long
234
before the expansion of the Robbins era—but which we are trying, I think unsuccessfully, to adapt to two national demands. One is, as the noble Lord, Lord Annan said, that we should have in this country at least a number of universities that can compete with the best in the world in research and in teaching—because without that, the country would be poorer spiritually, quite apart from any loss to industry from failures in scientific research. The other demand is the demand common to all advanced countries, and increasingly in developing countries as well, that the largest possible number of young people should have at least an acquaintance with what is meant by higher education.
What we have are institutions singularly ill-devised either to look at that problem or to present it and its financial consequences to the public. In the first place, we have no Secretary of State whose sole responsibility is in that field. What this country requires is not a Secretary of State for a multiform Department of Education and Science having a variety of different demands being made upon it by local authorities, the public, and a whole range of institutions. We require a Secretary of State for Science and Higher Education who could put the case for the first of those things at least to his Cabinet colleagues and make certain that the money was available for it.
One then thinks that a Secretary of State for Education, or perhaps a Secretary of State for Education and Training, relieved of that responsibility, might take a look at the schools. Another area of misunderstanding, or of miscomprehension, is between the schools and the universities. The schools complain that the universities interfere and dictate too much the course of the curriculum. The universities complain—and, I fear, with increasing proof—that in some fields of study at least, the schools are not supplying youngsters prepared for the demands that the universities have to make upon them. I should have thought that there was enough there for two Secretaries of State.
The noble Lord, Lord Flowers, believes that reform and enlargement of the UGC is the key. However, the UGC itself is a tremendous anomaly. It was created after the First World War to distribute to the universities funds provided by central government that were a tiny proportion of the universities' general income. The UGC's structure has no doubt developed and grown since then, but fundamentally it is not devised, and never was devised, to be the institution through which 90 per cent. of university funding would come. It is not surprising, therefore, that although the UGC worked reasonably well when money was plentiful, it has proved incapable of dealing systematically or credibly with the problems of contraction. I do not believe that anyone could blame the UGC for that.
It seems to me necessary that if there are to be institutions having major responsibilities for research in both science and the humanities, then they must have some kind of freedom from annual, triennial or even quinquennial current grants. The great strength of the American institutions, to many of which the noble Lord, Lord Annan, referred, is that they have massive endowments. If they were wholly dependent, let us say, on Congress, given what we know about

235
Congress, or if they were wholly dependent upon the state legislature, given what we know about the state legislatures, then their position would be even more parlous than that of our own universities.
How universities, or a limited number of them, can be given an endowment and freed altogether from the apron strings of the UGC or its successor is a matter to which proper attention should be given. I do not myself believe that one can have the independence that is required to plan and to meet new contingencies if one has to go cap in hand for funds all the time, either to the UGC or to the research councils.
One other effect of the system of course has been that it has created a lock step, with the universities having to deal—as the noble Lord, Lord Annan, has said—with degrees taking up the same amount of time, measured in the same way, for very different intakes, and with little opportunity to experiment. Experimentation was something that, in our tiny way, we were able to do at Buckingham, with 40-week, two-year courses which have proved in a limited number of fields perfectly effective but which no state financed university felt able to experiment with. That tiny example perhaps shows that one thing that is necessary if one is to experiment—and we cannot expect universities to be static—is to have at least some control over one's own sources of finance.
The noble Lord, Lord Annan, referred to the fact that there is another way in which we have inherited a very difficult position; that is, in relation to what is sometimes called the student grant question. I would call it rather the question of student support. Having had a relatively small number of students in our universities until relatively recently, we felt in the period of expansion that it would be possible to emulate the level of material support—and this, of course, affects the staff-student ratio as well—which was thought manageable when the number of students was much smaller.
Our European allies and competitors have never thought it possible that the taxpayer should pay for a large number of young people to enjoy a comfortable, middle-class standard of living in their early years even when this is largely paid for out of the taxation of people who will never earn the incomes that they are being prepared to earn. We got into this situation—and the noble Lord, Lord Annan, referred to it—which is an extremely difficult one to get out of because parents have their expectations. Nevertheless, it is not a system which encourages expansion and it is a system, I think, which aggravates the shortage of funds and makes more difficult to explain what it is that universities require of government.
I think that if we are to have a serious look at these matters we need to look well before our present discontents and see whether we should not consider the examples that we are offered both by our European neighbours and, in a very different situation, by our friends in the United States.
7.2 p.m.
The Lord Bishop of Ripon: My Lords, one of the privileges of speaking in your Lordships' House is that one is able to share in debates with those who speak with great authority and experience. The noble Lords
236
who have spoken before me all have experience as vice-chancellor and the corresponding authority that goes with it. I have no such authority and the point which I wish to make this evening is fairly modest, though I believe it is an important one.
It has to do with the place of the voluntary colleges within the system of higher education. The noble Lord, Lord Annan, referred earlier to a binary system of universities and polytechnics but it is the case, as your Lordships know, that there are other colleges of education within which the voluntary colleges find their place. Indeed, as I listened to the noble Lord, Lord Annan, describing a liberal arts college it occurred to me that it was not unlike the college at Ripon and York, of which I have the privilege of being a governor.
Before I speak of the place of these colleges I should like to make one general point about education and about the philosophy of education. As I listen to the debate on education I hear a number of voices saying that ways must be found to measure the efficiency of education; that we must in some way be able to quantify the results and that that may be done by reference to the part which those who are so educated play in the creation of wealth. It is said that we are investing in people and that we are doing so in such a way that that investment may be returned by the part they play in the creation of wealth and, by implication of course, in the salaries they earn in so doing.
However, I believe that to link education so closely with the creation of wealth is to make a grave mistake. I, as a churchman, would wish to argue, as I think I heard the noble Lord, Lord Beloff, saying, that there are much wider criteria which have to be taken into account. He referred to education for the spiritual state of the community and I would add that that spiritual state needs to take account of social awareness. I believe that there are many people who will wish to have the benefits of higher education without necessarily thinking that the consequences for them will be a high standard of living or a high salary. For instance, I think of many of those who find themselves in my own profession whose financial rewards are by no means large.
I wish to argue that the voluntary colleges, particularly the Church colleges which form a part of that voluntary sector, preserve such ideals. But I wish also to argue that they show some of the ability to be institutions which are managed in a way to which I believe noble Lords have already referred. The voluntary colleges do not, however, have the protection of the University Grants Committee. They do not relate through the UGC and are in fact funded by direct negotiation with the DES. It is remarkable, given the way in which funds have been reduced, that relationships between the voluntary colleges and the DES have remained so good and creative; and I should like to pay tribute to the DES for the way in which those relationships have been maintained.
Nevertheless, for that reason the voluntary colleges are in a particularly vulnerable position. They do not relate through the UGC and therefore they do not have a body with great power to speak for them. Nor, of course, do they relate to a local community, as do

237
polytechnics, and therefore do not draw on funds from a local authority. For that reason they are exposed.
I hope, therefore, that any structure for the future governance of our universities and polytechnics will take account of the position of the voluntary colleges. I say that because I believe they have demonstrated a degree of management and an ability to survive in a very cold climate which other institutions might take note of. The college in Yorkshire on whose governing body I sit has seen itself as being in the business of survival for several years. Each year we are by no means sure that that survival will take us far into the future.
One of the ways in which that survival has been ensured is by the provision of vocational and professional courses for which it is believed there may be a demand, particularly in that part of the country. It is by that kind of management, in part, that an institution such as the college of education at Ripon and York is able to continue. I think it is also the case that such institutions provide that kind of variety for which the noble Lord, Lord Annan, was pressing in his speech. They do not have large research departments. Their costs are comparatively low. They have managed to survive with a very considerable reduction in the kinds of funds available. I am not complaining about that, but I am saying that it places enormous strain upon any institution to live with such uncertainty, knowing that such voluntary colleges can of course come to an end at any time.
I also believe that they provide a cross-section of education, both vocational and professional, and general degrees in the arts and sciences which I think makes a good mix and provides the context within which the kinds of ideals that I mentioned earlier can be realised. Were there to be a change in the governance and funding of universities and polytechnics there would be a danger that such voluntary colleges as I have mentioned would become exposed. I hope that the noble Earl the Minister will be able to give me a reassurance at the end of the debate that whatever changes are proposed will include some measure of protection for the voluntary colleges.
7.9 p.m.
Baroness White: My Lords, I am sure that anyone who heard the noble Lord, Lord Annan, speak in the debate on higher education last December will not be surprised that he has returned to the fray today. I am sure he is right to draw attention to the basic difficulties in our current situation although, frankly, he offered us such a wide choice of remedies—some of them incompatible one with the other—that we need a great deal further consideration to decide which are the most promising for the future.
The noble Lord, Lord Flowers, has described the current state of higher education, particularly in our universities, with such authority and knowledge that I have no intention of going over the ground which he has so admirably described. However, I take it that the main argument which is being put forward by the noble Lord, Lord Annan, is that the present Government really see no instrument of change to hand, however desirable, beyond setting up the
238
Croham Committee and reducing resources in every direction. This situation has brought despondency to so many people in higher education and an air of uncertainty as to how they can possibly improve matters.
Whether or not it would be possible or desirable to elevate the Croham Committee into what I presume would be a Royal Commission on the lines suggested by the noble Lord, Lord Annan, is no doubt a matter for consideration. Of course it would delay any major reform. But possibly we have reached a stage, as I think the noble Lord, Lord Annan, is insisting upon, where we ought to go back and look at some of the fundamental characteristics of higher education.
I ought here perhaps to declare a modest interest. I am chairman of the Council of the University of Wales Institute of Science and Technology, though needless to say I speak today entirely for myself and do not reflect any corporate view, beyond perhaps mentioning how disappointed we are in Wales that there is no Welsh voice of any kind on the Croham Committee. At one time I was a member of the UGC under the chairmanship of the noble Lord, Lord Dainton, whom we shall shortly be welcoming among us, and Sir Edward Parkes. But I should like to go further back in history—more than twenty years in fact, and therefore pre-Robbins. The Robbins Report appeared in October 1963. A few weeks later, in December, the noble and learned Lord who now sits on the Woolsack, who was then Lord President of the Council and also Minister for Science and Technology (which is of interest to some of us), assumed departmental responsibility for university matters, including the University Grants Committee, which of course had until then been the direct responsibility of the Lords Commissioners of the Treasury.
In the period leading up to these exciting times many discussions were held on the shape of things to come. Earlier today I saw the noble Lord, Lord Taylor (the first of the four noble Lords of that name who have recently joined your Lordships' House) and I hoped that he might perhaps have felt himself able to speak in this debate. He was chairman of the pre-Robbins Labour Party committee of inquiry into higher education. I was a member of that committee and I still regret that some of our proposals were not heeded. We were much concerned with the binary divide and with the consequential demarcation between students, mainly in the same age range, who could find themselves on one side or other of the line, sometimes by a very narrow margin, with wide variation in the kind of provision that they could then expect.
We were concerned about this situation because we felt that to a large exent this was decided upon grounds which were not educational but concerned in particular with local government organisation. We were thinking not only of the technical colleges, which became CATs or polytechnics, as the case may be, but also of the teacher training colleges, which became colleges of education, the colleges of art, music and other such establishments. Of course, we recognised the necessity for specialised academic provision at various appropriate levels, but we could see no reason why, as regards their residential, social and sports activities for example, students could not be just

239
students, sharing such facilities as could be provided for them in the most convenient and economical way.
I think that that would have gone some distance at least to meet the situation in which more elaborate amenities were provided for the majority of university students, though I would by no means go all the way with the noble Lord, Lord Beloff. I am certainly not in accord with him on the difficulties with which students will be faced because of the forthcoming cuts in their support. Nevertheless, I believe that we could have provided an equally satisfactory and a more economical basis for the social and residential arrangements for the larger number of students that we were contemplating. In our committee proposals we suggested that if this notion of combined operations for students seemed too revolutionary, at least some experiments could be tried out. We had in mind Brighton and Coventry as two areas which could have lent themselves to such a pattern of a cité universitaire, each with a variety of existing or proposed institutions of higher education. The University of Sussex came into being before the Robbins Report appeared, and Coventry had Lanchester and an excellent teacher training college before the birth of the University of Warwick. But this ship never sailed.
The late Anthony Crosland, for whom many of us had a high regard in other respects, was simply not prepared to abandon the binary line. So we now have a number of frustrated polytechnics which want to be universities and which for the most part enjoy far less in the way of amenities than their more upmarket university brethren. The academic problems of collaboration between polytechnics and universities are real, not to mention the administrative problems. Nevertheless I have recently been very much interested to note the discussions that are now in train between the University of Keele and the Polytechnic of North Staffordshire, which are trying to devise some measure at least of sharing academic responsibilities and resources. It seems to me that, if we are going to advocate any major pattern of change, such possible relationships will have to be examined. At the present time there seems to be no mechanism for doing this, other than the kind of local initiative which is being taken in Staffordshire.
I shall not presume to dwell on the intra-university realignments which may come about in the next decade or two. All I can say is that I am involved in the merger between UWIST and University College, Cardiff. The noble and learned Lord, Lord Elwyn-Jones, is the revered president of that institution. We are both within the federal University of Wales. I think he would agree with me that it is a very wearing and exceedingly expensive exercise, though I believe it will be thoroughly justified in the longer term. But, as in the University of London on a much larger scale, it seems to me that this kind of exercise must be faced in various other situations if we are to establish a more satisfactory system for the future.
I am sure that various noble Lords will be interested in the description of the experience at the University of Buckingham and in the advocacy by the noble Lord, Lord Annan, of some of the practices, mostly I think on the other side of the Atlantic, with liberal arts colleges, two-year degrees and so forth. No doubt they
240
have their place, but I hope that we shall not go too far down that road. My own view is that, given the choice, if we must have limited resources and make choices, we should concentrate much more on mature students, mid-career retraining and what used to be called "women returners" to fill any university places which become available following the demographic decline in the 18-year-olds which will soon be upon us.
It would be criminal not to make use of such facilities as we have. But in my view the mid-20s to mid-40s age range is in some ways a better investment than liberal arts or two-year degrees on the American pattern. I should like to see much greater attention being given to that problem. Partly because of my experience with residential adult education, I am aware that the motivation of the mature student can often be more valuable than to spend the equivalent resources on a youngster who can gain a great deal of experience in life before settling down. If he or she is not particularly academically inclined one can get far better results a bit later on. Again, I feel that there is a gap in the consideration being given. I am not speaking simply of technical up-dating, but of a much broader concept of education.
In my view none of the spate of Green Papers, Statements, Jarratt reports and other documents of recent months has sounded the note of confidence that one needs if one is to encourage major reforms of the kind advocated by the noble Lord, Lord Annan. The note of confidence is lacking. There is uncertainty, apprehension, hesitation and disappointment in the university world. I hope that we can have a response from Her Majesty's Government that will indicate that they recognise that. They cannot simply cut resources and threaten further cuts of 2 per cent. per annum. Some of us were told this morning by the most authoritative sources in a Select Committee upstairs about the deficiencies in equipment grants. That will simply not enable us to face our responsibility as a country or to maintain our position in relation to countries that are no greater than ourselves but are our vigorous competitors in world markets.
We should be grateful to the noble Lord, Lord Annan, for asking us to think much more fundamentally than we have been doing. That is a great service. But a great deal more thought is needed if we are to restore to the universities and to the other elements in higher education the confidence that is required to re-structure our higher education system which I think we all believe to be essential.
7.22 p.m.
Lord Mackie of Benshie: My Lords, as with the universities, I shall cut my speech according to the time allocated to me. My excuse for getting up to speak is not that I am an academic, I can assure my noble friend, but I held the ancient office of rector in one of the newer universities in Scotland, the University of Dundee. As most people will know, Scotland has a much longer record of wider education than England, which I understand for years had only two universities whose names I have forgotten! In Scotland we now have eight universities, and I think that they should remain as universities. They should be independent centres. They may have to go cap in hand to a UGC committee, but whenever one gets

