Sitting of 20 March 1986

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

  PRIVATE BUSINESS
  TEIGNMOUTH QUAY COMPANY BILL (By Order)
  COUNTY OF SOUTH GLAMORGAN (TAFF CROSSING BILL) (By Order)
  SOUTH YORKSHIRE LIGHT RAIL TRANSIT BILL (By Order)
  BEXLEY LONDON BOROUGH COUNCIL BILL (By Order)
  SHOREHAM PORT AUTHORITY BILL (By Order)
  HARWICH PARKESTON QUAY BILL (By Order)
  Orders for Second Reading read.
  To be read a Second time upon Wednesday 26 March.
  MILFORD HAVEN PORT AUTHORITY BILL (By Order)
  Order read for resuming debate on Question proposed [18 February], That the Bill be now read a Second time.
  Debate further adjourned till Wednesday 26 March.
  BRITISH RAILWAYS (STANSTED) BILL (By Order)
  Order read for resuming debate on Question proposed [24 February], That the Bill be now read a Second time.
  Debate further adjourned till Wednesday 26 March.

Oral Answers to Questions
  HOME DEPARTMENT

    Prison Workshops
    Mr. Kilroy-Silkasked the Secretary of State for the Home Department if he has reached a decision on the prison department's recommendation that 57 prison workshops should be closed.
    The Parliamentary Under-Secretary of State for the Home Department (Mr. David Mellor): My right hon. Friend the Secretary of State hopes to make an announcement shortly.
    Mr. Kilroy-Silk: Before the Secretary of State comes to a decision on the future of those prison workshops, will the Minister ensure that he bears in mind that their closure would lead to a substantial reduction in the quality of the prison regime? Incidentally, the Chief Inspector of Prisons has already decided that that quality is unacceptable for the majority of inmates. Furthermore, does the hon Gentleman accept that such closures would make a mockery of the prison department's stated aim of enabling prisoners to lead a good and useful life?
    Mr. Mellor: Our aim is to give prison industries a firmer base so that they can provide a more efficient service and better value for money. We certainly do not want to destroy them. We recognise that their prime aim is to provide work for inmates. As the hon. Gentleman has said, purposeful work makes a contribution to the maintenance of good order and control in establishments. Our job is to try to arrest the decline in prison industries which has been experienced during the past 12 or 15 years, and that is what we are trying to do.
    Mr. Lawrence: Is my hon. Friend aware that if there is to be any hope for rehabilitative prison sentencing, more work, not less, will have to be done in prisons? If we ensure that there is a proper and widespread system of prison work, we might be able to abolish the parole system and let people work their way out of prison.
    Mr. Mellor: I am afraid that ambition is well short of realisation in the real world. Work, education and vocational and physical training are all key elements in our plans. However, last year the prison industries lost £25 million, which is a matter of concern to us and to the Public Accounts Committee. Plainly we must bear that in mind and put prison industries on a more efficient footing.
    Mr. Beith: Is the Minister aware that the unused workshop facilities, which represent such a gap in the rehabilitative regime that is supposed to exist in our prisons, are made worse by such cuts in the overtime budget as will occur at Castington? Indeed, I expressed fears about that during a recent Adjournment debate.
    Mr. Mellor: I know of the hon. Gentleman's concern, but he also knows that this Government have made more money available to prisons than any of their predecessors did. We have strengthened the prison service and are in the process of constructing prisons that are far more pleasant for prison officers to work in. Obviously, however, we cannot do everything at once, and we must keep a tight financial grip on things such as overtime.
    Mr. Soley: Does the Minister not understand that his last answer will be greeted with contempt by just about everyone who has any knowledge of the prison system, and by all the staff in the prison service? Both they and the Minister know that the Government are undermining the prison workshop regime because of the problems of prison overcrowding. The Government should be dealing with the problems of overcrowding so that workshops and education can be a proper part of the prison regime, as the inspector wants them to be.
    Mr. Mellor: The hon. Gentleman has made a wild statement, which is not typical of him. It must have been his lunch. I do not think that he will find people saying anything like that. Our position, in trying to run the prison system, would have been made much easier if we had inherited a system from the Labour Government that was in a less than utterly ramshackle state.

    Licensing Laws
    Mr Knoxasked the Secretary of State for the Home Department what recent representations he has received on changes in the licensing laws in England, following publication of the report of the Office of Population Censuses and Surveys on the effect of drinking patterns in Scotland of the Scottish licensing laws.
    The Secretary of State for the Home Department (Mr. Douglas Hurd): Since 4 February, when the report by the Office of Population Censuses and Surveys was published, I have received 10 letters from hon. Members on behalf of constituents and 23 letters from members of the public expressing views on the permitted opening hours of licensed premises in England and Wales. Of the 33, 25 supported relaxations in the law and eight were opposed.
    Mr. Knox: Does the report not show the benefits that have accrued to Scotland from the liberalisation of the licensing laws north of the border? Would not England similarly benefit from a liberalisation of its over-restrictive licensing laws? When does he intend to introduce legislation in this respect?
    Mr. Hurd: I have not finished studying the Scottish report, but it disposes of some of the fears that were expressed about what would happen in Scotland. There are strong arguments for considering relaxation in England and Wales. The Government would like to be sure that they stood on firm ground before embarking on a relaxation of the law.
    Mr. Nelson: Does my right hon. Friend agree that our drinking laws are not only out of date and in restraint of trade but are deeply patronising to the majority of people? Is it not high time that the law was changed, and will my right hon. Friend bear in mind the suggestion of my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) that the Government should introduce legislative proposals as soon as possible?.
    Mr. Hurd: I have a lot of sympathy with my hon. Friend. I notice that there is support for the idea in an early-day motion. I recall that there was similar support for the Auld committee report on Sunday trading, but that has not proved to be an entirely uncontroversial subject.
    Mr. Stokes: Will my right hon. Friend first come to a settlement about the Sunday trading controversy before needlessly upsetting many more people over the drinking law?
    Mr. Hurd: I rather anticipated my hon. Friend in my last answer. However, I have a lot of sympathy with the case for changing the laws, and I hope that the solid ground that I mentioned will materialise sooner rather than later.

    Identity Cards
    Sir John Biggs-Davisonasked the Secretary of State for the Home Department if, having regard to his co-operation with other Governments in countering terrorism, he will give further consideration to the introduction of identity cards in the United Kingdom.
    The Minister of State, Home Office (Mr. Giles Shaw): The Government have no proposals to introduce identity cards in the United Kingdom.
    Sir John Biggs-Davison: Would the suggestion not be helpful against terrorists and immigration and social security cheats? Has not the House of Commons set a good example by issuing identity cards to hon. Members, and should we not follow the example of our European partners and of our Commonwealth partner, Australia, which recently introduced identity cards, with very little dissent in that freedom-loving country?
    Mr. Shaw: I fully respect my hon. Friend's observations. He is well known for his interest in this issue. He will recall that the possibility of introducing identity cars to help in the fight against crime of all kinds, including terrorism, has been considered on a number of occasions and successive Governments have felt that such documents would not be of sufficient value to overcome the genuine antipathy that exists towards them in this country. As for our European partners, my hon. Friend will know that some countries, such as Ireland and Holland, do not have identity cards.
    Mr. Campbell-Savours: In co-operating with other Governments in combating terrorism, as it says in the question, does the Minister intend to take any action under section 10 of the Prevention of Terrorism Act 1974, against those companies in the City of London which sell kidnap insurance policies and are financing the IRA—
    Mr. Speaker: Order. The hon. Gentleman's supplementary question must be linked with identity cards.
    Mr. Campbell-Savours: On a point of order, Mr. Speaker. My question was in order—
    Mr. Speaker: No, I will not take points of order. The hon. Gentleman must get his question in order. Mr. Heathcoat-Amory to put the next question.
    Mr. Campbell-Savours: Further to that point of order, Mr. Speaker—
    Mr. Speaker: Order. I gave the hon. Gentleman a good steer. The question concerns the introduction of identity cards in the United Kingdom in connection with terrorism. It has nothing to do with the City of London.

    Motorway Speeding
    Mr. Heathcoat-Amoryasked the Secretary of State for the Home Department if he will take steps to seek to increase the number of prosecutions for motorway speeding offences.
    Mr. Giles Shaw: The responsibility for enforcing speed limits on motorways and for deciding to prosecute rests with individual chief officers of police. The number of convictions has increased in recent years. Prevention, by highly visible deterrent patrols, is also an important part of police motorway practice.
    Mr. Heathcoat-Amory: Has my hon. Friend noticed, as he drives down the motorway, how often he is overtaken by buses and lorries greatly exceeding the speed limit? Is he aware that the tachograph, which is already fitted, can be used to provide reliable evidence of speeding and that that is already done on the continent? Will he bring in a similar system here; and, if not, why not?
    Mr. Shaw: My hon. Friend will recall that my hon. Friend the Member for Wallasey (Mrs. Chalker), when Minister of State, Department of Transport, announced in November 1985 that that Department would be investigating the fitting of speed governors on coaches, limiting them to 70 mph.
    Mr. Madel: As engines and braking have improved so much in cars, should the Government not raise the speed limit to 80 mph for cars for an experimental period? That would deal with part of the problem that my hon. Friend the Member for Wells (Mr. Heathcoat-Amory) has just mentioned in relation to buses and lorries.
    Mr. Shaw: I am not clear whether my hon. Friend's suggestion is entirely fair and reasonable on the points raised by my hon. Friend the Member for Wells (Mr. Heathcoat-Amory) in his original question relating to maintaining the speed limit and seeking to bring prosecutions to observe it.

    Immigration
    Mr. Maddenasked the Secretary of State for the Home Department what representations he has received on draft guidance concerning representations by hon. Members on immigration matters.
    The Minister of State, Home Office (Mr. Davis Waddington): I refer the hon. Gentleman to the reply given to a question from my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet) yesterday.
    Mr. Madden: Will the Minister now scrap the revised guidelines, as they remain deeply offensive and are seen to be deeply objectionable by many hon. Members and their constituents? When will the hon. and learned Gentleman apologise for the serious allegations that he made against Members of Parliament, and which remain unsubstantiated, of abusing the immigration laws? When will he stop all his bluff and bluster and concentrate on what he should be doing—dealing with the crisis at Heathrow by appointing more trained immigration officers and qualified interpreters and providing for visitors to Britain proper conditions in which to be welcomed?
    Mr. Waddington: The hon. Gentleman has had his shout and he will have an opportunity to shout again when there is a debate on the matter. I understand that a debate is to be arranged in the near future.
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    As a result of the consultation exercise that we carried out, I am satisfied that there is wide acceptance among hon. Members of the need to tighten up the system of representations by Members of Parliament. Although we have dropped the proposal about contacting the ports, the rest of the proposals remain and they will be extremely useful.
    Mr. Douglas Hogg: Does my hon. and learned Friend accept that for most hon. Members the right to go to Ministers is an important right which must be cherished and that the appropriate restraint in cases of this kind is usually self-restraint?
    Mr. Waddington: There never has been any intention to take away from hon. Members the right to approach Ministers. There has been a certain amount of misunderstanding and some deliberate misconstruction of our proposals by Labour Members. We set out to give hon. Members a new facility to go to the ports and receive information about the reasons for a refusal direct from the immigration officer. It is nonsense to say that there is anything unconstitutional in that, because at present when a Member puts on a stop that does not interest the Minister one bit. The Minister's office is no more than a channel for communications and a place from where a message is relayed to the port.
    Mr. Corbyn: In view of the continued attacks that the Minister of State makes on Members of Parliament for taking up immigration cases, will he please explain what a new immigrant family is supposed to do if their Member of Parliament has views that are so racist that he cannot be approached or refuses to take up any immigration cases?
    Mr. Waddington: The hon. Gentleman is being unfair to his colleagues. Again, he is raising a matter that he will be able to raise in the forthcoming debate.
    Mr. Budgen: Does my hon. and learned Friend agree that, while it is important that the procedures should be fair and efficient, the interest of the country is overwhelmingly that immigration control should be firm and, in particular, that marriage should not be used in general as a means of entering the country?
    Mr. Waddington: I agree entirely with the remarks made by my hon. Friend. He will notice that in the revised guidelines a passage has been added, because it became abundantly plain from the consultations that a large number of hon. Members wanted a specific mention of the problem which is caused as a result of people coming into Britain through temporary admission and then getting married.
    Mr. Donald Stewart: Is the Minister aware that I am satisfied that the cases which I have referred to his Department—there have been quite a few — were handled with consideration and, indeed, in some instances, compassion? Will he assure the House that he will continue to allow Members to have access to his Department on behalf of constituents, while maintaining firm control of illegal immigration?
    Mr. Waddington: I am grateful to the right hon. Gentleman for what he has said. I assure hon. Members that my office will continue to deal with matters that they raise with consummate fairness and propriety. I repeat that hon. Members will be able to continue to raise immigration matters with the Minister.
    Mr. Hayes: I congratulate my hon. and learned Friend on promising to review the immigration rules relating to child brides coming into Britain. However, does he accept that there is a major legal loophole in the Sexual Offences Act 1976? Will he consider carefully the legislation which will be coming before the House soon to prevent this outrage?
    Hon. Members: Order.
    Mr. Speaker: Order. I think that it is part of the question.
    Mr. Waddington: I think my hon. Friend realises that the matter that he has raised is of great importance, but it goes very wide of the question on the Order Paper.
    Mr. Soames: I broadly welcome the guidance of my hon. and learned Friend on this matter. Will he, nevertheless, assure the House that he is satisfied that there are sufficient immigration officers to deal with the many difficult cases?
    Mr. Waddington: My hon. Friend has identified the problem. As a result of the number of representations having rocketed from only 1,000 in 1982 to 5,700 in 1985, far too many immigration officers are sitting in offices scribbling replies, which I have to sign and send to Members, instead of processing passengers who wish to obtain speedy entry into Britain. I am sure all hon. Members realise that, as a result of our dropping the port requirement, it becomes even more important that we should have firm time limits for making representations, so that cases can be dealt with speedily and efficiently.

    Civil Defence
    Mr. Michael Brownasked the Secretary of State for the Home Department if he has any plans to increase the local authority grant-aid for civil defence; and if he will make a statement.
    Mr. Giles Shaw: My hon. Friend will have seen from the 1986–87 Supply Estimates presented to Parliament on Tuesday 18 March that it is proposed to increase the level of grant-aid from £11·9 million to £13·7 million in 1986–87.
    Mr. Brown: Unfortunately, I have not yet seen those encouraging statistics. I am grateful to my hon. Friend the Minister and his colleagues for that reply. Can my hon. Friend give any advice to those of us who have to face local authorities which might not be making sufficient use of those resources and which are not making proper provision for civil defence?
    Mr. Shaw: The implementation of the Civil Defence Regulations 1983, now afoot throughout the country, is the most important prerequisite for making effective use of the civil defence grant to which I have referred. I trust that my hon. Friend will continue his sterling work of goading the recalcitrant local authorities to adopt a sensible approach to the security of their citizens.
    Mr. Corbett: If the Minister is really interested in the security of citizens, when will he start making money available to enable local authorities to plan properly to cope with non-nuclear emergencies. At the moment little or no cash is available and there is a big hole in the safety provisions.
    Mr. Shaw: I am delighted to receive that floral tribute from the hon. Gentleman. With the passage of the Bill introduced by my hon. Friend the Member for Upminster (Sir N. Bonsor) we shall be able to make it clear that local authorities can indeed use grant aid for non-nuclear, peacetime emergencies. That does not in any way stop them from making proper provision for volunteers or planning for all emergencies now.
    Mr. Neil Thorne: Will my hon. Friend do his best to continue to put pressure on the Treasury to agree to 100 per cent. funding for civil defence purposes? It is one of the main reasons why local authorities are so reluctant to be involved in this issue. There is no earthly reason why a suitable adjustment should not be made to the rate support grant which would mean that no more public expenditure would be involved.
    Mr. Shaw: My hon. Friend will be aware that there is another question on the Order Paper that relates to this issue. I shall confine myself now to making it clear that the Treasury has approved increases in grant-aid available through the Home Office—£9·1 million two years ago, £11·9 million last year and £13·7 million this year. We mean what we say. We are giving civil defence a substantial increase in expenditure.
    Mr. Greenway: Does my hon. Friend agree that money spent promoting so-called nuclear-free zones provides no civil defence cover before, during or after any nuclear or any other conflagration? Does he also agree that the £81,000 of taxpayers' and ratepayers' money devoted this year by the GLC to the promotion of nuclear-free zones would have been much better spent on civil defence throughout London?
    Mr. Shaw: My hon. Friend is right. The GLC has spent just short of £500,000 on the GLAWARS study, which seems to suggest that a substantial part of the Government's policy earns the GLC's endorsement. It is ridiculous to offer anyone at any time nuclear-free zones as a form of protection.

    Visiting Forces Act
    Mr. Ashdownasked the Secretary of State for the Home Department at how many institutions in the United Kingdom there are personnel presently covered by the terms of the Visiting Forces Act.
    Mr. Mellor: I understand that most of the personnel covered by the Act are members of United States forces stationed at eight main operational bases.
    Mr. Ashdown: I am grateful to the Minister for that answer. Why does the Home Office not collect information on the number of occasions on which the jurisdiction of British courts is dodged because visiting forces claim primary jurisdiction under the Visiting Forces Act 1952? Is the hon. Gentleman aware that foreign Governments collect such information? Is he further aware that the United States Government released the information that 420 members of the United States air force had infringed British law in relation to drug abuse and that 388 of them had been removed from the jurisdiction of the British courts? We have to rely on foreign Governments for information because the Home Office will not collect it.
    Mr. Mellor: It has never seemed appropriate for us to collect information about an Act which has been on the

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    statute book for more than 30 years and which, except for the hon. Gentleman's lonely crusade, has been generally accepted by most hon. Members as being good sense. The hon. Gentleman has given an extremely tendentious account of the arrangements. The arrangements cover who should have primary jurisdiction to deal with offences. If an offence is committed on a base and the only people involved are other service men, those forces deal with the offence in accordance with the rules of good order and discipline. If we object to the way in which they deal with the matter, we have a right under those arrangements to apply to have that jurisdiction waived. This is a way of determining who should deal with the issues. It is not a way by which the jurisdiction is "dodged", to use the hon. Gentleman's inapt expression.
    Mr. Baldry: Is it not disappointing that certain hon. Gentlemen should use the Visiting Forces Act as a snide way of attacking our American allies? As one who has a United States air force base in his constituency, I remind my hon. Friend that most people believe that those service men are very good neighbours. We are grateful for the protection and assistance that they give our people.
    Mr. Mellor: I quite agree with that.

    Criminal Justice (White Paper)
    Mr. Yeoasked the Secretary of State for the Home Department what representations he has received following the publication of his recent White Paper on criminal justice.
    Mr. Hurd: Very few so far, but I am glad that the White Paper has aroused considerable public interest and comment.
    Mr. Yeo: Is my right hon. Friend aware that the public will be greatly reassured if powers are taken to arrange for effective guidance to be given to ensure that sentences for serious and violent crimes reflect the profound public concern about those crimes?
    Mr. Hurd: There is public concern about sentencing. We carefully set out in the White Paper the various options. We preferred the option whereby guidance from the Court of Appeal should be published under statutory authority, which does not happen at the moment, and in a more accessible and single form. I think that that could provide substantial help in reassuring the public that occasional waywardness towards leniency in sentencing is corrected by those who should do that—the judiciary itself.
    Mr. Chris Smith: Does the right hon. Gentleman agree that the extension of the maximum sentence of life imprisonment for carrying firearms, as suggested in the White Paper, would be dangerous because it would incite people who carry firearms to use them? Is that proposal not another example of the Government being more interested in the rhetoric rather than in the substance of fighting crime?
    Mr. Hurd: No, Sir. I think that the hon. Gentleman has that quite wrong. We are talking about maximum sentences. If one offender uses a firearm and another merely carries one, it is open to the court to impose the greater sentence on the one who uses it.
    Mr. Peter Bruinvels: Will my right hon. Friend look at the possibility of naming rape defendants once they are
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    charged and also at the improper way in which rape victims tend to be named by some of the press? Both those issues cause great concern to the community at large as rape is such a shocking and detestable crime.
    Mr. Hurd: As my hon. Friend knows, we are examining both those issues.
    Mr. Kilroy-Silk: Is the right hon. Gentleman aware that many people are bitterly disappointed that the White Paper offers so little in the way of help to the victims of crime, whose numbers have increased dramatically since the Government came into office? The derisory £136,000 now being offered to the 282 victim support schemes shows just how little the Government really care about the victims of crime. Will the Home Secretary now reconsider the decision to fund centrally local victim support schemes?
    Mr. Hurd: One of the helpful things happening in this country is the increased interest in victims and the increased growth of victim support schemes. As the hon. Gentleman knows, we support the central and national associations for those schemes and they, in turn, give guidance to local schemes. This year, for the first time, we have a relatively modest sum for direct help to local schemes. The hon. Gentleman is quite wrong about the criminal justice White Paper. One of the main points in the White Paper is the increased pressure on courts to award compensation in suitable cases.
    Mr. Forth: Is my right hon. Friend aware that the public expect violent criminals to be put in prison for very long periods of time, if only to guarantee the safety of the public? Apart from the excellent prison building programme upon which the Government have now embarked, will my right hon. Friend undertake to look again at people who are now in prison and perhaps should not be, in order to ensure that those who should be in prison are guaranteed to be put there?
    Mr. Hurd: My hon. Friend is quite right. Both policies must go on at the same time. We must always be looking for alternatives to custody for relatively minor offenders, some of whom now go to prison because the courts are not persuaded that there are valid alternatives. At the same time, we must ensure that serious offenders receive the prison sentences they deserve, not just because of the nature of their crime, but for the proper protection of the public.
    Mr. Ryman: Will the right hon. Gentleman make it quite clear to those of his supporters who are obviously very ignorant about the machinery of justice that it is not for the Executive to express views about sentencing, but is a matter entirely for the judiciary? The right hon. Gentleman and the Executive should be careful not to infringe the discretion of the judiciary.
    Mr. Hurd: I think it is perfectly reasonable that public concern about the occasional leniency of sentences should find expression in this House. In the White Paper, as the hon. Gentleman will see, we set out carefully the options for meeting this concern and I hope that he will think that the one we prefer, which I have already sketched, is the sensible one.
    Mr. Spencer: If the judiciary does not pay attention to directions in the law reports or in textbooks on sentencing practice, why should it pay heed to any further publicity

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    on sentencing? Will my right hon. Friend consider, as a further option, giving the Crown the right of appeal against over-lenient sentences, with the requirement that the offender must serve any increased sentence?
    Mr. Hurd: That is one of the options in the White Paper. For the reason that I have given, I somewhat prefer the option that is set out at greater length, which is the one I described in an earlier answer.
    Mr. Kaufman: What is the use of a White Paper which deals so substantially with sentencing criminals when one cannot sentence most criminals, as most of them are not caught? In view of the fact that the clear-up rate for crimes of violence has fallen by 5 per cent. under this Government, for burglary by 9 per cent., for theft by 12·5 per cent., for fraud by 19 per cent., for criminal damage by 23 per cent., and the overall clear-up rate for crime has now fallen to 35 per cent., when, instead of this complacent waffle about crime, will the Home Secretary take effective action to deal with this record crime wave?
    Mr. Hurd: Throughout his comments the right hon. Gentleman seemed to be surprised and offended that the White Paper on criminal justice deals with criminal justice and not with police strengths. Almost every day I engage the right hon. Gentleman in one way or another on police strengths, police powers, crime prevention—to which I welcome the Labour party's belated conversion — and the different aspects of our strategy. The White Paper on criminal justice deals with criminal justice. When the Government introduce a Bill in the next Session, I am sure that the different elements that it contains will receive the support that they deserve from the Opposition Benches.
    Mr. Hickmet: To pick up the point of the right hon. Member for Manchester, Gorton (Mr. Kaufman), inasmuch as the White Paper is designed to increase the powers of the courts in relation to sentencing policy, and inasmuch as the right hon. Gentleman says that the courts cannot sentence those whom the police do not detect, what effect does my right hon. Friend think that the Labour party's policy of undermining confidence in the police and being anti-police, through their statements in this House and through the actions of the police committees, has had upon effective and efficient policing in this country and, consequently, upon the prosecution of offenders? Has not the Labour party undermined the authority of the police?
    Mr. Hurd: Of course, and that is one reason why the Opposition make so much noise about it. — [Interruption.] They are at it again, Mr. Speaker. They know that they will not be taken seriously on this matter until they do something about Labour leaders, particularly those in London, who spend all their time undermining and sabotaging the efforts of the police.

    Victims of Crime
    Mr. Hardyasked the Secretary of State for the Home Department if he will publish in his Department's regular statistics of crime details of the sex, age and ethnic origins and occupation of victims of crime.
    Mr. Mellor: Unfortunately, we cannot do that because the requisite information is not available to all police forces that provide the data on which the regular statistics are based. But much relevant material drawn from the Britsh crime survey is already published. An ad hoc survey
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    of some of the information from those forces that record it was carried out in 1985, and the main results will be published by the Home Office during 1986.
    Mr. Hardy: The Home Secretary was right a few moments ago when he commended the work of the victim support unit, especially at this time of absolutely astonishing and deplorable increases in crime of all kinds, but does the Minister accept that it might be useful if more were known about those who are particularly vulnerable to crime, not merely to assist in the prevention of crime, but to be of some help in determining how offenders are to be treated?
    Mr. Mellor: The Government have taken forward the work in that area in a number of ways, most notably by means of the experimental reparation schemes and the increased support that they have given to the victim support movement. I have to remind the hon. Gentleman that no money was given to the victim support movement by previous Governments, although there was a crime level that more than justified a greater interest in victims than previous Governments showed.
    Sir Anthony Kershaw: What is the point of knowing the ethnic origins of the victim? Does a Jew not bleed as much?
    Mr. Mellor: I am sure that that must be one of the reasons why the information is not collected.

    Young People (Violent Offences)
    Mr. Campbell-Savoursasked the Secretary of State for the Home Department how many young people aged under 21 years were cautioned for, and found guilty of, violent offences in 1979 and 1984, respectively.
    Mr. Mellor: Some 24,533 in 1979 and 26,891 in 1984.
    Mr. Campbell-Savours: If an adult under the age of 21 breaks into the home of an elderly couple and mercilessly and savagely beats them up, leading to hospitalisation, should the charge that is brought before the court be one of actual or grievous bodily harm, and should that person be allowed out on bail? Does the Minister wish to express a view on these matters?
    Mr. Mellor: I should have to suppress any view, although I may well have a view, on the basis that the question of what charge is preferred is a matter for the independent prosecution authorities and that the decision as to bail is a matter for the courts. One of the purposes behind the Offences Against the Person Act 1861 is to grade offences according to the severity of the violence caused. One hopes that the charge matches the severity of the violence caused.
    Mr. Favell: Should not the names of all young persons over the age of 14 who commit these appalling crimes of violence be published? Do they not deserve the derision of their neighbours?
    Mr. Mellor: The general rule has always been that the names of young persons should not be so published, but I have of course taken note of my hon. Friend's point.
    Mr. Corbett: Will the Minister concentrate on the real problem, which is that since his Government came to power violent crime has increased by 40 per cent., while the clear-up rate has gone down by 5 per cent.? What does

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    to do about dealing with violent crime to prevent more and more of our people—one person every nine seconds—becoming the victims of crime?
    Mr. Mellor: The hon. Gentleman well knows that the rise in violent crime was just as steep—indeed, steeper—under the last Labour Government. What we have done is to strengthen the police so that more crimes are being cleared up, and to give the courts enhanced powers to deal with violent offenders. That is the appropriate way to go forward.

    Civil Defence
    Sir Geoffrey Finsbergasked the Secretary of State for the Home Department when the Government intend to undertake a public recruitment campaign for civil defence volunteers.
    Dr. Blackburnasked the Secretary of State for the Home Department if the Government intend to increase the level of civil defence volunteer training and activity in the next 12 months; and if he will make a statement.
    Mr. Giles Shaw: Developments of this nature, while highly admirable, can be effective only in partnership with local authorities and if they are properly implementing the Civil Defence Regulations 1983. The Government give the highest priority to achieving this planned state of preparedness.
    Sir Geoffrey Finsberg: Is my hon. Friend aware that it is now some three years since the House started to get concerned at the Government's inability to put sufficient pressure upon those local authorities which are quite deliberately jeopardising their citizens? Is it not about time that the regulations were amended to put some teeth into them so that local authorities could be persuaded to start recruiting the many people who want to help in this sort of valuable work?
    Mr. Shaw: I fully support my hon. Friend's statement. He will recall that last year my right hon. Friend the Home Secretary issued the instructions that the regulations be enacted, and local authorities were given until December 1985 to produce plans of their civil defence preparedness. The plans are now being thoroughly investigated, and I shall be reporting to the House the result of that in due course.
    Dr. Blackburn: Will my right hon. Friend recommend to local authorities that the civil defence forces that we have are a valuable means of helping in peacetime catastrophes, and will he press this with the local authorities?
    Mr. Shaw: Yes, Sir. Our present range of volunteers include 1,100 scientific advisers, 13,000 community volunteers and 1,750 experts in communications. All these have an important role to play, and many of them could play a useful role in an entirely peaceful emergency.

    Crimes of Violence
    Mr. Lathamasked the Secretary of State for the Home Department how many representations he has received from the general public in recent weeks regarding crimes of violence and muggings; and what general reply he has given.
    Mr. Hurd: So far this year I have received 47 expressing concern about crimes of violence and mugging.
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    The replies generally set out the powers granted by Parliament to the courts for dealing with violent crime and explain the Government's crime strategy as it relates to these offences.
    Mr. Latham: Is my right hon. Friend aware that nothing could be more harmful to social harmony than the feeling among the frail and elderly that they are not safe on the streets or even in their homes? Will he ensure that the full resources of the state, both financially and in terms of information back-up, are given to the police to help them in their struggle against violence?
    Mr. Hurd: Yes, Sir. I agree with my hon. Friend. One reason why we are introducing the new offence of disorderly conduct is precisely to protect the kind of people my hon. Friend is talking about against harassment and distress. It is worth recording that, although violent crime has continued to rise for many years now, that rise has somewhat slowed down, and 75 per cent. of all offences of violence against the person are cleared up.
    Mr. Alton: When the Home Secretary is looking at the rise in violent crime, will he say whether any research has been done by his Department into the link between rising numbers of muggings and crimes of violence and the drugs trade? Will he say whether very many of the young people involved in these kinds of crimes are heroin addicts themselves?
    Mr. Hurd: It is difficult to get statistics about this. The hon. Member is quite right about its importance. Undoubtedly there is growing anecdotal evidence that more and more of the kinds of crimes with which the question deals are prompted by a desire to finance drug-taking.
    Mr. Dubs: Is the Home Secretary not appalled that under the Conservative Government crimes of violence have increased by 40 per cent.? This is what is worrying people throughout the country. Is it not true, as he said quite effectively in a press statement last week, that, however one looks at the facts and figures, the reality is bleak?
    Mr. Hurd: I agree with that. What I disagree with is the implication in the hon. Gentleman's question that this started in 1979. It has been going on for 30 years now. The peak age for offending by males is 15, and by females it is 14. That brings out the whole question of the responsibility of parents and of teachers as well as of the courts.

    Civil Defence
    Mr. Gerald Bowdenasked the Secretary of State for the Home Department if the Government intend to implement 100 per cent. grant-aid outside rate support grant to local authorities for civil defence expenditure; and if he will make a statement.
    Mr. Giles Shaw: Representations in support of extending the items eligible for 100 per cent. civil defence grant-aid are being actively considered and I will inform the House of the outcome.
    Mr. Bowden: Does my hon. Friend agree that 90 per cent. of local authorities will fail to fulfil their civil defence requirements until there is 100 per cent. funding?
    Mr. Shaw: I fully sympathise with my hon. Friend's view that, particularly on staff costs, a strong case is made

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    for extending the 100 per cent. grant. However, my hon. Friend should understand that we must consider closely the implications of any such extension.