241
money one's cap is in one's hand, whether it is an endowment or anything else. He who pays the piper does rather call the tune.
In Scotland the eight universities deserve a great deal more understanding than they can possibly get from a United Kingdom UGC. It would only be right for the Secretary of State to continue to fund the central institutions, the engineering colleges, and so on, and to deal with them according to the needs of the day. But the eight universities should continue to be independent centres of excellence and evolve their own contracts. In other words, they should be as independent as a proper university should be. I think that that would benefit Scotland. That justifies a sub-committee of the UGC or really a separate UGC to understand the needs of Scotland, and it would perhaps adopt a more consistent attitude.
I became rector of Dundee in 1980. It then came under the 1981 cuts and had to cut 15 per cent. in three years. It was a savage experience. When I went on to the court I was impressed by the practicality of its approach. For instance, long before the cuts it had a committee which re-examined every post that became vacant. There was no automatic reappointment. It was streamlining the different faculties towards the centres of excellence that were evolving. I must say to the noble Lord, Lord Annan, that the university had no choice in the 15 per cent. cut. It simply had to find redundancies where it could, and having to cut that money made a nonsense of its previous policies. It had to let go people whom it wanted to keep, but there was no other way to make the necessary cuts.
My noble friend had a point when he said that what is needed is better management of the cuts. The four old Scottish universities have strong and famous medical schools, and their people are involved in clinical work, ward work and operations in the hospitals. About 30 per cent. of the care in hospital wards and theatres in Dundee is undertaken by university staff There is not enough understanding in the allocation of funds from the UGC to the university of the fact that it has to pay its clinical staff on terms set by an entirely different body, the NHS. There are many other such inconsistencies. A Scottish UGC would understand that rather better.
We have talked about the excellence of teaching and the necessity to reward on merit. It is difficult for a university to do that when salaries are set nationally and they can make no award for merit. I understand that in certain universities in Canada the dean of a faculty has a merit fund from which he can reward people who have done good work; I understand that it can also be used to discourage people who are not wanted. If a university is to develop as a university it must have independence, and that means being able to pay and reward people as it would like and finds necessary and not as a nationally negotiated agreement dictates.
I do not want to take up too much time. My main plea is for consistency. The universities have not had that. The Government must think about what they want them to do. They must give them a target and stick to it. When the 15 per cent. cut was made no mention was made of a 2 per cent. cut for four years thereafter. We cannot go on like that and expect the
242
morale of the universities to remain reasonable. They must have a target and be able to go for it.
Dundee, as I may have mentioned previously, is an excellent example of a good new university. It has raised £4 million from industry for research under contract. That is a creditable amount to raise. But, again, the Government have to be consistent. If they expect universities to raise money, they must reform the tax system in order to encourage industry to cooperate. It is all very well to say that the Treasury will lose income. Of course that will happen. But normally funds that pass through the Government and go somewhere else lose something in the process. If a contribution is made by a company, it is not only tax that is given but also the remainder. If the Government are serious, it is necessary that they should reform the tax system so that companies give more freely.
I conclude by simply saying that the Government should be consistent. They should enable universities to act as universities. If that happens, institutions throughout Scotland, at any rate, will continue to do the country of Scotland and the country of Britain a great deal of good.
7.31 p.m.
The Earl of Perth: My Lords, the noble Lord, Lord Annan, may be right. There is a need for radical change. In the meantime, to use his words, there is the present discontent and equal misery throughout all the universities of the country. The noble Lord, Lord Beloff, said that it was a crisis. The noble Baroness, Lady White, used very much the same language. It is about this "in the meantime" period and what the Government must do before making any radical changes and grasping whatever nettle is necessary that I wish to speak.
I have spent nearly 15 years on the court of the University of St. Andrews. My time there is coming to an end. It might be some help if, on the theme of what the Government should do in the meantime, I recall my experience during that time. I joined the court at a time when we had just split from Dundee. The noble Lord, Lord Mackie of Benshie, will forgive me if I say that we should perhaps join together again. I may not be popular for saying that. The noble Lord, Lord Tedder, may go along with me. We have many Scottish speakers taking part in the debate, the noble Lord, Lord Tedder, and myself both from St. Andrews. Let me go back, however, to examine what the problems were that we faced at that time.
There was a lack of facilities, a lack of numbers and a shortage of housing for the students. We overcame those problems partly by appeals and partly by help from the University Grants Committee. For example, the committee recognised that we had no adequate library. But at that time morale was good. The students were relatively happy. They saw quite rightly that it was to their advantage and became members of the court. We even balanced our budget. But what has happened since them? First, we were told that we had to cut. That first cut was probably a reasonable request. We managed, by one means or another, to achieve what we were asked. There was undoubtedly a certain amount of fat in the administration. Without

243
exception, however, all universities at the time said, "Please, have us make these cuts over five years and not over three". But the Government were adamant. The sequel was most unsatisfactory and indeed costly.
What happened? We had to have haphazard cuts, and voluntary redundancies. Academic posts were not filled. The sequel was something pretty lopsided. We could of course have had compulsory redundancies. But unless legislation is introduced to this effect—I know that the Secretary of State is considering it—this will mean a tremendous struggle. It is the last thing that the academics will accept. I believe they are wrong, but that is another story.
We got over the first hurdle of cuts, and life began again. We saw a better future. More important, we thought at that time that the Government would give us level funding over subsequent years. We had one or two new chairs. We took other initiatives. Above all, we had more collaboration with industry and a new stress was placed on science and technology, just as the Government wanted. Then, however, things changed. The Government's promise of level funding no longer persisted. We were asked to make further cuts.
This time, there were no obvious economies to make. We had to consider cutting out whole disciplines. We had to consider cutting out music and cutting out maritime archaeology for which we are specially qualified. We had to consider cutting the botanical gardens side of the university, and also the Crawford Arts Centre. The arts centre may sound a luxury in London or Edinburgh. In a place like St. Andrews, it is essential for the students. Linguistics had already gone. How were we to balance things? One solution for many universities was the encouragement of overseas students. And very welcome they are! But there is a limit to the number that one should have. There is the dilemma that many well-qualified United Kingdom students find there is no space for them. I must say, however, that the overseas students have saved us at St. Andrews from bankruptcy. It is as simple as that.
A new blow then fell. We were asked to plan for the late 1980s a 2 per cent. cut per annum. This was beyond all reasonable demands. And what after that? It was argued, I believe, on a statistical basis that as the baby boom declined there should be fewer students. Surely it should be just the other way round. There was a chance to have a higher percentage of students receiving education. What has been the sequel for Scotland? A body called STEAC—I must get its name right—which stands for the Scottish Tertiary Education Advisory Committee, has thought out the solution that Scotland should go it alone and that it should operate through the Scottish Office on the grounds that it might be a beneficent helper. Despite what the noble Lord, Lord Mackie of Benshie, says, I am confident that this would be totally wrong. I am a devolutionist. But this would be a disaster.
What would happen? At present we have 18 per cent. of the cake of the university grant. There are reasons for this—our system of education and the fact that we have many English students, who are most welcome. Our percentage in respect of other matters is under 11 per cent. Despite what the Government
244
might undertake—the principals advocating this policy suggest that there should be a government undertaking that the cake would not be cut—the proposal is nevertheless politically most naive. No government can bind their successor. I am absolutely certain that if we went to the Scottish Office over the years we would find that our basis would be cut and the 18 could drop to the 11. That would be a disaster.
Lord Mackie of Benshie: My Lords, what I said was not that we should go to the Scottish Office. The Scottish Office was going to fund the central institutions. But I wanted a separate University Grants Committee for Scotland.
The Earl of Perth: My Lords, I am glad of that. I am sorry if I misunderstood. However, there is another reason for my strong belief that this is wrong. I think that all the universities are, if I may put it this way, in the same boat. We all have our contributions to make. We should all stand together and not try to divide, because to divide is fatal. I hope that this idea of devolution to the tune of the Scottish Office will be dropped. I am not at all averse to a sub-committee—or whatever form of University Grants Committee it may be—to help those who are concerned with the overall problem; but that is as far as it should go.
I look with sadness and dismay at what I find is the morale of the university at the present time. I beg the Government to stop, to look, to listen and to consider that until they grasp the nettle of change they must continue to help at the present level and must not keep on trying to have equal misery for one and all.
7.42 p.m.
Lord Hunter of Newington: My Lords, in 1982 there was an important event very relevant to tonight's debate. The advisory board of the research councils and the University Grants Committee set up a joint working party to survey for the very first time, I believe, the support of civil science by the Department of Education and Science through the UGC and the research councils focusing specifically on university scientific research. The report is of the greatest importance because it portrays the situation after the first round of university cuts and inevitably therefore cuts in research support, threatening the "well-founded" department provided by the UGC—so much the pride of successive governments—and creating the environment for specific staff and equipment grants from the research councils.
There is another dual support system of a somewhat different kind, to which reference was made by the noble Lord, Lord Mackie. That is the support by the grants committee and the Department of Education, on the one hand, and the Department of Health and Social Security, on the other, for medical education.
However, to return to the joint ABRC-UGC report, one thing that adds to its significance is that Sir Alec Merrison's successor, Sir David Phillips, as chairman of the ABRC, giving evidence to your Lordships' Select Committee on Science and Technology only a few weeks ago, made essentially the same points of importance that were made by the joint working party. The principal observation by the working party was that, because of public expenditure decisions, the capacity for universities to undertake basic research was being seriously impaired.

245
Lord Rothschild, in his report in 1971, listed the questions which one cannot answer about government research and development. Those were questions such as: what research and development are we doing that we should not be doing; or, is there an adequate machinery at the centre critically to evaluate the overall research and development programme; or, is the balance between pure and applied research about right? Your Lordships' Committee on Science and Technology has made, in successive reports, substantial progress in the examination of research and development. Their greatest achievement is perhaps persuading the Government to publish an annual report on government-funded research and development. There are, however, difficulties in taking this too far and Lord Rothschild's questions posed as above are unanswered and likely to remain so.
The reason I have referred to Lord Rothschild's view about research and development is that the same can be said about universities. There are some things which one cannot assess or answer. The conduct of research council funding and grants depends on peer review and it must be recognised that it has limitations. One cannot achieve a cost-effective situation because of some uncertainties which are important and continuing. Sir Alec Merrison's joint committee was also impressed by the dual support system which they would like to see continued, as does Sir David Phillips. It caters for the nurturing of new talent, for the emerging of innovative work, and additional support for promising new lines.
The advisory board for the research councils then and now has this view, as has the UGC. I believe that the Secretary of State has made substantial efforts to respond in a difficult financial situation. The universities therefore feed the research councils with new ideas and proposals. Cutting this university basic research may have the disastrous effect that these ideas and proposals of quality will not be reaching the research councils, leading to a very significant slackening of their effort. A vital part of this system is that there should be a little slack in UGC funding, allowing the modest support of the unexpected which has not been budgeted for. It is this slack which is disappearing but it is this slack which is also anathema to cost accountants and, I believe, the Treasury. Without it, universities may be severely crippled. Availability of research funds to respond to these innovations is just as vital.
How can all this be handled for the benefit of British research? Almost certainly not by committees in the first instance because it depends upon trained people with hunches and crazy ideas. All committees tend to be conservative, reluctant to face the unknown. The collaboration of all five research councils on biotechnology wanting to do the same thing is not a management decision. It is the decision of trained scientists with similar goals.
The joint committee's concept of a properly supported research area is funds for the recruitment of "new blood" posts, and, secondly, the provision of basic equipment. New blood posts, an idea of the Science Research Council, has been accepted by the UGC and the universities. It is simple but brilliant and workable. But linked to this is accommodation and
246
resources. One striking point about this country is that so many research institutes are isolated and there is a sharp contrast between that and the MRC policy of putting research units beside universities. This has not been followed. As developments and trends change, accommodation could be redistributed or reallocated. Could it not be a government decision now that all new accommodation for government research institutes should be located at or near universities? How many could be moved now? This is the complementary move to the development of science parks with industry. The isolated nature of Ministry of Defence research institutes comes to mind. But this is perhaps something to consider in preparing these centres for the 21st century.
Against this background one must examine the proposals about research contained in the Government's Green Paper The Development of Higher Education into the 1990s. Paragraph 5.3 states:
"The Government's aim is that the contribution of the higher education system to the nation's research effort should continue at about the present scale".
To university staff this means personnel, equipment and accommodation at the present scale, but from a study of the related paragraphs it is perfectly clear that to the Government this means money. Let me take only one example—equipment. Successive reports, including that of our own Select Committee, have made it abundantly clear that equipment costs are escalating and, therefore, in order to continue with the same scale of research, future costs will be substantially greater than they are at the present time. Therefore, paragraph 5.3 really means substantial cuts.
There is no disagreement with the statement in paragraph 5.4 that there is no evidence that all academic staff must engage in research; I think that is agreed. The same applies to paragraph 5.5, that the UGC should be more selective in its allocation or research support. But the Government and the UGC have to be consistent in this matter. That the UGC is more selective on anything more than a temporary basis means a departure from the "block grant" principle, and it looks very strange when considered along with paragraph 5.7, which states:
"Universities will still have discretion over the funds at their disposal."
What does all this mean? I hope that the Minister will be able to enlighten us.
In these circumstances, it is difficult to see how the original remit of the UGC can continue to be discharged and how they can maintain the autonomy of the universities, which is their job. The "well-funded" department provided by the UGC for other sources of funds than research council funds, is to my mind a new invention of the writer, or writers, of the Green Paper. I hope that the Minister will be able to clarify this point. If this were to be so, the UGC element on basic contributions towards research funds would have to be very substantially increased, particularly in the engineering departments.
Paragraph 5.7 states:
"greater concentration and selectivity may mean that some departments or even whole Universities will lose research funding from the UGC."

247
This is so serious a proposal that I feel it should be fully examined. What about the block grant and autonomy? The University Grants Committee under present circumstances could not remove all research from universities, and the statement is, in fact, contradicted by a later part of paragraph 5.7 which makes it clear that the block grant principle holds and the grants committee's job is to protect the autonomy of the university. What seems to be proposed is a fundamental alteration of the UGC's role and it proposes the introduction of intensive peer review. This idea has been linked in the minds of some to "upgrading" the grants committee and handing over to its sub-committees decision-making powers, like the research councils do to their boards. If these things happen, the grants committee will be removed from its present role, and in the minds of many this is a recipe for chaos.
7.53 p.m.
Lord Tedder: My Lords, it is perhaps cheek of me to speak when your Lordships' House has such a galaxy of former vice-chancellors and distinguished academics, many of whom have spoken today. However, just as the general staff are behind the front line and see a different picture from the soldiers in the front line, so the vice-chancellors see the overall picture, but this is different from the picture seen by academics who are still working in the laboratories and lecturing in the lecture theatres.
It is only North Sea oil which keeps our head above water, and what is the relevance of that? Although there is controversy over how soon it will run out, it is a diminishing resource and eventually the oilfields of the Gulf States will also run out. Long before then Britain will be without any major resource except its trained people. We should therefore be doing all we can to increase our scientific manpower.
At present proportionally fewer British students go to university than in our competitor countries, the United States, Japan or Germany. Worse still, on current figures so-called "level funding" means that by the end of the decade most university chemistry departments will be without money for consumables. Taking figures for my own department, for the 1984–85 session the chemistry department of the University of St. Andrews received a pay-roll of £567,000 and a class grant (for spending on chemicals and other consumables) of £62,000, giving a total of £629,000 for chemistry in one year.
If we take the Government's figures, the grant will be supplemented by 2 per cent. per annum, but against that the salaries are likely to increase at a rate of at least 5 per cent. a year. On these figures, for the session 1985–86 the salaries would have increased to £641,600, while the money available to the class grant—the chemicals, etc.—would have decreased to £46,000. If we continue these calculations until the end of the quinquennium, 1988–89, we find that there is insufficient money to pay the salaries even if there is no expenditure at all on chemicals. In other words, if inflation continues to rise at 3 per cent. above the so-called inflation index until the end of the decade, we either have no chemicals in the chemical laboratories or we have to save on pay-roll expenditure. This
248
implies pay increases of less than 2 per cent. per annum or all vacancies to be frozen. How you get either of those past the unions is beyond me!
We have been encouraged by the Government to take in more students from overseas who will pay full cost fees. Accordingly, my university has increased its overseas fee income from £800,000 in the session 1983–84 to £1,500,000 in the present session, 1985–86. This cannot go on indefinitely. Too many overseas students would change the character of St. Andrews. Furthermore, it would be intolerable if we had to reduce the number of well-qualified Scottish students so that we could take in more indifferently qualified foreign students. Let me repeat that because it is so important. It would be intolerable if we have to reduce the number of very well-qualified British students so that it would be possible to take in more indifferently qualified foreign students.
I have not mentioned the equipment grant, but taking the DES's own model, the equipment grant is running at about 20 per cent. below what is considered necessary to provide a base for research and innovation. The other source of income to the universities comes from the research councils. Chemistry comes under the Science and Engineering Research Council. In 1983–84 the chemistry committee of that council received 586 applications which, if funded, would have represented £26,800,000. These were considered by the chemistry committee. Fifty-five per cent. were graded Alpha, which means of a quality that should be supported, and 19 per cent. were graded Beta, which means that if there is money left over they would be worthy of support. The actual awards were 34 per cent. of demand by number or 24 per cent. by value—I hope that is clear. That is what was actually funded. These figures are very similar to the SERC's total expenditure. The demand for Alpha satisfied last year was 74 per cent. by number, or 48 per cent. by value. The overall demand satisfied was 26 per cent. by value. Thus, not only are the funds available to the UGC being cut so that universities cannot meet their teaching commitments or provide a base for research, but similarly the actual research funding is being squeezed so that the research performance of British universities is being seriously curtailed.
The universities have done their best to mitigate the problems caused by the original cuts. We understood that having coped with these we were to have true level funding. We have not had that. My Lords, there is much more that I could say, but I expect that your Lordships have had enough of this from us tonight, so I shall end here. However, I hope that those of your Lordships who are not on the university side will have some idea of what we are up against.
8.1 p.m.
Lord Wilberforce: My Lords, at this late hour in the evening and after the fine and authoritative speeches we have heard in the previous stages of this debate, my own contribution must necessarily be a modest one. I have, it is true, some connection with one of those older universities whose names escaped the memory of the noble Lord, Lord Mackie of Benshie, for the time being, but for the purposes of this debate I would rather put forward a point of view—perhaps the point

249
of view—of a smaller, newer university which may be typical of many others.
For quite a number of years I have been Chancellor of the University of Hull. This is a small institution of under 5,000 students which has perhaps particular problems which relate closely to the present, or contemplated, constitution of the UGC. For the purposes of this debate I think I have to assume that for some time we are going to live with something like the UGC. I cannot place myself in the empyrean realms which were placed before us by the noble Lord, Lord Annan. I must assume something like it, and try to see where changes might possibly be made which would help us.
I start from the point taken by the noble Lord, Lord Flowers, which I found sympathetic, that the UGC is weak in management. He gave the numbers three out of 20, and of course that is arithmetically correct. But I agreed with him entirely when he said that the management ability of the UGC does not really compare with that which exists in many of the universities themselves.
Certainly our own council—and I know this to be true of many others, and certainly true of the University of Dundee—includes a number of very practical, very experienced men of affairs (businessmen, scientists, local government administrators, and so on) and the council has taken on board in a most efficient and wholehearted way the Jarratt report and introduced changes. The noble Lord, Lord Annan, says that universities cannot reform themselves. Well, in my experience they can and do take radical steps in the way of restructuring departments, reorganising schools, discarding disciplines and discarding courses. One can argue about what is reform and what is less, but certainly extensive changes are made.
As regards the UGC, in relation to smaller and more distant universities there are certain necessary and unavoidable distortions and difficulties. I am not in any way criticising the present body which consists of a number of highly intelligent, hard-working people who are given a totally impossible job. In the first place they cannot, and do not, visit these universities with any great frequency. They have no idea in many cases what really happens on the ground. That is an inherent, inbuilt distortion.
Then there are at least two great difficulties with which they are faced when they apply, as they have to apply, statistics, or answers to questionnaires, or demographic considerations to universities as a whole. Let me mention two of them. The first is what is called in the jargon the "diseconomics of small scale". We all know that when one increases one's output one hopes to get economies. Equally, when one is faced with reduction from a small base, one gets what are called diseconomics of scale. You cannot make reductions in proportion to the size from which you started.
The Government recognise this symptom in relation to education generally. In their Command Paper 7841 they refer to "inescapable diseconomies of the smaller scale". But this principle does not seem to have received recognition in relation to the universities and polytechnics. Surely it should. To any body, I
250
would say, under 5,000 this particular factor is one of potent effect.
Then a second point of a similar kind. When one is trying to assess a reasonable expenditure in relation to an institution, that is not related and cannot be related in a linear manner to the size of the institution. In every case—and everybody recognises this, including the UGC itself—there are, as well as, say, numbers of students, all sorts of special factors, and there is room in the questionnaires for the special factors to be listed.
But what escapes notice is that these special factors have different relative weight when one comes down the scale of size. The noble Earl, Lord Perth, who is not in his place, referred to this in relation to his University of St. Andrews. What may not be a special factor of any great importance for a large institution with a large grant may be a decisive one for a smaller unit with a smaller grant. In other words, one has to recognise the relativity of special factors in relation to different sizes of bodies.
Then, finally, I should like to refer to one other factor of great importance which ought to be taken into account in relation to universities generally. The noble Lord, Lord Beloff, referred to two things which universities ought to do: the pursuit of excellence in research, and the training of youth. I suggest that in many cases there is a third factor of great importance, and that is this: many of the universities—and it is particularly true of civic universities such as Hull—make a significant contribution to their locality, not merely as an employer of labour, although that is quite significant, but as a centre and a source of social and cultural standards. This is particularly—but not exclusively—true of programmes of adult and continuing education, which a writer in The Times recently said was probably the most vital area in which education can develop at the present time. I was glad that the noble Baroness, Lady White, also referred to this point.
For example, for its size and income the University of Hull has the largest programme in adult and continuing education in the country. I cannot answer for Scotland. Maybe they can trump us there. Anyway, that is the fact in England. It is the sole provider of this service in a large section of east England, from Whitby down to Lincoln. That is an area of high unemployment. We believe that we have a role in training and retraining a workforce fit to compete in what one may call the knowledge world.
Is there not a case then for a social factor to be added into the usual equations? Can we not enlist the support of the Secretary of State for Employment—who, we know, is so sensitive to social considerations and who is doing so much through the MSC to advance them—to get beyond the statistics and the graphs? Where have the statistics and graphs led us? They have led us to terrible reductions in our capacity. They have led us to a reduction in our student numbers of 1,000 (a loss of 20 per cent.), and to a current programme—under the 2 per cent. with which we are threatened on top of all previous losses—with a loss of 109 academic and related staff. I shall not pile on the agony because the noble Earl behind me has already drawn attention to it, and it has been reinforced by the noble Lord who has just spoken.

251
Is this kind of reduction what people really want? Is there not a case for two things? First, there is a case for a more flexible conception of state support and the way in which state support is administered; and, secondly—I quite accept this—a questioning of the almost total dependence of universities on state funds; in other words more private support in the United States style with the taxation consequences and so on. Obviously, I cannot pursue that point this evening but I am glad that it has the authoritative support of the noble Lord, Lord Annan, and other speakers. That is surely a second factor which we have to add to the future, which is now looking rather gloomy.
8.10 p.m.
Viscount Hanworth: My Lords, the noble Lord, Lord Annan, will remember that some 15 years ago after his Reith lecture I initiated a debate on whether university education was fulfilling the long-term needs of the nation as a whole. I spoke again on this issue on 31st March 1976. I do not believe that on the first occasion we were in complete agreement, but, having listened to what he said tonight, I think we are probably very nearly so.
Today the Motion is concerned with funding the universities and polytechnics. But right funding must surely depend on how the objectives of higher education are achieved. Much has changed since I criticised the universities, but even in 1976 they still seemed to believe that whatever they taught and however badly they taught it, because it was taught in a university it was self-justifying. Looking back, I still believe that I was right in thinking that the Robbins Report was a disaster. It had the polytechnics rushing to become universities with the spawning of arts and social science courses, often unsatisfactory in their concept and execution.
Inevitably when a government has to make cuts education must take its share with other areas whose claim to available funds is certainly seen by their protagonists as equally important. It is perhaps worth reminding ourselves that however much one may deplore the selling off of state assets—the family silver as we call it on these Benches—this Government would have had to make more drastic cuts if they were to keep to their policy of balancing the budget and holding inflation under control. Faced with the problem of cuts in education, which of course may have very unfortunate long-term effects, the obvious course is to concentrate on those disciplines, engineering and others, of direct relevance to industry which earns our country its wealth.
My own party has several reservations on the Government's Green Paper. A very important one is the shortage of students at A-level in mathematics and sciences who could fill any increase of places in universities if they were provided. I do not intend to speak about the other criticisms, some of which I do not entirely support.
I believe that some universities are still living in their ivory towers and are failing to meet today's requirements. Within reason we should preserve the aim of training future academics and research workers and, in so far as we are able, of doing some pure research. Nevertheless, let us remember that the vast majority of university students are third or lower second class
252
material. For these people down-to-earth, efficient teaching is all-important. It seems to me very strange that whereas it takes three years to train elementary schoolteachers, some university lecturers presume to teach students without even occasional study periods to improve their techniques. Even more serious in my view is that some lecturers in arts and social science courses come straight from university without any experience in the outside world.
At one time, and I am sure it is still true today, university was a temporary haven for those with adequate A-levels who wished to postpone having to meet the harsher realities of the outside world. Sandwich courses have everything to commend them and the university of Surrey has pioneered such courses for all disciplines, even for music.
Only by experience gained in this way can students make the best of their university studies. I should think that partially-repayable grants have much to be said for them in this respect. Surely the idea adopted by some universities of giving students a combination of more than one discipline is right. I do not think, except that for future academics, the old idea of a three year course on economics was sensible. Such a course today should be combined with management studies for most students.
I should like to talk about university education from two other somewhat related angles. I think people believe that just as important as acquiring information is teaching the student to think and training him to have the logical approach. This in a previous generation was why classics was the preferred discipline. In those days even to have challenged this view would have been almost unthinkable. I really think that we might look back to that because surely we may have been wrong to some degree but not completely wrong in that assumption. In outside life judgment and common sense is what matters. I should be surprised if a student discussing in a paper, for example, different economic views and stating that some of them were misguided, giving good reasons, would do very well in that exam. But that is what should be the approach to a thinking student.
My second point is that, alas!, education as a whole has not made people more reasonable in a political sense. Even with highly educated people we still have the unfortunate fact that the more closely an issue is balanced, the more unreasonable do the protagonists on either side become. Yet it should be possible to correct this to some extent by higher education, given under some suitable academic title. In essence, the first step would be to lay all relevant factors on the table, as we usually do in this House on a Second Reading debate. Then, and only then, should the factors be weighed by bringing in experience and emotion. But it is essential to know the reasons for these weightings. I suggest starting students with some issues from history which now have little emotional impact and leading on gradually to present-day emotional topics. Unfortunately, the all-too-frequent approach is almost the reverse; people decide first what they think and then selectively look round for evidence to support their views.
I now return to funding. In this time of national difficulty it surely must not depend on historic precedents and "Buggins's turn". Invidious though it

253
may be, those concerned must have the courage to give the money to those universities which are fulfilling our needs. I know just a little about my local university, the University of Surrey. I have reason to believe that it is, to a major degree, producing what is now wanted. Some others are still adhering to the old shibboleths and are not. But when it comes to funding from the UGC, the progressives have to bear the same cuts as the reactionaries. Only by selective action will the aims of good, modern, higher education and technical college education be achieved because there is still a strongly established tradition against necessary change.
8.20 p.m.
Lord McIntosh of Haringey: My Lords, when he ceased to be Minister of Health, Mr. Enoch Powell wrote a very wise little book called Medicine and Politics, a book which has been very much neglected and under-rated, partly, I think, because librarians and booksellers do not know whether to file it under "Medicine" or under "Politics". But the lesson that Mr. Powell drew from his experience as Minister of Health was that Ministers ought not to spend too much time in a certain department for fear of becoming institutionalised, and, above all, that those who come professionally from the discipline which the department has to control on the whole make poorer Ministers than those who do not. In other words, that doctors should not be Ministers of Health, that teachers or university professors ought not to be Ministers of Education and, I suppose, although this has not been too much of a problem in this country, generals ought not to be Ministers of Defence.
I suspect that this lies behind a lot of Lord Annan's thinking and, if that is the case, then I agree with him. If war is too important a matter to be left to generals, then there is certainly a case (and the noble Lord has made it effectively) that higher education—and I use "higher education" in the OECD sense to cover universities and polytechnics and, indeed, the voluntary sector to which the right reverend Prelate has referred—is too important a matter to be left entirely to those who work in it.
There has been this evening in this debate which was so ably opened by the noble Lord, Lord Annan, and in which there have been so many well informed and authoritative speeches, a tendency to criticise the Robbins Committee for its effect on higher education in the 20-odd years since Robbins reported. I am not sure that that criticism is fully justified. Robbins said:
"There is no risk that within the next 20 years"—
that is, up until now—
"the growth in the proportion of young people with the qualifications and aptitudes suitable for entry to higher education will be restrained by a shortage of potential ability".
That was a view which was not all that widely shared when the Robbins Committee took that view. Mr. Kingsley Amis, among others, took a very different view, and I do not think that any Member of this House could deny that that view has been borne out 100 per cent. The need for increased higher education, the willingness of more students to come forward for higher education, the continuing abilities of those students who do come forward for higher education,
254
cannot be doubted. We are still barely beginning to scratch the surface of the ultimate demand for higher education from those who have been underrepresented in it in the past. We still have under-representation of students of working class parents; we still have under-representation of women in our universities and in higher education and, above all, we have barely started to scratch the surface of the latent demand for higher education from mature students, from those who have been so conspicuously successfully benefiting from the Open University. In looking at that situation, I say from this Dispatch Box that no solution of the sort proposed by the noble Lord, Lord Annan, is rejected in advance. I share with the noble Lord, Lord Beloff, a sympathy for the radical analysis of the problems of higher education rather than the more conservative analysis.
I listened very carefully to what Lord Annan was saying and I confess to having doubts about a number of his individual solutions. For example, he talked about the possibility of having centres of excellence and higher pay within those centres of excellence. I thought that the noble Lord, Lord Flowers, made a very effective point against that when he said that excellence in higher education is a dynamic and not a static matter and that the quality of research in a particular institution may vary from decade to decade. If you were to institutionalise centres of excellence, you might well find yourself fossilising the locations in which first-class work is done rather than finding opportunities for it to be done in newer institutions.
The noble Lord, Lord Annan, spoke about the need for liberal-studies colleges, both arts and science, and the need for two-year polytechnic courses. Of course, Anthony Crosland envisaged exactly that kind of thing when he was setting up the polytechnics. It was the idea that polytechnics would provide a possibility for movement, for example, from HND courses to CNAA degree courses, on the one hand, and, on the other hand, from full-time HND courses if that were more appropriate, to part-time HNC courses. What has been unfortunate is that the polytechnics themselves have become fossilised in a sort of crypto-university mould and that they have sought to emulate the universities rather than to develop the skills that they might have had, in Crosland's mind, of forming the basis of more comprehensive higher education.
A number of noble Lords, including my noble friend Lady White, have referred to the difficulties of breaking the mould as between polytechnics and universities. I am conscious that there have been experiments in this area not only in Wales but, for example, in Ulster where the new University of Ulster at Coleraine has merged with Ulster Polytechnic; but the result has been almost entirely a university rather than a polytechnic and certainly not an effectively new institution.
The noble Lord, Lord Annan, referred to the extravagance of our staff-student ratios and compared those with other countries. I think that it should be borne in mind that the countries which have poorer staff-student ratios, first of all, may not necessarily benefit from it but, secondly, that they have these staff-student ratios in an atmosphere of very much more open access and, therefore, a higher level of drop-out at the end of the first or second year. It is