    Crime Prevention (Community Programme)
    Mr. Couchmanasked the Secretary of State for the Home Department what involvement his Department has in promoting crime prevention projects through the community programme; and if he will make a statement.
    Mr. Giles Shaw: In October last year my right hon. Friend the Home Secretary announced an initiative designed to link the MSC community programme firmly with crime prevention projects. Since then a team has been set up within the Home Office to support the development of such projects. An explanatory booklet, "Crime Prevention and the Community Programme", has been widely distributed to various statutory and voluntary bodies in England and Wales to assist prospective sponsors.
    Mr. Couchman: Is my hon. Friend satisfied with progress on the projects which seek to curtail crime?
    Mr. Shaw: I certainly would not say that we can be satisfied, but the increasing efforts made through the community programme and the substantial number of places that are being offered under it augur well for crime prevention in city centres.

  PRIME MINISTER

    Engagements
    Mr. Penhaligonasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. I attended the memorial service for Mr. Palme in Westminster Abbey. In addition to my duties in this House I shall be having further meetings later today.
    Mr. Penhaligon: As a result of the Budget a married man will, on his 72nd earned pound, pay 29p in tax, but someone fortunate enough to inherit £10 million from a rich parent will have the tax reduced from £3 million to nothing. What have the Government got against working?
    The Prime Minister: I make no apology for this Government having reduced the confiscatory levels of taxation on those with considerable earnings and accumulated capital. If the hon. Gentleman wishes to join the Opposition Front Bench in going back to 83 per cent. on earned income and 98 per cent. on savings, will he let us know what Liberal party policy is?
    Mr. Wilkinsonasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Wilkinson: In view of the alarming increase in the incidence of violent crime, particularly by young people, can my right hon. Friend find time today to reconsider carefully the potential merits of the reintroduction of national service, especially as national service, in addition
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    to the youth training scheme, could be an invaluable way of providing young people with the technical training and skills which they need in today's world?
    The Prime Minister: I know my hon. Friend's views on this, but it would mean an enormous change in the whole of our defence policy, which is founded on professional armed services, and which has served the country well. Although I know that he would like to give many young people an opportunity of belonging to something like the armed services, I do not think I can promise him anything on this so far as I can see in the future. We prefer to rely on the armed services youth training scheme to give some people the opportunity.
    Mr. Kinnock: The Chancellor of the Exchequer rightly said on Tuesday:
    "given the very substantial increase in the oil companies' margins, there is clearly no need for the pump price of petrol to go up at all. Indeed, it ought to fall further."—[Official Report, 18 March 1986; Vol. 94, c. 180.]
    In view of the refusal of the major oil companies to follow that view, will the Prime Minister give an undertaking now that if the oil companies do not cut the price of a gallon of petrol by the 12p which they could well afford, she will take away their gains in a windfall tax on profits?
    The Prime Minister: I think that the right hon. Gentleman is a little premature. I support wholly what the Chancellor said. Indeed, we said virtually as much in the House before the Budget. If the majors do not hold down their prices, they will stand to lose out to the independents, who are purchasing and selling at cheaper prices. Therefore, they would not gain. I think that the announcement in which they said that they would put up their prices has already done them a great deal of harm.
    Mr. Kinnock: At the rate of £14 million a week in extra profit, which the oil majors will make if they do not cut their prices, they will be laughing all the way to the bank. Why does the Prime Minister not use the power that she has instead of offering what is now only a pious sentiment and expressing a hope in competition, which will probably not be realised?
    The Prime Minister: I think that it will take place. I think that people are shrewd enough to go to the independents, which are charging far less for petrol. I find it amazing that people will choose to go to those who charge higher prices when they can go to the independents, which, I have no doubt, will offer considerable competition.
    Mr. Leighasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Leigh: In the course of her busy day, has the Prime Minister had an opportunity to read Bernard Shaw's "The Intelligent Woman's Guide to Socialism and Capitalism", and in particular, the phrase:
    "money is made for us to get what we want, instead of what other people think we ought to want."
    Is not the theme of this Budget that tax cuts will enable the British people to get what they want, rather than what the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) thinks they ought to want?
    The Prime Minister: I agree with my hon. Friend, and that is why we are making a point of reducing personal

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    income tax. Had we left the national insurance surcharge—introduced and then raised by a Labour Government—where it was, personal income tax could already be down to 25p in the pound on the basic rate.
    Mr. Cartwrightasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Cartwright: Has the Prime Minister had time to note the admission by the Minister for Environment, Countryside and Local Government yesterday that sulphur pollution from British power stations is damaging Norwegian lakes? In the light of that admission, will the Government now ensure that all coal-fired power stations, particularly the five new ones announced yesterday, will be so designed as to cut sulphur emissions?
    The Prime Minister: Obviously we shall try to design new power stations so that there are even greater improvements than those which we have achieved on sulphur emission. This Government's record on reducing pollution is very good indeed.
    Mr. Rhodes James: Has the Prime Minister's attention been drawn to the deliberate physical assaults upon and intimidation of Professor John Vincent of Bristol university, who is an eminent and deeply respected historian? His lectures have been disrupted, his teaching prevented, his family afflicted, simply because he writes occasional articles for a paper owned by Mr. Rupert Murdoch. What has happened to free speech that we had—and for which we went through two world wars—and why is the Leader of the Opposition so silent about these outrages?
    The Prime Minister: I agree with my hon. Friend that such assaults are intolerable and should never occur in a free country. They should he condemned by everyone on both sides of this House.
    Mr. Garrettasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Garrett: I appreciate that the Prime Minister has a busy schedule and that she will not be able to attend the launch next week at Swan Hunters on Tyneside of HMS Sheffield. This ship replaces one sunk in the Falklands. Could she make arrangements to attend the launch on 8 April, the following week, of her sister ship, HMS Coventry? She will see, on both occasions, that both ships have gone down the slipway on time, and both have been secured as the result of hard, competitive bargaining with the Ministry of Defence. Is the right hon. Lady aware that, now that those ships are nearing completion, there will be a gap, and it is important that, on a free competitive basis, further orders be given to fill this gap in the work load, or there will be redundancies?
    The Prime Minister: I congratulate the hon. Gentleman and the work force of Swan Hunters on producing these ships on time. I recognise that further orders have to be placed on a competitive basis. I know the one about which he is concerned, and I stress that the order has to be done on a competitive basis.
    Mr. Douglas Hogg: My right hon. Friend will know that last week the Select Committee on the Environment
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    published a report on the disposal of nuclear waste. Does she agree that before any special development order is laid before the House authorising exploratory work to be carried out at Fulbeck airfield, time should be given for the fullest debate and consideration of the report, and that the special development order should be deferred until such time?
    The Prime Minister: I am aware that my hon. Friend has a particular interest in one of the sites, Fulbeck, which I also happen to know. I shall pass on the message to my right hon. Friend the Lord Privy Seal, and I understand that he will want a full debate on these matters.
    Dr. Owen: In view of the need to increase industrial competitiveness, why did the Government not use the money that they had given away in a penny off the standard rate of income tax to cut national insurance contributions by 10 per cent., which would also have had a substantially greater impact on unemployment?
    The Prime Minister: Because, having already abolished the national insurance surcharge—the right hon. Gentleman was a member of the Government that put it on and increased it—it was felt that those in industry should also have some incentive. I shall be interested to see whether the right hon. Gentleman votes against the reduction.
    Mr. Churchill: Has my right hon. Friend noticed the much greater alacrity with which oil companies have put up their prices, compared to the way they bring them down in line with worldwide prices? If the oil majors persist in refusing to heed the words of my right hon. Friend the Chancellor and other Ministers, will my right hon. Friend consider referral to the Monopolies and Mergers Commission?
    The Prime Minister: I shall pass that message on to my right hon. Friend the Secretary of State for Trade and Industry. We should wait a little to see whether the oil majors take the advice of my right hon. Friend the Chancellor, which was clearly given. If they do not, they will not get as much business. Therefore, they will have less profit than they would otherwise receive.
    Ms. Richardsonasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister: I refer the hon. Lady to the reply that I gave some moments ago.
    Ms. Richardson: As all women in a certain age group have to spend about £2 or £3 a month on sanitary products, when many of them are in low-paid jobs or on supplementary benefit, and as they have not had one penny of help out of the Budget, will the Prime Minister ask the Chancellor of the Exchequer to take the earliest opportunity to remove VAT from sanitary products?
    The Prime Minister: No. I believe that this is a matter that has come up every year on the Budget for many years under all Governments. I am afraid that I shall have to disappoint the hon. Lady.
    Mr. Pawseyasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Pawsey: Is my right hon. Friend aware of the concern that is felt in some quarters about the introduction

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    of the GCSE examination? Can she confirm that the examination is on target and that some adequate resources have been put into the system to ensure that teachers will be adequately trained in the new examination when it is introduced later this year?
    The Prime Minister: As my hon. Friend implies, I am aware that there is a great deal of concern about the timing of the new examination. I also know that considerable resources are being put into the programme—about £10 million for teacher training, and about £20 million for special equipment and textbooks. Although there is concern about the timing, I know of no proposal to postpone the introduction of this examination.
    Mr. Alfred Morris: Has the Prime Minister seen the recent Harris Poll finding, showing that a huge 91 per cent. of the electorate want Members of Parliament to be given a free vote on Sunday trading? Would it not be totally outrageous for her Government to try to steamroll the Shops Bill through, in the light of that finding?
    The Prime Minister: As the right hon. Gentleman is aware, the Bill has come from another place, and I think he must leave whipping until the Bill is going through this House.
    Mr. Favellasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Favell: What does my right hon. Friend think would be the effect on the Treasury of suddenly losing £5 billion of revenue if, God forbid, we ever had another Labour Government—or an alliance one, come to that?
    The Prime Minister: It would not be long before this country went to the International Monetary Fund again, and we must see that that never happens and that the possibility of a Labour Government does not happen.
    Mr. Willie W. Hamilton: Does the Prime Minister recall that before the election she was making scathing references to the enormous salaries of the City slickers? She was also referring to the tax imposed on the low-paid £140-a-week nurse. Does she concede that, as a result of the Budget, the City slicker on a salary of over £100,000 is getting more than £30 a week back in income tax while the £140-a-week nurse is getting 30 bob, and, if she lives in nursing accommodation and is threatened with eviction, she will be even worse off?
    The Prime Minister: But according to what I understood from the hon. Gentleman's own Front Bench yesterday, his party will not vote against the reduction of basic rate income tax.
    Mr. Hickmet: On a point of order, Mr. Speaker. During questions to Home Office Ministers the hon. Member for Islington, North (Mr. Corbyn) accused some Members of being racists. I ask you, Mr. Speaker, to ask the hon. Gentleman to withdraw that remark, especially as it is particularly offensive coming from a Member who has entertained the IRA in this Palace.
    Mr. Speaker: I did not hear a remark of that kind, but I am sure that the whole House would agree that we do not want comments of that sort levelled across the Chamber, if it was said.

Business of the House
3.33 pm
Mr. Neil Kinnock: May I ask the Leader of the House to state the business for next week?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): The business for next week will be as follows:
MONDAY 24 MARCH—Conclusion of the debate on the Budget statement.
Consideration of the Lords amendment to the Museum of London Bill.
Motions on the Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order and the Coal Industry (Limit on Payments in respect of Redundant Mineworkers) Order.
TUESDAY 25 MARCH—Third Reading of the Gas Bill—(2nd Allotted Day).
Motion for the Easter Adjournment
Consideration of Lords amendments to the Local Government Bill.
WEDNESDAY 26 MARCH—There will be a debate on Members' Representations on immigration cases on a motion for the Adjournment of the House.
THURSDAY 27 MARCH—The House will meet at 9.30 am, take questions until 10.30 am and adjourn at 3.30 pm until Tuesday 8 April.
The House may also be asked to consider other business as necessary.
Mr. Kinnock: I am grateful to the right hon. Gentleman. Does he recall that he has given repeated undertakings that when a conclusion to the negotiations about British Leyland is reached
"it will be for the House to debate and decide upon the result of those negotiations." — [Official Report, 20 February 1986; Vol. 92, c. 480.]?
No such debate is listed for debate next week. In view of the strong reports of the exchanges between the parties involved in the BL business, there is now widespread concern about the possibility that the House will be denied the opportunity which the right hon. Gentleman has been promising. Can he allay that justifiable anxiety by giving an undertaking now that there will be no conclusive settlement of purchase by anyone or by any organisation unless and until the House has debated and decided upon the course of events?
Could the right hon. Gentleman tell the House whether the Government will accept the Lords amendments to the Local Government Bill, and will he give us an undertaking that no subsequent legislation will be introduced to frustrate the effect of those amendments?
Finally, will the right hon. Gentleman arrange for a foreign affairs debate to be held as soon as possible after the House returns following the Easter recess? I have asked for a statement on the Government's attitude to President Reagan's readiness to contemplate the use of military force against Nicaragua and to finance the terrorist Contra rebels. The House should have an opportunity to debate that issue as well as the many other matters of pressing interest.
Mr. Biffen: In respect of British Leyland, the undertakings that I gave on 20 February still stand, but I understand why the right hon. Gentleman raises that point, since no debate on British Leyland has been announced for
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next week. Clearly, if it were necessary to change the business to provide for such a debate, it would be a matter for discussion through the usual channels. In any event, my right hon. Friend the Secretary of State for Trade and Industry will make a statement to the House before the House rises for the Easter recess.
On the question of the treatment of Lords amendments to the Local Government Bill, it would be apropriate for the Minister in charge of the Bill to make known Government policy in due course.
On the question of a foreign affairs debate, I take account of what the right hon. Gentleman says. Perhaps we can consider that through the usual channels.
Sir Anthony Grant: Has my right hon. Friend's attention been drawn to early-day motion 595 in the names of responsible Opposition Members and some Conservative Members congratulating Spain on its wise decision to remain within the NATO Alliance?
[That this House congratulates the Spanish people on their massive re-affirmation of membership of the North Atlantic Treaty Organisation.]
Has he further noticed an amendment entirely to the contrary tabled by the loony Left? In those circumstances, would it not be useful to have a debate so that we may clarify precisely where the Opposition stand on the important matter of the NATO Alliance?
Mr. Biffen: My hon. Friend raises a pertinent point. When we have the foreign affairs debate, which I hope cannot be too long delayed, it will be an opportunity for hon. Members in all parts of the House to assert their commitment to NATO and to a NATO which depends on nuclear weapons.
Mr. David Alton: Having heard the request of the hon. Member for Grantham (Mr. Hogg) that the debate on the special development orders on the NIREX sites should be deferred until the Environment Select Committee report has been discussed, will the Leader of the House give an assurance that that will be done?
Will there be a debate on the Sunday trading Bill in the first week after we return, and will the right hon. Gentleman's right hon. and hon. Friends be given a free vote?
Mr. Biffen: The hon. Gentleman has asked me about a free vote so often that, if I were less generous, I would judge that he was a slow learner. That is the responsibility of my right hon. Friend the Patronage Secretary. I take note of his concern that the Second Reading debate is held reasonably soon after our return. We shall have to see what progress we make.
On the hon. Gentleman's first point, the points raised by my hon. Friend the Member for Grantham (Mr. Hogg) are of great seriousness, and I shall take account of them when judging the timing of the debates on that topic.
Sir Frederic Bennett: As it now seems that we shall have a foreign affairs debate, of which we have comparatively few, will my right hon. Friend ensure that it is broadly drawn because we do not want it to develop merely into a discussion of matters regarding one small country in Central America, or, with due respect to my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant), even the Spanish adhesion to NATO? We

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should also like to discuss the question of continuing Soviet aggression and massacre in Afghanistan, and continuing Soviet-guided oppression in Poland.
Mr. Biffen: I am sure that my right hon. Friend echoes what has long been the tradition in foreign affairs debates—they are drawn and tabled in such a way as to enable the widest possible discussion.
Mr. Stuart Holland: Is the Leader of the House aware that yesterday the Government announced some £45 million of expenditure at Waterloo station to accommodate the terminus for the Channel fixed link? Is he further aware that, of 30 questions that I put to the Secretary of State for Transport on the matter, more than 20 were simply referred back to British Rail and a consultation document that does not answer them? Will he encourage his right hon. Friend the Secretary of State to make a statement to the House on how the money will be used so that both local communities and commuters in the southern region can see what congestion is likely to result at Waterloo from its being the exclusive terminus for the link?
Mr. Biffen: I am sure that the whole House will sympathise with the hon. Gentleman over his misfortune about trying to table questions effectively. He raises a point of substance and I will draw it to the attention of my right hon. Friend the Secretary of State for Transport.
Mr. Roger Sims: Is my right hon. Friend aware that in the last 12 months there have been several indications of the impending publication of the Government's proposals about family courts? Those indications have not been fulfilled. In view of suggestions that we are to see something before Easter, may we look forward to a statement next week about the publication of these proposals?
Mr. Biffen: I am unable to answer my hon. Friend, but I will take up his point with my right hon. Friend the Home Secretary.
Mr. James Hamilton: Will the Leader of the House ask his right hon. Friend the Secretary of State for Trade and Industry to make a statement about the British Steel Corporation's tubes division strike in my constituency and also in the constituency of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith)? Will he make representations to the chairman and the chairman-elect of the British Steel Corporation to get both sides to the negotiating table as quickly as possible in an effort to resolve this disastrous dispute? It is disastrous not only for the men but for the country.
Mr. Biffen: I can probably best help the hon. Gentleman by getting in touch with my right hon. Friend the Secretary of State for Trade and Industry.
Mr. David Madel: My right hon. Friend said that there would be a statement on British Leyland before the Easter recess. That statement will have ramifications in different parts of the country, and, in view of that, may I ask that the debate on the statement should not take place until after Easter? That will give us time to consult locally with the management and the workforce. We do not want a rush job on this because it has many important investment and employment ramifications.
Mr. Biffen: I note what my hon. Friend says and I understand the judgment which prompts him to make that request. I have said that the matter will be discussed through the usual channels, and I must stand by that.
Mr. Laurie Pavitt: Is the Leader of the House aware that there is great interest among all hon. Members about the impending voluntary agreement with the tobacco industry about advertising and sports sponsorship? Has he noticed that the last written question today, question 172, calls for an answer on this subject? That is a wholly unsatisfactory way of informing the House about a matter of major interest. Will he make sure that next week the Minister makes a statement to the House that can be questioned by hon. Members on both sides of the House?
Mr. Biffen: I will draw the hon. Gentleman's point to the attention of my right hon. Friend. He could chance his arm with an Adjournment debate on this topic.
Mr. Michael Latham: Rather than worrying about three line Whips—because a 30 line Whip would not induce me to vote for the Shops Bill—will my right hon. Friend spend his time at Easter considering whether we need to proceed with this regrettable measure?
Mr. Biffen: I am looking forward to eight days during which the topic will be erased from my memory. I know that it will still be here when I return.
Mr. Kevin McNamara: Has the attention of the Leader of the House been drawn to early-day motions 630 and 631, which were tabled late last evening and which are headed by all the names of the Opposition Members of the Select Committee on the Armed Forces Bill?
[That the Order [16th December] relating to the nomination of the Select Committee on the Armed Forces Bill be discharged.]
[That it be an instruction to the Select Committee on the Armed Forces Bill that it do not report the Bill to the House until: (a) it has received written and oral evidence on the conclusions of Mr. David Calcutt Q.C. on matters referred to him by the Secretary of State for Defence, as announced on 29th October 1985 and (b) it has received any oral evidence which the honourable Member for Newry and Armagh may wish to give and received oral evidence from the Ministry of Defence on the contents of their memoranda submitted to it on the rôle of the Ulster Defence Regiment insofar as it relates to the provisions of the Armed Forces Bill.]
Is the right hon. Gentleman aware that almost without precedent a gag has been put upon members of the Select Committee about receiving and hearing oral evidence from the Ministry of Defence, from hon. Members and from members of the public? Is he further aware that a guillotine motion on the Select Committee's proceedings was moved by the Parliamentary Private Secretary to the Minister of State for the Armed Forces who was serving on that Bill, and that there has been a clear abuse and a tyrannical use of Government power by the man who tried to gag Clive Ponting? He is trying to do it to Members of Parliament on that same Select Committee. Will the Leader of the House instruct his friends on that Committee not to proceed with the business of the Committee until we have discussed both these early-day motions?
Mr. Biffen: I am sure that the hon. Gentleman will appreciate that there are conventions which inhibit my role concerning what happens in Select Committees. In any case, the House will be able to debate the issues raised in the Select Committee when the Armed Forces Bill is reported to the House.
Mr. Jonathan Aitken: Although my right hon. Friend has no direct responsibility for the French National Assembly's problems of cohabitation with President Mitterrand, can he confirm that certain difficulties arise from the current situation in France that have created a virtual hiccup in progress on the Bill on the Channel tunnel? In view of the constitutional problems in France, will my right hon. Friend give the House his assurance that no attempt will be made to introduce or vote on the Bill in this House until the French have sorted out their domestic problems?
Mr. Biffen: I hate to tangle with my hon. Friend, particularly on this topic, but his enthusiasm over the French having got themselves into a fearful mess because of their change of Government might be a little premature. However, I take note of his remarks, and realise that the House will wish to return to the issue after the Easter recess.
Mr. Seamus Mallon: As the Select Committee on the Armed Forces Bill would not permit me to give oral evidence in relation to behaviour and discipline in the UDR, will the leader of the House arrange for a debate on that issue if only to circumvent such censorship and to protect the right of free speech of hon. Members elected to the House?
Mr. Biffen: I certainly do not accept the hon. Gentleman's description of the behaviour of my colleagues in Committee upstairs. However, if he wishes to pursue the matter, he should consider raising it during the debate on the Easter Adjournment motion or on one of the Adjournment debates immediately before the recess.
Mr. Teddy Taylor: Has my right hon. Friend seen the directive agreed yesterday by the Commission in Brussels which is designed to restrict the percentage of non-Common Market programmes shown on British television? In view of the importance of that in undermining the independence and authority of the BBC and the Independent Broadcasting Authority, will the right hon. Gentleman ensure that a Minister makes a statement next week saying whether the Government support that plan? Also, could the Single European Act be forced on Britain by a majority decision of the member states?
Mr. Biffen: I am beginning to realise how lack-lustre my life is, as I do not have the opportunity to pay such close attention as my hon. Friend obviously does to the European Commission's affairs. However, I shall study his point, and be in touch.
Mrs. Gwyneth Dunwoody: Given the rise in the number of reported cases of rape, will the Leader of the House find time next week to debate the need for the proper funding of rape crisis centres, the fact that the Home Office should run a campaign to educate women to be able to protect themselves better, the proper retraining of police forces and the creation of special units to train those dealing with sex crimes?
Mr. Biffen: I accept at once the importance of that point, but I think that the hon. Lady will agree that there are several Adjournment debates next week when it would be most appropriate to raise it.
Mr. John Wilkinson: Following the tragic and untimely death of my constituent, the boxer, Steve Watt, will my right hon. Friend encourage the Parliamentary Under-Secretary of State for the Environment, my hon. Friend the Member for Surbiton (Mr. Tracey), to hold discussions with the medical profession on improving protection against serious injury to boxers?
Mr. Biffen: My hon. Friend has raised a point of real and tragic seriousness, and I shall certainly draw the attention of my hon. Friend the Minister to it.
Mr. John Evans: Given the Government's welcome decision to drop their vindictive campaign against trade unionists at GCHQ, will the Leader of the House arrange for an early debate on the individual's right to belong to a trade union in a free society?
Mr. Biffen: I am always anxious to try to provide occasions for the hon. Gentleman to say thank you, but this time it might not be possible quite yet because of all the other demands on Government time.
Mr. Ivan Lawrence: May we have a clear statement soon on the Government's attitude towards flexible licensing hours, lest inaction causes unnecessary disappointment to brewery workers, workers in the tourist industry and Conservative supporters who believe that their party is against unnecessary nannying?
Mr. Biffen: My right hon. Friend the Home Secretary is wrestling with one major aspect of liberalisation and perhaps we should let him get that out of the way before considering other matters.
Mr. Greville Janner: Does the Leader of the House accept that next Wednesday's debate on the motion for the Adjournment of the House cannot possibly deal with the basic iniquity of separating families and will, in any event, come too late for some families? I think, for example, of the Vengadasamys in my constituency, where the father has been forced to return to Malaysia, leaving his wife and five children behind, and of Mr. Lakhatrariya, who is being forced out even though his wife is extremely unwell and they have a doctor's report. Is there to be no consideration of basic legislation to prevent the separation of families, which would never be countenanced in other countries that we criticise?
Mr. Biffen: I am not clear from what the hon. and learned Gentleman has said whether the cases he has quoted were in respect of illegal immigrants. The hon. and learned Gentleman ought to take advantage of next Wednesday's debate—for all its limitations—to make his point, which, I believe, is in favour of more liberal immigration laws.
Mr. Douglas Hogg: Will my right hon. Friend accept that it is the fairly clear view of the House that we should not be asked to debate special development orders on nuclear waste until we have been given the opportunity to debate the Select Committee's report? That being so, it may be some time before we debate the special development orders. In such circumstances, will my right

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hon. Friend make early arrangements for a debate on the subject of compensation, as my constituents are suffering financial loss as a result of the announcement made by NIREX that Fulbeck is a possible site for the disposal of nuclear waste?
Mr. Biffen: The hon. Member for Liverpool, Mossley Hill (Mr. Alton) put his point more shrewdly and skilfully than my hon. Friend. My hon. Friend is asking me to be more specific than I can reasonably undertake to be at the Dispatch Box. I must disappoint him, and that saddens me no end.
Mr. Jeremy Corbyn: Will the Leader of the House draw the attention of his right hon. Friend the Secretary of State for the Home Department to early-day motion 619?
[That this House is alarmed at the recent revelation of activity by the Contras against the democratically elected government of Nicaragua; is appalled that on 25th January 1985 in Waslala, Zelaya, a group of civilian travellers and children were ambushed on their way to meet President Ortega; is horrified that on 29th June 1984, Paco Sivilla, a teacher from Brownback, was hunted by a group of Contras and his ears, tongue and private parts cut off before he was brutally murdered; is shocked that in July 1984 Adám Flores, a 70-year-old man, was murdered by a force of 70 Contras; further believes that these are a few examples of the most appalling murders by Contra forces gainst the people of Nicaragua; believes that President Reagan's attempts to send a further $100 million in aid to the Contras can only continue the war and result in further murders of the Nicaraguan people; and accordingly demands that Her Majesty's Government put all possible pressure on President Reagan to cease all support for the Contras and respect the territorial integrity and peaceful wishes of the people of Nicaragua.]
It concerns the Contras' violence against the people of Nicaragua.
Will the right hon. Gentleman further arrange for his right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs to make a statement to the House about what efforts the Government have made to stop the sending of further aid to the Contras which can only lead to more murders and violations of human rights by the Contras forces backed by the United States? Does he accept that that is an urgent and important matter in the quest for world peace?
Mr. Biffen: I cannot accept the hon. Gentleman's description of the conflict which now unhappily divides Nicaragua. I will try to arrange as soon as I reasonably can a debate on foreign affairs in which the hon. Gentleman's point can be made.
Mr. Eric Forth: Does my right hon. Friend recall the assurances given by Her Majesty's Government about budget discipline in the EC following the Fontainebleau meeting? Is he aware that we are almost bound to get a large supplementary budget out of the EC this year demanding more money? Will he assure the House that, if that happens, we will be given the fullest possible opportunity to debate the matter and that we have a range of options to consider and not just a "take it or leave it" from the Government?
Mr. Biffen: I will certainly bear in mind my hon. Friend's point should that situation arise when I make my propositions about how the matter should be handled.
Mr. John Ryman: Would it be possible to have a sensible answer today from the Leader of the House about the colliery review procedure? Is he aware that this procedure has now fallen wholly into disrepute as many of the coal mining unions are contemplating refusal to participate in it? Is he also aware that the National Coal Board made its decision in respect of the Bates colliery closure in the face of the evidence of the recommendation made by the independent colliery review body? Is he further aware that, had NACODS had the courage and guts to help the coal miners at Bates colliery, the coal mining industry would have suffered enormously by a slowing down of production.
Will the right hon. Gentleman accept that nobody believes a word that the Secretary of State for Energy says about pit closures and therefore it is no use the Leader of the House giving me his customory, supercilious answer that he will refer the matter to the Secretary of State for Energy as no one believes a word the Secretary of State says?
Mr. Biffen: I seem to have spent most of today either listening to the hon. Gentleman or reading about him. I am afraid that I cannot add anything to what I said at this time last week, and I am sorry that such a sentiment is so unsatisfactory to him.
Mr. Henry Bellingham: Will right hon. Friend turn his attention to some of the takeover battles that are going on in the City? Is he aware that a new and sinister trend has started which involves squalid and vicious attempts to discredit chairmen and directors? Does he agree that such tactics are completely unethical and bring shame on a great institution? May we discuss that here?
Mr. Biffen: I understand very well why my hon. Friend feels compelled to raise that point and it is appropriate that I should draw the attention of my right hon. Friend the Secretary of State for Trade and Industry to his comments.
Mr. Harry Greenway: Will my right hon. Friend arrange an early debate on sentencing policy so that the House can take account of the strong feelings throughout Britain, particularly in London, on rape and the calls of many members of the public for life sentences for convicted rapists, the naming of convicted rapists, and for life to mean life in particularly nasty cases?
Mr. Biffen: My hon. Friend's point will cause concern within the Chamber and deep public anxiety. I shall refer his remarks to my right hon. Friend the Home Secretary, although I must say that, given the pressure on Government time from now on as we have to deal with the Finance Bill and Report stages of other legislation, I cannot promise that there will be an opportunity for an early debate in Government time.
Mr. Richard Hickmet: May I remind my right hon. Friend that the proposals of NIREX in selecting four sites for the disposal of low and intermediate level nuclear waste have caused great concern in the constituencies involved, one of which is in South Humberside, adjacent to my constituency? May I also remind my right hon. Friend that the Select

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Committee's report on the disposal of nuclear waste undermines many of the proposals of NIREX and that it would be unsatisfactory if we were to debate the special development order giving powers to survey in the various areas concerned before the Select Committee's report has been debated because if the recommendations were accepted the NIREX proposals would be left high and dry?
Mr. Biffen: I gave a fairly generous reply to the hon. Member for Liverpool, Mossley Hill (Mr. Alton) and I cannot go further than that. I know only too well how important this is to a number of my hon. Friends and they argue their constituency cases properly, legitimately and vigorously.
Mr. John Mark Taylor: With regard to Leyland, and in my case particularly Land Rover, will my right hon. Friend accept from me that some of us have found it the tiniest bit hard this afternoon to reconcile his remarks about next week's business with what we have been told in the past about a decision before Easter and a debate before a decision? That having been said, will he accept from me that we would sincerely rather have the right decision after Easter than a wrong or hurried one before Easter?
Mr. Biffen: This is a topic on which I am best advised to say that I note what my hon. Friend says.
Mr. Peter Bruinvels: Will my right hon. Friend find time for a debate on the registration and licensing of nursing homes and residential care homes? Is he aware that, under the Registered Homes Act 1984, 4,509 homes were registered in 1983 but that in 1985 the number had shot up by 45 per cent. to 6,443? I am sure that my right hon. Friend will agree that that growth industry is a matter for concern, and more adequate and professional staff should be appointed. Can something be done to arrange a debate to protect the elderly, who are being put into those homes at the expense of the Department of Health and Social Security?
Mr. Biffen: My hon. Friend is right to draw attention to that aspect of the development in our welfare services which is proceeding at such speed. As he will appreciate, the Department of Health and Social Security is top for questions next Tuesday, and I suspect that he will also take an interest in the matter when it comes to the Adjournment debates.