255
possible to be much more miserly about staff-student ratios in the first year if you know that you are going to have a sort out after that time. Therefore, I am not sure that his analogy is really valid.
As far as the issue of funding for research is concerned, a number of noble Lords spoke on that point. I do not think that there is any disagreement about it. Whether the alternative funding to that from the UGC is to come from the private sector, as Lord Beloff would wish, or whether it is to come from the research councils, as has been described by Lord Hunter; or whether it is to come—too much so in my view, as is the case with scientific funding at the moment—from the defence and military sector: from wherever research funding is to come, there can be no dispute (I would suggest) that the wider the variety of sources, the greater the strength of the funded institutions and the greater the possibility that first-class research will be funded at the expense of others.
The noble Lord, Lord Annan, referred to the inflexibility of our student grant system, as if somehow we were being extravagant about student grants. I would remind him that, in effect, student grants in real terms have gone down dramatically over recent years. It is a tribute to students' restraint that their enormous demonstration last week was carried out peacefully. It is a criticism of our sense of priorities that the newspapers and the television paid hardly any attention to it. One could be forgiven for drawing the conclusion that they only pay attention if there is actually going to be disruption and riot rather than an effective peaceful demonstration of the kind that we had.
But there have been dramatic changes in student grants, to the disadvantage of students, which have not in fact been recognised. And when the noble Lord, Lord Annan, refers to having a narrower range of subjects, I wonder whether he really wants to go away from the concept which I have always understood to be essential to that of universities—that universities are a lot of people learning different subjects, studying different subjects and doing research in different subjects together. I am sure that we would not wish to give that up, any more than we have had to in recent years; and certainly not as much as I am sure that we are going to have to in years to come, with the continuing decline in university funding.
With all respect to the noble Lord, Lord Annan, I do not think the suggestions he is making are absolutely fundamental to the problem. I do not think that the innovations, however welcome they may be at the University of Buckingham—and, much more important in my view, at the Open University—are really at the heart of the problem that the noble Lord is describing.
We do have a problem of the management of universities. It is not just a matter of the people who are doing the management or even a matter purely of the funding, although of course management, at a time of cuts, as a number of speakers have pointed out, is extraordinarily more difficult than management in an expanding economy or even management in a steady state. I suggest the problem is one of our society not setting adequately objectives for higher education, saying what role higher education should play in our
256
society, deciding who should set the objectives and how they should be set. The way in which I suggest that we should be thinking about those objectives is higher education as an investment in our society—and by that I do not simply mean an investment in terms of the potential in the job market: I mean investment in our society in the widest sense, in our culture as well as our economy.
My Lords, I recognise the time, but I believe there is still a moment or two to spare before the Minister has to respond. If we recognise the definition of the role of the universities more clearly than we do, then we can effectively demand of the universities that they think again about access, qualifications for entry, credit transfer, the flexibility of their structure and about the entitlement to higher education throughout life.
Finally, I think it must be said that the Government's Green Paper on Higher Education into the 1990s fulfils none of those criteria. It does not set adequate targets for universities; it does not do anything other than cause the continuous misery, which a number of your Lordships have described, in particular universities because it is not attempting to say what should happen in higher education. It is descriptive rather than anything else. Robert Graves in his poem, Non Cogent Astra, said:
"Prediction is no alternative to forethought".
I believe the Government's Green Paper is a prediction rather than a providing of forethought, and I believe that the noble Lord, Lord Annan, deserves some effective responses from the Government at the end of this debate.
8.34 p.m.
The Earl of Swinton: My Lords, I am grateful to the noble Lord, Lord Annan, for giving us a further opportunity to debate higher education matters. I am also grateful to the noble Lord for recognising that our system of higher education has to learn to operate on less generous levels of provision than it would like and that this will require change. But I am not sure that the noble Lord has given enough credit for the change that has taken place or that is being pursued.
A number of specific questions have been raised by the noble Lord and I should like now to try to deal briefly with them before coming to the core of my own remarks. Also, of course, I shall try in the course of my remarks to respond to points raised by other speakers. However, my time is fairly rationed and if I miss out any points that have been made I will of course read Hansard and write to the noble Lords concerned.
First, I do not think that the terms of reference of the committee of the noble Lord, Lord Croham, extend to the kind of wholesale reshaping of our higher education systems that the noble Lord went on to advocate. But I am sure that the noble Lord, Lord Croham, will have noted the underlying concerns of the noble Lord, Lord Annan, that there should be adequate machinery to secure the implementation of desirable change. I do not intend to deal in detail with the cornucopia of suggestions tumbled out by the noble Lord, many of which are referred to in the Government's Green Paper on higher education. For example, my right honourable friend has considerable sympathy with the idea that the pay arrangements in

257
higher education should perhaps reflect to a greater extent the differential supply of, and demand for, academic expertise.
I was delighted to hear from my noble friend Lord Beloff that the experiment he had carried on in the University of Buckingham in degrees in two years had been successful. The Government are keen to test the feasibility of two-year degree courses, and they have invited the advisory bodies to consider with the universities and the CNAA the mounting of a limited experiment. The proposition is that a two-year honours degree might become a prestigious route for the most able students. But that is a far cry from a general change to a two-year degree. The case for that has not been made, and the Government have no plans to pursue it.
The Green Paper also encourages fund raising by institutions and has confirmed that increases in income from outside sources will not lead to reductions in government funding for universities. I very much agree with my noble friend Lord Beloff and indeed with the noble and learned Lord, Lord Wilberforce, in what they said about the importance of financial independence of universities. The Green Paper explicitly recognises that greater financial independence could bring greater flexibility.
The general thesis of the noble Lord, Lord Annan, is that whatever the efficiency of the administration of the various aspects of higher education, the universities in particular are, as he said in a debate in your Lordships' House last December, appallingly mismanaged in academic matters because the central agencies, the Secretary of State and the University Grants Committee are able to exercise influence only by applying financial sanctions to the otherwise uncontrolled and uncontrollable activities of a collection of independent workers' co-operatives, which always shy away from bold decisions and seek to protect their own narrow interests. He implies both that bold decisions are necessary and that they can be taken only by some strong central force, be it the Secretary of State for higher education as a whole, the University Grants Committee for the universities or the vice-chancellor, principal or director for the individual institution.
I have a good deal of sympathy with that impatience and I know that my right honourable friend has too; but as well as a-case for change there is also a case for conservation. Nearly everything that is excellent in our institutions of higher education at present is there because of the initiative of institutions or individuals within those institutions. Merely to centralise power does not guarantee change and certainly does not guarantee desirable change. The centralisation of power tends both to gather momentum for itself and to stifle drive and initiative at the periphery.
What we have to seek to achieve, therefore, is a balanced diffusion of power and responsibility, a system of checks and balances in which leadership is exercised by persuasion and consent and not externally imposed by an autocracy. In such a system change may come more slowly but it may stand a better chance of being right and also of being accepted by those whom it affects.
258
Change is necessary, but the achievement of desirable change depends not so much on changes in structures at the centre as on the quality of leadership within institutions and a determination to make full use of the opportunities to exercise that leadership. In drawing attention, rightly, to the reluctance of the universities to contemplate change, the noble Lord looked back over a period of nearly 20 years and to matters of concern which in various ways have been on the agenda for much of that period, including most of the 13 points of Mrs. Williams. I make them 13 but the noble Lord said there were 14 points and I certainly would not argue about one of Mrs. Williams's points.
At the same time it is important to acknowledge just how much change there has been and how much is currently in train or in prospect, not just in universities but in higher education generally. Widening the focus from the universities there has been a massive change in the public sector of higher education. I am grateful to the right reverend Prelate the Bishop of Ripon for reminding us of the voluntary sector and that it has a part to play. The Green Paper confirms the status and character of the voluntary colleges. Bringing them within the scope of the national advisory body, as has now been achieved, will help to provide the wider planning and advisory framework for which the right reverend Prelate was asking.
In the United Kingdom as a whole, the public sector has grown by about 70,000 since 1979—a growth of over 30 per cent.—to provide about half our higher education and 40 per cent. of our degree work. That growth has contributed to an expansion of the scientific and technological subjects and has been achieved by gains in efficiency and cost effectiveness.
Since 1979, unit costs have fallen by about 18 per cent. Despite the noble Lord's crack about arty-technics, less than 20 per cent. of polytechnic enrolments are in subjects that are not scientific, technological or otherwise vocational. All of that has been achieved partly as a result of the initiative and commitment of individuals and institutions to the provision of opportunities of higher education, and partly as a result of the establishment in England and Wales of national planning arrangements for England in the National Advisory Body for Public Sector Higher Education, and in Wales for the parallel Wales advisory body. Those bodies, which bring together the local and central government partners to the enterprise of public sector higher education now provide for the first time a focus for the integrated planning of the local authority and the grant-aided sectors of higher education.
The creation of such planning and advisory arrangements for the public sector also create for the first time the possibility of more co-ordinated planning as between the universities and the public sector. Neither sector should plan in isolation and the various advisory bodies are now able to consider together both the general strategic questions, such as the expected recruitment of students, and the more detailed questions of the planning of provision in particular subject areas.
I was delighted to hear the noble Baroness, Lady White, mention one of those mergers. She was

259
supported by the noble Lord, Lord McIntosh of Haringey. For the universities, there has not perhaps been the same degree of highly visible change. But re-examination and change has been taking place, and what has been achieved should not be taken for granted. The universities have had to cope with a continuous diminution of resources in conditions of considerable uncertainty. They are currently being asked simultaneously to engage in the most detailed planning exercise on which the UGC has embarked for many years, and to review and overhaul their management and administration at all levels in response to the Jarratt report and to the concerns expressed by the UGC and others.
There has been a considerable Scottish element in the debate. The noble Earl, Lord Perth, the noble Lord, Lord Mackie of Benshie, and the noble Lord, Lord Tedder have spoken. I forget which of the three it was who mentioned the report of the Scottish Tertiary Education Advisory Council. I think that it was the noble Earl. It is interesting that in Scotland the recent report from the Scottish Tertiary Education Advisory Council has come up with a recommendation for an overarching planning and funding body to co-ordinate provision of higher education in Scotland across the university and non-university sectors.
Higher education in Scotland, indeed the education system as a whole, is different in many respects from that in England and Wales. I do not wish to comment on the recommendation which is at present subject to consultations, beyond acknowledging that it raises a number of complicated issues, because the Scottish universities—although, as the noble Lords have informed us this evening, they are very Scottish—are part of the United Kingdom university system. The Government are studying the report and the STEAC's recommendations carefully. To help in that, my right honourable friend the Secretary of State for Scotland published a report in December last upon which comments have been invited. The consultations will continue until Easter to allow those with an interest to express their views. I strongly suggest that those noble Lords who have shown such an interest in this matter do not hesitate to send their views to my right honourable friend the Secretary of State for Scotland. No decisions will be taken until those views have been received and considered.
The noble Lord, Lord Hunter of Newington, was very concerned about various aspects of research. The Government's funding of science overall has not been ungenerous. The science budget's 6 per cent. growth in real terms over the past few years reflects the seriousness of the Government's commitment to protect science. At the same time, the Government acknowledge that measures of average inflation do not fully reflect all the cost increases affecting research. Notably, they do not reflect increases in the cost of scientific equipment and materials which, as science and technology advance, tend to become more sophisticated, and hence in many cases more expensive.
It is not sensible to suggest that the funds made available to research can go on increasing in real terms year after year. The limit has to be set by reference to
260
national prosperity and what we as a nation can afford. Other countries in the developing world are similarly having to come to terms with that problem.
The noble Lord talked about the need for slack in the funding of research to allow for the unpredictable, and of course we recognise that science is unpredictable. That is why the Government support basic research across the whole range of scientific endeavour; but increased concentration of resources on centres of excellence should improve the access for the generality of scientists to expensive facilities and equipment which are increasingly needed.
It is simply no longer affordable to have fully equipped research laboratories in all fields in all universities up and down the land. Concentration is essential to avoid the available resources being too thinly spread. There is no threat to university autonomy here. However, autonomy does not mean a blank cheque. It has always been for the Government to decide what the country can afford.
The noble Lord also argued for closer links between research councils, other establishments and universities. The desirability of closer collaboration is recognised by the research councils. The Morris report identified the medical research council units, which are invariably located in universities, as particularly successful models that other research councils should adopt. However, it cannot seriously be suggested that existing research councils and other establishments should be physically relocated to put them in closer proximity to universities. That is simply not an economic proposition. There are, however, a number of ways in which the councils can improve the link between their establishments and the universities; for example, by exchanges of personnel and collaborative research projects. I am glad to say that those are being actively pursued.
I do not for a moment want to pretend that all is for the best in the best of all possible worlds. Not all universities are as efficient as they might be in all levels of management and administration. By no means all the relevant messages of management and of accountability have yet been absorbed and accepted by those concerned with the management of the heart of the academic enterprise. But much has been achieved, and an enormous amount of activity is still in progress. The Government are hopeful that yet more can be achieved in ways that will maintain and develop quality and liberate, not stifle, initiative.
In their dealings with higher education, the Government have to recognise that, as Burton Clark has put it, higher education is bottom heavy. I end with a quotation from him:
"Authoritativeness properly resides far down the line. Along the lower operational levels, it is radically fragmented and diffused, located in dozens, even hundreds of groups and even in the activities of particular individuals. … In the diversity of the system lies its constant attraction and promise. Governance then becomes a word for how we attempt collectively to cope with that diversity: to steer, just a little, the many ways, most of them unplanned, by which the system elaborates itself, thereby exhibiting flexibility in settings of growing uncertainty."
Lord Annan: At this late hour, with a Second Reading before us, I only wish to thank most sincerely

261
those noble Lords who have taken part in the debate, and to thank the noble Earl for his patience and to assure him that by now my desire for Papers has totally evaporated. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Museums and Galleries (Prohibition of Admission Charges) Bill [H.L.]
8.49 p.m.
Lord Jenkins of Putney: My Lords, I beg to move that the Bill be now read a second time. May I say, in moving the Second Reading of this Bill, that I very much regret its necessity. In 1974, as Minister for the Arts, it was my privilege to abolish the admission charges which then prevailed. When Mr. St. John-Stevas welcomed my statement in the other House on 22nd March 1974, he asked me whether it was my intention to introduce legislation to prevent the re-imposition of such charges, indicating in doing so that he thought that it would be very undesirable indeed that such charges should be re-introduced. I said that legislation was unnecessary, but events have shown that I was wrong.
The experience of a year or more of charging at that time had proved such a disaster that it seemed inconceivable that any Government would step back into the mire from which we had just emerged. There was general rejoicing and the official Conservative position then was that there was no intention of repeating an experiment which had proved so unpopular and which had not even paid for itself. The problem was then, and will be now, that if you fix charges low you do not even recover the cost of manning the turnstiles, whereas if you fix them higher you turn away precisely those people you are there to serve, and you halve your admissions.
The Times of 30th March 1974 reported, "Museums rejoice as charges end." They said that there had been a huge drop in attendances and they quoted Mr. Frederick Dunning, the curator of the Geological Museum then, as saying that everyone was glad. They expected in that museum an immediate recovery in attendances which had collapsed to a fraction of normal. All the national collections reported similarly and there were balloons flying at flag staffs and huge signs of "Free" outside the Tate, the National Gallery and so on.
This time it has been denied from that Dispatch Box that the Government's changes in museum and funding methods were in preparation for the return of charging, but The Times once again saw through that. On 11th February last it announced the changes under the heading "Backing for museum charges", and its piece began:
"Financial incentives have been announced to encourage national museums and galleries to charge entry fees."
When the decison was taken to permit charging in 1971–72, the fee was fixed at 10p with 5p for children, and as a result of that a number of improvements were to be made in most of the buildings housing the
262
national collections. In that end, in some cases the money collected did not even cover the cost of manning the turnstiles, and it certainly did not pay the costs of improving the buildings.
But the idea of charging, even at so modest a level, was by no means universally popular even in the Conservative Party. Members who are in this House today on the Government side spoke out against them then, and no one was more vociferous in his objections than Mr. Jeffrey Archer, then in another place, who is now vice-chairman of the Conservative Party. Mr. Archer said, among other things, at col. 331 on 18th October 1972:
"… the frightening question is, what comes after museum charges? Are we to have library charges next? I would oppose the Government on that as well … it must not be allowed." [Official Report, Commons.]
But, of course, it was allowed. There were not enough men and women who saw principle in the light that I see it to follow Mr. Archer. Perhaps we shall do better this time. We shall see.
Speaking in this House at that time my noble friend Lord Strabolgi said:
"I hope that this whole disgraceful policy will be changed by the next Labour Government",
and of course it was. My noble friend helped me to do it, and I found there was a great deal in what Lord Robbins said in opposing the Bill to charge admission in 1971. He was, I think, chairman of the National Gallery at the time. He said at col. 853 of the Official Report of 22nd November:
"I greatly regret what we are being compelled to do—that of course, is the plain fact of the matter".
And it was the plain fact of the matter. The notional freedom of the trustees to do as they wished was as illusory then, as Lord Robbins made clear, as it will prove now. Lord Robbins also said:
"… three-quarters of the pictures in the National Gallery have been given to and not bought by the nation … I would stick my neck out and say that most of them, from J. W. M. Turner downwards, hoped that all at large would be free to enjoy the riches that they were leaving behind them". [Col. 854.]
The same goes for many of the other national collections.
I suspect that behind the scenes discussions are taking place with the trustees today, in spite of the Government's protestations to the contrary. But what discussions have taken place with the trustees on this matter? What about the staffs of the museums and galleries? No discussions have taken place with them, yet they spend their lives in these great institutions. They are, almost to a man and a woman, against charging. Are they to have no say in the matter?
I have here 5,000 signatures, most of them collected by the staff of the V & A, against the so-called voluntary admission charge which has been exacted there. The petition reads:
"We the undersigned deplore the introduction of a voluntary admission charge to the Victoria and Albert Museum and request the trustees to explore other ways to make up the shortfall in running costs imposed by the Government's restrictions on public spending".
There are other ways and, if we are allowed to go into Committee, I have no doubt we will be able to discuss them then.