Easter Adjournment
Mr. Speaker: I have a short statement to make about the Easter Adjournment debates. I remind hon. Members that on the motion for the Adjournment of the House on Thursday 27 March up to nine Members may raise with Ministers subjects of their own choice. Applications should reach my office by 10 pm by Monday next. A ballot will be held on Tuesday morning and the results made known as soon as possible thereafter.
Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [18 March].

  AMENDMENT OF THE LAW
  Motion made, and Question proposed,
  That it is expedient to amend the law with respect to the national Debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

  (a) for zero-rating or exempting any supply;

  (b) for refunding any amount of tax;

  (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

  (d) for any relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Lawson.]

Budget Resolutions and Economic Situation
Relevant documents: European Community Document No. 9792/85, Annual Economic Report 1985–86 and the unnumbered document, Annual Economic Report 1985–86 (final version as adopted by the Council).
3.59 pm
The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): I always believe, in my simple way, that it is possible to get some agreement on objectives on both sides of the House. I hope that there is broad agreement, certainly in the county, that the main aim of the Budget has to be to maintain the present excellent performance of the economy in such a way as to speed up the number of new jobs which will be created. [Interruption.] It is no good Opposition Members deriding that statement of aim and description of the economy. One of the most notable aspects of the Budget statement of my right hon. Friend the Chancellor of the Exchequer was the extremely good outlook that he was able to describe to the House and the country.
We face the best economic outlook that most people of today's working generation have ever faced in their lifetime. We expect high growth, low inflation, falling oil prices and stable exchange rates at levels at which we can be competitive. Yesterday interest rates fell. I do not know of the experience of my hon. Friends or of Opposition Members, but most of the people I have met over the past few years in the manufacturing industries have told me that those are the conditions that we must try to create. All these things explain why employment has been rising faster in the United Kingdom than in the rest of the European Community. First, as a general proposition, the Chancellor has created the conditions for jobs. I congratulate my right hon. Friend on that and on his Budget measures. In my opinion, if my right hon. Friend had not used the slogan "Budget for jobs" last year, he could have used it forcefully for this Budget.
When people first react to a Budget, they immediately take on board the tax changes as they affect day-to-day life—a penny off the basic rate of income tax, 11p on a packet of cigarettes, nothing on beer, and so on. It will

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take a little more time for people to appreciate the complete extent of the employment measures in this Budget. They are extensive and they are ambitious. But, quite predictably, the principal complaint of all the Opposition parties is that they do not appear to cost enough to the taxpayer.
Most of our critics tend to pluck large figures of public expenditure out of the air and then claim that thousands of new jobs would be created if this spending went in certain directions. I have to say that, having considered most of the rival propositions which have been put forward over the past few months, the connection between the cash and the jobs is usually highly debatable.
In the Budget we have programmes which will be less expensive to the taxpayer than those urged upon us, but they will be more effective. We now have the opportunity to consider these measures in greater detail. First, we have measures designed to produce more new businesses and new jobs. The enterprise allowance scheme has been highly successful in helping unemployed people to set themselves up in business. Very many unemployed people—surprising numbers—would like to have a go at working self-employed in a business of their own. We offer support of £40 each week for a year and business advice for many who do so. My right hon. Friend announced in the Budget that we are now nearly doubling the size of this programme. Now we will be helping no fewer than 2,000 unemployed people each week to start working for themselves.
Mr. Ian Wrigglesworth: The Minister is seeking to proclaim the cost-effectiveness of expenditure on this scheme as compared with other schemes. Does he agree with his Department's figures that, for every 100 jobs created under this scheme, only 50 real jobs are created because they are replacing 50 other jobs—jobs which already exist? If the Minister had spent the money on the community programme, there would have been 93 new jobs created for every 100 jobs.
Mr. Clarke: We have studied carefully the cost per job created in each scheme, as we have for all the schemes that I shall outline. I shall come later to the expansion of the community programme.
All these schemes which we are expanding compare extremely favourably in cost per job terms with any of the rival propositions urged upon us. There is some deadweight in all of them—some displacement, some small businesses which do not succeed—but I can assure the hon. Gentleman that the enterprise allowance scheme has been highly successful. The vast majority of the new businesses thrive and many will provide fresh employment as they plan to take on employees within a year or two of starting up. I am not comparing this with the community programme; we are expanding that as well. I compare it with the propositions contained in the rival budget of the alliance, many of dubious quality and a high cost per job.
I assume that the hon. Member for Stockton, South (Mr. Wrigglesworth) will support the enterprise allowance scheme. The fact that we shall help 2,000 unemployed people each week is welcome.
Mr. David Howell: Although I welcome strongly the expansion of the scheme, is my right hon. and
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learned Friend aware that in some cases the taxation liability arising from being paid the enterprise allowance can be larger than the enterprise allowance? Will he look at this aspect in reforming the scheme?
Mr. Clarke: I am grateful to my right hon. Friend for drawing my attention to that. I think that my right hon. Friend the Chancellor announced in the Budget ending, and certainly has the intention of ending, that tax anomaly. It is a valid point, and my right hon. Friend the Chancellor has agreed to put it right in the Finance Bill.
We are dealing with the existing measures which will be expanded and we are introducing a new version of the small firms loan guarantee scheme, which will last for three years. Over the past seven months since I have been in the Department, I have repeatedly met business men whose enterprises are beginning to thrive and expand and who have impressed upon me how this scheme was essential to give them the working capital they need to start. The main snag with the old scheme was that loans were expensive with extra high interest being paid. We are halving the premium on new borrowing to 2·5 per cent. This will make the scheme even more successful and attractive to small businesses which need capital to expand.
The Opposition can never decide what their attitude should be to the EAS, the small firms loan guarantee scheme, to small firms, self-employment and personal enterprise. I have to tell them that small firms and self-employment are among the major sectors for employment growth worldwide and that we have a long way to go before we catch up with other countries. The Labour and trades union movement's apparent obsession with "smoke stack" industries is yet another example of their determination to put the clock back. The Government are determined to help those who wish to work for themselves or to set up small businesses—not least because they have to make an important contribution to the continuing growth in employment in Britain.
Mr. John Prescott: We fully support all programmes which increase economic activity and increase jobs. There is no doubt about that. It would come a little bit stronger from the Minister for Employment if he recognised that many Labour authorities, through their enterprise and economic units, have created many small businesses and they are often much more effective than the Government. The Government and, in particular, the Chancellor have denied £8 million to the GLC to do that type of work.
Mr. Clarke: I shall look forward to receiving the support for small business schemes which the hon. Member for Kingston upon Hull, East (Mr. Prescott) has promised. It is certainly true that the Labour and trades union movements are not in the forefront of initiating policies which seek to expand self-employment or small business in any way.
The hon. Member refers to the activity of local authorities with regard to small business support and enterprise. When such support is well directed and carefully thought out, the Government are quite prepared to support it. I recognise that some councils do a reasonable job. However, the effectiveness of councils' actions varies considerably up and down the country. In my opinion, there are certainly a large number of local

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authorities which ought to pay greater attention to keeping down the rate burden on businesses in their areas than they do in attempting to get into the enterprise policy area.
I certainly query the cost per job effectiveness of many of the things done by local councils. I shall probably have the support of the hon. Member for Kingston upon Hull, East when I state that the schemes I have described are cost effective and well directed. I have dealt only with expanding the existing successful programmes. We are also introducing two new programmes. One is for young people entering employment for the first time. We have called it the new workers scheme.
The new workers scheme will provide a direct financial incentive for employers to recruit 18 to 20-year-olds by paying them a subsidy of £15 a week for 12 months. We have seen a steady fall in the rate of unemployment of young people under 18 over the past three years. We are anxious that employers should be able to offer inexperienced young people over 18 the jobs at the start of their career ladder that many need to start their working lives. We expect that no fewer than 70,000 young people will benefit from the scheme in its first year at a cost of some £25 million.
This scheme will build on the two-year YTS which is being launched in two weeks' time and which will provide quality training leading to recognised qualifications for 16 and 17-year-old school leavers. I hope—I repeat the sentiment with which I began—that we can all agree on the value of giving school leavers a better start in the world and better job prospects through YTS. I believe that the great majority of sensible people in industry are positively enthusiastic about our new scheme, which will be a permanent feature of training for work.
However, I noticed that, only last week, the hon. Member for Kingston upon Hull, East described the youth training scheme as a "skivvy" scheme. As I have said before, that was a ludicrously irresponsible way for a member of the shadow Cabinet to dismiss a new system of youth training supported by employers, trade unionists, the CBI and the TUC. The hon. Gentleman's view of the YTS is not shared by young people. We have carried out surveys to ascertain what young people think of the scheme. More than 1 million young people have entered the YTS since 1983. Our surveys show that 80 per cent. say that their training was worth while. Two thirds of YTS trainees get jobs immediately or move straight on to further education or other forms of training.
What the hon. Member for Kingston upon Hull, East says is not just irresponsible or politically damaging to his party, although I believe it is certainly that—it is certainly damaging his credibility in the industrial world—but is positively damaging to the interests of the more gullible young people who are influenced by what he says. Calling YTS a "skivvy" scheme or "slave labour", or whatever the current cant phrase of the Labour Left maybe, has only one effect — to make some young people suspicious of YTS, to put them off joining it and, therefore, to make them miss out on an important chance of improving their job prospects. That is what the hon. Gentleman and the more Left-wing of his colleagues in the Labour party are doing and the sooner they realise it, the better.
Mr. Prescott: I am glad that the right hon. and learned Gentleman has got that off his chest. I said at the press conference I attended that many of the schemes under YTS
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are cheap, exploitive and skivvy schemes. [Interruption.] Another Minister asked me for evidence and I sent him parcels and papers — all the details. He left before saying whether he thought that I was right about private agencies. Many people are concerned about this matter. The Paymaster General has talked about industry's record. Its record in putting money into training is deplorable, as the Manpower Services Commission has shown in the piddling amount of money it put into training compared with our competitors.
Mr. Clarke: The hon. Gentleman's second point was a good, hearty and virulent attack on something about which I was not speaking. I referred to his remarks about the two-year YTS and YTS. On the hon. Gentleman's first point, he knows perfectly well that we are describing the introduction of a two-year scheme which will provide for training provided by approved training agencies. Of course, in the early days, the training was less than satisfactory and, no doubt, there are still some cases in which we have not improved that position. Everyone in the CBI, the TUC and the MSC has striven to eliminate that unsatisfactory training. The hon. Member for Kingston upon Hull, East knows that the press conferences he gives turn into virulent attacks on YTS which deter young people who might otherwise take up this opportunity in April.
I shall at least give the hon. Member for Kingston upon Hull, East credit for one thing: when he attacks YTS, or aspects of it, he seems to understand what he is attacking. He follows and studies his subject. Yesterday, I could not help noticing that the leader of the Liberal party, in introducing his ten-minute Bill, said:
"I accept that the YTS is improving, but the process is painfully slow and it needs speeding up."—[Official Report, 19 March 1986; Vol. 94. c. 302.]
I do not know whether the right hon. Gentleman was seriously suggesting that the Liberal party could introduce a new, improved form of YTS before 1 April this year. I do not know whether he has tried telling employers, unions and managing agents, who, in my experience, are working flat out for the success of the new scheme, that progress is "painfully slow". The way in which the right hon. Gentleman introduced the Bill showed the pathetic irrelevance of the Liberal party to employment and training.
Mr. Michael Foot: I assure the right hon. and learned Gentleman that I do not seek to intervene on behalf of the Liberal party. I should like to put to the right hon. and learned Gentleman the question I put to him before on the second year of YTS. Why does he not sort out properly the matter of the extra burden imposed by the present arrangements for the second year on local authorities, especially those that have given such great assistance in making the schemes work? Surely the right hon. and learned Gentleman would be very encouraging if he said that the whole of the extra cost would be borne by central Government and that local authorities, especially in areas of the highest unemployment, would not have to bear that extra burden.
Mr. Clarke: I have had a lengthy exchange on this matter before with the right hon. Gentleman. I am sure that he went back to his constituency and checked up on our exchanges. We have no shortage generally of the two-year places we require, which are provided by employers in the public sector and in the private sector who accept that, in

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the second year, they must pick up part of the burden. This reflects the fact that, in that second year, the trainees are undoubtedly giving added value to the employer. Local authorities are offering second-year places.
The local authorities that claim they are getting into most difficulty are those that are bowing to pressure from their branch of the National and Local Government Officers Association to top up the allowance payable to YTS trainees. That is a totally self-imposed burden chosen by local authorities and not one to which the Government could agree to divert funds from the mainstream of their training policies. I cannot understand why the local authority of the right hon. Member for Blaenau Gwent (Mr. Foot) has difficulties which other local authorities in equally hard-pressed areas do not have if it is paying the YTS allowance at the level accepted in the programmes generally.
Mr. Foot: The right hon. and learned Gentleman has got it wrong again. The same demand is faced by all the local authorities in our area — not just my local authority. Will the right hon. and learned Gentleman look at the matter afresh and ascertain whether the whole of the extra cost in the second year can be borne by central Government rather than by the local authorities?
Mr. Clarke: I shall look again to ascertain whether all local authorities in south Wales are agreeing to NALGO's demands that they top up the YTS allowance to an unnecessary level. If that is not happening, I cannot understand why local authorities generally in the right hon. Gentleman's area cannot participate in the two-year YTS on the same basis as many other local authorities throughout the United Kingdom. I do not accept that this is a general problem which we are failing to tackle. I believe that, if local authorities, as private sector employment and voluntary bodies, continue to participate, we shall find that the two-year YTS is a desirable and permanent addition to the training and preparation for work of young people.
I began by describing the new workers scheme which will follow on from the two-year YTS. It is an extremely valuable addition to everything we are doing to continue to reduce unemployment among young people.
Our second new programme is a package of measures designed to help the long-term unemployed which we call our restart programme. Ever since we began to work together last autumn, my right hon. and noble Friend the Secretary of State for Employment and I have become increasingly convinced that it is our duty to help those people who are in danger of completely falling out of the world of work. After a year or more of unemployment, despair and disillusion can set in in the mind of an unemployed person. Perversely, employers are reluctant to take on people who have no recent record of work to show that they can hold down a job and cope with the disciplines and pace of work. I have found in my contacts with my opposite numbers in the European Council of Ministers that the problem of long-term unemployment is an emerging problem in all our economies and is obviously one of the most important problems we should tackle.
Our plans, which we have carefully drawn up, are concerned with the social consequences of unemployment and the dignity of those seeking work as well as the creation of jobs. That approach underlines our ambitious
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plans to help the long-term unemployed. We have deliberately chosen to make a high priority of the 1·3 million people who have been registered as out of work for more than a year. We must not allow them to be left out of the better job market that economic recovery is producing.
We propose a person-to-person approach on an individual basis to each and every man and woman in the United Kingdom unemployed for more than a year.
Mr. Prescott: Tea and sympathy.
Mr. Clarke: It is ridiculous for the hon. Gentleman, before he has addressed himself to the details, to react in his typically aggressive way to the idea that we are turning our attention to the individual problems of more than 1 million people. If the hon. Gentleman will refrain from uttering his slogans for a minute and will follow the details, I shall challenge him to criticise our approach or to say in what way he would build on it. I cannot believe that the hon. Gentleman would scrap it, abandon it or seek to oppose it in any way.
Mr. Prescott: I do not oppose it.
Mr. Clarke: I have never before faced an hon. Member across the Dispatch Box who barracks so persistently on something which he then says he will not oppose.
Mr. Prescott: Anything which gives help or advice to the unemployed we will welcome. What the unemployed want after the advice is the jobs. There are 20 unemployed for every one vacancy the Government offer. All the right hon. and learned Gentleman can be offering is tea and sympathy, not a job.
Mr. Clarke: That is not true. If the hon. Gentleman will listen he will discover what we are talking about and what he is barracking.
He agrees with anything that offers individual support for the long-term unemployed. That involves a substantial effort when we are talking about 1·3 million people. Every one of those long-term unemployed will be invited, in the first place, to a discussion with an adviser in a jobcentre, who will consider the personal position and needs of each one. The discussion will determine which of a menu—for lack of a better phrase—of opportunities, some new and some already established, is most suitable for the person being helped. As I have already said, it is a massive undertaking, in organisational terms alone, to address ourselves to the individual position of well over 1 million people and offer them individual help. It amounts to a revolution in our approach to long-term unemployment.
Let me describe the process and see whether I can get more agreement not to oppose from the hon. Member for Kingston upon Hull, East. The jobcentres will take the initiative in calling in the long-term unemployed, every single one of them, by March of next year. We are recruiting 2,000 extra staff—an increase of nearly 25 per cent. on the staff in the jobcentres—to be able to offer the help I have described. Beyond the initial interview at the jobcentre, we are providing a whole range of courses and programmes designed to improve the chances of the long-term unemployed finding work.
In the first place, we are increasing the chances of their finding work by expanding the community programme to

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a total of 255,000 places by the end of this year. That will mean that in a full year the community programme will be able to provide jobs for some 300,000 people.
Secondly, we are greatly extending the network of job clubs, which have a very impressive record in helping the long-term unemployed back into work. I do not think that the shadow Chancellor, who is not here today, altogether understands that. The shadow Chancellor said yesterday that job clubs were places where, as he understood it,
"young people come together and discuss why it is that they are out of work."—[Official Report, 19 March 1986; Vol. 94, c. 307.]
That is absolute rubbish, and if that is his understanding, he should study the concept of job clubs more closely. Job clubs are places where long-term unemployed people of all ages come together for a minimum number of hours each week to be helped by a member of our staff in a sustained effort of job application, seeking every suitable advertised vacancy in the locality.
What was wrong with the figures of the hon. Member for Kingston upon Hull, East is that he talked only about vacancies in jobcentres, which are going up. As we all know, only a small proportion are ever notified to jobcentres in the first place. The job clubs actually help the people who participate to pursue not only jobcentre vacancies but all those advertised in the local newspapers. People are given the support of a member of staff in chasing all those jobs.
Job clubs are one of the most successful measures we have adopted. Contrary to what the shadow Chancellor appeared to assert, our records so far show that nearly two thirds of job club members have found work. If the hon. Member for Kingston upon Hull, East or any other Opposition Member visits a job club he will find spectacular individual examples of people who have been out of work for some time who have been placed in jobs by this method.
Mr. Tony Baldry: Does my right hon. and learned Friend agree that it is strange that in many areas employers are looking for people to work for them but cannot get the people they want with the right skills? Does he also agree that job clubs will be a great help in giving people advice as to what skills are needed in the market place and where they can go to be trained in those skills?
Mr. Clarke: That is the point of the initiative we are taking to provide individual advice for the long-term unemployed. I am working through what I have described as the menu of opportunities we offer. When some people discuss their individual situation it is found that they require training and that if they acquired some skills which were within their grasp they would be much more employable. Others are already equipped to find work but they are helped by a job club to find it.
Some people will be able to obtain help from other schemes we are extending, such as the new restart courses, which help people to brush up their job-finding skills. Many of the long-term unemployed are not good at presenting themselves and employers have something of a prejudice against the long-term unemployed, who they believe will not satisfactorily hold down a job.
Finally, over and above that, we are making a £20 a week job start allowance available nationally so as to provide a direct financial incentive to the long-term unemployed person to return to work, even if he has to take a lower paid job to get started again.
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We have carefully tried out that package of measures. The programme we now call the restart programme was previously tried out in nine totally different towns as diverse as Crawley and Dundee. We have had no time to do a full academic study of the results because we are acting urgently and we want to crack on with tackling the problem. However, since we started our pilot schemes, we have noticed that while unemployment fell nationally in January — a bad month — by only 0·1 per cent., unemployment in our restart trial areas fell by 1·1 per cent. We have been carrying out much more detailed and sophisticated monitoring and what we have seen so far has given us confidence to go national in the restart programme.
I know what the Labour party's reaction is. It is wholly predictable, as it has been throughout the debate. It will say "That cannot be good enough; it does not cost enough." Anything in a Socialist programme has to cost a large amount of taxpayers' money. Even our moderate critics tend, as I said at the beginning of my speech, to talk of billions of pounds of public expenditure whenever they talk of unemployment in order to give more credibility to their proposals.
If I address the only coherent alternative to what we are putting forward, I suppose the most fashionable ingredient in every instant wonder cure for unemployment being peddled at the moment is increased spending on infrastructure. I have no intention of being totally hostile to spending on infrastructure when I am a member of Government who are already spending greatly increased amounts on the infrastructure. I played a part in restoring the trunk road programme and the hospital building programme, which had both been savaged by our Lib-Lab predecessors. New hospital building in particular had been axed by a third in 1976 by the people who are now converted to the wonders of infrastructure spending. Sweeping speeches about going further and thereby solving unemployment have to be examined with scepticism and care.
The hon. Member for Kingston upon Hull, East has followed me in some of the things I have done in Government and Opposition. He and I have faced each other on other issues and he knows as well as I do, and should remember from personal experience, that on transport and health when we need to spend money, we spend it. Since 1979 we have increased capital spending in real terms, over and above inflation, on motorways and trunk roads by almost one quarter. Spending on motorway and trunk road repairs has increased by 100 per cent. in real terms since 1979. I am working through the list of items that have appeared in the speeches of Labour Members. I have not noticed that they have omitted roads. The alliance always mentions roads, as does the Labour party. We have spent 16 per cent. more in real terms on hospitals since 1979.
The problem that arises in those areas and that makes such a nonsense of the Opposition's sweeping assertions is often one of delays to projects rather than unwillingness to spend money to meet real needs. It typically takes 10 years to build a road, from its planning stage, and 15 years for a hospital. Personally, I trust that my successors at the Department of Health and Social Security are tackling that with the same vigour as I was trying to, because those lead times would be regarded as ludicrous in any private sector schemes. However, the delays are caused by public inquiries and bureaucracy. They are more of an enemy to

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the infrastructure in those areas than tight money or lack of financing. That is relevant to our debate. Those problems have to be borne in mind. That is why claims to boost infrastructure spending are often impracticable as well as unnecessary.
The real problem is that modern construction methods are capital intensive, not labour intensive. Person-to-person service industries are the labour intensive activities in a modern economy, not public works. Capital programmes that are perfectly desirable in themselves to cut out transport costs and improve our environment are fairly useless when looked at as special measures to assist the unemployed.
Arguments are advanced about all the unemployed building workers. The Opposition are being converted. At one time they listed sewers. This is the daftest example of all to give when seeking to suggest that increased spending on the infrastructure will produce more jobs. The Opposition are now talking only about housing. That, at least, has narrowed the scope. Modern tunnelling methods mean that the number of men who are required to build sewers is tiny. It is good to build sewers to prevent holes appearing in roads but, as a special measure in itself, it is not a good way of trying to put the unemployed back to work. Even the favourite arguments about all the unemployed building workers—those who might be employed in housing—are hard to sustain in many parts of the country. This has relevance even to those who say that housing is the main method of boosting employment. I have read a recent report of the Federation of Master Builders. It is headed "Work goes begging as firms struggle to get craftsmen."
Mr. Wrigglesworth: Will the right hon. and learned Gentleman give way?
Mr. Clarke: I shall give way in a moment. The hon. Gentleman's alternative budget will rely heavily upon sudden boosts to infrastructure spending to create jobs.
Mr. Wrigglesworth rose—
Mr. Clarke: Let the hon. Gentleman listen to this quotation from the magazine Building of 7 March 1986 and then I shall give way. It is based on a report of the Federation of Master Builders. It says:
"Small and medium-sized firms affiliated to the Federation of Master Builders are reporting labour shortages throughout the country. Some companies are turning down work because of the unfilled vacancies, which are blamed mainly on poor training. A survey carried out by the Federation of Master Builders shows that 39 per cent. of the 528 member firms who responded are suffering skills shortages even in areas of high unemployment. London is worst hit with 53 per cent. of firms short of manpower."
Mr. Jack Straw rose—
Mr. Clarke: I trust that the hon. Member for Blackburn (Mr. Straw) will make a speech during the course of the Budget debate. He has tried to intervene in every Budget speech that I have listened to so far.
Mr. Straw: What are the skillcentres doing?
Mr. Clarke: Before the hon. Gentleman makes his speech, he ought to consider the fact that the number of people who are being trained in skillcentres has greatly increased during the last 12 months. Let me continue my quotation, and then I shall give way either to the hon.
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Member for Blackburn or to the hon. Member for Stockton, South, if either of those Members is prepared to stand up. The following quotation is also relevant. It says:
"In addition, 14 per cent. of firms reporting labour shortages could not find general operatives, despite the high number of labourers registered as unemployed. The overwhelming majority, some 74 per cent. have been unable to fill job vacancies for six months or more, according to the report, with 60 per cent. being 'limited in the workload they could take on as a consequence'. Many firms wanted to employ direct labour but found that the growth of the black economy and the number of self-employed tradesmen prevented 34 per cent. of firms from doing so."
Relevant lessons are to be drawn from that. I agree with the quotation given by the federation's national director, Bill Hilton, at the end of the report. He said:
"The report's findings prove that we have to do far more to encourage carpenters, bricklayers and other skills into the industry. There are lessons for the Government and the industry."
But there is also a lesson for the Opposition that is relevant to this debate. When they put forward alternative budgets they claim that increased, instant spending will increase the number of jobs. However, those who are seeking workers cannot find labour. Most of the claims in the alternative budgets of the Labour, Liberal and Social Democratic parties that millions of pounds of new building work would take thousands of building workers off the dole are not sustainable.
Mr. Wrigglesworth: It is remarkable that the organisation upon which the Paymaster General relies for this report also spends a considerable amount of time pressing the alliance and others to increase expenditure in the very areas that he has decried. Is the right hon. and learned Gentleman aware that our budget proposals both for last year and this year do not rely entirely, as he seeks to suggest, upon massively increased spending on capital projects? They include a spread of proposals, including education and training in particular, to ensure that the skill shortages in my area, about which many complaints are made, do not exist in the future.
Mr. Clarke: I shall try to refer to as many ingredients as possible in the alleged alternative budget, but I am now dealing with the Government's Budget. If the hon. Gentleman says that the Federation of Master Builders has lobbied his party for increased spending on the building, I can believe it. He has been in politics long enough to know that most of those who come along to lobby do so because they want the amount of building to be increased in their area. My point is that the experiene of the Federation of Master Builders is that they are turning away work because they cannot recruit labour, including unskilled labour. Therefore, we have to address that problem before that ingredient of the hon. Gentleman's policies, which he says would increase jobs, can be sustained.
Mr. Bob Edwards: Will the right hon. and learned Gentleman give way?
Mr. Clarke: I shall give way in a minute. After I have dealt with training, I shall listen to what the hon. Gentleman has to say.
Of course there is a training problem. That is why we are putting so much effort into training. Recently I visited the new training complex of the Construction Industry Training Board at Bircham Newton. The CITB is the major agency for providing youth training scheme places. It has provided 18,000 training places for young people,

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and next year it will be taking full advantage of the Government's new programme of two-year training. No doubt the hon. Member for Kingston upon Hull, East will continue to try to put young people off taking advantage of those training schemes by attacking them as "skivvy" schemes.
Mr. Prescott: The right hon. and learned Gentleman is introducing a great deal of confusion into the debate. The Government have abolished 16 of the 23 industrial training boards. The Construction Industry Training Board is one of the few that remains. In that sense, there is control by industry, employers and unions over the introduction of a proper degree of training into the youth training scheme. I fully endorse and accept that point, but that is not the experience in the majority of youth training schemes.
Mr. Clarke: I repeat what I said earlier—that we are concentrating upon improving the quality of the training that is provided in the youth training schemes. Mistakes were no doubt made during the early days of the YTS. Everybody is now concentrating upon providing good quality, two-year training from 1 April next. Substantial changes are being made. From 1 April, those who provide places will have to be approved training agencies. However, that does not appear to be leading to any abatement of the hon. Gentleman's attacks upon the scheme. I believe that it should. The way in which he attacks the scheme is clearly designed to put off young people. He is playing up to the audience behind him, which he knows contains—[HON. MEMBERS: "Not so much of an audience."] No. We keep returning to the same point.
We are told that that infrastructure spending is the main alternative. When one looks at the alliance alternatives, one finds that substantial reliance is placed on the community programme. I looked carefully at the alliance's alternative budget to try to find out where the large number of jobs that they claimed would be created could be found. I found that those which had any credibility were boosted significantly by taking the target that we had announced before the budget of 230,000 places and calmly doubling it to 460,000. I take that imitation as a compliment. The alliance has slipped into its policy a calm invitation to increase the successful community programme that this Government have already launched. We have been expanding it flat out, to the limits of what is practicable.
We have to improve the quality of the work that is being provided in the community programme. It has to be of real quality for those who are engaged in the community programme so that at the end of 12 months they can demonstrate that they have done a worthwhile job that involves real work disciplines. It also has to be of value to the community as a whole. That is why we are devising schemes of crime prevention by putting in locks and similar equipment for elderly people and of energy conservation by insulating the homes of elderly people. My right hon. Friend the Secretary of State for the Environment is preparing a programme of schemes relating to the environment, as is my right hon. Friend the Minister of Agriculture, Fisheries and Food to help farming in rural areas. This will involve over 250,000 people at any one time in schemes of real quality.
To put together an alternative budget, all the alliance can do is pluck a figure out of the air and claim that it can
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double the whole programme to a little less than 500,000 people, and I have to say that we would be back to counting lamp posts if we tried to expand to that degree and at that level. It may make a good speech, but it does not make any more credible a policy for unemployment, any more than does asserting that infrastructure spending of one kind or another—even on housing, which the Opposition appear to accept is the only one worth arguing—can make a substantial contribution to the number of jobs that it is claimed will be achieved if these alternative policies are implemented.
Mr. Sydney Bidwell: The other day I was talking to a bricklayer who was working near my home. He has come from Glasgow to work in the south because he cannot get employment in his trade in Glasgow. The right hon. and learned Gentleman has given these bland assurances that building employers cannot get skilled workers, but is there not something wrong with the structure? Is it a fact that skilled building workers cannot get work in the north and come to the south in search of it? Is that what is going on and, if so, to what extent is it going on?
Mr. Clarke: I find that astonishing, first, because, when one visits Glasgow, one sees an extensive amount of rebuilding going on, particularly in east Glasgow. Secondly, according to the claims of the Federation of Master Builders, in the north, which in its submission includes the whole of Scotland and a bit of northern England as well, 20 per cent. of firms were reporting shortages of labour while in London 53 per cent. of employers were reporting difficulty in finding labour. If a bricklayer is skilled and produces work of quality, he ought to be able to find a job. That is why we concentrate so much on building up the amount of training that is given to bricklayers.
I have spent some time setting out our employment propositions in the programme we put together, which was announced in the Budget of my right hon. Friend. I think that the full extent of it has not yet been appreciated, but it will be as we start to tackle the problems of the long-term unemployed and the need for training throughout the country.
I will not spend much more time on the policies of the Opposition because I think that, on the whole, they exist in speeches rather than in reality.
We heard yesterday from the shadow Chancellor that he is no longer into big spending. He is indignant about the Chief Secretary's attacks on his £24 billion programme, which the shadow Chancellor combines with a clear commitment not to raise the basic rate of income tax and an apparent determination—
Mr. Prescott: He withdrew it last night.
Mr. Clarke: No, he did not. The shadow Chancellor is indignantly trying to refute the £24 billion. My right hon. Friend's answer was quite clear. He said that he had looked at the figures and was prepared to reduce one and increase another on what the Labour party keeps saying. The shadow Chancellor combines this with a commitment, that I have heard him make twice, that he will not raise the basic rate of income tax and an apparent determination not to oppose our 1p reduction in the basic rate.
If the shadow Chancellor and his right hon. and hon. Friends on the Opposition Front Bench seek to assert that

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£24 billion is not the case, I cannot help thinking, as I did yesterday, that I hope they have had a word with the shadow spokesmen on social services, on education and on health who have been going round the country showering promises like confetti—[Interruption.] It is interesting to note that the shadow Chancellor will apparently say no to all those proposals that have been made by the hon. Member for Oldham, West (Mr. Meacher) and others of his hon. Friends.
As the Opposition clearly do not like what I am describing of their programme, let me give my understanding of what the scaled-down programme amounts to. The shadow Chancellor has now come down from the giddy heights of £24 billion towards the lower foothills of £6 billion or £7 billion. Half of what he describes as a "drive to create jobs" came from a straightforward addition to what he previously said regarding the recent Select Committee report. He added that £3·3 billion would produce 750,000 jobs as a result of adopting the Select Committee report. As shadow Chancellor, he ought to know that the gross cost of the Select Committee's proposals is at least £6 billion. The one-year jobs in the building industry and the one-year jobs in the Health Service proposed by the Select Committee merely repeat and do not add to the shadow Chancellor's other proposals, as he implied in his speech yesterday. He has taken on a new commitment to a £40 per week subsidy to the employer for every long-term unemployed person taken on, without any ceiling on the pay of that person. I can only say that that would displace thousands of people from their jobs if it were adopted as a general proposition.
I do not know—no doubt another spokesman will explain to the House—whether the shadow Chancellor is now taking on hook, line and sinker the Select Committee proposals, as appeared likely, only a few weeks after they came out without any further examination. The fact that he seems to have done so is a surprise to me. Alternatively, does his throw-away line yesterday suggest that, until the Select Committee came along with its report, he was desperately short of any employment policy? There must be a purpose in measures to help the unemployed, and that is what is plainly lacking in the right hon. Gentleman's plans.
Mr. Ron Leighton: I suspect that the Government also are desperately short of an employment policy, and I would be pleased if they took on board the Select Committee's report. Will the right hon. and learned Gentleman guarantee to use his influence to ensure that there is a proper debate in the House on the report of the Select Committee?
Mr. Clarke: If the "drive to create jobs" now comprises the main part of the Opposition's policy, no doubt there will be rather more frequent opportunities to debate that.
It has been suggested that I should leave the Opposition to speak for their own policies. I therefore look forward to hearing the hon. Member for Kingston upon Hull, East describe his party's commitments to reducing unemployment after he finishes what will no doubt be his inevitable denigration of the measures that I have announced.
I will be fair to the hon. Gentleman. He can sometimes be a very reponsible politician. Not for him the reckless
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protestations of the shadow Chancellor, who a few weeks ago exhorted all local authorities to get their plans ready for an orgy of capital spending in the event of a Labour Government getting back. The hon. Member for Kingston upon Hull, East spoke to a fringe meeting on 7 February at the Labour local government conference at Norwich, where he was candid and frank, as he often is. I have made inquiries of those responsible, and I am assured that the Municipal Journal of 7 February 1986 reported him accurately. It certainly looks authentic, and it was his usual forthright stuff to Labour Councillors. I will quote verbatim that report. It refers to him as the Labour spokesman on regional affairs, which is probably a reflection on the hon. Gentleman's spokesmanship on employment. It said:
"'Central Government cannot be indifferent to the way you spend your money' he told delegates. 'And we must start spelling out exactly what we are going to do instead of simply issuing slogans to win power.' He turned to Neil Kinnock. 'How did we get this promise of one million jobs? Who worked on the programme? Promises such as these simply label us with targets we cannot achieve and expose our credibility'."
That is good forthright stuff, and in a moment I will allow the hon. Gentleman to start spelling out his programme. The time has come for the hon. Gentleman to start trying to do something about the tattered credibility of the Labour party. I do not envy him his task in answering a Budget which is based on an excellent economic outlook and which contains extremely worthwhile tax changes and most significant and ambitious employment measures aimed in particular at the young and the long-term unemployed. Neither I nor most of the public believe that he can improve on it. I shall follow with care every word he says as he tries to prove that 1 million new jobs could be created by the proposals he and the shadow Chancellor have been putting out.
4.50 pm
Mr. John Prescott: The Paymaster General spoke for a long time, but not one extra job will come out of the policy about which he talked. It is caring capitalism, the people's capitalism offering tea and sympathy instead of jobs. The argument of my right hon. and hon. Friends is not against giving counsel and offering schemes to small businesses and big businesses. We want jobs from wherever they may come. We have no ideological obsession whether jobs come from the private or the public sector or about what advice we give. We fully support local authorities, particularly Labour authorities and the metropolitan county councils which are being abolished, which have done much to produce jobs by using both public and private money. Hon. Members should not be in any doubt about our endorsement of any economic activity which creates jobs.
In regard to the quotation made by the Paymaster General at the end of his speech, the fact that the Municipal Journal got the wrong title for me calls into question the accuracy of the report. I do not deny that I said it is not good enough simply to repeat a slogan about 1 million jobs and hope that people will believe it; we are obliged to spell out precisely where the jobs will come from and the consequential effects on inflation, on the balance of payments and on borrowing. We must face the facts straight. If we do not, the electorate will not believe us. We do not need lectures, such as the Paymaster General's speech, about what we should do.

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Central Government have taken it upon themselves to say that the reduction in unemployment is a central feature of Labour party policy. In the first two years of a Labour Government we would look to local authorities to play a major part in the public expenditure role. But we cannot be indifferent to how local authorities spend the money if we want to get the maximum number of jobs. That is a central point for anyone who wishes to work with local authorities in achieving the objective of 1 million jobs.
We shall spell out in detail where the jobs will come from. Yesterday my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley), the shadow Chancellor, started to identify the areas in which jobs would be created. More work is being done on the policies. The programme will be published in detail within 12 months in time for the next election. The Government can tell us then why they will not spend money on those areas. It is not just Labour Members who say that the Government could use public expenditure to create jobs; many of the Paymaster General's hon. Friends have been saying that for some time.
When the right hon. and learned Gentleman was in the Tory Reform Group that is precisely what he used to say. I assume that he is still a member of that group, which gave the following advice to the Chancellor:
"We believe that any extra resources should be used to cut unemployment by spending on direct job creation through essential public investment and measures such as we discuss below."
On the front of the document is the name of the Paymaster General.
Mr. Kenneth Clarke: Not as an author.
Mr. Prescott: The right hon. and learned Gentleman may not be an author, but I notice that every one of the authors comes from the Conservative party research department. If the Paymaster General wants not to endorse the document, but just to sponsor it, then, to avoid embarrassment with his hon. Friends, he should withdraw his name from the endorsement of that policy. I shall give him the opportunity now to disown it.
Mr. Clarke: As the hon. Gentleman has just denounced the accuracy of the Municipal Journal and then repeated just about every word he was reported as having said, he should cease taking what appear to be good points from the hon. Member for Blackburn (Mr. Straw), who first discovered this pamphlet. If the hon. Gentleman looks at the front page, he will see a list of patrons of the Tory Reform Group, which includes the deputy Prime Minister and my right hon. Friend the Member for Worcester (Mr. Walker) and other people. It is plain that we are not the authors of the document. I am proud to be a patron of the Tory Reform Group, but I do not agree with each and every word that it publishes, nor does every other member of the group.
Mr. Prescott: The Paymaster General has earned his title as one who deals more in tea and sympathy than in hard, concrete facts about what he is prepared to do for jobs. I accept that he does not endorse the policy of using public expenditure as a way of creating employment. We accept that that is not his view, or the view of the Government.
When the Paymaster General talked about local authority enterprise and community schemes, he was asked about training schemes run by local authorities.
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Local authorities are in doubt about maintaining good quality training under the youth training scheme because they are in difficulty through rate capping in financing schemes on a two-year basis. When the Government talk about local authorities using public expenditure to create jobs, they should remember that local authorities have been penalised by the loss of £16 billion of rate support grant, which in itself has created much unemployment.
On local authority financing we see in the Red Book that a further £2 billion burden is to be placed on ratepayers by the Government's financial proposals. That will undoubtedly cause further problems for local authority employment units and development bodies which have been creating jobs by using public and private capital, taking advice and introducing enterprise schemes.
I do not oppose business schemes, community schemes, YTS and counselling as a contribution to overcoming difficulties. My main charge against the Paymaster General is that he is misleading people because there is no prospect of his providing them with jobs. I accept that the long-term unemployed need advice and that they can get a good deal of help. I visit many jobcentres, job clubs, and so on, and talk to the people. I am (not embarrassed about admitting that. I welcome the help that is being given to the long-term unemployed, but the main question we ask is whether the Government can provide them with jobs.
Mr. Eric Forth: Given that we all share the hon. Gentleman's views on YTS and hope that local authorities will participate in it in future, may I ask the hon. Gentleman whether he agrees that the financial pressure on local authorities is often as much of their own making as of anyone else's? Does he agree that it would be more appropriate for local authorities to spend money on YTS rather than on nuclear-free zones or on give-away newspapers and propaganda? Does he agree that that would be a better priority?
Mr. Prescott: The hon. Gentleman is establishing a reputation for asking questions which are totally irrelevant to the point before the House. When local authorities have lost £16 billion from their rate support grant — a phenomenal amount of money—it is more relevant to point that out not just to Labour councils but to Tory councils, which have also been heavily penalised. We must remember that the loss of that money has affected training and employment. The Government are determined to pursue that policy, which is designed to create more unemployment, not jobs, although the Paymaster General says that he is concerned about job creation.
Mr. Kenneth Clarke: If the hon. Gentleman takes as long as I did to make a speech, it will be because he has given way as often as I did. He said a moment ago that he was not opposed to counselling and that he supported job clubs. Does he recall listening with me yesterday to the shadow Chancellor saying that
"the scheme for identifying the long-term unemployed and giving them counselling and help is not only deeply patronising to the long-term unemployed, but demonstrates a deep ignorance of the problem"?
The hon. Gentleman described job clubs as places
"where, as I understand it, young people come together and discuss why it is that they are out of work." — [Official Report, 19 March 1986; Vol. 94, c. 306–7.]
Would the hon. Gentleman confirm that, 24 hours later, he refuted both those statements?
Mr. Prescott: The Paymaster General has a reputation for being considerably sharper than that small point shows. He was put into that job to give it a liberal face and to put sharpness into it. He is not doing very well at the moment.
My right hon. Friend the Member for Sparkbrook and I have discussed our experiences when we visited jobcentres. We do not enter into criticism without getting some assessment and feedback. The job club scheme implies counselling the unemployed on how to get a job because many do not know how to write or to present themselves properly. That is an insult to many unemployed, who have previously been unemployed under a Labour Government when unemployment was 1·2 million. Two million more of these workers were then in work. They do not need any advice on how to get a job. They just want to get a job. That is what my right hon. Friend was concerned about when he made that point.
This Budget debate shows the kind of different reactions that we have seen in the press. I was looking at some of the quotes and newspaper reactions to the Budget.
The Daily Mail says that
"the Chancellor made a tasty Budget out of the scraps."
The Daily Express referred to a
"a Budget for a brave future."
The Daily Telegraph said it was "ingenious". I do not read The Times and The Sun, and nor should anyone else. The intellectual paper, The Guardian—I rather like this quote—said:
"All the basic problems that Mr. Lawson has inherited remain to haunt future administrations — appalling infrastructure, desperate housing conditions, low manufacturing investments, a withering technological base, a growing army of disenfranchised poor and unemployed. Yesterday's performance, for all its clever shifts and bright notions, did not even begin to address that grim and growing legacy."
When the Chancellor was faced with that quote on the "Today" programme, he said that it was "typical Guardian rubbish", or words to that effect. It was pointed out that the Financial Times editorial was similar.
There are two different views about this Budget. This is the first time that any Government have clearly rejected the idea of doing anything about reducing mass unemployment. It is the first time that they have given any sign that unemployment is not an electoral liability. They feel that it is far better to operate on tax than on the level of unemployment, and they are morally indifferent as to what is going to be the level of unemployment at the next election. That is one heck of a kick in the teeth for the unemployed.
Another reaction is that it is clearly a money Budget. Anyone who has any doubt has only to see the reaction of Conservative Back Benchers. Whenever money was being doled out, there were cheers and the waving of Order Papers, and suggestions that we cheer. There was not one murmur when we whizzed through the special employment package. Nobody knew that it had been done. I almost shouted, "Where is the beef?"
There was then a press conference the next day for the three-pronged attack by Lord Young—that amateur in the other place — and the Paymaster General to announce their new approach to unemployment. It clearly is a money Budget. My right hon. Friend the Member for Sparkbrook pointed out that the rich will pay less, and the rest will pay more. It is true. That is precisely what came out of that Budget. He showed that a family on £5,000 a year gets 26 pence a week back. A family on £50,000 a year gets £3.30 a week back, which is even proportionately
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higher in relation to the income that they earn. When one considers that those earning £50,000 a year actually have received £1 billion in tax since 1979, and are still getting it fed down their throats, that is highly offensive to the 3 million or 4 million unemployed. The money that was given in stamp duty and other capital transfer stamps is twice as much as the amount of money that Lord Young persuaded the Chancellor to give towards these tea and sympathy measures that the Paymaster General has been talking about.
I think the one condemnation of this Budget is that it seems that the Government are prepared to borrow. I did not see anyone protest when my right hon. Friend the Leader of the Opposition made the point that this Government have borrowed more than the Labour Government in their five years. We are actually borrowing to pay tax, but apparently it is evil to borrow to put people back into work. That is what this Budget is telling us. It is significant that this Budget does not mention anything about solving unemployment as an objective policy.
I looked back on some of the speeches that had been made in previous Budget debates, and I should like to remind the House of what was said. We have had six or seven years of this Government's policies, and we can now assume that they have had a chance to work in some form.
In the first Budget of March 1980 there were 1·3 million unemployed. The Chancellor at that time said:
"These are realistic policies, to which there is no alternative."—[Official Report, 26 March 1980, Vol. 981, c. 1489.]
By March 1981, and the next Budget, unemployment went up by 957,000 to 2·3 million. The Chancellor stated:
"Unemployment may be slowing down."—[Official Report, 10 March 1981, Vol. 1000, c. 757.]
Then in November 1981, we had the first fiddle which reduced the unemployment figures by 37,000. That made no difference. Unemployment, by the next Budget in March 1982, had gone up by nearly 500,000 to 2·8 million. The Chancellor then stated:
"I have a Budget for industry, and so it is a Budget for jobs."—[Official Report, 9 March 1982: Vol. 19, c. 727.]
We got the second fiddle in October 1982, which took a further 190,000 off the figures. By March 1983 unemployment went up by 351,000 to 3·1 million, and the Chancellor said:
"It is a Budget for recovery."—[Official Report, 15 March 1983; Vol. 39, c. 157.]
By April 1983 we had entered into another further fiddle—160,000 taken off our unemployed figures.
By March 1984—the Budget that was known as the "Budget for jobs" — unemployment had fallen by 29,000. The curious thing about that was that the only time unemployment fell in this country was in the period between the end of one Parliament and the election of another, because the Government pumped a bit of money into the economy and told local authorities, "Go out and spend, quick." They said, "Spend on housing" — no problems with skilled labour.
We then had a new Chancellor, and he said that the Government would assist in the creation of jobs. Well, they got into creating in the "Budget for jobs," and we find in March 1985 that unemployment had gone up by 125,000. By February 1986 it had gone up another 114,000, and the Chancellor told us yesterday of a further substantial range of measures to help the unemployed. I do not think that those are many of the sort of things that the Paymaster General talked about, unless it is the tea and sympathy jobs—not jobs.

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As Lord Young said in an interview last night, the purpose of these measures is to show that the Government have not forgotten the long-term unemployed. They have not; they have invited them for a cup of tea and a chat. But the long-term unemployed cannot get jobs. There are no jobs in any of these proposals. The only jobs in these proposals are the 2,000 jobcentre workers who are going to interview the unemployed, and I welcome that. At least it is an increase in jobs. It is also an increase in bureaucracy in the Civil Service, which this Government have spent an awful lot of time proudly reducing.
The record shows the latest little bit of a fiddle. The Paymaster General exclaimed with great indignation when we called it a fiddle, although he knows it to be a fiddle. When he adds the self-employed to these figures—a method that has not been used in Europe—by June he will be able to show that the percentage of unemployed, such as the figure of 14·1 per cent. in January, is reduced to something like 12·9 per cent. We shall see a remarkable turn around in the June figures due to the Government's fiddling—loading up the total amount of people in work and reducing the number of unemployed by using different calculations.
Mr. Kenneth Clarke: We made one change simply to correct an error, and I am pleased to hear that the hon. Gentleman is not attacking that. As to the rate of unemployment, does he agree that what we mean by that is a comparison between the number of those out of work and seeking work and the total numbers of the work force? Is he still on to the argument that the self-employed should not count as part of the work force? Does he not think that people working on their own account are in work?
Mr. Prescott: No, we cannot ignore the self-employed. However, this is the eighteenth change of the figures, and they are all designed to do one thing—reduce the figures of unemployed. The Paymaster General should stick with me and think it through. If he adds the self-employed to the total employed labour force and divides it by the same set of unemployed figures, he will get a different, reduced percentage.
Mr. Clarke: More accurate.
Mr. Prescott: I am all for having accurate statistics, and I am not in doubt about them. When I was asked on television whether I would change the system, I said that I would look at the evidence and make a judgment. I can understand that the self-employed should be included. However, my judgment is that the Government spend all their time looking for ways to reduce the unemployed figures by fiddling them down.
Let us get a comparison with full-time equivalents, because the Government's only claim is based on part-time jobs, which form two thirds of the increase in jobs. The Bank of England and the Library have done the calculations with full-time figures. Unfortunately, when I asked the Paymaster General for an answer on this, he said that the Department could not deal with the problem because there was too much detail. If he has the statistics from the Library, why does he not get his computers working?
If the Paymaster General takes full-time equivalents now compared with 1979, which is a matter of record, he will find that full-time equivalents have gone down to about 2·1 million. The Bank of England looked at this
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assessment and averaged what the increase in full-time equivalents has been, on that basis, from 1983 to 1985. The figure is about 24,000, as I think the Paymaster General is aware. That is about 12,000 a year on the balance of full-time equivalents. I asked the Library how long it would take us to reach the level of full-time equivalents of 1979 on the rate of increase that the Government have proudly put forward. The answer was 1,875 years.
Mr. Clarke: The hon. Gentleman cannot make his attacks on fiddling the figures and then start using an ingenuity that the hon. Member for Oldham, West (Mr. Meacher) would envy. Since 1983, the last election, over 700,000 people have gone into new employment. The hon. Gentleman is talking it all down, not least of all by leaving out all the self-employed again. There is a huge growth in self-employment, and the hon. Gentleman is betraying what I have already said is the prejudice of the Labour movement by leaving the self-employed out of the calculation.
Mr. Prescott: I shall not pursue too far the point about the self-employed.
Mr. Clarke: The hon. Gentleman is ducking the point.
Mr. Prescott: I am not ducking it, because I have not looked at it. The assessment made of the self-employed in the labour force surveys operates in a different way from when the Labour Administration were in power. If we asked that question, we should probably want to consider that possibility. I am not worried about that. However, if the Government want to compare their record on unemployment with that of the Labour Government, the records should at least be compared on the same basis so that we can get a fair judgment of where the Government's policies have been more successful. As I recall, the poster that the Government used in the 1979 election showed queues of people and said "Labour isn't working." Unemployment has gone up by 2·5 million since then, we have not heard a murmur from the Government, and the Budget is not doing anything to help.
The Government are also trying to manipulate the situation. They are trying to put a gloss on caring capitalism. Lord Young was appointed to his job to improve the image. We know how he does that. He gets out a calculator and fiddles the figures down, an then hires a PR agency for 1·5 million to tell us how daring the Government are and what they are doing to help the long-term unemployed. He is using the taxpayers' money for Tory propaganda about the Government's policy, which is what they do not want local authorities to do.
That is not acceptable, and the electorate are rumbling the Government. Why are we worried whether the figure is 3·2 million, 3·4 million, 4 million or 4·2 million? The reality is that the trend is inevitably up. The figure is expressed in millions of people unemployed.
Mr. Clarke: I do not think that the hon. Gentleman is on safe ground in asserting that the present trend in unemployment is up. He is drawing comparisions by going back to 1979. All our critics do that, but they take in the worst period of the recession, which was from 1979 to 1981. We have now had four or five years of sustained growth in the economy and we are rapidly creating new jobs. To go back to 1979 is to exaggerate the analogy. The hon. Gentleman cannot assert, on the basis of what I admit

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are somewhat perplexing figures over the past few months, that we are on a rising trend of unemployment. He has no basis for asserting that.
Mr. Prescott: Does the Paymaster General spend any time looking at the figures? I can give him two from his Department. Unemployment in March 1984 was 3·1 million. Will he accept that proposition? They are figures from his Department, so I assure him that they come from a good source. In February 1986, the figure had gone up to 3·382 million. I am not a clever kid on figures, but that is an increase of nearly 250,000 people on the unemployment list.
Through the post I received a document from the Paymaster General's Department. It says at the top:
"Restricted to Ministers for Question Time."
It is about the latest unemployment figures, and the Minister's civil servants have advised:
"Unemployment is 3·2 million. If asked, that is the smallest increase since November 1985."
That is good propaganda, but it goes on to say:
"The total is the highest recorded since seasonally adjusted figures started in 1948."
I did not hear that from the Dispatch Box in the last Employment Question Time. The document is full of good stuff which I shall use on other occasions.
Unemployment is higher now than it was in the 1930s, but in the 1930s it continued to go up for only four years at a run. I hope that the Minister will not deny those figures. In the 1980s, under this Government, unemployment figures have gone up every year for six years. My charge is not that the Government have made a mess of it, but that it is a deliberate act of the Government to maintain unemployment as part of their policy. There has never been any doubt about that. I shall not again weary the House with the figures for OECD countries and what happened under previous Tory and Labour Administrations, but the evidence is clear. It may be that people have been shaken out, as the Prime Minister suggested, but undoubtedly Government policy had a greater effect than any world recession on the nature of unemployment in the British economy. To that extent, the Budget, by giving money in tax cuts, confirmed that the Government were not prepared to give it for jobs.
We are always hearing arguments about how many jobs can be bought for £1 billion of borrowing. It is generally agreed that fewer jobs are obtained by taking 1p off tax than by putting the money into public infrastructure. Indeed—I am sure that the Minister will agree—more people can be taken off the unemployment register by producing cheapie schemes, such as the youth training scheme, community programmes, and so on. In fact, one of the conditions of going on those programmes is that a person is registered as unemployed. It is to get people off the unemployment register that those schemes are provided. What the Government chose to do in the Budget was to go for tax cuts and a lot of cheapie schemes, because that, basically, is what they boil down to.
I must make clear again my attitude to community programmes, YTS, and other such schemes. There is definitely a role for them in order to bring about a full employment economy. We are not going to produce 4 million jobs on a 40-hour week basis. Those days are gone. We have got to find all sorts of ways in which we can give the opportunity to all in our society to make a
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useful contribution. Community programmes are clearly one such way, and they are here to stay, as is the YTS. My attacks on these programmes relate to the Government's using them simply to manipulate the unemployment figures and to avoid doing anything themselves about providing jobs.
The Minister says that he does not agree with the Tory reform package. I can only say that I wish that he had shown more consideration to the report of my hon. Friend the Member for Newham, North-East (Mr. Leighton). The Select Committee on Employment is made up of hon. Members from both sides of the House. That report was rubbished in a press release within an hour of its coming off the press. Any hon. Member who cares to refer to the evidence will see the following:
"We released it at 11 o'clock, we then had a Press conference at 12 o'clock and one of the journalists who came along at 12 o'clock had in his pocket what he called a Department of Employment Press release which pretty comprehensively savaged and denounced the whole report."
That is the sort of attention that the Paymaster General gives to the serious attempt of hon. Members on both sides of the House to do something about unemployment.
My main objection to the Government's policy—this enterprise culture, this desire to give incentives and to vamp up profits—is that I believe it to have failed. The Government seem to believe that if people are given incentives and companies are given more profits, what the Chancellor calls the engine of growth will get going—the engine of capitalism, reinvestment and the provision of jobs.
If we look at the proportion of net domestic product that went to profits between 1979 and 1984 we find that it increased from 9·1 per cent. to 14·9 per cent.—a 6 per cent. increase, which is equivalent to £14 billion. What did they do with that £14 billion? They did not put it into investment. We have heard throughout these debates that investment has been lower in manufacturing.
When I was doing research for this speech, one thing that really struck me was something that the Prime Minister said when she was Leader of the Opposition. Talking about manufacturing industry, she said:
"On the economic side, we have to break through the prosperity barrier in manufacturing industry." — [Official Report, 28 March 1979; Vol. 965, c. 468.]
The right hon. Lady not only broke through barriers, but she smashed down manufacturing industry, with investment, output and trade deficit all worse than in 1979.
When we look at what happened to the £14 billion, we see that it did not go into investment, training or research and development. As the previous Tory Prime Minister found out, despite all the incentives, money was not put into investment or jobs. It was put into property in New York, it was put into investment abroad, so that, as the Chancellor says, we can live in the future, when we have not got oil money, on all the money coming back from those investments. But it is at the cost of the collapse of our manufacturing industry and the loss of the jobs associated with it.
When I hear talk in this debate about training, I must say that industry has no room to criticise what the Government do about training. It was this Government who got rid of 16 of the 23 industrial training boards. It was this Government who got rid of the levies. The one thing that is claimed to be a success—YTS—is one of the industrial training boards that survived — the construction training board.

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We are told from the Dispatch Box that we are short of all kinds of skills. Not only were the industrial training boards closed, but the Government closed the skillcentres, as the Minister said, because they deal with the traditional skills such as plastering, bricklaying, and other such jobs. That is what the Government have done about training.
When representatives of industry say that they are short of skilled workers, I ask them how much they take from their pockets to put towards training. They pay very little. It is scandalous how little they are doing about training. Most of industry is using the YTS to finance its apprenticeship programmes in the early stages; it does not even pay for its apprenticeship schemes.
I have an advertisement here which I find most insulting. It reads:
"Here comes Spikey Dodds. Watch out Japan."
There is no doubt about what Japan does for its youngsters in education, making resources available, planning five-year training programmes and ensuring the acquisition of qualifications. Anybody who thinks that Spikey Dodds, after a two-year YTS scheme, is going to threaten Japan, Germany or America must be living in cloud-cuckoo-land. We are kidding ourselves if we believe that that is training for our youngsters, and we cannot maintain an industrialised economy without the skills necessary for a developed economy.
Even under the training boards we did not do enough training, but to dismantle them was criminal. The Government used the defence that with the training boards manpower got more places. Yes — they put the instructors on bikes to cycle round the factories. We do not do enough by way of training, and it is at the cost of our contribution to the industrialisation of the economy of this country. We see the kind of public relations stuff coming out from Saatchi and Saatchi. They do all right on it, but it is another example of tea and sympathy. It does not address itself to the real problem.
I therefore want to know where all the money went. A lot of it undoubtedly went abroad. That is the reason why we talk about a national investment bank. But an awful lot went in increased dividends, which went up 68 per cent. between 1981 and 1984 in real terms. In 1984 top salaries went up by 16 per cent. and incentives by 184 per cent. All this can be seen in the top salaries review. Real profits went up by 45 per cent. between 1981 and 1982 and real pay by 2 per cent.
Many of those top salaries and increased dividends go to people who work in the Confederation of British Industry, and we hear Sir Terence Beckett talking about nowt for nowt, as if somehow we are all being treated the same in the distribution of resources either by the tax handout by the Government or by the distribution of dividends and shares. People realise that they are treated differently. The richer one is, the richer one gets; the poorer one is, the poorer one gets. Poverty abounds and continues to increase in this country.
That is what really annoys me about the Government's policy. Most of these policies and schemes are designed to produce low-paid part-time jobs. If anybody has any doubt about that, it is only necessary to go into a jobcentre. I go into jobcentres all the time. I find jobs advertised that are illegal, and I take the cards off the board. I find jobs offered at 30 per cent. of the takings, which is illegal according to wage councils rates.
There is one distinct difference in the jobcentres compared with the time when the Labour party was in
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office. There are fewer jobs but bigger cards. This is to make the jobs look more impressive. But the main jobs are community programme jobs. They are part-time, and, even with the increase in the rate which the Minister talked about, the rate in the community programme is not brought up to the real rate, which should be about £75 a week. It is still below the proper rate, and the people on these community programmes are going to be counselled to go into part-time low-paid jobs. The Government have an interest in that. It means that two people come off the dole queue instead of one. This is what the tea and sympathy and the counselling are all about. It is to get people into the community scheme jobs. That is what all these job subsidy schemes are for—to force down the wage rate and get people to work for less. The Government believe that this creates more jobs, but it only creates more part-time employment and leads to more self-employed.
I am not necessarily saying that those measures do not have a role to play, but more must be done. I can give the House a good example from my industry—shipping. I was a seaman for 10 years. I shall leave aside the question of paintings and bottles of wine. I am glad to hear that such abuses are to be stopped. Indeed, we said that that would happen. Capital finds a way of making its money. The Government say that they will extend the business expansion scheme to shipping. I am worried about shipping because we have lost about 700 ships since the Government came to power, and thousands of seamen have been thrown on the dole. The Government say that they will get shipping where it is cheapest, but with the Falkland islands campaign they went running around for ships.
I understand that the Government will encourage the BES for coastal shipping only. But the Secretary of State for Transport is dismantling cabotage—the only area in which Britain's shipping enjoys 60 per cent. of its United Kingdom cargoes. We have not yet done to our coastal trade what we have done to our deep sea fleets. The Government are stepping in with a charity scheme, while they are wholly dismantling all the jobs and the fleets in coastal shipping. But we are arguing against their proposals, relying as they do on the market system and on giving tea and sympathy. Many of the community programme schemes offer low pay, low skills, and few hours. Anyone can see through those schemes. It was hoped that 30 per cent. of the places would be full-time jobs, but the figure has dropped to 16 per cent. The Government's policy is to create part-time, low-paid, poverty jobs, and the MSC is their agent in doing that. That is why people resist MSC schemes and think that they are skivvy schemes.
It is not only the Labour party which talks about alternatives. I am sure that we shall hear much more about them. Indeed, we have heard about them before from the Conservative Benches, the Trades Union Congress, the Confederation of British Industry and the wets. They all say that public expenditue can be used to create more jobs, that local authority enterprise boards can be vamped and put in reverse to create more jobs.
My right hon. Friend the Member for Sparkbrook pointed out how 1 million jobs could come in two years. We have said how much that will cost, and the areas where they will come, but the Government criticise us for not having worked out how we shall find bricklayers and joiners. The Paymaster General made great play of housing. Obviously, we want to use the £6 billion in local