263
Turning to my Bill, it is a simple four clause affair with two main clauses. Clause 2 prohibits charging for admission to any museum or gallery of which the expenses are wholly or mainly met out of moneys provided by Parliament. This also prohibits voluntary contributions on entry. It does not, of course, prevent any other voluntary contributions. I think it is important to note that. Similarly, the other main clause makes it clear that admission may be charged to any special exhibition within the museum or gallery.
A few years ago, one of the Sunday papers had the idea of asking some people to write a piece saying which great painting they most admired and why they would like to possess it. I found no difficulty in announcing my love for Manet's Water Lilies which is in the National Gallery—a wonderful painting. You can go in on a dull cold day and warm yourself body and soul in its hazy sunshine. You can even lose your fear of death in it. The difficulty arose when I said that I did not want to move the painting as I already owned it and wanted it to stay on the walls of the National Gallery where it would be well looked after. The Sunday Times did not follow this at all. It was not possession as they saw it and so I lost my £50, or whatever it was, for the article. However, when the charges were abolished we all gained the Manet, and much besides, which belongs to me and to everyone else—and no one must be charged money to see it.
I was interested to follow the end of the previous debate on universities. I do not quite go along with George Bernard Shaw, who said that he never ceased to thank God that his mind was never crippled by a university education. My university, as I left school at an unconscionable early age, was the Enfield Public Library, the British Museum, and the National Gallery. Later I discovered the V & A, the other Kensington museums, and the Tate. I wandered around London day after day, going from one to another, amazed and astounded at the richness that was mine and at my endless discovery. I found the world and all that was in it. I began to grasp the extraordinary achievements of the species to which I belong: its history, its glory, and its terrible failures. I obtained a perspective on the universe, and I could have acquired that in no other way.
Such cannot be obtained by a formal visit; that is only the start. Are the children of the future to be deprived of that wealth? My Lords, surely not. So I beg your Lordships to give my Bill a Second Reading.
Moved, That the Bill be now read a second time.—(Lord Jenkins of Putney).
9.2 p.m.
Lord Harmar-Nicholls Lord Harmar-Nicholls rose to move, as an amendment standing in my name on the Order Paper that we consider giving this Bill a Second Reading in insert ("this day six months").
The noble Lord said: My Lords, I beg to move the amendment standing in my name on the Order Paper, that we consider giving this Bill a Second Reading in six months' time. That, as your Lordships will know, is the well-mannered way of telling the noble Lord, Lord Jenkins, that we do not want his Bill in its present form. That is what I want to say in very clear terms.
In my view, the noble Lord's Bill, which is far-reaching in the effect that it would have on the powers of trustees of museums and on the Exchequer, is so fundamental that it is not a proper subject to consider, in the terms in which it is set out, under the Private Bill procedure. It is possible to do so but it is not altogether in conformity with the general convention of what is dealt with under the Private Bill procedure.
In addition to the Bill being at variance with any convention usually associated with a Private Bill, it is a Bill that must be examined seriously because it is both destructive and extreme in its intent. All of us, whatever our views on this particular Bill, are proud of our museums and art galleries. They are a national possession of great value. We enjoy sharing the pleasure of visiting them and learning from them with all the visitors to our shores. There is no different view on that point. We are proud of our museums and galleries, they are valuable, and certainly we want to see that they continue in existence—with perhaps ever-growing power.
Initially, and for many years, we all took great pride, I am sure, in the fact that even though we were allocating the nation's money to replenishing and generally maintaining those museums and galleries, we could permit visitors admission to them free of charge. It was a matter of some pride also that we were almost alone among the nations of the world in doing so. I do not imagine that any other nation—socialist, capitalist, or whatever one likes to call their general thinking—had ever done the same. That other nations did not follow our line in that respect was, I have no doubt, for very good reasons.
From a personal point of view, I have to say that I can think of few things that give more self-satisfaction than giving something worthwhile to one's family and neighbours. However, when circumstances change nothing is more stupid than to carry on blindly doing so when such a course may well undermine both the value and existence of that special something that one wants to give. I believe that we have now reached that point in respect of our museums and galleries.
So far as concerns the arts, no one can deny that over recent years circumstances have changed; the circumstances that enabled us to imagine that we could go on acquiring valuable possessions, maintain them, and replenish them depending only on grants from the nation's Exchequer. The reason for that change can be summed up in seven words: inflation, improved living standards, increased running costs.
The figures to confirm that change and the cost of it are there to be seen. When I first entered Parliament in 1950, the Exchequer grant to the arts was £1¾ million. In 1970, it had increased to £18½ million. This year, in 1986, it will increase to £273 million.
Lord Donaldson of Kingsbridge: My Lords, will the noble Lord allow me to ask whether we may have those amounts in real figures? We all know that there has been inflation of something like 30 times. If one wants to give figures, they would be much easier understood if they were made roughly comparable.
Lord Harmar-Nicholls: My Lords, the figures that I am giving the House are figures that have been

265
extracted from the Official Report. They are true figures.
If it is that one wants to separate the costs of the museums and galleries from the general costs of the arts that I have just set out, then they are as follows. In 1950, the grant to museums was £1 million. In 1970, it had increased to £8.8 million. In 1986, the grant has increased to £89 million. That shows an increase in costs that reflects changed circumstances. I submit that those figures themselves make it essential that any policy of free entrance that may have been right when things and costs were different cannot be right today.
The risk that we would get to the point where, unless we obtained extra replenishment of funds, the quality of our museums would fall was recognised on this side of the House as far back as 1972. At that time my noble friend Lord Eccles—who I am delighted to see here and even more delighted to know is to take part in the debate—was then Paymaster-General and put through an Act which removed any statutory impediment to charging at the trustees' discretion.
The Government never have recommended in statutory form that there should be a charge. What my noble friend did was to remove the statutory objections to the trustees and the directors of the museums—and who should know more about their needs and the risks than the people in charge, day by day?—being able to consider other ways of adding to any government grants in a way which would enable them to carry out their task of producing quality in their museums and galleries. I recommend to noble Lords who are interested in this subject that they read my noble friend's speech of 22nd November 1971, because he set out the general circumstances which anticipated the problems we are having to face today. It was the first step towards alleviating the problem while in no way interfering with the quality of the museums themselves.
When my noble friend produced his 1972 Act the suggested admission charge, if people followed it through, was 10p. If it had been accepted at that time it could well be that many of the problems we are facing today would have been mitigated. However, as the noble Lord, Lord Jenkins, said, within four months or so of the passing of that Act the Labour Government came to power and the noble Lord himself, as Minister for the Arts, removed the beginning of even a 10p charge for entering museums. I think that is very sad.
In this new Bill—and this is why I claim that it is an extreme Bill—the noble Lord wants to eradicate entirely the 1972 Act. What he wants to do now is to remove any powers that the trustees and the directors of museums and galleries have to even consider making a charge, whatever the circumstances. My noble friend's Bill merely removed the statutory objections if they thought that it would be justified. It left them free to run their shows and take everything into account. As regards the young Jenkins not having his university equivalent by going to museums I am quite certain that the trustees in charge of these great organisations will find it possible to bring in the kind of amendments that will allow people in that situation
266
to take advantage of them. Experience has shown that ordinary users of the galleries are prepared to pay, as they have to do in every other country.
At this point I want to justify my comment that this Bill is destructive. What it does is set itself against the judgment of the experienced trustees who have the day-to-day contact and knowledge and whose only interest—it has nothing whatever to do with one's general view of the sort of society in which we live—is to maintain the quality of the establishments.
The need for such changes made possible by the 1972 Act, which this Bill would remove, was recognised by many organisations. The education, science and arts Select Committee approved it in 1982 and said that it was good. The trustees of the National Maritime Museum have inaugurated charges because they think it is necessary. The Victoria and Albert Museum trustees have come down on the side of applying the intentions behind the Bill. They have not put on a charge although they have tried to encourage visitors to make a voluntary contribution; but it is specifically set out in this Bill that not even a voluntary contribution can be made. The Natural History Museum in South Kensington, as we read in the newspaper only last week, said it has to choose between admission charges and staff redundancies.
If this Bill were accepted and became an Act, it would mean that in the absence of money from some other source we should have to face up to redundancies, and that is hardly in keeping with the outlook that any of us want at this time with unemployment as it is.
Charging has nothing to do with keeping people out. We want more money to be spent on the arts in general, and one way of obtaining that is to share the rising costs between the general body of the taxpayer and those who use the particular form of art which appeals to them. That is not new. It is done in all the subsidised theatres and opera houses; it is done at places of historic interest; in many museums and at ancient monuments. No one expects to go to the Coliseum to hear the English National Opera for nothing. No one expects to go to the Aldwych, which is supported by public funds, for nothing. People do not expect to go to the Festival Hall for free. No one expects to go round Hampton Court or the Tower of London for nothing. In all such instances it is accepted by the public and by the trustees that the costs should be shared between the taxpayer and the users. It is a partnership which is sensible, which is accepted internationally and which is most likely to enable us to achieve what we most want—properly stocked and replenished museums and art galleries.
In this Bill, which I find so objectionable, the noble Lord in subsection (2) twists the knife because he not only prevents trustees from considering admission charges, he says that they cannot encourage users, not even overseas visitors, to make a voluntary contribution. Which church is there in the land where they do not have a gift box if you look around the church?
Lord Jenkins of Putney: My Lords, if the noble Lord would give way I should like to correct him on a point of accuracy. It would be very kind indeed and I should

267
be most grateful to him. I think it should be on record that there is no objection to voluntary contributions so long as they are not associated with entry to the museum or gallery.
Lord Harmar-Nicholls: My Lords, the noble Lord made that quite clear and his Bill makes it quite clear; but he would not allow the Victoria and Albert Museum to do what it is now doing, that is, not putting on an admission charge but asking people to contribute voluntarily if they wish to do so. This Bill would rule that out. I do not know of a church in the land where they do not do that. I do not know of any museum in the world where they do not want to do that. I am saying that we must not have a statute which does not allow that.
At the Victoria and Albert Museum, where I have naturally investigated, they tell me that, despite the picket lines that have been outside the building since last November, a half to a third of the people going to the V & A have made contributions, and that by and large overseas visitors have contributed about £2 per head. Your Lordships will see how sensible this is when you know that the V & A explain that 82 per cent. of the grant they receive goes in wages and salaries. I believe that to interfere with the means of obtaining extra money would be a retrograde step and a dangerous step, and that the proposal reflects an extremism which I should not have thought this House would want to encourage.
When charges were put on at Apsley House, the National Folk Museum, the Museum of Norwich and the National Trust properties, the attendance went up rather than down. The Government have tried to give a lead. We want to maintain our museums and galleries at the highest standard. For three years and perhaps beyond that we have undertaken to maintain the funding that now exists, but we recognise that extra money may well be needed by the museums over and above the contribution which we make and which we guarantee.
In order for the museums to obtain the extra money that may be needed, we encourage the setting up of shops and all the activities that are found at museums which may well bring a profit which will help their finances. We encourage them to do what the Victoria and Albert Museum is doing in asking for contributions. It would be retrograde once again to put on the statute book an obstacle to allowing people voluntarily to make a contribution. It would be dangerous and destructive to remove from the trustees the right to make a charge if they feel that it is in the interests of the museum to do so.
It is in order to retain that kind of freedom, which is universal, sensible and likely to produce the kind of results that we all want in terms of keeping our museums at the highest level, that I hope that your Lordships will follow me into the Lobby, if there is any need for it, to see to it that this rather extreme, destructive Bill does not obtain a Second Reading. I beg to move.
Moved, as an amendment to the Motion that the Bill be now read a second time, to leave out ("now") and at the end to insert ("this day six months").—(Lord Harmar-Nicholls.)
The Deputy Speaker (Baroness White): My Lords, the original Question was, That this Bill be now read a second time, since when an amendment has been moved to leave out the word "now" and at the end to insert, "this day six months". The Question that I now have to put, therefore, is that this amendment be agreed to.
9.20 p.m.
Lord Hutchinson of Lullington: My Lords, I say to the noble Lord opposite that I knew that the Government had been selling off the family silver, but I had not appreciated, and I do not feel that I can accept, that they have brought this country to such a pretty pass that they are now unable to afford to maintain our museums and national galleries. The noble Lord said that it was up until then that he, among the other inhabitants of this country, had pride in the fact that we could go to our museums and galleries without pain; but if that is the case, it is only since this Government came to power that that emergency has arisen.
I support this Bill which I find constructive and far from destructive. The noble Lord brings it forward, as he says—and I agree with him—as a matter of necessity; as an answer to this Government's approach to the arts, the unacceptable face of the market economy. The inspirational message sent out by the Minister for the Arts is that we get what we pay for; if I may say so, the age old prerogative of the harlot throughout history.
What a retreat we have seen in this past decade from the ideals that inspired the creation of our great museums and galleries. They were to become, and have become, centres of scholarship and discrimination, where the human heritage of man's infinitely varying imagination and skills is preserved in trust for the present and for future generations; freely accessible to the people, irrespective of wealth, status, education, age or nationality. They were works hitherto available only to the privileged few but now to be enjoyed by all for the enrichment of their lives. Cared for by dedicated and highly qualified professional staffs, and admired and envied across the world, the contents of those institutions, acquired by state purchase and private benefaction, have become the property of the nation, to be held on trust in the care of trustees, so held for the enjoyment and the education of the people, and that means all the people.
What do we now see? We see a government pursuing a policy which undermines and pressurises the trustees to betray their trust. It is a policy to commercialise the museums; to run them as businesses with the aim of generating income; above all, to market and profit by their products, as the noble Viscount, Lord Eccles, would say. The trustees are to be business men; tycoons who, with some notable exceptions, know nothing about scholarship and less about art. Their job is now to manage, as if those institutions were corporations, with the arrogance and the ruthlessness so necessary for success in the market place. The highly qualified directors and staff are apparently to be considered as mere employees; employees of the board, and a board not of trustees but a board of directors.