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authority capital receipts from the sale of council houses. We know that 500,000 building workers are on the dole and that there is a need for houses. Is that not a sensible way to get people back to work? The Paymaster General is responsible for doing something about the unemployed, but he tells us that the skills are not available. He tells us that, having dismantled the skill training centres and the industrial training boards.
I wish to put a simple proposition to the Paymaster General. I think that the debate has been helpful to him to get to know the facts. In 1978–79, 280,000 houses were built, but in 1985 only 190,000 were built. Where did we get the skills so many years ago to run such a big building programme? Where did they go? The skills must still be there. They may have gone into the black economy. I have no doubt that there is a good deal of that going on in that industry. [Interruption.] I am adding the two together. I know that the Government do not like to do that. They talk only about the private sector. I shall let the Paymaster General into a secret. There is a brickie who works on both private and public houses, and his skills are needed for both.
If we had the skills for that programme in 1979, why do we not have them now? Of course we have them. They may be used in the black economy for a few bob in the pocket. We are looking at that aspect carefully. I would not mind financing a programme with those people. However, I had better leave it at that. People in the black economy are avoiding their obligations to pay national insurance and taxes, as they should and as they do on community programmes.
The Paymaster General does not need to worry or to rely on smears about a £25 billion programme. I see that the Chief Secretary has left the Chamber. My hon. Friend the Member for Thurrock (Dr. McDonald) challenged him last night. She said:
"The Chief Secretary claims that the Labour party proposes to spend £235 million on teachers,"
and £871 millon on building and equipment. The Chief Secretary admitted that that claim did not come from the Labour party, or even Labour party documents. The Chief Secretary replied:
"Could I say quite simply to the hon. Lady that I am happy indeed to get the record right … I want to establish … precisely what pledges the Opposition are putting forward. I shall be very happy to tick them off from the £24 billion." — [Official Report, 19 March 1986: Vol. 94, c. 374.]
The right hon. Gentleman accepted that they were not Labour party figures. It was a big slur by the Government, and propaganda about a programme which was not part of Labour's policy.
Mr. Kenneth Clarke: The hon. Gentleman stopped that quote at a convenient point. My right hon. Friend the Chief Secretary said that he would be happy to tick the pledges off, and that if the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who was in the Chamber,
"would like to write to me telling me what pledges I have got wrong, I will do the costing accurately."—[Official Report, 19 March 1986; Vol. 94, c. 374.]
We have costed the Labour party programme at that figure, and we are waiting for the right hon. Member for Sparkbrook, or someone, to write to us saying on which
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promises the Labour party will renege to get its present public spending commitments down to the figure that it is now talking about.
Mr. Prescott: Even if the logic is correct, why did the Government not write and ask in the first place? If the Government were concerned, all they had to do was ask.
The Minister's answer makes the position clear. He is new to the job of Employment spokesman. He was brought in with a new image. I accept that Lord Young has a completely different style. He not only fiddles the figures, but fiddles television and radio interviews to ensure that he does not appear to defend his policies. He is gutless and has no courage to defend his policies, so we must make do with the number two—the Paymaster General.
The Budget is an offence and a kick in the teeth to the unemployed. All it is offering is more tea and sympathy in various sorts of schemes designed to reduce wage levels, and to create more part-time work to fiddle the employment figures. There is an alternative and Labour is presenting it. The issue of getting people back to work will be proven with the return of a Labour Government.
5.36 pm
Mr. Peter Rees: The hon. Member for Kingston upon Hull, East (Mr. Prescott) has made a long and vigorous speech. I hope that he will not think me discourteous if I do not follow every point that he made because many of them did not appear to relate closely to the Budget. They may be more appropriate in a more general debate on employment, or on a debate about merchant shipping, about which he knows I am concerned.
I rather warmed to the hon. Gentleman when he opened his speech by saying with becoming candour that he would produce clear, precise and carefully-costed proposals for reducing unemployment and dealing with that problem. Despite the 55 minutes that elapsed, I still remain—this may be a reflection on my capacity for absorbing his oratory — entirely unclear about the Labour party's precise proposals.
I heard and read with care the words of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), and saw his proposals. I did not notice whether they were endorsed by the hon. Gentleman. Perhaps he was wise not to. Or does the hon. Gentleman endorse them?
Mr. Prescott: Yes.
Mr. Rees: The hon. Gentleman does endorse them. The proposals amount to £1 billion on infrastructure for capital programmes, and an increase in public-sector employment, costing a further £1 billion. I commend the right hon. Gentleman for his modesty and self-restraint. He then went on, perhaps a little less modestly and with a little less self-restraint, to endorse completely, perhaps not entirely understanding the figures, the recommendations of the all-party Select Committee. That would take him up into the £8 billion region.
I sense a certain unease on the Opposition Benches about the levels of public expenditure to which they may or may not have committed themselves. I noted the uncharacteristically sharp words of the hon. Member for Thurrock (Dr. McDonald), who is beating a retreat at this moment, and who promises my right hon. Friend the Chief Secretary hard times in Committee.
We in the House and people outside are entitled to have carefully costed proposals from the Labour party. It may

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be that the Labour party is resiling rapidly from the figure of £24 billion, but I will not go into the details of that. [Interruption.] I have a warm regard for the contributions from the hon. Member for Sedgefield (Mr. Blair) with whom I had delightful and often constructive debates last year in Standing Committee. Perhaps in due course he will throw a little bit of light on these matters. I know that the temptation in opposition is always to commit oneself to a little bit more than one can fulfil, but the country and the House are entitled to know in more detail what the proposals are, what they will cost, and how they will be funded.
I should like now to turn to what should be the subject matter of the debate, the Budget proposals. The hon. Member for Kingston upon Hull, East made a vigorous and voluminous speech, but my confidence in his grasp of the Budget proposals was a little shaken when I heard him say that the stamp duty reductions would be more than the figure devoted to employment measures. Let us look at both. The stamp duty reductions in the year 1986–87 are self cancelling. Page four of the Red Book says that there will be a reduction in the rate which will cost £70 million and there will be an extension of the base which will yield £70 million.
The changes in capital transfer tax, or, as we must now call it, the inheritance tax, will involve a remission of tax of £35 million. If the hon. Gentleman had cast his eye a little bit further down he would have seen that the total gross expenditure on employment measures will cost £195 million. The hon. Gentleman has possibly not done his homework in this field with quite the assiduity that he showed in other areas. If there is tea and sympathy on the Government side of the House, there is a great deal of tea and great deal of sloganising on the Opposition side, but not many practical measures.
I should now like to look at some of the measures which my right hon. Friend the Chancellor so wisely commended to the House. I congratulate the Chancellor because he constructed some rather attractive bricks with only a little straw. I am sure the House understands the constraints under which he was operating. The right hon. Member for Sparkbrook said that, notwithstanding the constraints, there was an opportunity for a great economic breakout. Alas, his suggestions gave me the impression that he had not the remotest idea of how to achieve an economic breakout.
I hope there is common ground on the fact that the lowering of oil prices, if maintained, should feed through over the years to assist in creating a yet more buoyant and vigorous industry and should yield increasing amounts of corporation tax to the Exchequer. It was an irony, and perhaps a difficulty, for my right hon. Friend the Chancellor that concurrently with the Budget speech there was an important OPEC meeting, the conclusion of which is perhaps a little bit difficult to divine at the present time. The lowering of oil prices should assist in reducing further the rate of inflation. My right hon. Friend was right to defer the major reforms upon which all my hon. and right hon. Friends have set their hearts.
Mr. Nicholas Budgen: Will my right hon. and learned Friend explain why the lowering of oil prices will necessarily reduce the rate of inflation? It will reduce some costs, but if inflation comes from an increase in the money supply, will the reduction not be balanced by increases in other costs?
Mr. Rees: I do not take such a theoretical view as my hon. Friend. Fuel and energy costs bulk large not only in domestic but also in industrial budgets, and I hope that they will be reflected in the figures I have cited. The right hon. Member for Sparkbrook talked about the "essential triviality" of my right hon. Friend's Budget. Has he really grasped the philosophic thrust that has characterised not only this Budget but other Conservative Budgets? It is right for my right hon. Friend and his predecessor to take credit for perhaps the longest period of sustained growth over the past 10 or even 20 years, and that has been coupled with a steady downward trend in inflation. That emphasises the underlying soundness of the economy and of Government financial policy.
It cannot be the enfeebled economy that the Opposition would have us believe it is. We have time to survive the miners' strike and the uncertainties of the oil market. Casting my mind forward to the future, I hope that against this background my right hon. Friend will share his thinking with the House about when it would be appropriate for us to join the exchange rate mechanism of the European monetary system. This may not be the appropriate moment or the appropriate debate in which to ask about that.
Sir Peter Emery: It is as good a time as any.
Mr. Rees: I think that my hon. Friend has reached the same conclusion as I have. This is a decision that we cannot shirk for ever. I will be persuaded by the able advocacy of my right hon. Friend when he winds up on Monday or by the advocacy of my hon. Friend the Economic Secretary when he winds up tonight. I leave them diffidently with the thought that perhaps the time will come—if not this week or this month then perhaps this summer—for some movement on this delicate front. I am sure that the advantages of such a movement are clear to the House.
I should like to revert to more immediate concerns. It was made clear by my right hon. Friend the Chancellor that the essential theme of the Budget and the long-term theme of the Conservative party is the encouragement of a property owning democracy. We have moved a little further away from the cry of three acres and a cow. It is now a house, a transportable pension scheme and, it is hoped, a modest stake in the equity market. That is the background of this Budget. We could have a significant debate on the philosophic divide between hon. Members on the Government side and hon. Members in the Opposition. I hope that hon. Gentlemen who feel able to contribute to such a debate will explain to us their real objections to the Budget and will not repeat the prejudices which I am sure the hon. Member for Sedgefield does not share. Perhaps he could explain the objections of thinking members of his party.
I used to think that the Labour party would like us all to be tenants of local authorities and employees of the state and, ultimately, pensioners of the state. I am sure I have misconstrued its thinking, but we are left a little bit in the dark. We are reminded constantly by the Opposition that we are possibly within a year or a year and a half, and certainly not more than two years, of a general election. The Labour party owes us its thinking on that and on other subjects. I hope I shall be forgiven for dealing in generalities, but our policies will create not only social and

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industrial stability, but will generate and sustain the increased economic activity which alone can create sound and long lasting jobs.
If one looks at the speech by the right hon. Member for Sparkbrook, one sees that it is once again a question of padding the public sector payroll. The thinking of the hon. Member for Kingston upon Hull, East, who has abandoned the House—I have no doubt for good reasons—was to treat the local authorities as the engines for creating employment. The clear inference was that the payroll of the local authorities should be padded. Is that a constructive suggestion in the second half of the 20th century?
I now come to the measures which I find especially attractive and skilful in the Budget. Bearing in mind the limited resources that my right hon. Friend had to deploy, I commend the business expansion scheme and its permanent extension. I had something to do with its early initiation and I recognise that it needed to be refined and improved. I am sure that my hon. and right hon. Friends will be open minded in considering whether it needs to be expanded as well as redefined. The principle has now been accepted and the scheme is recognised as a useful and appropriate way of mobilising capital for developing businesses. That is a healthy development.
I well understand the pressure on my Treasury colleagues, and why the profit sharing proposals could not be deployed now. However, I await them, as they are developed, in keen anticipation. Over the years we have had share incentive schemes. I know that the alliance is particularly attracted to such schemes, and I hope that it will find common ground with the Government in approving of profit sharing proposals. No doubt the Labour party, with its hard-line approach to such matters, will attempt to rubbish them, but all moderate and thinking people will recognise the advantages to be derived from some new thinking in this area.
I turn to the personal equity plan, I have always nourished some interest in the Loi Monory. Of course, it will not be reproduced exactly in a British context; indeed, we know that circumstances in France were slightly different. Nevertheless, I welcome the Loi Lawson. I certainly do not underestimate the contribution that it can make.
I have no reservation about the part played by pension funds and insurance companies in our social and economic life. But it is important to encourage people to hold a direct personal stake in the shares of British companies. Buying shares, for example, in companies that are household names will lead people to understand their position, and the real economic prospects. Such an understanding has been lacking until now.
I shall now consider the provisions relating to capital transfer tax. I remember the sharp debates that we had over the winter Finance Bill introduced by the last Labour Administration. I always thought that it was an ill-judged price to pay for the support of the extreme Left wing of the Labour party for other measures that had to be carried through. But that is an abiding feature of Labour Governments. They have to pay a price to their Left wing. In those days, the Treasury Bench, if pressed, would probably have said that it was of limited concern to it whether or not there was an extension of capital transfer tax, but that such and such had to be done to satisfy the
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—to coin a phrase from the then Chancellor of the Exchequer—"tiny Chinese minds" of the Left wing of the Labour party.
We rightly committed ourselves to drawing the teeth of capital transfer tax, and I believe that we have fully honoured that commitment. The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) made a characteristically elegant contribution yesterday. I was rather charmed by his military metaphors, as I had not heard them from his lips before. However, in his absence, I should like to commend him on that new turn in his eloquence. The right hon. Gentleman suggested that we should try to establish a stable regime. I believe that stability can be achieved using the measures that the Government have in mind. There are always points of significant detail to consider, and we may have to consider rates from time to time, but we now have a structure which will not always be attractive to those families who will have to meet this impost but which could provide us with some common ground. I hope that the alliance will confirm my feelings on that point.
We were right to give priority to tax thresholds during the past few years. Moreover, I warm to the statement of my right hon. Friend the Chief Secretary that there is room to advance on both fronts. It must be recognised that the starting point for income tax, coupled with national insurance payments, is now as high as, if not higher than, that in any other country in western Europe. Indeed, as my right hon. Friend so appropriately and gracefully emphasised yesterday, we should consider the middle band of taxpayers and reflect on how far their position has been advanced over the years. We should contemplate whether a little more could be done for them.
At the risk of striking a rather heterodox pose and perhaps disavowing some of the things that I have said in the past, I should point out that the time may come, particularly when the Inland Revenue has computerised its activities, to consider returning to a variety of intermediate rate bands. I fully realise the breathtaking nature of that proposal. I have argued vigorously against a single intermediate rate band because it concentrates the advantages too narrowly. However, I am no longer in a position to master the technicalities of my proposal, and am not even in a position to cost it. I recognise that it might be rather expensive, but I hope that my right hon. and hon. Friends will give it some thought.
It is appropriate to point out that so far no Opposition Front-Bench spokesman has made any reference to the staggering and imaginative reliefs that have been devised for charities not only in this Budget but in previous ones. I have read all the speeches of Opposition spokesmen, although I hope that I have not read them too fast. Indeed, we have not even had tea and sympathy for charities from the hon. Member for Kingston upon Hull, East. That tells us a little about the Opposition's approach to hardship and poverty. It is an institutionalised Socialist approach. I see that the hon. Member for Kingston upon Hull, East is stirring uneasily and I hope that he will give the lie to that.
Mr. Prescott: It is all in the speech of my right hon. Friend the Member for Islwyn (Mr. Kinnock).
Mr. Rees: I am delighted to hear that, and I am willing to withdraw my remarks. I candidly admit that I did not take the speech of the Leader of the Opposition seriously enough, and I shall make an exception in the case of the

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right hon. Gentleman. However, I shall give way if the hon. Member for Kingston upon Hull, East wishes to intervene in response to my remarks.
We have had an imaginative Budget. We shall, of course, look for more substantial moves next year, but this Budget can be taken as an earnest of things to come. More importantly, it demonstrates the continuing vitality and original thinking of both the Treasury and the Government. One is bound to contrast that with the thinking of the Labour party, with its muddle over its public expenditure plans, which is perhaps symptomatic of the difficulties that it finds itself in. The rather harsh exchanges that were heard between my right hon. Friend the Chief Secretary and Opposition Members show that the Opposition are a little uneasy about the paucity of careful thought on their Benches. But we would like to know what their public expenditure plans are, and what programmes they would boost and what programmes they would trim.
Mr. Prescott: They are coming.
Mr. Rees: Well, we have been waiting a very long time. The Labour party has been in opposition since 1979, and there may be another general election sooner rather than later. The Labour party owes it to the country to spell out in detail—[Interruption.] The hon. Member for Kingston upon Hull, East may have spoken about it, but then his speech was bereft of any thinking on this subject.
At present the right hon. Member for Sparkbrook has said only that all the higher rate reliefs would be clawed back and that there would be an investment income surcharge. He put the simple proposition that the higher earners had been uniquely benefited. I remind him and the hon. Member for Kingston upon Hull, East that they were uniquely disadvantaged during the years of Labour rule. It cannot be a maxim that this country's unity must be bought by income tax rates of 98 and 83 per cent.
We have been told that this is a divisive Budget. I have heard nothing from the Opposition Benches to suggest that their fiscal plans will achieve harmony, let alone any economic vitality. The Opposition's fiscal plan is a step back to the 1970s and the sterile slogans of class warfare which are utterly irrelevant to the latter part of the 20th century and which have been decisively rejected at the last two general elections.
The electorate will recognise where there has been constructive and imaginative thinking. It will recognise this Budget as evidence of that thinking, and I shall support my right hon. Friend the Chancellor of the Exchequer's Budget proposals with real pleasure in the Division Lobby on Monday.
6.1 pm
Mr. Ian Wrigglesworth: I am pleased to follow the right hon. and learned Member for Dover (Mr. Rees) because I would like to begin my speech by covering those points of the Budget where I am happy to agree with the Government's actions and to say that, in some respects, we shall be pleased to support the Government on those proposals in the Finance Bill and in later stages.
Not all the points relate to the Finance Bill but I will mention some points that are important. First, there has been a substantial change in the Government's attitude towards the international and national finance markets. The reason why the right hon. Member for Birmingham,
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Sparkbrook (Mr. Hattersley) got it wrong about interest rates the other week when he forecast that they would rise—
Mr. Tony Blair: The alliance got it wrong too.
Mr. Wrigglesworth: No, we did not make that forecast. In fact, we made the opposite forecast because some alliance hon. Members were aware of what was happening in the City at that time. What happened then was something which should have happened previously and which I am pleased that the Government have done. They have intervened through the Bank of England in the financial markets in order to steer interest rates in a way that they were not prepared to do previously.
In his Budget speech, the Chancellor paid some compliments to the efforts made by the United States Administration—by the Secretary of State and the chairman of the Federal Reserve bank—through their intervention in world markets and by way of the Plaza agreement. That agreement has benefited this country and the whole international financial system. I welcome the change of view that intervention by Governments in these markets is beneficial and I hope that the Government will continue to pursue that policy.
I am pleased also to welcome the Government's announced intention to examine the possibility of giving tax relief for profit sharing and I join the right hon. and learned Member for Dover on that point. The House will not be surprised to hear that the alliance has some pride of authorship in supporting that suggestion. The suggestion is only tentative at this stage but, like the right hon. and learned Gentleman, we shall follow with great interest what the Government are doing and if they can come up with a scheme that will help to encourage profit-sharing to become a much greater part of the remuneration of staff at all levels in enterprises, we shall in principle give that scheme our support.
Similarly, we support in principle the Government's proposals for tax relief and other benefits for people buying shares for the personal equity plan. However, having looked at some of the details, I am not as impressed with the scheme as I was by its original principle. I fear that the benefits that are offered and the scale of the scheme are very limited and I do not think that it will be Loi Lawson. The scheme has a lot further to go before it achieves what France and other countries have done to encourage people to buy a substantial number of shares. It has our support in principle, but in practice we will have to study the details in the Finance Bill before we decide our attitude on the matter.
I am pleased to support the Government's proposals on charities, which are comprehensive, both for the expenditure made by charities and the contributions made to them. The proposals will be widely welcomed inside and outside the House.
I also welcome the publication of the Green Paper on the reform of personal taxation. The proposals to separate the taxation of man and wife are welcome. I have made similar proposals in previous Finance Bills and this idea has had increasing support across the political spectrum. However, I do not think that the alliance will be able to support the proposals for the transferability of allowances contained in the Green Paper. Obviously a great deal more study must take place before we can strike our attitudes on

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the detailed proposals. However, it is good to have the proposals in their present form, as they allow public debate to take place before the computerisation of the revenue takes place in 1990 and we can all come up with proposals for consideration.
I would like to make the following appeal to the Government. I hope that they will consider in a way that they were regrettably not prepared to consider in relation to pensions the possibilities of seeking some agreement between the parties on the direction and shape of the proposed taxation system. There are some areas on that issue where we might be able to get agreement across the Floor of the House. It may benefit the Revenue, the Government and, most importantly, the country if we can have some stability in the organisation of the tax system rather than having constant changes with changes of Government. I would suggest that the Government have consultations across the parties to see whether a measure of agreement can be reached on the proposals.
Those are the areas of the Budget for which I commend the Government. However, my commendations must end on the shape of the Budget strategy. The Chancellor's sums depend on a very rosy view of international and national activity in the economy over the forthcoming year. His projection of a 5·5 per cent. growth in world trade compared with 3 per cent. this year generated by falling oil prices may be correct. Whether British exporters can share in that expansion depends crucially upon the effects of unit labour costs and whether those costs will undermine the possibility of firms taking up some of the demand from overseas that will undoubtedly come as a result of the fall in the price of oil.
The Chancellor's PSBR and other targets crucially depend on how much progress we can make in the direction of unit labour costs. The Chancellor has not paid sufficient attention to the impact in the longer term that the fall in the price of oil and the rise in unit labour costs will have on our balance of payments. Our current account will very soon come under increasing pressure as the revenues from the sale of oil overseas decline and as our unit labour costs make industry less competitive. In future, that will be a major constraint on the economy for any Government to face. I would like the Minister to pay attention to the forecasts and respond to that clear threat for the future.
The principal criticism that I and my colleagues make of this Budget is that its priorities are wrong. The expenditure upon which the Chancellor has embarked as a result of his fiscal adjustment—the cut in taxes—is the wrong thing to do at present. The Budget has done nothing to use the Chancellor's fiscal freedom to encourage and increase jobs in the most cost-effective way and it has done very little to help the competitiveness of British industry.
There has been a great debate, which we have witnessed again today, about the costing of the Labour party's proposals. I would like to say a few words about public expenditure as I think that the Government's actions have been valuable in exposing the hollow nature of the Labour party's proposals and in drawing attention to the grave problems of public expenditure which this Government and any Opposition party with any sense would recognise are constantly being faced today, in this country and elsewhere.
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Not many people acknowledge that public expenditure has increased under the Government. The financial deficit shows an increase to £12·2 billion. There have been substantial increases in public expenditure in some programmes. They are not the programmes that I and my colleagues would like to see expanded. The defence budget has been massively increased, as indeed has the employment benefit and social security benefit programmes. They have been one of the major reasons why public expenditure has increased.
But any Government today will have major problems in containing the growth of public expenditure. The Government's analysis of Labour's promises has drawn attention to the way in which parties in opposition can too easily make great promises to all sorts of pressure groups and end up in the position of the Labour party. We recognised that a long time ago and I hope that the Economic Secretary will accept that. We did not just pull figures out of the sky in the way that the Labour party has. We sought, as well as we could, to test our budget proposals not only on one economic model but on two. There are grave problems for any Opposition party doing that without the resources of all the Government Departments behind it. We published all the figures and consequences of that and decided upon the public sector borrowing requirement that we were prepared to accept could be borne.
I hope that the Minister will acknowledge that we were making a serious attempt to put forward a credible policy. Certainly that has been widely acknowledged in parts of the press that are not sympathetic to our cause and in other areas of the public press. We have clearly stated the consequences of our programmes for inflation, the PSBR, the exchange rate and interest rates in forthcoming years.
We have heard a lot of figures from the Labour Front Bench about what the Labour party will spend on this and that. But we have heard little about what the interest rate, the exchange rate or the PSBR will be in two years' time under Labour's programme. In fact, we have heard nothing at all.
The right hon. and learned Member for Dover and the Minister cannot have heard the right hon. Member for Sparkbrook on the radio this morning. I almost had a crash listening to him in my car on the "Jimmy Young" programme. The £3·5 billion that he has gladly given out to the pensioners, the long-term unemployed and all the others who have been promised great increases in benefit he took away this morning. We were told that that money would come from the top 5 per cent.—those who earn £25,000 and more. But this morning the right hon. Gentleman said when pressed that he had always felt that people who earned about £25,000 had been taxed much too heavily and that he had nothing against people earning £25,000 and above. He then went on to say that there would be no increase in income tax for those people. Where he thinks he will get £3·5 billion from to increase pensions and all the other benefits if he does not increase income tax on people earning above £25,000, I do not know. He will certainly not get that money from increases in capital taxes on those people and the others that he is proposing. The bulk of that £3·5 billion could come only from restoring the levels of taxation—which he then went on to condemn—that had been levied in the past upon such highly paid people.
That is typical of what we have heard month in and month out from Labour spokesmen. They have taken

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figures out of the air which, when added up, are meaningless. It is nothing more than a public relations exercise. It is irresponsible opposition. The Opposition are not prepared to test their figures on the London Business School computer, on the Treasury computer, on the National Institute economic model or anywhere else. We are told that we shall have the figures in a year's time but I bet that that deadline will slip because the Opposition are caught between the Left in their party, who want them to spend the money, and the figures—the consequences of the programme that they are putting forward. They cannot reconcile those two forces. That is why we shall never have any serious proposals from them.
I acknowledge that containing public expenditure is a major problem for any Administration. The Government have demonstrated the truth of that by the difficulties that they have had in reining back public expenditure, about which they have been enthusiastic. My right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) pointed to that fact yesterday. Unless we are able to increase the competitiveness of British industry and to increase Britain's wealth we shall not be able to increase public expenditure in the way that all the pressure groups and I and my colleagues in the alliance want to do in the future. As the revenues from oil decline and as the contribution to the balance of payments from oil declines, it is crucial that manufacturing industry should be efficient and beat the competition from West Germany, Japan, America and other countries.
The only way in which we can improve the efficiency of manufacturing industry is by having a long-term plan. We put proposals in our budget statement for that for improved education and training and for cutting the employers' national insurance contribution. I shall not go through all the proposals that we made, but they hang together to get people back to work and to increase the competitiveness of British industry in order to increase the size of the cake from which to pay for social services, the Health Service and all the other things. That is vital and that is why our major criticism of the Budget is that the £1 billion or thereabouts that the Chancellor had available has been given away in a cut in income tax of 1p. That will do virtually nothing to get people back to work. A reasonable estimate is that it will create about 30,000 jobs over two years. It will do virtually nothing to help the competitiveness of British industry. If that money had been spent on research and development, which the Chancellor mentioned, industry would not have been on its own. All he was able to say was that the private sector will be allowed to increase its profits. Yes, it must have profits, and substantial profits, to reinvest, but cannot the Chancellor seek to direct that investment and to help industry by using the substantial amount of money that he has given to those who are in work to help industry and so to get some people off the dole queue, using that capacity to create the wealth that we need for the social services and the other things that we all want to see?
Mr. William Cash: I am listening carefully to what the hon. Gentleman is saying. Surely the way in which we shall be able to compete successfully in world markets is by producing higher quality goods. I hope that he will give us some idea of how he will put forward policies which will enable us to produce goods of a quality and kind which will compete successfully in world markets.
Mr. Wrigglesworth: We shall have to spend a great deal more on research and development in industry. We shall have to spend a great deal more on obtaining a highly skilled, highly educated work force that is innovative and can produce the best in design and one that has all the talents to create that wealth. We must not do what the Government have done much too much of—trying to have a low-paid, low-skill economy. That may be all right for developing countries, where there is cheap labour that can be used to undercut in many mass production industries. But, indeed, even in that sphere there is no future.
Although I am pointing out the importance of manufacturing industry, we shall not go back, as some Labour Members seem to think, to the position where tens of thousands of people are employed in factory after factory with smoke rising from the chimneys in the regions and other parts of Britain. We shall have a decreasing number of people working in manufacturing industry.
Manufacturing industry must remain productive and be the most effective means of creating wealth in the economy, upon which the service industries can be based. The City of London and many of our service industries, among the best in the world, would not exist were it not for the great manufacturing and trading power of our country in the past.
The manufacturing base was eroded dramatically during the period 1979 to 1981. The Government made many wrong decisions. We had a high exchange rate, high interest rates and manufacturing industry and other sectors were undermined by economic circumstances. It was not that they were inefficient but rather that they were undermined by such circumstances. At the same time there was the Clegg report and VAT was increased from 8 per cent. to 15 per cent.
The Economic Secretary to the Treasury (Mr. Ian Stewart): The hon. Gentleman has accused the Government of making wrong decisions. Is he saying that the cut in the basic rate of income tax by 1p to 29p is a wrong decision? Is he opposed to that?
Mr. Wrigglesworth: I am absolutely opposed to it. It is the wrong priority at this time. In the future I would love to see a 25p rate of income tax. A rate of income tax of 25p on a much bigger base in a wealthier country would raise more revenue than the rate of 30p or the proposed 29p. A rate of 25p is a marvellous aim. We will not achieve that unless we invest in the things we advocated in our budget proposals and our autumn statement.
There is consensus — it unfortunately does not encompass the Treasury Benches—among many right hon. and hon. Members on Conservative and Labour Benches. This consensus is shared by the British Institute of Management, the CBI, management in industry and the trade unions. It is most regrettable that the Government will not recognise this consensus and act upon it.
My right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) has said before—so it will come as no surprise to hon. Members to hear it again—that many of the policies that the Government have implemented with regard to industrial relations over the past few years have been enormously beneficial. The increased productivity that has been achieved in the steel, mining and other industries is largely a result of the firm

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steps that the management and the Government have taken. It is right to acknowledge and welcome those achievements. However, much more needs to be done.
Where should that money go and what should we do with that money? The Paymaster General criticises us for wanting to spend some of the money on the community programme. I am sorry that he made that criticism. The community programme has made a great contribution to helping people who are suffering unemployment, as it has provided work for a substantial number of people. It is an immediate and cost-effective way of getting people back to work. That is why we suggested that the ceiling should be doubled and that more money should be directed to the programme. The programme is effective, both in terms of time and in terms of cost, in providing worthwhile jobs. We have also suggested a 10 per cent. cut in each of the bands of employers' national insurance contributions. That would help to make industry more confident—it would be able to increase its sales in overseas markets, increase profits and therefore invest more. The national insurance contribution is a tax on jobs. A cut of 10 per cent. in national insurance contributions—not the 1 per cent that we previously advocated and that is now advocated by the Labour party—would encourage firms to take on more labour. There is considerable evidence to substantiate that a percentage cut on each band would be a most effective way of achieving it. It would encourage firms to take on more highly skilled labour as well as benefiting people in the lower rate bands.
We would like to see more help given to the long-term unemployed. There is a high level of unemployment and something should be done immediately. The long-term unemployed should be on a long-term rate of supplementary benefit and family support and child benefit should be increased. Help should also be given to pensioners who are being hit hard by the current economic circumstances. We would also want to see a programme for skills.
As part of the mix of expenditure which we would like to see the Government embark upon, £2 billion should be spent on what is loosely called the infrastructure. The Paymaster General did a great disservice to the House by giving the impression that we are simply proposing highly capital-intensive investment. All we have said in our budget proposals is that it should include:
"tackling the major backlog of housing repairs and maintenance, and building and renovating houses to meet the substantial requirement for accommodation, renewing out-dated NHS hospitals; rebuilding dilapidated sewers and undertaking essential road construction schemes and repairs."
There is a tremendous amount of work in the public sector that needs to be done. Such work would not damage our current account because it is not import-intensive. It uses indigenous materials. Such work is labour-intensive. We have concentrated on house repairs, insulation and renovation. This work and the new start programmes are the most labour-intensive. We believe that mix of proposals would be the best way to help in the long term those who have been hardest hit in the shortterm.
I join with the right hon. and learned Member for Dover in regretting that the Chancellor had nothing to say about joining the exchange rate mechanism of the European monetary system. We have advocated this, not in a blind desire to go headlong into Europe, as some of our opponents have tried to suggest, but in the belief that this
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system would sustain confidence. It would provide discipline, would give greater stability, and would take out some of the peaks and troughs both in the interest rates and the exchange rates. It would be beneficial to British industry and to the community as a whole.
If we were to join the exchange rate mechanism it would allow the European monetary system to develop into a much more effective force within the international financial system. Britain's half-in, half-out position is preventing the development of the system. For these reasons I hope that, one weekend, the Chancellor—or perhaps the Prime Minister is the right person—will decide to join the exchange rate mechanism and on the following Monday an announcement to that effect will be made. Bearing in mind our present exchange rate with the basket of currencies, the position of the deutschmark and dollar, this is the most appropriate time for negotiations to take place. I hope that the Government will do something about it.
I come now to unit labour costs. In the last quarter of 1985 unit wage costs in the United Kingdom increased by 5 per cent. In Japan and West Germany there was a nil increase and in the United States they increased by 2 per cent. In recent years, unit labour costs in Britain have continued to increase consistently compared with the costs of our major competitors. That must stop. Unless it does, we shall not be able to compete with our major competitors, especially in West Germany, Japan and the United States, and the comparative decline in Britain will continue.
We must make tough decisions and face up to difficult circumstances if we are to stop that decline. The Government must be prepared to intervene, not only in the level of interest rates, as they are now rightly doing, but by having a pay strategy. Exhortations from the Dispatch Box and criticisms at CBI dinners of what is happening are not enough.
I hope that one of the proposals we advocated in our statement on the Budget and which the Government appear to have taken up will be developed—the proposal to give tax relief on profit sharing. We have advocated tax relief because there has been justifiable criticism of the old-style pay policies, which have sought to penalise firms and people for increasing pay levels above the norm. We have advocated that firms should enter into longer-term pay contracts, initially for two years and perhaps later for three years, instead of an annual pay round, and that firms should encompass within those contracts a much greater share of the profits. We have proposed giving financial benefits to firms that conclude such agreements.
I hope that the Government will be persuaded to move in that direction. We believe that that measure should be tried and that it could provide the key to moderating the type of pay settlements made recently which have been undermining our competitiveness, increasing our unit labour costs and thereby ensuring that unemployment is not reduced.
We are opposed to this Budget strategy because it concentrates on giving to those who already have—to those who have jobs, and to those who have incomes—rather than on investing in the long-term future of industry and on getting people back to work to create the wealth needed for all the social services and for the public expenditure that we and many others would like.
6.32 pm
Sir Peter Emery: I was pleased to note the number of aspects of the Budget welcomed by the hon. Member for Stockton, South (Mr. Wrigglesworth). One might have expected him to welcome the profit-sharing measures. He welcomed also the personal equity scheme and the Budget's approach to unit costs. My right hon. Friend the Chancellor stressed some of the points that were made by the hon. Gentleman, although not in the same way. The Government realise as strongly as the hon. Gentleman that the level of unit costs is one of the major factors that will make or break the long-term strategy for economic advance. Unless unit costs are held down, there will be considerable problems. Although I do not believe that the Government can do this on their own, I believe that a strong Government lead is essential.
I agree with the hon. Member for Stockton, South in only one aspect of his criticism of the Government. The Government will not be surprised to find that, as chairman of the Science and Technology Committee of the North Atlantic Assembly, I am sorry that more has not been done for research and development. Research and development provides one of the ways in which long-term jobs can be created for the future. I do not believe that total expenditure on research and development—whether by industry or by Government through their aid programmes and grants—is sufficient. I should have been much happier if M3—I think it is now known as "broad money"—had been increased by another £500 million to stimulate research and development in industry generally.
I think that it would be surly of me in a debate that should be mainly concerned with unemployment if, as the first Member from the west country to speak, I did not refer to some of the benefits that the Budget has provided for the west country. For many years, I have campaigned for those concerned that charities should receive a greater benefit from tax relief. I strongly welcome, as do many people in the west country who play a major role in charities, the fact that the Government have at last seen the wisdom of the arguments we have put to them.
I welcome also the higher VAT registration limit because of the impact it will have on small businesses in the west country. The threshold has been increased by more than might have been expected. That is obviously a good thing, although I should have liked a greater increase.
I welcome the proper indexation of income tax thresholds for the elderly and pensioners. That change was essential for my constituency and for many people living in the west country.
The abolition of the gift tax structure is of particular concern to small and medium-sized businesses which are owned by people fighting to be able to hand on their businesses to their children. I believe that that measure is more important than the media have said, especially for agriculture.
I welcome the personal equity plan. We in the west country want to see the property-owning democracy turned into an industry-owning democracy. I should be happier if at least part of that investment were allowed pre-tax rather than post-tax, because that would obviously provide greater stimulation.
Because of the type of industry and enterprise we have in the west counry, the small loans guarantee scheme is
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important. The area depends very much on farming and the capital allowance for agriculture buildings is, therefore, very important.
Those are many of the aspects in the Budget that will be of particular benefit to the west counry.
I have crossed swords more than once with my right hon. Friend the Chancellor in his former capacity as Secretary of State for Energy. I argued that Britain and the United States should have taken the lead in breaking the oligopolistic structure of the Organisation of Petroleum Exporting Countries to bring down oil prices throughout the world. Reduced oil prices are important in stimulating assistance to the economies of underdeveloped nations—for example, Ghana has to pay as much as 47 per cent. of its total foreign currency earnings just to buy the hydrocarbons needed to sustain transport and industry in that country. That will help world trade. Therefore, the decrease in those prices will have a much greater effect in world economic terms than the Chancellor has been willing to estimate. We are fortunate that this will assist in bringing down unit prices. This then has at last come about even if the Government have not been a leader.
I believe that the major aspect of economic policy surrounding the Government's approach is unemployment and the provision of more jobs for the unemployed. That is not just for the economic benefit of the nation. I go back in my political career to Bruce Griffiths and me tossing a coin way back in 1950 as to who should become the first chairman and the first secretary of the Bow group. I lost and, as the secretary, had to write the constitution. However, at no time in my political career or as part of my political philosophy could I ever stand by idly and believe that it can be accepted that 10, 12 or 15 per cent. of our people should be standing by idly, unused, unfulfilled and making no contribution to the economic strength of the nation. Equally, Conservative philosophy involves understanding not just the economic but the emotional effect that unemployment has on an individual.
I do not know how many of us in the House have experienced or known, as I have, the frustration and buildup of desperation which comes from pounding the pavements going to every potential employer in search of work. I do not know who has experienced the frustration in writing letter after letter to advertisers of jobs—and frequently to many who have not been advertising—and more often than not receiving no reply. The degradation that one experiences and the desperate anger that comes when one knows that one can contribute but no one can or will use your ability can turn to a deep bitterness against society and a loss of self-respect. That is a frustration which few who have not suffered it can really understand.
It is no good saying that that should not take place, that it is wrong to have those feelings or that it is nobody's fault. That does not overcome the anger or the bitterness. It is true that the Conservative Government have done more, spent more, and introduced more schemes than arty other Government in the history of this country to overcome unemployment and they have done so in an extensive way. It is right that that should be so because our people deserve it and it is right that their demands should be met. I believe that people who are out of work have a right to demand to contribute to economic growth and that they be given the opportunity to make that contribution and be able to stand on their own feet and not have to rely on the social security benefits which the nation may provide.

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Therefore, I want to take the time of the House to put forward what I believe might be an entirely new thought in trying to provide a new employment-linked investment scheme. If we accept that the reduction of employment is the Government's major policy objective, the Government must be searching for every way to ensure the creation of new jobs. Therefore, if any scheme could be put to them which would prove positively that new jobs could be created and that in so doing it would not even increase the PSBR or demand a further increase in supply expenditure, such a concept should be seriously considered. That is what I wish to outline to the House.
It is my experience that new investment decisions, when considered by boards of companies in manufacturing industry or elsewhere, which effect expansion rest on a whole variety of matters. However, after the acceptance by a board of proof that there is a market demand or a need for the product or expansion, certain factors come into play. Those factors are the political climate, the availability of labour, investment cost, return on investment, alterations to the liquidity position of the company and the whole structure of how that can be funded. Therefore, the basis of most of those decisions is the financial cost.
If the Government were able to provide some cash bonus to make that investment much more realistic, I believe that it would prove to be a major stimulus, to bring forward schemes which, at the moment, are planned but are held up for the right time or the right amount of money.
In order to encourage companies to invest in new manufacturing industry, I suggest that the Government should ask every company to register at the Department of Trade and Industry the new scheme and the number of jobs that would be created. The Government should provide that any company which registers with the Department of Trade and Industry—it would not have to—would receive an investment bonus, tax free, of £4,500—that figure could be higher or lower; the Government can alter it, because the scheme is flexible—for each job created after the new employee had been employed for 12 months. The company would have to show that the new employee had been taken off the unemployment register and had not previously been employed by the same company during the last three or six months, so that there would be no internal way to get round the scheme. The outcome of that would be to provide a cash bonus for all new investment which created new jobs. Cash is the type of bonus which stimulates medium and small businesses to introduce investment projects, and for the larger firms it would provide an interesting and new immediate cash return for their investment.
The major benefit of this scheme is that it need involve no overall cost to the Treasury. The present accepted cost for an unemployed person is between £5,200 and £5,500 per annum in benefits paid and in the loss of taxation. If the investment stimulated by the scheme was not to be made, the Exchequer would have to meet for a full year the cost of the man who is not employed. The beauty of the scheme is that no money would be paid in grant or bonus until the company could prove that it had employed staff who had worked for a period of 12 months. The saving to the Exchequer would, on whatever analysis one makes, be between £5,200 and £5,500 for each person who becomes employed. The scheme has great flexibility.
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Without delaying the House for too long, I should like to give three examples. Taking a small firm with a small extension, perhaps creating eight new jobs, if one costs that out, as I have—I would be willing to provide a copy for anyone who is interested—it would be under £40,000. If that company realised that after it had employed eight persons for 12 months it would receive a cash bonus of about £36,000—that is, £4,500 multiplied by eight—can anyone think that there would not be a massive number of small firms which would be looking to expand their businesses? With a medium-sized firm, creating perhaps 80 jobs, a likely and acceptable total for expenditure would probably be about £600,000. At the rate that I have suggested, that would bring in, after 80 people had been employed for 12 months, a bonus of £360,000, which would meet approximately 47 per cent. of the total cost. Why not? The Government will have to spend that money if people are unemployed. Why not spend it in order to create jobs and get people back to work?
The flexibility of the scheme is that is could be for a limited period. In order not to overheat the economy, there could be a cut-off point after the first 300,000 jobs had been registered this year. Furthermore, different levels of bonus could be applied in different parts of the country. There could be a bonus of £4,500 in the north-east, the north-west, in Wales and in Scotland, a bonus of £3,000 in the midlands and a very small bonus in the south-east. And if we wanted to be sexist, different bonuses could be paid for jobs for men and jobs for women, or a bonus could be paid to those who have a family to support which is different from that which is paid to those who have no family to support. Massive flexibility is built into the application of the scheme.
There are two arguments against such a scheme. The first is that people would get round the regulations. The Treasury always puts up that argument. If, however, a company had to prove that it had employed people for 12 months, it would be up to that company to show to the Department of Trade and Industry that it should benefit from the scheme. If one or two firms got round the scheme, so what? It would not matter if 97 or 98 per cent. of the jobs that were created were genuine jobs.
Furthermore, it can be argued that part of this investment would not have to be paid for. Normal expansion would bring many jobs on to the market. The scheme is capable of dealing with that expansion. If 300,000 new jobs were created, while normal expansion created 60,000 new jobs, the amount of the bonus could be lowered to cover the 20 per cent. of firms to which an unnecessary bonus has to be paid. I shall not bore the House with the details, but I know that such a scheme could be worked out.
This is a new concept. It would cost no money and it would result in an incentive for industry to create long-term jobs, not just short-term jobs, that would be of major benefit to the country—in racing terms, no foal, no fee. The Government would have to pay nothing until the bonus was paid. It would have to pay the bonus only after the employer had proved that he had taken somebody off the unemployment register and provided him with work for a year.
Such a scheme would considerably help to create the incentive and the image of a caring Government who are determined to find jobs for those who are out of work. It would not go astray. Surely it is worth a try.
6.53 pm
Mr. Ron Leighton: We consider the Budget against the sombre background of ever rising unemployment. Despite last year's absurdly described "Budget for jobs", there have been six consecutive annual increases in the number of people out of work. The most worrying aspect is the remorseless increase within those totals of the number of long-term unemployed. They now number 1·4 million, 800,000 of whom have been without a job for more than two years, with all the misery, heartache and waste that that involves. There is no evidence from this pygmy of a Budget that the Government either care or have a clue about what to do about it. There must be a response that is commensurate with the size and scope of this tragedy.
As the House knows, the Select Committee on Employment has produced a well researched and costed programme to give a job guarantee to the long-term unemployed. The House awaits, but now with diminishing expectations, the Government's response, which again has been delayed. The report envisaged taking on 100,000 in the National Health Service and the social services, 300,000 in a building and renovation programme and 350,000 in private industry. This, with 250,000 on the community programme, would amount to 1 million jobs and constitute the guarantee. While awaiting the Government's response, it is to the community programme that I want to address my remarks.
The Minister knows that for the past three years I and the Select Committee have advocated an expansion of the community programme — indeed, an enhanced and improved community programme. This is a programme to help long-term unemployed adults to improve their prospects by providing them with temporary employment, either full-time or part-time, on work which otherwise would not be done but which would be of practical benefit to the community. I devoted an Adjournment debate to this topic. I have taken the initiative in expanding the programme in my constituency, so nobody can say that I am an opponent, or an ill-motivated critic. However, I am forced to take a critical view of the Government's parsimonious handling of the community programme. They are damaging and jeopardising the future of the programme by trying to cut costs. They are spoiling the ship for a ha'porth of tar. This is arousing great, and justified, criticism.
The truth is that the Government's motives are suspect. They are thought to be primarily concerned with seeking cosmetically to reduce the numbers on the unemployment register at the lowest possible cost. Each month, an additional 8,000 to 9,000 people leave the register and take up places on the community programme, thus exerting a downward pressure on the monthly headline figure of unemployment, which the Government will seek to exploit politically. But the present shaving of costs is devaluing the programme and increasingly restricting it to young, single people who are doing low-paid, part-time, insecure jobs. The Budget increase in the average wage from £63 to £67 is hopelessly inadequate. I shall refer to that in a moment.
Recently the Government changed the eligibility rules—probably unlawfully—so that only those who are able to claim unemployment benefit can get a place. As we know, many of the unemployed who are seeking work, especially married women, are unable to claim benefit.
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The purpose and consequence of this discrimination against women was the cosmetic one of increasing the number of people taken off the register and at the same time reducing the net cost of the programme, because the previous benefits of more of the participants could be deducted from the gross costs. As a result, the net cost of removing one person from the register fell from £2,200 in 1985 to £1,900 in 1986, a fall of nearly 14 per cent.
In addition to such jobs as painting and decorating and renovating community buildings, the community programme is now funding playgroups, latch-key schemes and visiting and day care schemes for the elderly and the disabled. This is to be welcomed but obviously there will be contradictions, tensions and discontinuities between the needs of these schemes and a community programme that has restrictive eligibility and wage and operating criteria and that consists mainly of young, single men. If the Government do not want the programme to be brought into disrepute, they must pay immediate attention to a number of deficiencies and remedy them. The operating cost of each community programme place has never been increased during the lifetime of the programme, despite the increase in inflation. To keep pace with inflation, the current figure of £440 per annum would need to be increased to £514, and this should be done.
Most important, the average wage should be increased. In three years the average wage was increased only once, by 5 per cent. to £63 and, in this Budget, to £67. This miserly movement is insultingly inadequate. It amounts to not much more than one third of the national average wage. The £67 is an average as some—for example, the supervisory staff—get more and others get less. These low rates impair the quality of the programme, for the wages in the community programme have to be the trade union rate for the job.
As these other normal rates increase each year with inflation, the number of hours that can be offered on any community programme project is constantly squeezed down as each agency struggles to keep within the £67 average. This inevitably means fewer hours for part timers and a falling proportion of full timers, both of which damage the programme. In the year to August 1984, nearly 30 per cent. of the 122,600 participants were full time. By July 1985, the proportion of the 175,000 workers on the community programme in the previous year had fallen to just over 17 per cent. The low wages and reduced hours mean that part-time community programme posts are financially attractive only to single people living at home.
Over the same period, the proportion of single people on the community programme increased from 66 per cent. to more than 78 per cent. Older people and those with families, often those longest unemployed, have been squeezed out. While the 18 to 25-year-olds constitute only 36 per cent. of the eligible client group, their participation in the programme increased from 56 per cent. to nearly 60 per cent. from August 1984 to July 1985.
As a result, it is now questionable to what extent the programme is really helping the growing ranks of the longterm unemployed. The average wage on the programme must be urgently increased to at least an average minimum of £75 a week. I estimate that the net cost of that would be less than £100 million per annum. If the Government are not willing to spend that, they are not serious about wishing to solve the problem.
The eligibility rules, which limit recruitment to those drawing benefit, thus discriminating against married

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women, reinforce the male bias of the programme: four out of five participants are men. These features not only are important for those who are excluded, but have implications for the quality of projects and of the work experience offered.
Another problem is training. At one time, 50,000 training places were to be offered on the community programme. Now, as a result of the decision to reduce the training linked-to-community programme budget by £15 million, only a few thousand training opportunities have been created, yet training, including on the job skills and day release education and training, would be an important part of any quality programme. Is it any wonder that it appears to many that the Government's main motive and priority is to remove people from the register and to massage the unemployment figures as cheaply and meretriciously as possible rather than improving the quality of the programme?
As the Minister knows, I have taken a great interest in, and given my support and encouragement to, the community programme, but this may no longer be possible. Unless extra resources are put into the programme, people like me will have to reconsider their attitude.
7.4 pm
Sir Ian Gilmour: The hon. Member for Newham, North-East (Mr. Leighton) has made a closely informed speech. He and I disagree on a number of matters, but I have a great deal of sympathy with what he says and does, if I may say so, in his capacity as Chairman of the Select Committee on Employment.
A number of criticisms can be made of the Budget, but one which cannot be made is that the Chancellor has inflamed the Labour party into opposition. While the hon. Member for Kingston upon Hull, East (Mr. Prescott) was making a very lively speech, he was supported at no time by more than seven Opposition Back Benchers, and usually fewer than that. The Chancellor can be pleased that there is so little opposition to him from the Opposition Benches. Although the attendance on Conservative Benches has not been overwhelming, it has been a good deal better than that on the Opposition Benches.
As everybody agrees, the Chancellor has produced an extremely ingenious Budget with a lot of good things in it. What he has done about the victims of Nazi persecution is good and right—so right that one wonders why it was not done many years ago, but I suppose that nobody thought of it. I thoroughly welcome that, just as I welcome what he has done about charities, which I think will be beneficial from every conceivable point of view. The same applies to his proposals on shares and profit sharing and matters relating to popular capitalism.
I have a less warm welcome for the 1 per cent. cut in income tax because I believe that that money could have been far better used. Moreover, the income tax cut looks a bit odd beside the £2 billion increase in rates which is apparently projected this year. No doubt some of that sum is due to the policies of authorities controlled by the Opposition parties, but a good deal of it is due to the policies of the Government.
Buckinghamshire is Conservative-controlled and has a very careful and economical county council, yet entirely because of the Government's actions it has had to impose
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a rate increase this year of no less than 30 per cent. together with a small cut in services. Therefore, I fear that the ratepayers of Buckinghamshire will not be greatly impressed by getting 1p off their income tax.
However, in my view, the chief objection to the cut in income tax is that it will produce fewer jobs than almost any other conceivable way of using that money. I greatly welcome the Chancellor's special measures for the unemployed, but, despite the strictures which my right hon. and learned Friend the Paymaster General and Minister for Employment gave in a persuasive but, to me, not wholly convincing speech when he complained that people should judge the measures by the amount of money that they cost, no doubt other considerations should enter into one's judgment on these matters, but I still feel that a net cost of £100 million is a good deal less than excessive. It is inadequate particularly because the lower oil price will produce lower inflation, affording the opportunity therefore for greater growth. Unemployment should, I hope, begin at last to fall a little this year, but, in view of the level that it has now reached, that will not be enough.
The Government's economic policy has had a number of successes. The way in which the exchange rate has been managed in the last few weeks with the fall in oil prices has been very skilful and has shown some good decision making by the Chancellor and some adroit management by the Bank of England.
Whatever the other successes in the economic policy have been, undoubtedly there has not been a success in regard to unemployment. The Chancellor spoke on Tuesday of five years of solid growth. Unfortunately, there have also been five years of solid growth of unemployment.
A number of changes in the counting of unemployment have been made over the years, but if we use the current definition of wholly unemployed adults seasonally adjusted, unemployment was 2,144,000 in March 1981, it has grown every year since then, and it is now 3,210,000, a solid growth of just over 1 million. If one used the previous definition, one would find that the rise was even greater. The policy on unemployment, to put it mildly, has not worked, yet it has not been changed.
Even more remarkably, the rhetoric defending that policy has not changed either. We are still told constantly that the Government cannot create jobs and that the only way that unemployment can be reduced is by bringing down inflation, by increasing efficiency and by people pricing themselves into jobs. In his Budget speech on Tuesday, my right hon. Friend the Chancellor said:
"The solution to the problem of unemployment—it is the only solution—requires progress on two key fronts. The first is a sustained improvement in the performance of business and industry, and thus of the economy as a whole. That is what every aspect of the Government's economic policy has been designed to assist, and it is already achieving impressive results. The second is a level of pay which enables workers to be priced into jobs instead of pricing them out of jobs, and which in particular ensures that British industry can hold its own against our major international competitors."—[Official Report, 18 March 1986; Vol. 94, c. 171.]
On the first point, assuming that my right hon. Friend is right in saying that the Government's policy has already achieved "impressive results", it has to be said that those results have achieved nothing that is good in regard to unemployment. As to the Chancellor's second point, assuming that that too is correct, the pricing into jobs has not happened over the last seven years. One wonders what

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the Government or the Chancellor can do to ensure that it happens now. Just a mild exhortation has not been productive over the last seven years. One wonders why it should be productive now.
Therefore, considering the results of the policy and the rhetoric, it seems to me that there are only two possible conclusions. The first is that the policy is mistaken, and the alternative is that unemployment is a relatively unimportant matter and should not be allowed significantly to affect economic policy. Having listened to the extremely humane speech of my right hon. and learned Friend the Paymaster General this afternoon, I think that the first conclusion is right. He confirmed that the second alternative is the wrong conclusion, although perhaps he did not mean to confirm that the first conclusion is right.
There is no mystery about the reasons for the failure of the policy. On Tuesday the Chancellor rightly took pride in the growth of productivity. He pointed out that since 1979 productivity in manufacturing industry had increased by an average of 3·5 per cent. a year. The rise in productivity in the economy as a whole is naturally a little less, but I think that it rose by nearly 3 per cent. between 1981 and 1985, which is still substantial.
The Chancellor also said, as reported in column 166, that we could look back on five years of growth at about 3 per cent. a year. I may be wrong about this, but to judge from page 40 of the Red Book the Chancellor must be looking forward as well as back and including 1986 in that calculation, because, if 1986 is excluded, growth seems to have been at just over 2·5 per cent. a year. Moreover, if oil is excluded, as I think it has to be for these purposes since it employs very few people, growth has been about 2·25 per cent. a year. That is the explanation of the growth in unemployment. There has never been a five-year period with that rate of growth in which unemployment did not rise. Unless output rises as fast as productivity, which it should do this year, unemployment will continue to rise.
My right hon. Friend almost always bases his calculations on 1981. In doing so he misleads himself because between 1980 and 1981 employment increased by 1 million. If the growth rate is taken from 1979 instead of 1981, it is either 1·1 per cent. or 1·2 per cent. a year. That again is the cause of unemployment.
As I said, unemployment should fall a little this year with the growth in output of 3 per cent. but, according to the Chancellor's forecast in the Red Book, in the two subsequent years growth will be only 2·5 per cent., which means that on current policies there is unlikely to be much, if any, further fall in unemployment, on the Chancellor's own figures. So a change of policy is clearly necessary. We need more growth and more special employment measures to get unemployment down. It is sad that the Chancellor has not taken the opportunity to make that change.
Many proposals have been made over the years by a number of people, including myself. My right hon. and learned Friend the Paymaster General talked about instant proposals. In fact, proposals have been made over a period of at least five years. So they are far from instant; if anything, they are extremely stale. The proposals have been there for some time, but unfortunatley nobody has paid much attention to them.
What is needed is a combination of measures, including increased expenditure on infrastructure. Again, my right hon. and learned Friend was scathing about that this afternoon; perhaps he should have a word with the
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Confederation of British Industry, which does not agree with him on it. I was not sure about the point which he was seeking to make about the shortage of skills. It seems to be a heavy condemnation of the Government's policy that, even with so much unemployment, there should be such a shortage of skills. Obviously there should be a combination of increased expenditure on infrastructure, a reduction in taxes on employment, and special meaures of the sort recommended by the Select Committee chaired by the hon. Member for Newham, North-East.
Such a strategy is needed not only because of the 3 million unemployed, although that is reason enough in itself, but because of the severe structural problems that the country faces. The Chancellor sought to make light of these problems and made rather a good flip comment about them in his Budget speech.
On a number of occasions my right hon. Friend has denigrated the House of Lords Select Committee, but there are at lest two answers to what he said. The first was given yesterday. There is all the difference in the world between a fall in the price of oil which helps almost everyone and a fall just in our oil revenues and our balance of payments which harms only us. The second answer, which is perhaps even more important, is that the problems of Britain's lack of competitiveness in manufacturing trade were evident long before we had any North sea oil. Therefore, the idea that they will disappear when North sea oil disappears is distinctly implausible. As the House of Lords Select Committee rightly said, the problem of the growing competitiveness of British industry will not solve itself.
I continue to believe that there is cause for serious concern about the future of British manufacturing industry and our competitiveness. Meanwhile, I regret that the Chancellor has not chosen the best way to make capitalism both popular and caring by reducing unemployment.
7.17 pm
Mr. Max Madden: Opening the debate today on behalf of the Opposition my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) quoted the views of various newspapers on the Budget. I want to quote from the editorial, not of a national newspaper, but of my local newspaper, the Bradford Telegraph and Argus. The editorial was headed "Whole lot of nothing":
"Once again a Tory Chancellor has robbed the poor of an opportunity to climb out of the poverty trap in favour of paying the rich with his measures to encourage wider share ownership.
While the Chancellor patched up his fiscal policies, he left the real core of the problem untouched. In failing to introduce any measures to cut the dole queues he is guilty of gross dereliction of duty.
The decision to spend around £200 million increasing the number employed under the so-called Community Programme is little more than window dressing.
What the low paid and the unemployed needed was some real help—or at least the prospect of some light at the end of the tunnel. Instead all Britain was offered was a cosmetic exercise. No amount of this sort of make-up can cover the malignant growth of unemployment.
Certainly the Budget will do little to help Bradford and its problems. There were no measures to help regenerate the inner city areas and little to encourage a business community still reeling from the near 30 per cent. rate rise."
That was the authentic voice of the north, which is dominated by mass unemployment, poverty and deprivation. What is so tragic and sad about the Budget is that it was a Budget for the people who do not live in the

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north. It was a Budget of the haves against the have nots, of the comfortable against the uncomfortable, and of the south against the north.
The right hon. Member for Chesham and Amersham (Sir I. Gilmour) chided the Opposition for not being inflamed by this Budget, but I think that he let the cat out of the bag as to why there are so few people in the Chamber protesting against the Government. He has said that for five years he and others have been putting forward alternatives to this Government, but they have not been heeded. The problem is that we have a Government who are deaf, uncaring and locked into their own dogma, and are not in any way prepared to respond to constructive alternative policies which are posed in this Chamber or any other place.
The right hon. Member for Chesham and Amersham and the right hon. Member for Guildford (Mr. Howell) are present. We have had a fleeting glimpse of the right hon. Member for Cambridgeshire, South-East (Mr. Pym); and the right hon. Member for Hertsmere (Mr. Parkinson) was here a few moments ago. They are members of the Conservative party who have been defeated and who have been complete failures in persuading the Government to change course.
This Budget should have been about creating real jobs—the jobs to which the Prime Minister referred so much between 1976 and 1979. It should have been about combating poverty, which grips my constituency. One third of my constituents are on social security. More than 20 per cent. of them are unemployed, with the situation getting worse daily.
The Budget should have been about doing something positive to help manufacturing industry. The reality is that it does very little. At times, I read the Daily Telegraph, the house journal of the Conservative party, and yesterday, tucked away in its vast and often euphoric response to the Budget, was this little news item under the heading "Opportunities for Jobs Missed":
"Builders said the Budget would push more people 'into the black economy', and that it had missed the chance to create permanent jobs in construction by putting the emphasis on cosmetic schemes for teenagers. The Building Employers Confederation said part time training schemes are helping to produce more people doing botched jobs for householders, offering lower charges because they evade paying value added tax. The Federation of Civil and Engineering Contractors also regretted that the Chancellor had 'not taken the option to create real jobs' by new investment in infrastructure projects. This was the cheapest real way of creating extra jobs."
The Paymaster General may choose to deride and sneer at that positive alternative proposal, but it remains the truth. I think that everybody, except the Government, recognises that money put into new buildings and into the renovation and improvement of old buildings is the best way to tackle one of the most urgent social problems facing this country — deprived slum areas and overcrowded housing—and will create a great many jobs quickly.
My own city at present has 9,000 people on the housing waiting list; 10,000 applications for home improvement grants have been rejected; 5,000 properties have been found to be structurally defective, and 5,000 more without water, inside toilets or bathrooms. That is the collective inheritance which we could tackle tomorrow with money and conviction if the Government had the political will to
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do it. The sad fact is that that will does not exist, and will not exist until the people of this country have pushed this Government into changing the direction of its policies.
More resources should be made available for housing, especially to local authorities. We need a relaxation of the limits on capital receipts—another way of unlocking a lot of money which could be put into housing. There is disappointment in my city that we were left off the list of eight cities to receive special help in tackling our inner city problems. I hope that the Economic Secretary will be able to say when Bradford will receive additional help to tackle our problems. We meet every criteria of the other cities that were given help, and we have the unique feature that our population is due to increase by 10 per cent. in the next 20 years.
The Budget does nothing for the poor. It is obscene that it took money away from the unemployed. It gave £9 a week extra to people on £50,000 a year, but the family on £4,000 a year were lucky if they saw an extra £1·60 a week. That is the scale of this Government's priorities. Those are their real feelings about the people of this country. They are happy to give still more to the rich and take it away from the poor, which, of course, is what they have been doing ever since they were elected in 1979. We know that the best way to help low-income families is to increase child benefit. Even the Conservative Women's Organisation wants to save the child benefit. It has joined with many other organisations in campaigning to persuade the Government to increase child benefit as the most effective way of combating low income family poverty.
However, the Government gave a miserly 10p increase in child benefit, at the same time as the insulting increase of 40p a week for pensioners. Cutting the basic tax rate and lifting personal allowances is the least effective way of combating poverty. The Government know this. Every organisation that is concerned with poverty knows it, and yet the Government continue along the same course.
I hope that the Government will come to see that what we need are not further cuts in basic taxation but substantial and sustained increases in child benefit as the best way of giving substantial extra amounts of money to low-income families, who will spend that money, and thereby stimulate the economy as a whole and local economies in particular.
The Budget has done nothing to help manufacturing industry. We were looking for a positive strategy that would assist manufacturing industry, particularly through lower interest rates and a low exchange rate.
My chamber of commerce has conducted continuing surveys of local companies, and every survey has shown that the two biggest constraints on business in Bradford over the past 24 months have been high interest rates and high exchange rates. This Budget has done very little to assist manufacturers in my city, and they have already said so in reports published in the Telegraph and Argus yesterday. Certainly it is not creating a situation whereby they can look with confidence to increased orders, still less to taking on more employees.
Bradford is a city suffering immense problems. It is a very proud city, and we are very independent, gritty people, who want to help ourselves, but we have reached a situation where we shall not be able to arrest the spiral of decline that faces our city unless there is Government intervention, substantial amounts of Government resources, and sustained Government assistance.