269
The Government promised that they would never introduce entry charges after the fiasco of 1974. Instead, they have deliberately promoted a policy of cutting grants, with the message to generate income to fill the gap; in other words, to bring in entry charges. Each museum is picked off singly. Each is forced to act in its own self-interest without reference to the public good.
I ask your Lordships: do we want to erect barriers at the door to sections of the population in our museums? Do we want the squalid blackmail that is now being pursued in South Kensington? Do we want candle-lit dinners and social soirées among the Rembrandts where the well-heeled shareholders of the sponsors come to look at each other rather than to look at the works on the walls of the museum? Is it an extra pleasure to pay 50p to turn on the light in order to see the Rembrandt? Shall we charge next, as already mentioned by the noble Lord who introduced the debate, for libraries, public parks and gardens? It would, I suggest, be an abomination to charge a fee for each visit to our national museum of modern art, the Tate, where artists of all ages and many members of the public go repeatedly to study contemporary art, ever changing, ever different, week by week.
It would be more than an abomination, I suggest, to charge for the soon to be opened Turner-Clore Gallery that will house the Turner bequest, those paintings left by that great artist to the nation for the public. He would turn in his grave. Of course, arguments can be made for charging and arguments can be made against charging. In my view, the question is simply one of principle and nothing less.
Before I finish, I should like to address a question to the Minister. A very obscure and difficult to understand statement was made in this House on 10th February. It related to the measures that are to be taken to enable museums to keep the money that they generate and to carry over a certain amount of it from year to year. The words used in the statement are that, in order that the museums shall be allowed to keep this income, the Minister has found it necessary,
"to convert the method of financing from direct Vote provision to grant-in-aid".—[Official Report, 10/2/86; col. 92.]
I do not know what those words mean. There is, I know, a great deal of questioning in the museums as to what they mean. Hitherto the running costs of the national museums have been provided on the Vote and only the purchase grant by means of the grant-in-aid. I ask the Minister: does the change mean that now the whole of the museums' financial provision will be at the discretion of the Minister? If so, does it mean that the trustees can use all this money for any legitimate expense? I say, frankly, that I am suspicious that the new funding puts the museums to a far greater extent at the mercy of the Minister. I ask the Minister to allay that suspicion if he is able to do so when he winds up the debate.
Finally, I say to the Minister that the trustees must of course move with the times. They must present their treasures in a contemporary way. They must provide the public with the facilities that they need. And of course they must see that their catering and their shops work at a profit. They can use sponsorship as small icing on the cake. They can charge for special
270
exhibitions. I would say, however, that if you persist in your aim of commercialising these great institutions you will lose for ever their disinterested services to the public and their standards of scholarship and discrimination which, I can assure the Minister, in this one area are still the envy of the world.
9.30 p.m.
The Earl of Perth: My Lords, in 1971, as the noble Lord, Lord Jenkins, recalled, the noble Viscount, Lord Eccles, introduced the Bill to authorise museum charges. I well remember that I supported him at that time and I need not rehearse again the reasons because in some degree they have been outlined by the noble Lord, Lord Harmar-Nicholls. I have in mind particularly such things as charges for the theatre, charges for National Trust, and so on. What I do remember was the attack—that is not perhaps quite the right word—of the noble Baroness, Lady Lee, on my support of the noble Viscount, Lord Eccles. That upset me because she was a very great Minister of the Arts. I was also attacked by Lord George-Brown. One can remember those things and yet one can hold one's position.
In my opinion, today's Bill tries to put the clock back. It is trying to stop all charges except for special exhibitions despite a very important change in the last 15 years. That change has been announced recently—namely, that what the museums and galleries can raise by their own endeavours will not be taken into account when making any block grant.
That to me is something of the greatest importance and I was rather distressed when I heard the noble Lord, Lord Hutchinson, being pretty unfair about ceremonies or functions which may take place in museums. After all, does he not want to have Friends of museums? Does he not want that support? It seems to me that he went too far. The noble Lord accepts certain things which the museums can do. There are shops—they were not allowed some time ago—there are sponsorships, but they may not have entrance charges. There is this all-important principle that each board of trustees is free to do what it wants: to make charges, as it thinks best. There need be no uniformity, and nothing compulsory.
Several of your Lordships have talked about the V & A. My wife and I happened to go there on Sunday. There was the lady with the sign saying "Voluntary contributions" and the list of the contributions which one might or might not make. I was very interested in the experience. I said, "Very well, I shall be happy to pay something." The lady looked at me—and it was quite clear that I was an old age pensioner—so when I suggested paying something more she said, "You do not have to. You really do not have to pay anything." All right, there is no objection. Of course, the sequel to that is that one probably willingly puts up some money. It is not the kind of voluntary contribution system that one has, for example, in the Metropolitan Museum in New York. As it is being operated at the present time it is a genuine and free chance to help pay for what one is going to enjoy. All the same, as I have said already, the trustees have absolute power to do as they see fit, to decide what they charge, who they

271
charge, whether they charge, whether there is no charge. The decision about the classes of people who might be charged is entirely up to them.
I have only one thing that I would urge on all trustees of all museums. It is that if they decide to charge they leave at least one day in the week as a free day for anybody to go in.
I am off tomorrow morning—I have delayed going to Italy for the university debate and this one—and when I go to Italy I shall go to museums and galleries. Without exception, I shall be charged. I do not mind; indeed, nobody minds. One can make certain arrangements for the locals of the town to have a pass so that they pay virtually nothing. All those kinds of things are possible, but the idea of ruling them out altogether I find misguided.
I do not think that there is any high principle involved in this. The noble Lord, Lord Hutchinson, spoke about a high principle. I just know that in Victorian days we were the richest country in the world and so could afford to let things continue to be free, but nowadays we are not in that happy position.
We all know that ahead of us lies more leisure, and this is a challenge to the museums and galleries to do better and to give better value, better facilities, better showing, better conservation—for example, air conditioning is an essential in picture galleries.
However, all this costs money and there is no doubt in my mind that, if the museums can raise a considerable sum for these necessities, which cannot be provided with the present shortage of money, visitors will benefit greatly. I think that this Bill is out of date; it is out of tune with the times. It is well-meaning, but it is not to the advantage of the public. Far from gaining, I believe that they would suffer. Therefore, I go along with the noble Lord, Lord Harmar-Nicholls, and support his amendment.
9.37 p.m.
Lord Harris of High Cross: My Lords, it is the first time that I have had the pleasure of following straight upon another Cross-Bencher, the noble Earl, Lord Perth, with whom I found myself in complete agreement. As I understand it, the facility that we have available for introducing Private Members' Bills can serve several quite distinct purposes: it may prove a launching pad for some great reform which the Government of the day have shrunk from tackling; it may tentatively draw attention to some major ill that ultimately calls for perhaps a different form of remedy; it may be a modest effort to tidy up some striking anomaly in the law that would draw wide support; or, less pretentiously, the Private Member's Bill has on occasions allowed a frustrated Back-Bencher to discharge an undelivered speech and to get some bees out of his bonnet. As an often frustrated Back-Bencher myself, I suspect that this Bill introduced by the noble Lord, Lord Jenkins of Putney, to proscribe museum charges and voluntary contributions falls into this last category. It is part of the charm of the noble Lord that he is never short of an undelivered speech and, like me, he has his share of bees in his bonnet.
First, I congratulate the noble Lord on getting this particular buzz out into the open, especially as I suspect that it will sting most of us less than it appears
272
to have been stinging him. However, I find it difficult to share his engaging enthusiasm for this particular Bill. Its author seemed to claim that it was a positive, forward-looking measure to relieve our people of some great deprivation. Picking my words carefully to avoid the Standing Order on "asperity of speech", I would rather describe it as a narrow, negative, myopic expression of sentimental or doctrinaire prejudice. It is a prejudice apparently shared by the noble Lord, Lord Hutchinson, from, I seem to think, the Social Democrat Benches and the area of the Tate Gallery. It is a prejudice against the ordinary freedom of contract between willing buyers and willing sellers which is the hallmark of a free society.
As the noble Lord, Lord Harmar-Nicholls, said, this Bill seeks to overrule the judgment of trustees and governing bodies of museums or galleries that accept public money. More precisely, it provides that no museum or gallery may charge for admission if it is wholly or in part (whether directly or indirectly) dependent on moneys provided by Parliament. I suspect that if this Bill were to survive for a Committee stage we might have much innocent fun scrutinising some of these words in that part of the Bill.
What astonished me was that the noble Lord's ire was aroused not only by the imposition of admission charges, but under subsection (2) would strain the English language by decreeing that
"the making of a charge for admission includes an invitation to make a voluntary contribution on entry to the museum or gallery".
I suddenly wondered whether the noble Lord is perhaps secretly a better economist than he gives himself credit for. If we are not allowed even to volunteer a donation on entry, may I assume that he would leave us free to drop something in a box on the way out? Indeed, since the noble Lord's primary prohibition is against what the Bill plainly specifies as charges for admission, might he allow an invitation for a donation as people leave, when perhaps they have a better view of the value of what they have seen?
I personally objected in my local church when they introduced the practice of making the offering on the way into the service. As a market economist I have always thought that we should pass the plate around immediately after the preacher sits down, so that he might learn something from variations in the size of the collection.
Lord Jenkins of Putney: My Lords, may I assure the noble Lord that on this point, if on no other, we are entirely at one. I have no objection whatsoever to exit charges.
Lord Harris of High Cross: Well, my Lords, that is good news. I must say, quite seriously, that the everyday mechanism of payment for goods and services fulfils a number of perfectly useful purposes. It serves to remind us that resources are scarce. It teaches what economists call the concept of "opportunity costs", characterised by the late Lord Robbins as "the invincible truism" that you cannot have your cake and eat it. Payment is a test of demand and a measure of the satisfaction derived from indulging it. Without payment, I would argue, attendance figures mean very little indeed. Their accuracy cannot be vouched for, and anyway people may just have dropped into the museum to avoid the rain or to visit the restaurant.

273
Is it not worth reminding visitors to the treasures of an art gallery that there are costs involved which merit some contribution? Do people fully value that which they get for nothing? Why should children be brought up to believe that going with a school party swimming, or to a country house, costs something, while visiting a local museum is not worth paying towards?
If more money can be raised from charges, galleries and museums can spend more on advertising and marketing—so much scorned by the noble Lord, Lord Hutchinson—to enlarge the tiny fraction of the community which still now visits such places. Why, anyway, should the cultured elite and those with special links with the museums expect the rest of the taxpayers to pay wholly in taxes for their special pleasures?
Why this doctrinaire obsession that ordinary folk should not be allowed the responsibility and dignity of parting with their own money towards anything which their self-elected betters think is good for them? As the
274
noble Earl, Lord Perth, said, if we have charges there can be exemptions or reductions for children, for students, for pensioners, or better still, as in Italy, one day a week can be set aside when entry is free for all.
Alternatively, I commend to the noble Lord, Lord Jenkins, the notice outside the Art Institute of Chicago, which was so striking that when I last visited it in 1982 I wrote it down in my diary. It read then:
"Pay what you wish but you must pay something. Suggested entrance fee: adults 3 dollars, children, students and senior citizens 1.50 dollars."
Speaking for myself, having paid my three dollars, I for one saw that I received good value for my money by exploring all the wonderful offerings, including the best display of Impressionist paintings outside Washington. What is wrong with that, so long as children and pensioners can get in for 10 cents? The Bill is objectionable not least because it distrusts freedom of choice. I shall gladly go through the Lobby, without payment, to vote it down.
9.45 p.m.
Viscount Eccles: My Lords, the noble Lord, Lord Jenkins of Putney, thinks that the Bill will strike a blow for British culture. I think he is mistaken, because when museums were first established it was for the pleasure and instruction of a tiny, limited section of the population. The first director of the British Museum was told not to admit more than six visitors a day. From then on, decade after decade, the number of visitors increased and so did the expense of maintaining and adding to the collections. So also did many other forms of government expenditure: the health service, education, the police and local government. There never has been and there never will be enough revenue for all the well-founded claims to be met.
Faced with that situation in 1970, the Conservative Government decided to see whether the museums could help a little in meeting the costs of their maintenance. That was the main purpose of the Bill which I then introduced. But I had a second purpose. It is about that that I should like to say a word or two.
I had observed that in those museums which charged—Norwich is a good example and the Tower of London another—the relations between the curators and the general public were closer and much more friendly than in the museums which did not charge. Why was that? Because as the number of visitors grew and grew so did the needs for facilities which had little to do with the care of the collections. They needed more seats in the galleries, more informative labelling, more space where visitors could buy postcards or publications, more cloakrooms, somewhere to get a cup of tea; and there were many more questions to the expert staff.
The scholarly curator may be forgiven if he or she thinks that it is a misdirection of resources to spend so much time and money on the common or garden wants of a public who have paid nothing to come in. Also, as your Lordships know, if there are too many visitors in a gallery it is impossible seriously to study the objects. When I asked the late Lord and Lady Clark whether they would support my Bill to introduce museum charges, they thought for a moment and then said, "Yes, we will support you, but on one condition: children must be charged double".
One can realise how strong is this feeling that visitors are a nuisance only if one has been a trustee of various museums, as I have. But it is wonderfully diminished when a charge is made for entrance. I do not support the kind of blackmail voluntary charge which is made in the metropolitan museum in New York and which my noble friend Lord Perth has referred to; I think it is offensive. In my view, there should be a charge for everybody at the door, because such a charge establishes a clear reason for the staff to attend to the needs of the general public. It is an argument which grows in importance as the number of visitors increases.
Money remains a great problem for all museums. In the last 10 years, the price of important works of art has risen many times, far more than inflation in the retail price index. So also has the cost of repairing old buildings or building an extension on to an existing museum. How, then, can the museum budgets keep
276
pace? Noble Lords will have their own views on the size of the acquisition grants which should be made out of public funds. Is a bust by Bernini more important than the new equipment which hospitals want so badly? Is it right to subsidise more students from overseas to our universities or to buy another drawing by Raphael?
The answers to these questions can never be agreed upon but the question will not go away. In fact, they are going to be more numerous and more difficult and, therefore, museums must look round for new sources of revenue. Charges will bring in only modest sums but it is a good thing that the Treasury says that they may keep them, although how exactly they will arrange that I do not know. But very much more than the fruits of charging is needed and the best way to find it is by tax relief on annual gifts, and I hope very much that the Chancellor of the Exchequer is going to make it possible for the public to share more in the financing of our museums and all other artistic activities.
Here and now, I want museum trustees to be free to charge or not to charge as they think best for their museum and for their visitors. Of course, I shall vote for the amendment of my noble friend Lord Harmar-Nicholls, unless, as I hope, the noble Lord, Lord Jenkins, will withdraw his Bill; because, when you come to look into it, it is not going to help the people whom he very rightly wants to help.
9.52 p.m.
Lord Hayter: My Lords, I am going temporarily to upset the noble Lord, Lord Jenkins of Putney, by quoting the Conservative Party political broadcast on television last week which included the words:
"Building for the future is the most important thing one can do today".
Of course, it is precisely because this charging at museums and art galleries is not going to build for the future, is going to try to stifle the children from the total environment of education, that I shall support the noble Lord, Lord Jenkins. It is really, when you have listened to the debate so far, a contrast between those to whom money is everything and those who feel that there are some things that money cannot buy.
For my own part, I disliked—and I may have misunderstood—the short laughs that followed Lord Jenkins when he talked about having been educated in his youth at the museums and the galleries, and that it was part of his, so to speak, university education. I was lucky enough to have a university education. But I, too, was educated in that same way. I wonder how many of your Lordships can remember going for the first time to the Natural History Museum and seeing that enlarged flea in its glass case side by side with the whale, the biggest animal in this world. It was a revelation to me and it is a revelation to all the children who go there.
If you try and stop them from going in, if you are going to put charges on every child and sometimes the parents cannot afford to pay them, who are you going to deprive? It may be the very scientists of the future that we need. Heaven knows, we have been talking

277
about the dearth of scientists time after time in this House! For my part, I feel that it is a great mistake to have any charges at the art galleries or at the museums.
There has been a lot of talk this evening about what happens abroad, and of course it is true that there are these charges made abroad; but when you reflect on the matter of tourism in this country—the trains are late, hotels are too expensive and the streets are littered with paper—one of the reasons why people come here is because they know that the museums and art galleries are free. I feel that is the right attitude to take up.
In a nostalgic mood, I was thinking the other day of a singer some of your Lordships may remember, called Jack Smith. He was "the whispering baritone" and the first line of one of his songs was "The moon belongs to everyone". I will not sing it because I am sure that is against Standing Orders; but then, having sung of love and the stars above, he came out with the last line, which was the refrain and indeed the title of the song:
"The best things in life are free".
That would be my theme so far as this Bill is concerned.
I confess I should like to appeal to the noble Lord, Lord Harmar-Nicholls. Each of us on either side of the argument wants to get the right decision. I do not think it is perhaps the right time just now—it is fairly late in the evening in a comparatively thin House—to have a Division over the matter of the principle of this Bill. I would suggest that it would be far better to give this Bill a benign Second Reading, perhaps with a wink, and then to attack it as much as one likes in a Committee of the Whole House, particularly when it comes to the question of Clause 2 standing part. So I hope that the noble Lord will not press his amendment; but, if he does, I shall vote against it and for a Second Reading for Lord Jenkins' Bill.
9.57 p.m.
Lord Ritchie of Dundee: My Lords, I should like to echo the words of the noble Lord, Lord Hayter, in proposing that we should give the Bill a benign Second Reading. I think that it requires clarification and amendment, especially in connection with the matter of entry charges and exit charges, as the noble Lord, Lord Jenkins, himself said.
My first reaction, like perhaps others of your Lordships, on hearing of the proposed museum admission charges was one of distaste and indignation. I protested that the great museums and galleries have always been free and it is part of our civilized society that the splendours of western culture should be freely accessible. I remembered wandering freely into those great halls of treasures—those Aladdin's caves—when I was young and drinking in the hush and the timelessness of those places.
I was never a serious or earnest student but an idle browser—one who would go into the National Gallery for 20 minutes while waiting for a train, or who would perhaps arrange to meet someone there and incidentally look at one picture. That was the essential
278
joy in the life of these places—a brief escape from the hurly-burly of the streets and the 20th century.
If one had to pay, one would be robbed of this. I know that view is the view taken by the overwhelming majority of the professional staffs of the museums and art galleries. In fact a big survey is being undertaken at the moment in which the opinions of all those professionally involved are being sought, and I understand we shall know much more about the facts and figures by the end of the summer.
However, with this debate coming up, I thought there was nothing like a little first-hand, up-to-the-minute experience; so, not having been there previously, I went along to the V & A this afternoon to see how their scheme was working out. I expected to be horrified and angered, but in the event I must say I was far from either. Here I would confirm what I think the noble Earl, Lord Perth, was saying; that the pressurising can be minimal. Two young women were sitting by what they admittedly called a cash desk. By them were notices inviting me to donate up to £2, or 50p if I were an aged pensioner. I asked them what their reaction would be if I offered them nothing. They said that that would be quite all right. I asked them then if, not being the wearer of a badge which I would be given if I paid, I would be approached by some aggressive sales promoter in the Indian gallery or somewhere. They said, "No; that might happen in New York, but it does not happen here."
It was true. I was not molested in any way. I felt quite guiltless and I managed to leave the Victoria and Albert Museum without paying a penny. I had a long talk with the press and public relations officer who was very persuasive. He told me a great many of the problems that the museum faces with which I shall not weary the House, as your Lordships no doubt have a good idea of them.
I came away with the feeling that I would rather that all the national museums and galleries were free, but that, if a parsimonious Government will not fund them adequately, if the choice were between maintaining and improving what is offered to the public, on the one hand, and, on the other, a continuing decline of standards and decay of premises, a museum or gallery cannot be deprived of resorting to inviting donations from visitors.
If that is done with sufficient tact and sensitivity, as it seemed to me was being done at the Victoria and Albert Museum, if contributions are linked to specific projects and if, perhaps, the contributions are invited when a visitor leaves rather than when he arrives, such a scheme may well be not entirely unacceptable. I am, therefore, happy to support the intentions behind the Bill, but I think that clarification about the voluntary contributions is required.
10.2 p.m.
Lord Annan: My Lords, I rise to say that I shall vote for the amendment on the grounds that having been a trustee of the British Museum for some 15 years and then trustee and chairman of the National Gallery, I cannot conceive that the trustees' freedom to do what they think best for the gallery or the museum of which

279
they are the trustees for the public should be curtailed in that way.
When I was chairman of the National Gallery, I remember hearing the director say that we were moving into an age when the level of the purchase grant would mean that we would never again be able to buy a major painting. I thought that, as the trustees had been told that important fact, they should have some discussions about the principle that we are discussing tonight.
On the main issue, I do not have to make any apology. The noble Viscount, Lord Eccles, will well remember that I opened the debate in this House opposing the museum charges which he imposed when he was Minister. All the arguments that I have heard from the noble Lord, Lord Hutchinson, tonight are arguments that I used on that occasion.
When the trustees debated this matter there was of course a great divergence of opinion. Some thought that we should under no circumstances give way on this matter of principle and if the trustees as a whole voted in favour of any kind of charge, they would resign as trustees. That was a perfectly honourable position to take. Other trustees said that their first duty, as they saw it, was to enable the gallery to remain a living institution which could purchase paintings even at the astronomical cost to which they had risen.
That matter having been initiated, among the points made was the natural one that we should perhaps try to discover whether we could raise funds to help us in our dilemma. That is how we left the matter. As your Lordships know, we were very fortunate because, quite apart from the fantastically generous gift which Sir John Sainsbury and his brothers made towards the cost of the new extension to the building, we received that princely gift of £50 million from Mr. Getty. Of course, I do not expect that every institution, gallery and museum which is funded from public funds can expect that kind of fantastic response, but it enabled the trustees, so to say, to put on one side the matter of the museum charges.
Nevertheless, there was the issue. The issue was: does this gallery become an institution which will add to its collections virtually only items of historical interest, but not those works of the finest quality with which the gallery has always been associated in its purchasing policy, or does one charge for admission in one way or another? Most people were rather against the voluntary principle and thought it was more honourable or honest to charge something in the neighbourhood of, at present prices, £2, but, as I say, no decision was taken in any way. I do not want anybody to think that the trustees came to any commitment on this matter.
Therefore, when I think about this problem again, it seems to me that we can say many things about it. We can say that we are being exceedingly parochial in regard to Europe. We are a member of the European Community. I cannot think of a country in the European Community which does not, in some way or other, charge for admission to its galleries and museums. Of course, the great ones like France and West Germany charge, and the charge is swingeing. In Italy, the charge is tremendous. But nobody should
280
misunderstand this problem. If you charge, it does not mean that all your problems are solved.
I remember going to Italy in 1974 and finding that the museums were closed. I could not go into the gallery at Bologna, because they did not have the funds, despite the charges, for that gallery to operate. Of course, today Italy is in a very much better position economically and that is what is at the bottom of the whole problem that we are discussing—the actual economy of the country. If it flourishes, we do not need to change our present policy. If it does not, then the trustees have to think again. But I should be very sorry to see anything which curtailed the freedom of the trustees.
It may be that the noble Lord, Lord Hutchinson, and I take a slightly different view. I think that the noble Lord, Hutchinson, has a Wagnerian quality in his temperament. He would rather see "Gotterdammerung" and, as it were, everything going up in flames, rather than concede that that inviolable principle should be destroyed and impaired. I take a more pragmatic and dreary line, a rational line, where, if one is absolutely forced into this, we might have to make some accommodation. There are lots of ways in which you can help your students to go while at the same time having charges which force the tourists to come across with their money. You can have masses of different ways of imposing charges of one kind or another. On the principle, I remain entirely with the noble Lords, Lord Hutchinson and Lord Jenkins, and I am, in principle, opposed. But I should not like to see the freedom of the trustees fettered in this way.
10.9 p.m.
Lord Beaumont of Whitley: My Lords, I belong to the school that believes that this matter involves a principle, and a very important principle. I am not lured by the arguments that say that if one charges for admission then one can buy the priceless masterpieces that the museums and art galleries want. Our museums and art galleries are already crammed with priceless masterpieces. It may be that we will get the offer of some more, and it may be that we shall be able to encourage rich people to help us to buy them as they have done in the past, by the generous gifts that we have been told about.
It may be that this or a future Government will think of other ways of funding that most important matter—the arts. However, we should not be led astray into thinking that we ought to decide this matter of principle on merely the question of whether one charges for admission or buys new pictures because I do not believe that is a real choice.
It seems to me that the matter that is before us tonight is a test of a civilised society. If I am told that ours is the only society that holds to that test, then it will be the first time for a long time that I have found myself in the chauvinistic position of defending Britain as being out ahead of the rest of the world. If we are out ahead of the rest of the world on this particular matter, then we should stay out ahead and we should not necessarily pay attention to what they are doing in the EC—good European though I am.
Tonight's debate is absolutely vital. I want to mention an area that has hardly been touched upon when we have been talking about people like

281
ourselves, about old-age pensioners, and about children. We have not been talking about that great underclass of society that exists now and may exist even more in the future. Probably at least 15 per cent. of our society are the kind of people who really cannot afford charges, and certainly could not afford charges if they went very often to museums. I know that they are not queuing to go into museums; but I shall come to that point in a moment.
Creativity is surely the most fundamental attribute of man. It is the divine gift. We are created in God's image and are made to share in God's creative power. A society that cuts its citizens off from creativity is to be condemned. It is to be condemned if it cuts them off from creativity because it makes them poor and creates an underclass. It is to be condemned if it cuts them off from creativity by denying them work. It is to be condemned if it cuts them off from creativity at all, if it begrudges the money that will allow them to enjoy their heritage.
It should not be a matter of estimating how many people who cannot afford to visit museums are being excluded; least of all—and I have made reference to the point—whether they want to visit them. I know that the unemployed in Liverpool are not queuing to get into the museums; but if only one unemployed person is excluded from our society, then that is one person too many. Even if there is none, the principle of exclusion is still wrong. If one is going to shut up one's riches from the poor, then of course it is better to have loopholes such as free days and special prices for the unemployed (and in fact, no one has mentioned that particular point) so that they can find some way in. But once the principle of free access is broken, it seems to me that our society is condemned by its own actions.
The principle is that the museums, the galleries and the libraries of society should be free to all. Once you have broken that principle, you are condemned as unjust, unloving and philistine. The true philistine is the man who thinks that art is his possession, that he can buy and sell it and that he can do what he wants with it; he can make it pay, he can possess it. We must not be philistines. We must make sure that the greatest riches that we possess are available to all, all the time. It actually will not cost us a great deal compared with the wealth of this country, but it would not matter very much if it did; it would still be right.
10.16 p.m.
Lord Donaldson of Kingsbridge: My Lords, I am sorry that the noble and learned Lord, Lord Simon, is not here to speak, because I usually agree with him. I do not know whether I should have done so tonight but I was hoping for his support in what I am about to say and I shall now have to get on without him.
It is not for me to sum up—there are three other speakers after me who will do so—but I must make one or two comments on the debate. To me the most extraordinary comment was made by the noble Viscount, Lord Eccles, who is an old friend and protagonist on this subject. He said that the staff tend not to attend to the needs of people unless there is a charge. I simply cannot understand that. It seems to me to be an absolutely meaningless statement, although he does not make meaningless statements.
282
The facts are, as we were told by the noble Lord, Lord Jenkins, in his opening speech, that the staffs that have been consulted have been unanimously against museum charges. This cannot be because they do not want to attend. I find the whole thing too confusing for words. Perhaps we can discuss it later, but it seems to give a wrong impression of the attitude of the staffs of museums, from what I have heard and from what the noble Lord, Lord Jenkins, has heard; though I must say it was a great surprise to me that Mr. Archer agreed, and that was a pleasure.
I have to agree with the noble Earl, Lord Perth, that if this is to go wrong let us at least have one free day. I should like to have one paying day as a possible development. However, those possibilities do not arise if the Bill is passed, so we need not worry about that. I always enjoy the arguments of the noble Lord, Lord Harris, because they are consistent. Unfortunately he has gone, so I will not go on about it. However, I was only going to say that he accused my noble friend Lord Hutchinson of being sentimental. The answer is that of course he is sentimental. When the noble Lord, Lord Annan, speaks of him as Wagnerian he does not know what he is talking about.
This matter has to be seen from a sentimental point of view. We are sentimental about the fact that in this country we lend 600 million books—or 6,000 million; I cannot remember which—from our public libraries, free of charge without one penny paid. Of course, if you want to make some money then charge five bob a book. The numbers will come down to 200,000, or whatever it is, but you will get quite a lot of money. However, we are sentimental about this. We would rather not have the money than have that going on.
To me, exactly the same applies to the great museums and the great collections which, as has been said again and again, have often been collected by someone on a foreign tour, purchased cheap, brought home and sold because he married an American actress, or whatever. It does not matter how we got them, the fact is that we have them. They are part of our heritage and they should be available to everyone.
It is perfectly true to say that there is a culture gap in every class at every level. My racing friends from Eton never go to museums, galleries or concerts. Exactly the same applies to the racing men in the factories. It is a fact of life that we have found by the introduction of art into education over, I suppose, the past 15 years—it was hardly going on before that—that a lot of children begin to be interested. Of course, when they go round the museums and galleries they are dreadful. They are the most awful nuisance. They entirely spoil one's own enjoyment of the place. But they are getting something, and some of them come back. We think that they should not have to pay anything to come back.
The argument which I am putting is a very simple one. We on these Benches—and I think our point of view is shared by the Labour Benches, and very largely shared, though it is not always entirely evident, by the Conservative Benches—believe that the arts should be supported centrally and that they should be supported more generously than they are at the moment. We believe that there are two reasons why the arts should be supported. The first reason is that we think the ordinary person should be given the opportunity to

283
appreciate the arts. If one is brought up with no education and by parents who do not read books, one does not have the opportunity to appreciate the arts; but if one is taken to museums and galleries by one's school, then the opportunity is there. The second reason why we want to support the arts is to nurture and develop local talent which, as we know very well, comes from all levels of society.
If one wants to stop children benefiting from this "evil" activity of going to picture galleries, what does one do? One charges for admission. If your Lordships were to say, "We have to stop all these children from going round picture galleries", then you would put charges on. That is the first thing one does if one wants to stop it. It is because we do not want to stop it that we are against charges. There is really nothing more to be said from our point of view—yet I want to say one or two things, because I have had only five minutes!
The first thing I want to say is that one of the speakers tonight—I forget which one—asked why there should not be free concerts. The answer is that the performing arts are entirely different from the static collections. The performing arts are things which are done by people who have to be paid to do them. I think that they should be subsidised as heavily as possible, but certainly they could never be free. No one who has thought twice about this matter—and I do not remember who it was who said it—would think that.
The only other point that I want to make—and I am rather disappointed that it has not been brought out in the strongest way tonight—concerns an argument which was put to me the other day, which is that people really only value things if they have to pay for them. I said to myself, "Is this true? Do those of us who are over 65 years of age value the tube less because we travel on it free? Do people in your Lordships' House value their telephone calls less because they are free? Do I value a bottle of wine that I get at a restaurant—which is far too expensive and entirely spoils the evening for me because I have to pay for it—more than a bottle of Chateau Petrus 47 or something which is offered to me by the noble Lord who has invited me? Does the fact that I have not had to pay for the wine—and never could—give it any added advantage? This lies behind the thinking of some noble Lords who have spoken, and quite honestly it is absolute rot.
I think that the real question here is this, that the only point in having museum charges is to enable the Government to give less money than they ought to give to museums. We know that the Government have financial problems. We think that a lot of them are of their own making, and we think that there are many ways round them, which we are not here tonight to discuss. In my opinion the only reason for imposing museum charges is because there is no other way to get the money to run one's property properly. I do not believe that this excuse is true and therefore I shall vote for the Bill.
10.24 p.m.
Baroness Birk: My Lords, having listened to all the speakers in this interesting debate, it is clear to me that we are not just discussing finance or even basically whether there should be voluntary contributions under a certain amount of pressure or charges, as the
284
noble Viscount, Lord Eccles, would prefer. Behind the debate is the basic philosophic approach to our national life. We are no longer leaders in manufacturing industry. We have a great many problems which cover the whole of our economic life. We have abominably high unemployment. But we are unique in one aspect; that is, in our contribution to culture, not just within our national boundary but in the world. For that reason, what we are considering is the priority that we give to the various aspects of our society. That is at the bottom of it all.
The noble Viscount said that there will never be enough revenue. That is true under whichever Government are in power unless top priority is given to the arts; and we are here discussing the visual arts, the museums and galleries. If a Government do that, I believe that the main bulk of the money necessary will be forthcoming, but it needs to be properly managed. After all, in what is considered to be an emergency a sum of around £275 million can be found to build an airport in the Falklands. There is no reason to argue that other matters which may cost a similar amount are more or less important. The attitude to the arts has always been that they are a frill on the edge of our society rather than being central to our quality of life and the way that we live.
Strong arguments have been made for leaving the decision whether to charge with individual boards of trustees. Superficially that sounds convincing in a democratic society, where people should be able to say what they want and run their own patch in their own way. But it would be hard, if the trustees decided to impose charges, whether compulsory or pseudo-voluntary, to reverse the decision once apparent dependence is established. Other people fundamentally, as part of their philosophy, believe that one should pay. That has nothing to do with the financial needs of a particular museum or gallery; it is their view of life. I do not believe that that view fits in with what we want to see in our national heritage.
While I was waiting for the debate on my noble friend's Bill I was entertaining the head of the faculty of arts of a large polytechnic. We were discussing quite a different matter, but, when he saw that we were to debate this subject, he told me that he went to a secondary modern school and learned as a youngster everything that he knew from visiting the V & A, the National Gallery and the British Museum. He said that it is daunting to go into a grand-looking building; one is apprehensive. The charge is an even greater deterrent. Charges eliminate the casual approach; the great tradition that you can go in to browse for a short time and not feel that you have to get your money's worth, which in cultural and educational terms means that you are not getting true value.
As my friend the professor said, a life pattern had been built up for him. He is convinced that he would never have achieved his position today without that constant contact with and easy access to museums and galleries. Again as he pointed out, educated people can make their own judgment. They decide whether they want to pay to attend a concert or go to one of the performing arts. But for youngsters, who have the opportunity to go to a museum or gallery free, who enjoy it and who find they are visiting them more frequently, it is entirely different.