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The biggest employer is the local council. We are now facing substantial cuts in the rate support grant, which has led in part to a substantial increase in rates of 30 per cent. The largest party on Bradford council is the Conservative group, which is supported by the Liberal-SDP alliance. We have seen also the cost of the measure abolishing the county councils. These factors have led to a 30 per cent. rate increase.
The second biggest employer is the university of Bradford. In 1981, the cuts in higher education resulted in a large number of redundancies, a reduction in students, and the closure of three university departments. They also took £6 million out of the local economy. Cuts over the next three years, estimated at 3 per cent. a year, will take further enormous amounts of money out of the local economy, as will the mere 2 per cent. increase in student grants. Increasing pensions and other benefits by less than the rate of inflation will mean yet more money going out of the local economy.
Last Friday, I attended the inauguration of Sir John Harvey-Jones, chairman of ICI, as the new chancellor of the university. The House will remember that about 18 months ago he was very vocal in challenging the Government's view that the expansion of the service industry would compensate for the loss of manufacturing industry, and last Friday he was critical of the Government's education policy, particularly in respect of higher education. A number of other speakers, including the vice-chancellor, were equally critical of the Government's approach.
It is a scandal that Bradford university will be closing its physics department. This university, together with Aston and Salford, faced enormous cuts in 1981. The Government tell us almost daily of their belief in support for technological advance. How can they reconcile those claims with cuts in higher education generally and massive cuts in particular in technological universities? It is lunacy.
West Yorkshire has the lowest wages of any urban area in the United Kingdom, but people still have the audacity to say that if only workers accepted lower wages they would price themselves into employment. How can that be true when, in an area of traditionally very low wages, we have well above the national average of unemployment? These are the economics of the madhouse. It is unbelieveable that the Government are daily trying to persuade all of us that if only people would accept low wages there would be more jobs and more job security. If that were true in Bradford, we would have some of the lowest levels of unemployment instead of some of the highest.
The impact of the social security review will be not only to reduce the incomes of the poorest—the pensioners, the disabled, the unemployed, the single-parent families and many others—but to take massive sums of money out of the local economy, reduce demand and exaggerate and intensify our problems. We want a reversal of those problems, so that we get more resources into the local economy, stimulate demand, the opportunities for jobs and the expansion of industry to produce more goods and services. We are trapped in a spiral decline. We have seen massive job losses in manufacturing industry, particularly textiles, but we are not seeing job opportunities in service industries to compensate for those job losses.
Our population is growing. We are not unduly optimistic about the prospects of attracting new industry
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into the city. A recently published major report said that the main hope must be to expand existing industries rather than attract new industries to greenfield sites.
We want support from the Government, and priorities that give the utmost support to inner cities, such as Bradford, which are facing enormous and grotesque problems. We do not want tea and sympathy, although Ministers visit us almost daily to give us that. We want action and money and resources to help us. We want to see jobs, housing and schools.
At the moment, teachers are delivering letters to the homes of 650 pupils at the Belle Vue school, in my constituency, saying:
"We are seriously worried about lack of money in education. At this school we are desperately short of room and the heating in the winter is very poor."
Bradford probably had more publicity over the past two years about the controversy over the head teacher at Drummond middle school, Ray Honeyford, than we have had in any other comparable, controversy. Many of the people who campaigned for that head teacher's right to free speech are not now campaigning to improve the fabric and conditions of schools, including the one involved, although I would welcome it if they did.
Most of the schools in my constituency were built when Queen Victoria was on the throne. They are falling down, leaking and in an appalling condition, and they are not fit places in which to try to give the best possible education to our children and the generations of children to come. We lack the resources to deal with the schools, environmental and infrastructure problems—the enormous problems of dereliction and trying to clear away old buildings.
The Chancellor spoke about Britain now being a property-owning democracy and said that he wanted it to become a share-owning democracy. As my quotation from the editorial of my local newspaper shows, such aspirations are as remote from the perspective of my constituents as if the Chancellor had been speaking from Mars. The thought that many of my constituents will be able to invest £200 a month is ludicrous, as were some of the other remarks in the Budget speech.
The Government have stolen millions upon millions of pounds from Bradford by cutting the money that they give to local authorities to support services. Overall, the cut is 17 per cent. The Government have stolen a great deal from Bradford pensioners, the unemployed, the disabled and single parents by a cut in benefits or by not increasing them by more than the increase in the cost of living. They have stolen money by not giving more in housing investment and something to deal with the structurally defective buildings and many other problems to which I have referred. The people of Bradford have no reason to thank the Chancellor for this Budget, and that is simply because it has done nothing for them.
7.37 pm
Mr. David Howell: The hon. Member for Bradford, West (Mr. Madden) called for lower interest and exchange rates, which he said were badly needed. As he has got both those things—interest rates have already fallen and will fall further and the exchange rate against the deutschmark has moved down dramatically, as it has against all other currencies except the dollar—I would have expected him to recognise those benefits, although he had many criticisms and strong feelings about the state

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of the city that he represents. In a way, that was a good example of how some of the Government's critics, who can always pick on particular points when things have not gone well, have got into a flywheel state, where the criticism spins on like some tired cassette without them recognising that we are moving into a new economic situation in which manufacturing is expanding, industrial relations are vastly improving and the potential for growth is great. We are achieving something that the Labour Goverment said could never be achieved—they failed to achieve it themselves—steady expansion with inflation low and falling.
I want to pick out at this late hour in the debate one particular aspect of the argument. Through all the criticisms of the Government's current policy there has run the view that tax cuts do not help the unemployed. Indeed, the whole of the speech by the hon. Member for Kingston upon Hull, East (Mr. Prescott) was made as though these were two completely separate things. The same idea ran through the speech of the hon. Member for Bradford, West. I wish totally to repudiate that view. I do not rule out the case for more local government capital receipts being spent, and I wish that there had been more room for that in the Budget. But to argue that is the only way forward and to shut one's eyes to the immense power of tax cuts to wage war on unemployment and poverty is to be absolutely blind to what is happening in economies in the rest of the world and to what is happening in our economy as well. The more one looks at the world, the more obvious it is that there is a very detailed correlation between lower taxes and more jobs.
In the United States the number of jobs created in January was a staggering 565,000, of which 75 per cent. were in the service sector. In that economy jobs have been increasing at the rate of 355,000 a month since the middle of last year. There are other examples also, of which, of course, Japan is the classic one. Its total tax take is more than 10 per cent. below the tax take of the United Kingdom and its unemployment rate is 2·8 per cent.
The message seems to me to be one that can only be ignored by simply insisting that the facts of today's world economy do not exist.
Tax cuts do help jobs, in particular—this is the point I want to concentrate on—the kind of tax reductions which enlarge personal savings, encourage small enterprise and self-employment and, above all, extend personal ownership and pride in ownership. The motivations for enterprise and towards the social obligations that go with ownership are, above all, the forces that are going to help most to create a fully occupied society, which of course we have got to achieve and want to achieve. One proposition we hear is that this can be done by creating a million jobs through public works expenditure, and so on. Maybe there is some truth in the argument for capital spending, but to ignore the influence of tax cuts is to try to stand a chair on two legs, which of course will not succeed.
Ownership tax incentives are immensely valuable and powerful and help all communities, including the community about which the hon. Member for Bradford, West has just been speaking, to begin to create within themselves the seeds of business, enterprise, job opportunities and occupations which have been so sadly missing in so many of our rundown city areas.
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That is why I welcome enormously the strong emphasis in this Budget on enlarging personal ownership of all kinds, and welcome in particular the personal equity plan scheme. I must confess to my right hon. and hon. Friends that when I first heard the Chancellor speaking about it I thought for one moment that we were really going for a scheme allowing every wage and salary earner to put, tax-free, £2,400 into a personal investment pool. That really would have been a Loi Monory and that is the kind of way we want to go. This is not a fantasy; other countries have done it, so that millions of workers can share in the wealth of the nation in which they work. Although we have not been able to go that far yet—and the PEP is an excellent first step—we must be quite clear that these objectives are obtainable in the future. I am very glad that the Budget contains that proposal.
I want to put a few further thoughts to my right hon. and hon. Friends about the next steps in this vital drive for wider ownership, which I believe should be the major social goal of a Conservative Government in the 1980s and 1990s, and I hope that is the way that my right hon. and hon. Friends are thinking.
First, we have to be clear about the different paths to wider ownership that need to be pursued, possibly together, because they are not necessarily alternatives.
There is the question of profit sharing, which the hon. Member for Stockton, South (Mr. Wrigglesworth), speaking for the SDP, mentioned. I know that his party is keen on such things. The Budget contains proposals, which I gather the Chancellor is now discussing with industry, for seeing whether profit-related payments can be built into the wage system. We are years behind other countries on this. Japan has a system under which one quarter of all wages is paid in bonus, and that bonus is discretionary, and in some cases it attracts tax privileges. I think in the next phase we should be looking towards a tax privilege, a tax incentive, being related to the bonus rather than just, as at present, to employee shares. At the moment, if employee shares are given, tax privileges arise. Income tax is not paid, nor is capital gains tax, if the shares are held a certain time. So it should be for the bonus idea. It certainly has an amazing effect in encouraging the taking on of new workers. Some very interesting ideas are now circulating, originating largely in America and Japan, on the power of the bonus system in wage settlements, in expanding employment, in encouraging the taking on of more people and, of course, in motivating the work force.
Secondly, there is the whole area of ideas related to wider ownership of shares. Here I really must take issue with the hon. Member for Bradford, West. It is not an idea just for the elite. That is really a very old-fashioned, quaint belief. We are talking about the potential for millions of families to have a stake in the country in which they live. It is very interesting that, when the British Telecom issue was organised, 26 per cent. of the adult population, I am told, made inquiries about buying shares. That means that 11 million people were interested in becoming owners as well as earners. I think that we should now aim, through our policies, at establishing at least that number of people who are familiar with the ownership of shares and equity in the industry of this country. I should like to see incentives not merely for those who are lucky enough to be employees in firms where shares are handed out, but for everybody, including public sector workers, to become shareholders in this nation.

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We can do much better. Neighbouring economies have done much better and there are many more people involved in sharing the growing wealth which inevitably develops as industry becomes more capital-intensive and more based on knowledge and high technology.
Thirdly, there is the idea of citizen ownership, which Samuel Brittan has written about in the Financial Times very interestingly. This broadly means that shares should be distributed by the Government free or at a very low cost to millions of people. It is an idea that I have tried out in the past on some of my colleagues, but I did not get anywhere. That should certainly be considered, possibly based on the idea of bearer bonds.
In the 1960s and the mid-1970s we looked at a plan in British Columbia, Canada, where they had distributed shares in the major utilities to every citizen, and we saw how that worked. It did not bring immediate benefit to all the citizens of British Columbia, but it is an idea for involving people in a far better way than any kind of centralist Socialism and nationalisation, and all that outdated nonsense.
The fourth idea is one that my hon. Friends have pushed for very hard in recent years—to widen the ownership of small business. That is the living expression of ownership, and I am glad that so many measures have been pushed through to create this. I am also glad that the enterprise allowance has been reformed slightly. I did not like the way that it was working before, and I am delighted to hear that the tax anomaly is to be corrected.
We must now move further on this front. This is the area in which for two decades now some of us have been arguing that the major thrust is required to move away from the dead hand of collectivism and the nationalised compassion which has been bound up in the outdated welfare state. The areas in which we now need to make progress are the following.
First, we should go further towards substantial tax relief for every wage and salary earner for putting money aside for personal investment, not necessarily investment that is lost in the great institutions, but investment where there is a personal connection—investment ideally in small and rather localised business. A lot more could be done at local level to encourage the link between saving and new jobs and investment.
Secondly, we need to transform the input into our education system as far as business is concerned so that children really understand how enterprise works, how a capital-owning society operates and what the opportunities are for them in that kind of society. That is changing a bit, but there is still too much emphasis on the idea that somehow the jobs will be provided by somebody else or manufactured by the state, which really means that millions of people have to pay taxes to subsidise other people on low incomes.
Thirdly, we need to see a social dimension in this whole area, by which I mean far more encouragement of those who have capital and savings to fulfil their social obligations by doing voluntary work, helping charities, giving, caring and generally filling in the bits and pieces of a sensitive caring society that the welfare state has failed to do. That is why I am delighted at the measure in the Budget which directs people's attention towards charities, and which allows them to deduct from their payroll a small annual amount to give to voluntary work. That is a step in the right direction and part of the jigsaw—the new pattern for the future.
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Fourthly, if we are to have more capital owners in a more flexible society with opportunities for small business job creation, part-time jobs and all the things that will grow—it is no use the Labour party saying that that is the wrong direction because that will be the pattern of the future—society will need to be supported by good public services. We are learning that many public services can be better organised on a privatised, decentralised basis. We thought that telephones, water systems and big public services could be run only centrally, but that turns out to he wrong. Nevertheless, the undelegated services that remain with the Government should be properly supported. If the railway system cannot be privatised, I should hate to see it run down. It should be better supported. Similarly, I should hate to see other basic services inadequately supported. The priorities should be clear. Earlier one hon. Member called for more expenditure on roads and hospitals. The roads programme is already enormous, and so is the hospital building programme, so I doubt whether extra capital spending is needed there. But more is needed in other areas, and I was sorry that there was not sufficient emphasis on that in the Budget.
We need not only the enterprise culture, of which my right hon. Friend the Chancellor of the Exchequer spoke, but an ownership culture. We are sorry to see a further steady expansion in the real economy. It is happening now, and it will continue in the coming year. However, it will tend to be concentrated on capital growth; and it is essential for the Conservative party to recognise the need for the benefits of that capital growth to be spread, not concentrated. Wealth must be spread. Inevitably we shall see this new kind of growth in expanding rewards for capital-intensive industry, not so much in factory jobs of the old-fashioned sort of the 1950s and 1960s.
The key social goal of Tory party policy in the 1990s should be to achieve mass ownership and to disperse power and wealth to the people. I hope that next year's Budget will take us a long way further down that road.
7.52 pm
Mr. Peter Pike: I shall not follow the line of the right hon. Member Guildford (Mr. Howell); I shall pursue the line of my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) in his opening speech. My hon. Friend showed clearly the Government's failure yet again to use the opportunity of the 1986 Budget to tackle the real problems facing us, and to take positive initiatives to get people back to work and to deal with the unacceptable unemployment position. Tory Members often fail to listen closely to what we in the Labour party say. My hon. Friend made it clear that the Labour party neither believed nor claimed that it could get 4 million people back to work in traditional industries, or that the measures that it would take to put money back into the economy would put everybody back to work in the lifetime of the next Labour Government. He made it clear that we would have to take many measures to distribute the work and wealth available.
There is one major difference between the two main political parties. The Labour party accepts that we shall never employ as many people as we did a few years ago in manufacturing industry and many other areas because of new technology, and that new technology must certainly be used in our industries if we are to compete in the market places of the world. The major difference is that

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we believe that we must ensure that the whole of society benefits from that change and that there is not an elite in work whose standard of living continues to grow while the standard of living of the unemployed, the retired, the sick and the disabled not only fails to maintain its present level, but ultimately starts to decline. If the Conservative party continues to pursue its present policies, we shall face that position in the not too distant future.
My hon. Friend the Member for Bradford, West (Mr. Madden), in a powerful speech, described how the Budget would affect the people of Bradford. The same case may be argued for constituency after constituency. The Budget has failed to tackle our problems, and once again is disastrous for the majority of people. I accept that this year the Chancellor of the Exchequer did not describe the Budget as a "Budget for jobs". Indeed, if Ministers were liable for prosecution under the Trade Descriptions Act 1968 the Chancellor would have been the first of many to face legal action for his false representation of the 1985 Budget.
When the Chancellor presented this year's Budget, he said that the aim was to concentrate the benefits of his limited room for manoeuvre following the oil price collapse
"not on the rich but on the great majority of ordinary taxpayers."—[Official Report, 18 March 1986; Vol 94, c. 183.]
The Budget fails to live up to his comments. It is a Budget for those in work. It does not try to get people back to work. It does nothing to remove the barrier and widening rift that exists between the south and the north. Some places in the north may be prosperous, and some areas in inner London may be deprived, but on balance the north is deprived and the south is prosperous. It is time that we sought to eliminate and reduce that widening rift.
Today the Paymaster General referred to additional expenditure and described what the Government were doing regarding health. In my constituency ambulances cannot run people to hospital for outpatient treatment, because they are on a quota system, and once they have used their allocation of quota no ambulances are available. Even emergency ambulances are stretched to the limit. Two hospitals are proposed for closure. While I accept that Burnley general hospital is to have an extension, that extension gives the Government and the National Health Service an opportunity to use the old premises to ensure that those on waiting lists and those needing geriatric care are given the necessary care and attention.
The Paymaster General referred to my hon. Friend the Member for Oldham, West (Mr. Meacher), and quoted him as having made promises all over the country at various meetings about what the Labour Government will do—and a Labour Government will be elected at the general election. Once again, the Paymaster General failed to listen carefully to what my hon. Friend and other Labour party Members have said. We were fortunate to have my hon. Friend speaking at a public meeting in Burnley recently. While he made the Labour party's priorities clear, he was careful to make it absolutely clear that, because of the mess that we shall inherit from this Government, we cannot make promises to do everything that we should like to do during the lifetime of one Labour Government. The Opposition recognise that five years will not be sufficient to repair all the damage done by this Government.
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The move to assist charities is welcome, but the proposals about VAT could have gone further. However, that is a move in the right direction, and the provision to allow companies to make one-off payments is also an attractive feature. I hope we shall see companies responding to that and taking the opportunity to make donations to charities. Of course, that money will be in addition to the covenanting payments that companies are already able to make.
The capital transfer tax on lifetime gifts is to be abolished and replaced by an inheritance tax. Few people in my constituency will benefit from that. It is a totally wrong move, and one made to assist the wealthy. It is not acceptable. The Government should think again.
The Government should spend more money on housing and improving the infrastructure. The £935 million that they are using to reduce income tax over and above the rates fixed by indexation could have been used for those purposes and would have been a small step in the right direction. The Paymaster General said that not many people work on the construction of sewers. I accept that may be true, but he fails to recognise that the materials used to carry out that work are important. While the work on sewers may be minimal, it would put other people back to work making the materials.
The Paymaster General also said that the Federation of Master Builders was unable to recruit the type of labour that it required. He spoke about general labour, but especially skilled craftsmen. Some employers are unable to recruit the skilled workmen they need because of Government cuts in the last few years. We no longer have the apprentices getting the training that they require, and in a few years that will be a major problem.
Until financial pressures were put upon them, the direct labour organisations of local authorities were the biggest single organisations in the building industry that gave craftsmen training in joinery and plastering and other types of building trades. Direct labour organisations had a tremendous record of training craftsmen and tradesmen. The Paymaster General should not take at face value what the Federation of Master Builders has said. That information should be considered much more closely.
Just two weeks ago in the House of Commons representatives from the Confederation of British Industry in the north-west met Labour Members from the north-west and separately a number of Conservative Members of Parliament. The CBI was quite clear in saying what the priorities in the Budget should be. It said that at least £1 billion should be used to get people back to work. Its representatives did not believe that income tax should be a priority. They were quite clear that, if there were to be cuts in income tax, the adjustment should be to the threshold, not to the basic rate. The Government have failed to take the opportunity to do that and have chosen to reduce the basic rate by one penny at a cost of £935 million in 1986–87 over and above the statutory indexation.
The cut of a penny in income tax is nonsense. The Government should not have moved in that direction. The benefits for the ordinary working person as a result of that cut are minimal, and the money could be better used for house building and repairs. Like my hon. Friend the Member for Bradford, West, I have people in my constituency who cannot get repair or improvement grants for their houses. Council houses are deteriorating, and there are many problems that this £935 million could have

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been used to solve. By spending it to solve those problems we could have got people back to work. If we had to have an income tax adjustment over and above indexation—I say "if' because that is not a priority—it should have been an adjustment to the threshold. That would have been of greater benefit to lower paid people.
The right hon. and learned Member for Dover (Mr. Rees) talked about graduated rates and different bands of income tax. Perhaps for the first part of taxable income we should have a lower rate, because that again would benefit lower paid people. However, that is not a priority. Perhaps we could think about it when more money is available because it is nonsense to adjust the basic rate to 29p rather than to have a lower intermediate rate. As a result of the Budget, the public sector borrowing requirement is set at £7 million, or 1·75 per cent. of gross domestic product. Bearing in mind the problems facing us, that figure is ridiculous.
Hon. Members on the Government side have said several times during the debate that the Labour party should lay the cost of its programme before the House. When the Conservative party faced the 1979 and 1983 elections it never said to the electorate that the country would end up with 3 million people out of work or that to control inflation it would cut public expenditure and hit most those who are deprived. Our poorest people are the ones that this Government have hurt most of all. They are the people living in the most deprived areas and they have suffered as a result of this Government's policies.
We will make our plans clear to the country before the next election, but the Conservatives should spell out exactly what they intend to do. I should like them to tell the people what they will do when they have disposed of all our publicly owned assets. British Telecom has already gone, and another of our assets is British Gas. By selling those assets the Government get an income for one year and use it either to benefit the taxpayers or for public expenditure. Once that money has been used, it has gone and cannot be used again.
One could go home this weekend and sell the gas cooker and the fridge and have a good weekend out, but the sale of those things would be regretted the following week. This Government will regret the disposal of our assets. It is not only the asset that goes but the income from it, and that income is lost not just for one year, but for year after year. On British Gas alone we are talking of a present benefit on profit of £1·5 billion each year. The Government will eliminate that asset and put it into private hands.
The Budget dealt with the extension of the pilot scheme for the long-term unemployed. Burnley was one of the enterprise areas. That extension is a welcome move, although the £40 a week the applicants receive is perhaps too small when related to the £1,000 that each applicant has to find. That will be a deterrent to some people entering the scheme. The scheme has certainly had considerable success in Burnley, but it will not solve the problem of unemployment. If the Government believe that it will, they are under an illusion. I believe that that figure should be increased from £40 a week, and that the period should be extended, because many people start to run into difficulties just at the time when the state scheme stops supporting them. The new workers scheme subsidy pays employers £15 a week for all 18 to 19–year-olds if they are paid a wage of up to £55 a week. The Government are again attempting to limit wage levels, and they have often
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said that low pay is better than no pay. It is significant that the Shops Bill, which is now being considered, contains a clause which removes some of the restrictions, Of course, I accept that the other place has made an important amendment to the Bill. Nevertheless, it is being introduced at the same time as the Wages Bill, which will also remove a lot of protection for the lower paid.
The Government have once again got their policies wrong. They have not faced the issues before us in 1986. They should make more money available to tackle the problems of housing, and the difficulties facing our hospitals as well as all the major problems that exist in areas such as those represented by my hon. Friends and myself. That would put people back to work. That is what the Government should be doing instead of giving handouts to the wealthy.
In 1979, the Conservative Government's first act was to reduce the top tax band from 83p to 60p. That is nonsense. The sands of time are running out for them. They should face the difficulties in Britain in 1986 and get people back to work instead of paying lip service to our problems.
8.11 pm
Mr. Andrew Rowe: The crudity of the Budget analysis given by the hon. Member for Burnley (Mr. Pike) gives me some hope. I am no economist, but even I can probably do better. To my innocent mind, there is a considerable difference between selling my gas cooker, which means that I shall no longer have one, and the Government changing the ownership of the national gas network, which means that we can still enjoy gas.
Anything that I say about this Budget has to be set against a background of considerable admiration for my right hon. Friend the Chancellor for having dealt with a sudden, swingeing loss of £5·5 billion without rocking the stability of the economy. I do not believe that any other Chancellor could lay claim to such an amazing feat, and I admire him very much.
Debates on the Budget always seem to be an opportunity to lay out the ground for the next Budget. I have three points to raise. My first concerns skill shortages. My second concerns the difficult question of the mixture between private gain and public programmes, and my third involves small firms. However, as other hon. Members wish to speak, I shall be as brief as possible.
Skill shortages are already with us in, for example, electro-mechanical engineering, the teaching of maths and physics and in information technology skills. However, I must admit that the expansion of the information technology industry is limited more by a public lack of understanding than by any shortage of people capable of meeting those needs.
Who really cares about such shortages? The Butcher report is a sign that the Government are at least concerned to some degree. It is true that the Manpower Services Commission recently told the Employment Committee that it was doing its best to collect and assimilate information on skill shortages and to provide job training in areas of acute skill shortages, and of course the infant Open Tech is also being nurtured, but those are minor points. Today, I checked who was collecting information, and I was staggered to be told by the Engineering Employers Federation that that was not one of its concerns.
I hope that my right hon. Friend the Chancellor will consider the short-term palliative of greater mobility for

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skilled workers who cannot put their skills into practice because they cannot find anywhere to live. I realise that that is not the direct concern of the Department of Employment or of my right hon. Friend the Chancellor, as it involves housing problems. However, I very much hope that the private rented sector will be re-emphasised, with proper safeguards against Rachman-like landlords. Those who sell their houses for £15,000 or £30,000 in order to move to areas with high employment find that they cannot afford to buy a house, and so return home disenchanted because they cannot take their families with them.
The Select Committee visited Alfred Marks and learnt that the price payable for work processing skills was so far in excess of that payable for simple typewriting skills that it paid Alfred Marks to install a training programme so that temps could learn how to use word processors. Of course, the pay-off time is short, as is the training time, so everyone can see the immediate benefit. Indeed, I am sure that there is no need for the Government to intervene in that area.
Mr. Barry Sheerman: Is the hon. Gentleman not amazed that the Government should have introduced a new workers scheme in the Budget which gives such substantial subsidies to employers who employ young people without any strings being attached and without training being necessary? Those young people need not be trained throughout that period of employment.
Mr. Rowe: I am sympathetic to the Government as they are in a tremendous dilemma. If too many strings are attached to the provisions for young workers, employers just will not take them on. But I hope to argue that we should increase the incentive and, to some extent, the strings in order to make people accept responsibility for training. I wonder whether there is scope in some of the more difficult areas of training—where the pay-off is slower or the training is longer—for a tax benefit for upgrading skills. After all, we get tax benefits as individuals for upgrading our houses and for upgrading our pensions, so it is not entirely incongruous to try to work out a system of tax benefits for upgrading our skills, particularly in areas of skill shortages.
Furthermore, the means for much of that provision is at hand. I have spoken on this subject before, but I did not elicit any serious rejoinder. Nevertheless, I shall try again. Many people own home videos and so there is a great opportunity to use them for self improvement. The video tape is an extraordinary instrument, because it is expensive to make but incredibly cheap to copy. Moreover, it can be copied by transmission via the television set, and so can be copied anywhere. The Government should seriously consider establishing some means whereby a copyright-free training video programme could be introduced under the auspices of the Open University—which I know is of interest to the hon. Member for Huddersfield—or under the auspices of the Open Tech. That serious suggestion is worth taking up. It does not really matter whether people pirate those videos at home, but it is not on for teachers to pirate the copyright, and we should try to do something about that.
We need to know where our skills shortages are now and, as far as possible, where they are likely to be in future. That is a difficult but necessary task. We must
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urgently tackle the problem of those shortages because the upswing in the economy, which we are all confident will arrive, will be strangled by such shortages. We can identify them now and we ought to be dealing with them on a crash basis.
Private gain is a difficult and complex subject. Substitution of private sector jobs by public subsidy jobs is a real danger, especially with the huge programmes being implemented by the Manpower Services Commission. There is, however, scope for more participation — for example, in the community programme—by private employers. At present only 2 per cent. of community programme schemes have private sector participation. I know that the MSC and the CBI are examining that. We must be bold in this matter. If private firms fight shy of inner city sites because of the level of dereliction, why should we abuse the community programme by bringing those sites up to a standard at which they would be attractive enough to the private sector to take them on? We should not be afraid of helping private firms to prosper. Rather we should be afraid that by using public money to subsidise some private firms they are then able to destroy others. That is a difficult balance to strike, but I believe that it is a priority area and I hope that the Government will address themselves to it.
The Budget has been very helpful for small firms. I am delighted at the continuation of the loan guarantee scheme. I played a small part in its introduction. It was proposed in the face of considerable scepticism from the banks and others. It has played a major role in launching small firms and in educating the financial institutions about the importance of the small firms sector.
I welcome the continuation of the business expansion scheme on a permanent basis. However, I am sorry that there has not been a bold move on training for small firms. I still do not understand why the financial institutions, particularly the clearing banks, take so little interest in the training record of their debtors. They value the machinery, the property and the owner's home, but they do nothing to value the quality of the staff, which is the most expensive item.
My suggestions for personal tax relief for individuals could perhaps be paralleled by a tax relief for companies with a good training record. I am tired of financial institutions pleading that it is not their job to play any role in improving the quality of management in the businesses to which they lend money. If it is not their job, whose job is it? They have access to the firms and power over them. For them to say that they do not understand enough about the running of small businesses to help them is a dereliction of duty.
I shall take the Minister close to home. Small firms complain bitterly about their customers' slowness in paying bills. That has a direct effect on their ability to employ staff. I must tell the Government that the Government Departments are often as bad at that as anyone else. If codes of conduct or letters of encouragement do not improve the situation, should we not try penalties?
We have heard about vacant properties and unused land, but I remind the Government that the DOE survey shows that central Government have the largest number of longstanding vacant properties and still own a huge property bank. These matters are under the direct control

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of the Treasury as the establishment officer for the Civil Service. I hope that my right hon. Friend will do everything to ensure that the Treasury exercises that duty.
Mr. Deputy Speaker (Sir Paul Dean): Order. The winding-up speeches are expected to begin at about 9.20 pm. At least six hon. Members still wish to speak, and I hope that speeches will be brief so that all those hon. Members can make their contributions before the Front Bench speeches begin.
8.24 pm
Mr. Don Dixon: I apologise for having missed the opening speeches, but I was delayed in Committee Room 12 dealing with that paltry, squalid little Bill that the Government introduced, the Wages Bill. It is aimed at those at the bottom of the wages ladder, and is more or less in line with the theme of the Budget proposals.
I shall follow the line adopted by my hon. Friend the Member for Bradford, West (Mr. Madden) who spoke about our region, the northern region, which over the past eight years has suffered because of restructuring, unemployment and, now, the social problems that have been caused by many of the Government's policies. For example, the northern region has lost 230,000 jobs over the past eight years, which is 18 per cent., or almost one in five of employees. Some 34 per cent. of manufacturing jobs have been lost, which totals 146,000 jobs. That means that one in three of the work force employed in the manufacturing industry have lost their jobs. A total of 50 per cent. of construction jobs have been lost, and house building is down by 50 per cent. Public sector house building has been reduced by two thirds and road construction works are being delayed. However, there are thousands of construction workers on the dole. Ours is one of the only regions to have suffered a decline in service employment. In 1984 9,000 fewer people were employed in the service industries in the northern region than in 1977.
The Chancellor could have done something to alleviate the problems in the northern region with the £935 million that he has given in tax concessions. He could have made sure that tourism there was improved. In 1983 the value of tourism in the northern region was £250 million. The Chancellor could have made sure that the regional tourist boards were allocated a significant increase in resources for marketing and development.
Total unemployment in the northern region has moved from 8 per cent. to 19 per cent. Male unemployment rose from 10 per cent. to 23 per cent., and the percentage of long-term unemployed has doubled. Of that long-term unemployed in the northern region, 29 per cent. are youngsters under 25 years of age. In my constituency 43·1 per cent. of the unemployed have been out of work for more than a year. Those 3,585 men and women have experienced the humiliation and despair of repeatedly being rejected for a place among the work force. There are 40–year-olds in my constituency who can see no future as they will be unable to get another job during their working lifetimes. That is the situation in the northern region and in my constituency, yet very little, if anything, has been done for them in the Budget. The Chancellor could have done so much with the £935 million to assist regions and constituencies such as mine instead of knocking a penny off the basic rate of income tax.
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The worst unemployment black spots are in the northern region. The five worst in England—South Tyneside, Hartlepool, Middlesbrough, Bishop Auckland and Sunderland—are in the northern region. South Tyneside is the worst unemployment black spot in Great Britain. My hon. Friend the Member for South Shields (Dr. Clark) and I have repeatedly asked the Minister to redesignate South Tyneside, because of the high unemployment and the social problems, from a programmed authority to a partnership authority, but to no avail. There has been a 57 per cent. reduction in real terms in Government regional assistance to industry in the northern region, and average household incomes are the lowest in the United Kingdom.
The Budget has done nothing to help people in the northern region if one considers what the Chancellor has given in tax concessions. A married couple with a total income of £4,000 will be 67p a week better off, yet those with an income of £50,000 a year will be £8·79 a week better off. The Chancellor has made matters worse through his Budget.
The north-south divide is increasing every month under this Government. There are 23 redundancies per thousand in the northern region, whereas in the south-east there are only five for every thousand. In the south-east the unemployment rates in 1985 were 10 per cent., and in the northern region they were nearly double that at 19 per cent. The percentage of those who became unemployed between April and July was 6·5 per cent. for the northern region and in the south-east 3·9 per cent. The change in average weekly household incomes compared with the United Kingdom average between 1977 and 1985 was plus 4 per cent. for the south-east and minus 8 per cent. for the northern region.
Between 1976–77 and 1983–84 school-leavers going on to full-time education in the south-east rose by an average of 6 per cent,. and in the northern region fell by 29 per cent. Under this Government we have two nations. We have the north-south divide, which was so forcefully described by my hon. Friend the Member for Bradford, West.
Local authorities in the northern region which try to help to generate employment, even working with the private sector, are being severely hampered by the penal effects of the Government's block grant system.
In view of the huge restructuring that is taking place in the northern region, it is imperative that the remaining key industries such as steel, coal, shipbuilding, heavy engineering and machine tool manufacturing should be protected by the Government. It is nonsense that a shipyard worker should be put on the dole at a cost to the Treasury of £6,000 per annum when he could be kept in work building ships that are required. In that industry we are being outmanoeuvred by countries that subsidise their shipbuilding industries.
The Chancellor could have provided support for small firms in our region. Support is being restricted by the 40 per cent. EC limit on public sector support. In our area 30 per cent. of the work force is employed in small firms, as against 47 per cent. in the south-east.
The North of England County Councils Association has a conference tomorrow to announce its regional policy—the state-of-the-region report. The association has, since 1979, repeatedly asked the Government to do something for our region. We need a Minister of Cabinet rank to express the needs of the English assisted regions.