285
Charges would have to be extremely high to contribute in any meaningful way to the maintenance of a building like the V & A. It is known that since the introduction of charges there has been a reduction in numbers visiting the museum compared to the previous year. November's figures were down by over 20 per cent., December's by nearly 48 per cent., and January's by 38·7 per cent. So the situation does not sound very hopeful. We have heard more about foreign museums where one pays than about those like the Smithsonian in Washington, the National Gallery in Washington, the Scandinavian museums and many of the Berlin museums, where one does not. In recent days at home, the Natural History and the Geological Museums have been saying that they will have to impose charges if they are to be able to manage. Those museums are funded by the Department of Education and Science. The funding has been cut. The Medical Research Council and a great many scientific activities have suffered in the same way. They are having to charge, not because they are in the same grouping as the other museums but because of their scientific work and the problems that they have encountered following cuts by the Department of Education and Science.
The Bill may not be perfect. I do not believe that it is in every respect. I hope, however, that the noble Lord, Lord Harmar-Nicholls, will follow the usual practice in this House and allow the measure to have a Second Reading. The noble Lord can pull it to pieces in Committee. I am asking him, not appealing to him—because I am not sure that he finds me very appealing, and I shall therefore not use the word "appealing". I agree with the noble Lord, Lord Beaumont of Whitley, that late at night, on a serious subject, it is pulling a fast one—if I may use the expression—to try and knock the Bill straight out. Given the interest that has been aroused and the width of the subject that we are discussing, the noble Lord should at least allow it to have a Second Reading. That is all we are discussing tonight. We should not be considering the setting up of fresh barriers against people gaining knowledge and also a great deal of enjoyment, which has not been mentioned to the same extent.
There are ways, in addition to revenue from the Government, in which museums can help themselves. This is the only point on which I disagree with the noble Lord, Lord Hutchinson, who, in an excellent speech, expressed his dislike of sponsorship and also, so far as I could see, museums marketing themselves and making money in that way. I believe that there is scope for a great deal more to be done in this area. I tried as a Minister at the Department of the Environment, which was responsible for the housing of museums—the noble Lord, Lord Donaldson, was at that time the Minister for the Arts—to promote efforts in that direction. Even today, there are far more opportunities for this approach, and perhaps to have franchises for reproductions of wallpapers, and such things, from somewhere like the V & A. I believe that this can be done if there is the will to do it. We do not have to enter into the area of charges and pressured donations. If there is the will, and if we as a country—and in this House we find the right place to give a lead—show that we believe that the museums
286
and galleries are a very important facet of our national life, the arts as a whole ought to receive far greater priority than they ever have until now.
10.35 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, the noble Baroness, Lady Birk, with her characteristic kindness of heart, appealed to your Lordships to give this Bill a Second Reading on the grounds that it would give the noble Lord, Lord Jenkins, the opportunity to have this subject debated, not only on the Second Reading of this Bill but again in Committee and at the further stages of the Bill. As one who has been through two stages of the Museum of London Bill—on both occasions of which the noble Lord, Lord Jenkins, seized the opportunity to have a debate on museum charges, announced his intention that he was going to have another debate at Report stage of the Bill, had a discussion on the radio, as I understand it, this morning, and will no doubt be having yet a final discussion on the Third Reading of the Museum of London Bill—I do not think (although I applaud the kindness of heart of the noble Baroness) that it is one of the strongest of arguments.
This debate has attracted three former Ministers for the Arts and I must say that for somebody like me—who has I know a great deal to learn about this subject—it has been a very interesting evening. But, however one dresses it up, this is a Bill to curtail freedom. In our country Parliament has placed the management of our great national museums and galleries in the hands of boards of trustees. They can charge for admission to their institutions if they so choose. This Bill seeks to curtail the freedom of trustees by prohibiting charging for, or even requesting a donation for, admission to a museum or gallery. I must say that I join with my noble friend Lord Harmar-Nicholls in opposing that curtailment of the trustees' freedom. Indeed, we would wish in government to encourage trustees who seek to enhance or expand their facilities or their collections.
On 10th February, on behalf of my right honourable friend the Minister for the Arts, I announced in your Lordships' House a change which I believe is beneficial in the financial arrangements for the museums and galleries funded directly from the arts budget which the Government propose to introduce during the coming financial year. The noble Earl, Lord Perth, rightly said, if I may say so, that the object of the change announced on that day is to allow the nine major institutions which are funded in that way to enjoy the fruits of their labours rather than to see any extra money that they earn clawed back into the Exchequer.
The noble Lord, Lord Hutchinson of Lullington, asked me particularly about words which were in the reply to a Parliamentary Question by my right honourable friend in which Mr. Luce said that in order to effect these changes within existing conventions, it would be necessary to convert the method of financing from direct Vote provision to grant-in-aid. I assure the noble Lord that there is nothing sinister in those words at all, as I am sure the noble Lord knows better than I. The existing rules for direct Votes require receipts to be deducted and prohibit carry-over. It is

287
for that reason—and that reason alone—if we are to make the beneficial change which my right honourable friend announced on that day, and I repeated in your Lordships' House, that it would be necessary to consider going from direct Vote to grant-in-aid.
Through doing this we genuinely want to encourage the nine national museums and galleries, as a first step at any rate, so that their revenue-producing efforts will supplement—but not, I emphasise, replace—the funding from central government. The Government remain committed to funding the basic activities of the national museums and galleries in line with our 1983 election manifesto commitment to keep up the level of support for the arts.
Indeed, perhaps I may say in passing that we have done better than that over the seven years of the present Government and the previous Conservative Government. Between 1979 and the present financial year, Exchequer funding of museum running costs from the arts budget has increased 16 per cent. in real terms, and of their building and maintenance work by 52 per cent. in real terms. Greater emphasis has been placed on better conservation of the collections and of the historic buildings which house them. Yet even this is not quite enough to satisfy the imaginative and innovative plans of museum trustees and directors who, understandably, wish to develop and improve their institutions in order to meet the increasing public demand for their services.
I was enormously interested to hear my noble friend Lord Eccles, who it was such a pleasure to hear speaking in your Lordships' House again this evening, making the interesting point that if museums and galleries are to be helpful and friendly to visitors, trustees will want to provide facilities which will make all the difference between a warm welcome and rather cold comfort.
The Government will certainly endeavour to keep up their good record. However, there is a limit to what can be afforded on top of that. That is why we are encouraging the trustees to find ways of financing growth and new developments over and above those provided by Government cored funding. Of course, they may do this by attracting business sponsorship, which may in turn attract an award under the Government's highly successful Business Sponsorship Incentive Scheme for the Arts; and I was grateful to the noble Baroness, Lady Birk, for mentioning sponsorship in approving terms. It is now making an enormous difference to money flowing into the arts. There can, of course, be private patronage, which was mentioned in the interesting speech of the noble Lord, Lord Annan; fund-raising from the general public; or commercial activity of various kinds.
One means of raising funds is to ask visitors for a donation on entry; and one form of commercial activity would be charging for admission to the museum. Both would be forbidden by this Bill. I believe it is wrong to restrict the trustees' choice. I believe that my noble friend Lord Harmar-Nicholls was absolutlely right in saying that the Government have no wish to impose admission charges, but we are convinced that they are an option which should be
288
open to trustees in deciding what is best for their own particular institution.
Therefore, with respect to the noble Lord, Lord Jenkins; I believe that this Bill is wrong in principle: but I believe that it is also wrong in practice. After all, to deny the National Maritime Museum the income from admission charges to its main collection and to the old Royal Observatory at Greewich would be to deprive it of an important source of income—about £0·5 million a year. Similarly, the disappearance of income from the long-standing admission charges to places like Duxford Airfield, Apsley House, HMS "Belfast" and the Barbara Hepworth Museum would be sorely felt by the parent institutions.
Of course, the Bill would also outlaw requests for donations from visitors on entry. This is something which has been talked about this evening by your Lordships. The V & A scheme has been mentioned, but one which has not been mentioned is the Imperial War Museum scheme, where visitors are being asked for contributions towards the museum's share of the costs for an ambitious redevelopment scheme, the bulk of whose cost is being borne by the Government. This too would fall prey to the Bill.
I think that my noble friend Lord Harmar-Nicholls was absolutely justified in pressing the noble Lord, Lord Jenkins, about the prohibition which is to be found in this short Bill on voluntary contributions. How could it possibly be right actually to prevent visitors or other well-wishers from contributing to museums if they wanted to do so? The noble Lord will forgive me if I say that there is an element of killjoy in the attitude of this Bill and I can only assume that the noble Lord who is introducing it wishes to prevent museums from undertaking the new developments which such income can finance. I am genuinely at a loss to see how this would benefit anyone.
The noble Baroness, Lady Birk, made the point that museum attendances will fall if charges are introduced. With respect to the noble Baroness there is certainly some evidence that this happens in the short term, but by no means necessarily in the long term. I would point to the success of the National Maritime Museum at Greenwich, where charges were introduced in April 1984 and paying attendance during the nine months of 1985 was 11 per cent. up on the previous year. I think that that illustrates that the public are prepared to make a payment for the success of a museum in making itself attractive to visitors.
Baroness Birk: My Lords, I was not talking about charges. I was talking about the so-called voluntary contributions at the V & A. Attendances have gone down in the three months compared with the same three months last year. That is what I was comparing.
Lord Belstead: My Lords, I am saying to the noble Baroness that she needs to wait a little while and she may well find, although the case is slightly different, that the attendances will rise. Incidentally, the noble Lord, Lord Ritchie of Dundee (who is always very fair in the case he makes), although he was supporting the Bill of the noble Lord, Lord Jenkins, said fairly in his speech that he felt the way in which those voluntary contributions were being collected at the V & A was sensitive and sensible.

289
The noble Lord, Lord Jenkins, will forgive me if I say that I found his opening speech had rather a Bourbon flavour about it, for it harked back a good deal and showed little recognition of the opportunities for raising money which the noble Lord, Lord Annan, so rightly pointed out to us towards the end of his speech. The decision on whether, and how, to charge should be left to trustees to take in the light of the circumstances of their own particular institutions. This discretion Lord Jenkins's Bill would wholly take away. It is for that reason, and for that reason only, that the Government cannot possibly support this Bill and would wish to support the amendment of my noble friend.
10.48 p.m.
Lord Jenkins of Putney: My Lords, your Lordships would not welcome my replying, or seeking to reply, at any length to the debate at this time of night. I shall content myself with thanking those noble Lords who have contributed, and even those who have not seen wholly eye to eye with the views that I expressed in moving the Bill.
I wish to make just a couple of points for information. In regard to the views of the staff, it would be wrong to give your Lordships the impression that I have gone round all the museums seeing what the staffs in every one of them think, but those I have discovered where charges are about to be imposed or have already been imposed are implacably opposed to the whole idea. One example is from the British Museum natural history branch:
"This branch supports the Bill … that the making of charges for admission to museums and galleries in Great Britain, funded wholly or mainly out of monies provided by Parliament, is prohibited and lends its support to campaigns being waged in other museums and galleries against the imposition of such charges."
The resolution goes on to that effect.
There is widespread opposition against this whole idea among the people who do the main bulk of the work in the museums, and they have the right idea about what museums are for. My noble friend is indicating to me that I should not expand on that point. I shall, however, quote again an authority who I think has put one of the points in a nutshell. I refer again to Mr. Jeffrey Archer, the vice-chairman of the Conservative Party. He said on 18th October, 1972 (at col. 331 of Hansard):
"We on this side of the House must fight again and again to hold back from this sort of charge, for one reason and one reason only: this is a civilised standard we have set, and the fact that other countries do not have it does not mean that we should become uncivilised as well."
Mr. Jeffrey Archer spoke better for the Conservative Party on that occasion than did the noble Lord whose implacable reasonableness is the only possible reason why I would not wish to pursue this Bill further.
I now come to my appeal to the noble Lord who is moving the amendment. I should like to ask him this. There are noble Lords about the House who, though in principle opposed to the idea of charging, feel that the Bill is defective in some degree, or needs altreration or change. Will the noble Lord deny them the opportunity of moving amendments to improve the Bill? Will the House deny itself its role of producing a Bill in a better form to the other House? Is this not our
290
traditional role? Will not noble Lords at least say that this is something which we must do? Will they not join me in asking the noble Lord not to press his amendment, but, if he does press it, in saying that we must, in the interests of what is our function, defeat it?
10.51 p.m.
Lord Harmar-Nicholls: My Lords, I do not know how pleased the noble Lord's noble friends will be when he puts them in the same Lobby as Mr. Jeffrey Archer. I hope that they will feel at home. I hope they feel that they will do that on more than this one occasion; if they want to do their duty.
Of course we must put my amendment to the vote. The noble Baroness, Lady Birk, spoke as though it was my amendment that was changing the law. It is not my amendment that is changing the law. I want to retain the law that has been in operation since 1972. It has worked all right. It gave a freedom to the trustees to do certain things in the interests of their museums. Some of them have taken advantage of that by opening shops, others by putting on charges and others by imposing a voluntary donation. It is not my amendment that seeks to alter the law; and I do not think that a case has been made out for altering the law.
It is the noble Lord's Bill which wants to make it impossible for people to make a voluntary donation. I believe that the noble Lord, Lord Annan—as he so often does—in an examination of the Bill put in a nutshell the real issue. Do we, or do we not, want to remove the freedom from the trustees? The noble Lord, Lord Annan, said that the freedom of the trustees should be curtailed. The only thing that the Bill does it to curtail the freedom of the people who have the job of ensuring that these museums remain in existence at the high level of excellence to which we have always been used.
The noble Lord, Lord Donaldson, made a point which I accept. He said that arts should be supported sensibly. Nobody disagrees with that, and the arts will go on being supported sensibly. The Government have given an undertaking that the support at the high level that has been introduced this year will be maintained irrespective of what happens over the next three years and, very likely, beyond that.
We must face up to the fact that because of the excellent case made for wanting to preserve our museums and make them available—which I accept, and in my speech I tried to say that I have the same high principles for retaining this that the people who are not in agreement with my amendment have—and with things as they are and as we all know they are likely to develop, it needs a partnership between the central government support which the noble Lord, Lord Donaldson, wants, and the trustees having the freedom to use any methods that they think are in keeping with their possessions to enable them to exist in the future.
The noble Baroness said that I ought not to put my amendment to the vote. The very fact that I put down the amendment was a very clear indication that I thought it was important enough to be put to the vote irrespective of the arguments. The fact that I used the procedure of endeavouring to delay the Second Reading for six months was a very clear message in parliamentary language as to what we wanted.

291
Otherwise, I would just have voted against the Bill; so the indications as to what I thought ought to be done were very clear from the time this amendment was put on the Order Paper.
I believe that the message that we received from the noble Lord, Lord Annan, ought to be reflected in our vote if we eventually go into the Lobbies. I repeat that I move the amendment standing in my name on the Order Paper.
10.57 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 23; Not-Contents, 34.

DIVISION NO. 1

CONTENTS

Annan, L.

Henley, L.

Belstead, L.

Hooper, B.

Brabazon of Tara, L.

Lindsey and Abingdon, E.

Brougham and Vaux, L.

Long, V.

Caithness, E.

Lucas of Chilworth, L.

Davidson, V.

Mottistone, L.

Denham, L.

Perth, E.

Eccles, V.

Simon of Glaisdale, L.

Gisborough, L.

Skelmersdale, L.

Harmar-Nicholls, L. [Teller.]

Swinton, E.

Harris of High Cross, L. [Teller.]

Whitelaw, V.

Windlesham, L.

NOT-CONTENTS

Airedale, L.

McNair, L.

Beaumont of Whitley, L.

Nicol, B.

Birk, B.

Pitt of Hampstead, L.

Brockway, L.

Ponsonby of Shulbrede, L.

Carmichael of Kelvingrove, L.

Rea, L.

Crawshaw of Aintree, L.

Ritchie of Dundee, L. [Teller.]

David, B.

Robson of Kiddington, B.

Donaldson of Kingsbridge, L.

Seear, B.

Elwyn-Jones, L.

Shackleton, L.

Fitt, L.

Silkin of Dulwich, L.

Graham of Edmonton, L.

Stewart of Fulham, L.

Hatch of Lusby, L.

Stoddart of Swindon, L.

Hayter, L.

Taylor of Blackburn, L.

Hutchinson of Lullington, L.

Tordoff, L.

Irving of Dartford, L.

Underhill, L.

Jenkins of Putney, L. [Teller.]

Wells-Pestell, L.

Kennet, L.

Ypres, E.

Resolved in the negative, and amendment disagreed to accordingly.
On Question, Bill read a second time, and committed to Committee of the Whole House.

Greater Manchester (Light Rapid Transit System)(No. 2) Bill [H.L.]
Committed to an Unopposed Bill Committee.
House adjourned at five minutes past eleven o'clock.

  EMPLOYMENT STATISTICS
  EMPLOYMENT STATISTICS
  MONTHLY UNEMPLOYMENT COUNT
  MONTHLY UNEMPLOYMENT COUNT
  THERMONUCLEAR FUSION: RESEARCH
  THERMONUCLEAR FUSION: RESEARCH
  FLUORIDATION OF WATER SUPPLIES
  FLUORIDATION OF WATER SUPPLIES
  REGIONAL SECURE UNITS
  REGIONAL SECURE UNITS