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Why should the Scottish and the Welsh have a Secretary of State with Cabinet rank when the English regions have not? Why should we not have a Minister in the Cabinet to speak up for regional development and support?
There should be increased resources for infrastructure and support for the EC programmes, not as a substitute for them. There should be increased funding for new technology, telecommunications and research and development projects. There should be greater recognition of the region's needs in regional industrial policy. There should be special employment measures and support for training.
We lost the Killingworth skillcentre. The hon. Member for Mid-Kent (Mr. Rowe) talked about training. There is now no skillcentre between the Tyne and Edinburgh because of the Government's decision to close the Killingworth skillcentre. The dispersal of Government officers and research establishments to the region would assist the area. All those measures have been asked for over the years, but little has been done.
The Government should recognise the value of local authorities. Tyne and Wear, an effective job creation authority, has been abolished by the Government. Other local authorities are hampered by the block grant restrictions. There should be increased spending on housing and health facilities. The Black report pointed out that South Tyneside district council, in my constituency, was one of the 10 worst in the country, yet we are being starved of resources.
The housing investment programme allocation for South Tyneside this year is £6·5 million. To maintain the real value of 1979 it would have to be £27 million. Yet the local authority has £6·5 million to deal with all of its housing problems. Asbestos has been found in a block of flats for which the council has a modernisation programme which is due to be carried out next year. Because of the restriction on the money available for housing, the local authority cannot bring that programme forward to coincide with the work that has to be done to remove the asbestos.
The Chancellor and the Government could have done many things to help our region. It requires support more than any other region because of its particular problems, most of which are the result of the Government's policies. The other night during a debate on the EC, I suggested that the northern region should be treated as a priority area, because our social and unemployment problems are as bad as those in Northern Ireland, the only priority area in the United Kingdom. The Chancellor should have taken that into account in the Budget.
The Select Committee on Employment produced a good report on long-term unemployment. It put forward positive suggestions to help the 750,000 people who have lost hope and the will to work because they have been unemployed for so long. Yet that report has been ignored. Indeed, the Paymaster General tried to rubbish it before it was even officially published.
The Government could do many things rather than taking a penny off the standard rate of income tax in order to help the people in our area who are unemployed and deprived, which the Government apparently think nothing about.
8.36 pm
Mr. Roger Freeman: I hope that the hon. Member for Jarrow (Mr. Dixon) will forgive me if I do not pursue his line of thinking about the northern region. It is not because I do not understand and sympathise with the unemployment problems in the north-east. My constituency in Northamptonshire is, comparatively, much more fortunate with an unemployment rate of only 9 per cent.
I want to concentrate my remarks on the taxation of savings and investment. I appreciate that for a person who has no job talk of the reform of taxation of savings and investment is not directly relevant. Nevertheless, I want to follow the comments of my hon. Friend the Member for Reigate (Mr. Gardiner) in commenting briefly tonight on the Budget's provisions for savings and investments.
I hope that my right hon. and learned Friend the Paymaster General will pursue with my right hon. Friend the Chancellor of the Exchequer the idea of discussions with industry on the introduction of profit-sharing schemes. That is crucial and could be important for employment prospects. I say that as a former employer. If we had the taxation incentive whereby part of the overall remuneration came in the way of a profit-sharing arrangement with the firm—a bonus pact—I am sure that an employer would be more flexible in taking on additional staff when times were better because the employer would not be building in the high fixed costs that can often follow if one has to pay comparatively high rates of standard pay plus overtime. I welcome that initiative. One route that my right hon. Friend might pursue is to limit the national insurance contributions for the employer and the employee to the basic salary, leaving some concession for the national insurance contribution on the profit share or bonus payment.
I welcome the Budget as being another step in the right direction towards share ownership. By that I mean not only the broader spread of the ownership of assets in Britain but the direct control of those assets by individuals rather than through institutions.
The privatisation of British Telecom was a marvellous opportunity, which has been fulfilled, in the spread of ownership of shares. I hope that some of the reforms—two in particular—will encourage that process even further. I welcome the reduction in stamp duty from 1 per cent. to 0·5 per cent. Next year, I hope that the Chancellor will abolish it. It is a tax on savings, investment and trading. I do not believe that it should have a permanent place in the Chancellor's armoury of taxation. Many investors—now, fortunately, without exchange control—can make investments in other markets and in other exchanges where there is no stamp duty.
I welcome the personal equity plan, although I agree with the suggestion of my hon. Friend the Member for Reigate that, instead of allowing a husband and wife a concession of £4,800 a year of investment in a personal equity plan and the capital gains and dividends income rolling out tax-free, a more modest concession of £500 of investment, could be made out of pre-tax income similar to the Loi Monory. That would have a more direct beneficial effect on the spread of share ownership. Nevertheless, the proposals in the Budget are welcome.
I notice from the Red Book, when trying to calculate what the officials have estimated the take-up rate will be in the fiscal year 1987–88, that the constant of the scheme

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is shown at £25 million for the full tax year. I have calculated, making modest assumptions about dividend yield and rates of taxation on the individuals who take part, that it is equivalent to £1 billion worth of equity investment. That could account for perhaps 500,000 new shareholders with a concession of say £2,000 worth of investment per annum. They are large numbers and I hope the plan is successful.
We are in the grey period between the Budget debate and the Finance Bill. I hope that we will have the First Reading of the Finance Bill as soon as possible to enable not only the House but those interested outside to make their comments in good time for the Second Reading and Committee. I ask the Minister to consider seriously, if we are to encourage the monthly deduction from the payroll of payments into personal equity plans, tax relief on interest earned on amounts deposited until they are invested. Otherwise it could be a disincentive. A sum of £200, £100 or £50 a month will take some time to build up before a sensible share purchase can be made. Perhaps we have many constituents who applied for the 800 allotment of British Telecom shares. That is £2,000. It therefore will take time for the individual to build up his cash reserves in a personal equity plan before he can make a sensible direct equity investment. Otherwise the expense of buying shares in smaller tranches could be prohibitive.
When the Minister is drafting the Finance Bill, will he please ensure that no relief is given if the individual makes his investment through a unit trust or institution? The relief should be for individuals who invest directly in equity shares. That is what we want to encourage, and not investment through institutions.
The business expansion scheme relates to the flow of savings and investment. I have taken some time to study the voluminous report from Peat Marwick. It is an excellent report and it gives justification for the Chancellor to proceed to extend the business expansion scheme indefinitely. The report shows that there has been incremental equity investment and it justifies the scheme and its relatively generous tax concessions.
I feel strongly that we have not made enough progress with the encouragement of what I call local syndicates on a county, town or metropolitan basis. The syndicates would encourage local investors to claim tax relief and invest in local business. Local investors often know which local businesses are likely to thrive. I would like to see some guidance either from the Department of Trade and Industry or the Treasury to local enterprise agencies. About 200 have already been set up in the country, including one in my own constituency. There should be some guidance to those agencies on the practical steps that should be taken to set up local syndicates.
The Chancellor encouraged industry to invest more in research and development. I was pleased to see that in the Finance Act 1985 there were concessions to encourage business expansion schemes to invest in research and development projects. I think we should go further. There is no magic in the £40,000 worth of relief but perhaps the business expansion schemes could invest that sum in research and development projects. The money should be directed into high technology and high-risk projects. The Government might consider lifting the ceiling of £40,000 to encourage more money to flow into research and development.
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I welcome the Budget. I think that it is imaginative, and I think it will promote what the Chancellor called the enterprise culture. It is good for jobs but it is especially good for wider share ownership.
8.46 pm
Mr. Ray Powell: I cannot echo the praise of the hon. Member for Kettering (Mr. Freeman) for the Budget. He obviously does not represent a constituency like mine in south Wales. If he did, he would not be talking about his constituents looking for shares in British Telecom. Most of my constituents are looking for sufficient money to exist on. The reason for that is the massive unemployment which has been created in the past seven years of Tory government.
I am sympathetic to my hon. Friend the Member for Jarrow (Mr. Dixon). I enjoyed his speech very much. I should not like him to assume that perhaps by having a Secretary of State for the northern region, as we have a Secretary of State for Wales, his region would benefit. In fact, he would find, as we have done with the Welsh Development Agency and the Secretary of State for Wales, that the region was worse off.
In 1979, the unemployment percentage for the whole of the Port Talbot travel-to-work area was 3·7 per cent. It is now 20 per cent. In one area of my constituency, Maesteg, male unemployment is 40 per cent. How has this come about since 1979? We have had demanning at Margam steelworks near Maesteg and there has been the closure of a number of collieries. In 1980 the Caerau colliery was closed, and in 1981 the Coegnant colliery was closed. Since the miners strike, St. John's colliery in Llynfi valley has closed. That is only one of the four valleys that comprise my constituency. Since the end of the miners strike, in Garw valley the Garw-Fylaldu colliery has closed. In the Ogmore valley we have had the closure of the Wyndham Western colliery. In recent weeks the last link of the Ogmore constituency with the mining industry has been severed with the closure of the Coed-Ely colliery. Since the end of the miners strike, we have lost 1,500 jobs, together with all the supportive industry jobs which were lost in conjunction with those closures.
All this has combined with the closure of factories on the Bridgend estate, together with bankruptcies and other matters which have caused businesses to close. To this is added the cut in revenue for local authorities and the compelled reductions in services such as social services. In the Ogmore area there are still 2,500 people waiting for housing. We are looking for sheltered accommodation for the elderly. All those services have been drastically reduced because of the Government's financial policies.
Hospital services in the whole of Mid Glamorgan have been severely cut. I understand that there is an abundance of doctors, qualified nurses and experienced personnel in a variety of supportive roles who are all out of work. They are all seeking employment but no jobs are available for them; yet the Mid Glamorgan health authority has announced that it is 1,000 nurses short in the area. The social work and essential services necessary for the old, disabled and disadvantaged have all been abandoned to the whim of the grocer's daughter.
Where is there in the Budget any compassion or sign of caring for people? What action is included to reduce the unacceptable figure of 3·5 million unemployed to a level that we would assume was reasonable—back to the

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1979 figure in the Ogmore constituency and the travel-to-work area of the Ogwr borough and Port Talbot? What a blessing it would be for the 8,000 people in my area who are out of work if we could return to the 1979 figure.
Nevertheless, I welcome the extension of aid, limited though it is, to the MSC's community programme schemes. Even the increase in the average wage from £65 to £67—a meagre £2 increase—is acceptable. It will help some of the administrators to extend slightly the scope of the schemes. A much more realistic figure would have been £80.
Of course, I welcome the measure as chairman of one of these successful schemes called community and training in Ogwr. It provides for about 450 places this year and the number is steadily increasing. I have some knowledge of the people applying for jobs especially in the construction industry, because I have interviewed bricklayers, floorlayers, plasterers, painters, plumbers, electricians, architects, buyers, and planners—every conceivable professional or technical person required to build what we need in the construction industry. I have interviewed them. There are thousands of such people in my area alone seeking employment.
We need to meet the demand. My right hon. Friend the shadow Chancellor and deputy Leader of the Opposition —the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley)—spelt out in detail only yesterday what Labour will do when we form the next Government. It is a matter of priorities. Everyone knows what they should be, but getting the country back to work is more important than anything else. We should be exploiting every sinew of Government responsibility to solve this appalling social curse. We should be rejecting the massive unemployment in the United Kingdom. Hon. Members on both sides of the House should recognise and appreciate the social upheavals it is causing. Young men in the prime of life are thrown out of work, without hope and without a future for themselves, their children, their grandchildren or even future generations.
Since the miners' strike, the coalfield communities campaign has been set up nationally. A Welsh section has been formed to bring organisations together to help the coalfield communities. My constituency desperately needs the assistance of the coalfield communities campaign and of the Government. The coalfield communities campaign has said that in Wales it is vitally concerned with those communities in the Principality which have lost the pits which provided basic resources and the basic source of employment. The campaign stated:
"Throughout this period of economic change …one fact remains constant, while the miners themselves may have received some financial consolation for their redundancy, the stranded Community gets no help at all.
The Coalfield Communities in Wales have severe economic problems that are long standing and require investment over a number of years … it is in co-operation … between the Private and Public sectors that a policy and a programme should be provided for the economic, social and physical retention and regeneration of our Coalfield Communities."
The campaign stated that the Government should
"provide action on a massive scale involving major spending in the fields of communication, house building and environmental improvements."
It referred to
"long-standing difficulties of securing sufficient jobs for displaced coal-miners and their dependants within the constrained Valley areas and the traditionally high levels of
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unemployment which … we have suffered and which are factors peculiar to the coalfield areas by comparison with the urban areas of England and Scotland."
The campaign continued:
"the securing of alternative employment opportunities was beset with difficulties. The most serious result being, in my view, the loss of post-school training opportunities for youngsters. Traditional apprenticeships have disappeared and youngsters are not being recruited into employment in any great numbers."
There are already 21 authorities in Wales participating in the Welsh campaign—16 district councils and five county councils—which together represent more than 2 million people.
The Welsh coalfield communities campaign made its main point to the Welsh group of the parliamentary Labour party. One councillor stated:
"Our coalfield communities face very serious problems which are particularly severe if you compare us with the rest of Britain.
I am most familiar with my own County and what I have to say is specifically about Mid Glamorgan … it is one of the most deprived counties in Britain, but you will see much the same difficulties in all Welsh coalfield communities.
Our unemployment problems are severe. Almost one person in every five of our workforce claimed unemployment benefit in January. We believe the true rate of unemployment is probably more like one in four—rising well above that in some parts of the County. We are among the 6 worst counties in Britain.
Our communities are plagued with ill-health. Death rates are the second highest in Britain and more people are permanently sick than anywhere else in the country. As a result more prescriptions are issued to each person than in any other Welsh county.
Our housing is amongst the worst in Britain, with more houses without inside toilets than anywhere else …
The environment our people live and work in is still badly scarred by over two centuries of mining and other industrial activities. Public infrastructure like schools and roads is old and desperately needs replacing or improving.
All those problems are most severe in the mining communities in the valleys and are closely associated with the way the industry has developed and exploited the area.
Putting matters right is enormously expensive and a programme of capital spending in Mid Glamorgan has recently been submitted to the European Regional Development Fund. It is limited to eligible projects on which we might hope to get a capital allocation from Central Government. Even so, it amounts to £77 million over four years.
Mid Glamorgan's ability to commit resources to help overcome its difficulties is severely limited by the present Government's expenditure controls and by its own extremely weak rate base. We have the lowest rateable values in Britain.
Government policies seem to us to favour the prosperous South and South East of England and, when they occasionally focus on poorer areas, it always seems to be the big cities that benefit. Well, we have a big city population in our valleys and our needs are every bit as great. Our potential to contribute to the nation's prosperity, given the right help, is probably greater."
I could go on at some length on the problems which beset Mid Glamorgan and my constituency of Ogmore. I ask the Government to consider nine points which I should like to put to them. They are:
"Recognition by Government of the special needs of the Coalfield Communities of Britain.
Designation of Coalfield Community Action Zones as a means of focussing new policies and giving higher rates of Regional Grant and other support.
An additional investment programme to improve the environment and modernise the public infrastructure in Coalfield Community Action Zones.
A specific additional grant to Welsh Development Agency earmarked for land reclamation and major environmental schemes in the Welsh Coalfield Community Action Zones.
An allocation of additional resources through RSG and capital allocations to the local authorities of the Coalfield Community Action Zones in Wales …
A recognition by NCB and the Government that the scale of the problem is not reflected in the scale and scope of the funding and activities of NCB (Enterprise) Ltd. We would particularly

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like to see NCB (Enterprise) given more support in the form of grants, providing venture capital for new start ups and widening its support towards training beyond ex-miners.
A three year moratorium on colliery closures in Wales and a commitment to invest in a new colliery at Margam.
A far more effective marketing of Welsh coal by NCB, reflecting its special qualities, and an extension of the Government's coal firing scheme to the public sector.
A complete revision of the EEC's coal policies on the lines of the recommendations by the Labour Group of members of the European Parliament."
The Budget has not even considered further prospects of employment within the area to which I have referred. My hon. Friend the Member for Newport, East (Mr. Hughes) mentioned the slogan of the Budget of my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) some years ago, "Steady as she goes". My hon. Friend said on Tuesday that this Budget could be given the slogan "Steady as she sinks".
9.3 pm
Sir Brandon Rhys Williams: There are many excellent features in the Budget and I should like to give a personal welcome to the reconsideration of the tax position of occupational pension funds. I hope that I am right in expecting that this will at last prove a decisive move in the direction of full transferability of all accrued pension rights.
I want briefly to express some concern about the general Budget strategy. I am worried about its impact on the serious development in this country—the reappearance of the division of the nation into haves and have-nots. I think that there are two aspects of that problem which we can discern in the Budget. First, there is what I would call the cult of the equity, which we see in the otherwise excellent plan for the PEP. I wonder why it is necessary to confine that project to investment in equities only. I think that the decision should be reconsidered, because it seems to be against a discernible trend in the direction of management buy-outs, worker participation, employee shareholdings and the generally increased perception of the advantages of allowing workers to receive a larger share of their remuneration through the performance of the business rather than their wages. Other classes of share such as convertible debentures, value added loan stocks, dynamised debentures, participating preferences and perhaps other experimental forms of investor participation ought to be encouraged as well. I hope that my right hon. and hon. Friends will consider this point.
I should like to see what on the continent is known as the historic compromise: a closer relationship between workers and investors and a greater recognition of their absolute identity of interest. I have said in the House before—I think that I shocked people when I said it, but I shall repeat it now—that we are moving towards a time when workers will give up their right to strike and investors will give up their claim to an equity dividend. This may lie some way ahead, but we should prepare for moves towards greater harmony and better relations between investors and workers. The "two sides in industry" concept ought not to be allowed to continue. Marx may have had a point when he said
"The profit belongs to the workers"
but of course a fair return belongs to the investors, too. Otherwise there will be no profits and, sooner or later, no workers either.
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However that may be, I think that the historic compromise in the creation of wealth and the end of the game of "Normans and Saxons" should be a particular mission of the Conservative party. I hope, therefore, that the PEP scheme, which I believe is destined to have a very great success, should be extended to other classes of share besides equities.
I should like to say a few words about the increasing division between those in work and those in need in our society. We now have 8 million people on supplementary benefit. That is a very large number and, unfortunately, it seems to me that as a result of the reforms of the rating system which the Government have in mind—and which I fully support—and also as a result of the impact of the Social Security Bill which is now in Standing Committee, it is likely to rise. If it is implemented as it stands, with the emphasis so strongly on needs-related benefit and, unfortunately, inadequate provision for contribution-related benefits and neglect of the scope for benefits founded on citizenship as of right, I am afraid that the division between those in work and those in need in Britain will become even more marked. Every civilised community has to strike a balance between unity and freedom: the unity of the community and the freedom of the individual. That is what politics is all about.
In a modern society where our mutual relationships are so widely expressed in terms of cash, the Budget is an important indicator, a determinant of the balance between the scope which our economy provides for the pursuit of selfish aims—making our own choices—and the power of the various systems and social institutions by which we bear one another's burdens. I am not convinced that the Chancellor of the Exchequer is wise to commit himself to a reduction in the rate of income tax to 25p in the pound and to move in that direction this year by a reduction of 1p in the pound in the taxation of income. I should have preferred that the resources he has chosen to deny to the Departments should have been dispersed in a less random fashion and in a way that would have promoted the unity of the nation rather than its division.
Lastly, I would like to refer to the Chancellor's Green Paper on the reform of personal taxation. It adds to my sense of uneasiness. In 1974 the Conservative party committed itself to the tax credit scheme, though not entirely in the form that I personally would have chosen, and the commitment was repeated in 1979 in the first general election manifesto that emanated from my right hon. Friend the Prime Minister. But the Green Paper is plainly intended to kill the idea of tax credits stone dead. I am currently serving on the Standing Committee on the Social Security Bill, and as we progress through its clauses I become more and more deeply convinced that the stone that the builder is seeking to reject in 1986—the concept of a tax credit scheme, or what I call the BIG idea, the basic income guarantee—will, before very long, become the head of the corner in our system for the redistribution of income.
9.4 pm
Mr. Frank Haynes: First, I must apologise for not having been in the Chamber for very long. I have been in Standing Committee all day on the Social Security Bill. However, I want to make a small contribution to the debate. I heard the Paymaster General's speech this afternoon. He is a Member of Parliament for an east midlands constituency, which is just down the road from

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mine. His contribution in Government has been to cut and cut again. He supported similar policies as Minister for Health when we were trying to formulate a policy for a district general hospital. The project got off the ground, but then he imposed cuts and delayed the programme for two years, and jobs went in the process.
Now we have another Budget. The Chancellor suggested that the 7·5p increase in the price of petrol should be absorbed by the petrol companies. They have already given him their answer—they are not prepared to do it. The result is that the increase is to be added to the price. As everybody realises, an increase in the price of petrol means an increase in the prices of commodities which have to be transported, and that will no doubt be reflected in the prices of commodities in the shops. At the weekend I go shopping with my wife fairly regularly, and I notice that prices continue increasing, and never decrease. Nor will they decrease in spite of the reduction in the price of oil, because that cut is not being passed on to the consumer as it should be. The big oil companies are raking off massive profits, yet the Chancellor is prepared to let that continue and not to do a great deal about it.
The Chancellor has missed a real opportunity to reduce unemployment. Every constituency suffers from unemployment, some more than others. There has been a dramatic increase in unemployment in my constituency since 1979, and it continues to rise. I remember in 1979 when the Chancellor of the day gave a massive reduction in income tax to the rich. The Prime Minister, when questioned at the first Prime Minister's questions after that reduction, said that all the money that was being given back would be invested in industry so that industry would expand and jobs would be created, but it has gone the other way. When the restrictions were removed, money flowed out of the country to places where the pickings were richer than in the United Kingdom. The result was massive unemployment, and the level of unemployment continues to rise and cause misery in our constituencies.
Many changes are taking place as a result of the Government's policies. In Committee on the Social Security Bill, the Government have said that they want child benefit paid into the man's pay pocket. That is scandalous. That money belongs to the person who looks after the child, and in the main that is the mother. When the Labour party was in power, it made sure that the mother received the child benefit. Now, however, the system is being reversed. It will be put into the man's pay packet, and many women will be denied that money in future. We all know what happens, and that is why the Labour party when in office changed the rules.
I recall the comment of the hon. Member for Mid-Sussex (Mr. Renton)—I am glad that he has come back into the Chamber—about ensuring that business has proper training programmes. I think that the hon. Member has a nerve. His party has been in office for almost seven years, and has not done a great deal about training except that the Government got frit, they realised that people were not very pleased with what they were doing and they rushed into a youth opportunity programme that was cheap labour, using youngsters on adult jobs. The £25 paid by the Government was the only money that those youngsters got for the work they did. The Government brought in other schemes but they only provide cheap labour. We want a proper training programme. The Government are
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late in bringing forward proposals. The people have got the message on unemployment. The training that would enable people to be ready for jobs when the economy improved has not been provided for.
The Government have done a wicked job on education. They talk about skill training and places in universities. Now, by cutting student grants, they are making parents pay. The people who can least afford it have to pay for their children to go to university. Is it any wonder that we get massive lobbies of parents and students to tell us what they feel about Government policy on education?
I have no good words for the Budget. It will not help many of my constituents in Ashfield in Nottinghamshire. When I go home this weekend, my constituents will give me the message at my surgery that they do not accept the Budget either.
9.16 pm
Mr. Alan Howarth: It is the mark of a creative Chancellor that against a background of having lost enormous income which he might have expected from tax revenues, and finding himself with very little room for manoeuvre, he has nonetheless managed to spread good cheer throughout the country, other than on the Opposition Benches, and he has managed to lead the country in constructive directions.
This is a Budget for enterprise and responsibility. We should note first, however, that his macro-economic strategy has been overwhelmingly endorsed by the markets. Before we have voted on the Budget the markets have given an enormous vote of approval to the Chancellor's measures and strategy. That is because he has been prudent in his overall fiscal policy. Against the background of the erratic behaviour of sterling M3, the situation has been particularly difficult. Therefore, the Chancellor has been right to take the cautious path on the public sector borrowing requirement. He has been vindicated by the response of the market, by the fall in interest rates, and by the resilience and positive strength of the pound.
The Labour party proposes to spend £24 billion additionally. Heaven knows what would happen to interest rates and to sterling if that seemed a credible and realistic prospect. I listened with great interest to the hon. Member for Stockton. South (Mr. Wrigglesworth). The alliance, too, proposes to spend more. I was puzzled by some public statement by alliance spokesmen recently, when they said that. unfortunately, because of falling oil prices, they could no longer create so many new jobs through their proposed budget. They seemed to suppose that it is politicians and not businesses who create jobs.
The fall in oil prices has been a massive benefit to the economy overall. There has been a tremendous drop in the input costs of business. Along with that we have seen a fall in the pound and, because of the background of good financial management, interest rates have come down. So we must congratulate the Government on having ensured that the economy is in such good shape that it is able to take the greatest advantage of the new circumstances, which could have been very difficult to cope with.
Not only has the falling oil price reduced industrial costs, but the Government have been able to reduce the overall tax burden.
It is a Budget for enterprise. The introduction of the personal equity plan is an exciting prospect. Because mortgage interest rates are coming down people will have

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more money to put into the new investment opportunity. We must be wary and ensure that the plans do not involve excessive administrative costs. We must also be careful about encouraging investors to put more than they can afford into individual stocks. I certainly wish the scheme well although, with time, it may need development and refinement. It is very much a move in the right direction, as is the Government's intention to explore the possibility of profit sharing, which would do so much to end the adversarial style of industrial relations, which has been so dismally characteristic in our national life, and which seems to be the sole, backward looking, stale vision of the Opposition.
This is a Budget for responsibility, and I welcome the initiatives taken to promote charitable giving. That will be of benefit in not only releasing a whole range of resources and energies complementary to the statutory and bureaucratic welfare system, but could be immensely beneficial to training in encouraging firms to give direct charity funding.
With the vote of confidence that the markets have given, with lower taxes, with the incentive to enterprise and responsibility that the Chancellor's Budget has allowed us, Britain faces an encouraging future and significantly improved prospects for employment.
9.21 pm
Mr. Tony Blair: The hon. Member for Stratford-on-Avon (Mr. Howarth) said that this is a creative Budget that has been welcomed by the City. We need not a creative Chancellor for the City, but an effective Chancellor for the unemployed.
This is a Budget designed not for the regeneration of Britain, but for the regeneration of the Conservative party. On neither count will it succeed. Whereas the latter is a problem for Conservative Members, the former is a problem for the whole country. From tax cuts which benefit the wealthiest to an assortment of schemes whose principal feature is their utter insignificance to this country's problems, this is a Budget that does not address our difficulties, but ignores them. It will chiefly be remembered as the Budget which expresses the Government's final word on the unemployed—"You are on your own". This Government no longer see their responsibility in an economic sense, for the unemployed, but see unemployment as simply a social or human problem. I am not sure whether the Paymaster General was disclaiming or avowing the Tory Reform Group proposals earlier. When we look at what it says, we can see that there is a considerable consensus of opinion, not merely on this side of the House, but crossing the House, that it is a central role of Government—and not just the free market—to address the problems of unemployment. The real argument between this Government and so much of the country is that we see the role of Government as central to curing unemployment, whereas the Government see their role as incidental. The unemployed will get a lot of caring, but very little capital.
Last year's Budget was said to be a Budget for jobs, and unemployment rose. This year, not even the pretence has remained. It may be true that one cannot measure priorities simply by the amount of money spent, but it is some guide to priorities. When we consider that the net cost of the Government's employment measures is one-tenth of the give away in tax handouts, that shows us the measure of
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priority that this Government has towards the unemployed. We should strip away the rhetoric and get down to reality when we examine all the Government schemes.
We heard many comments from Conservative Members about the personal equity plan. The hon. Member for Stockton, South (Mr. Wrigglesworth) welcomed the plan without qualification; a position which is inconsistent with the position taken by the hon. Member for Berwick-upon-Tweed (Mr. Beith), who said that the plan amounts more or less to a con trick. Perhaps that is not unusual with 'the alliance. Let us examine the reality of this personal equity plan against the claims that are made for it in the Budget.
It is claimed that the personal equity plan will extend share ownership, and it will give first-time shareholders, the ordinary man in the street, the right to invest in shares so that they will benefit from the scheme. Further, it is said that it is to be seen in the same light as council house sales, so that the person who bought his council house will now invest money in shares.
Let us examine for a moment who will benefit under this personal equity plan. First of all, let us blow away some of the puff that has surrounded the plan. The hon. Member for Kettering (Mr. Freeman) and others might be forgiven, if they simply read the popular press, for thinking that the personal equity plan gives some sort of tax break when entering the plan, so that the money put into the plan would be taken out of pre-tax income. However, it is only to money out of taxed income that the plan applies, and if one wants to get the full benefit of the plan, one will have to have £200 a month out of one's taxed income lying spare. I do not know how many Conservative Members have constituents in that position, but Labour Members have few.
Secondly, tax incentives are given first on capital gains tax, and secondly on dividends. The capital gains incentive should be seen in the context that the maximum that can be put in to the personal equity plan is £2,400 a year. It will take years for any one putting in even £2,400 a year in a personal equity plan to yield capital gains on the sale of those shares, which will require relief up to the capital gains maximum of £6,300 a year. It will take several years, even if a person is putting in the full £2,400 a year, before he gets to the stage at which there is a benefit on capital gains tax.
The tax relief given on dividends is a relief only on dividend income that is put back in to buy further shares. Let us take a basic rate taxpayer, remembering that this plan has been sold as the ordinary man in the street's ability to buy shares. Supposing he puts in £2,400 in the first year. If we take the Government's figures, his dividend will be £120 to £150 a year. He will be paying about £40 a year in income tax on that. He can then reinvest that £40. The sole benefit that he gets out of his £2,400 is the right to buy an extra £40 worth of shares and put them back into the plan. Out of that, he has to pay the scheme manager's charges.
I suggest that for the average basic rate taxpayer or man in the street, the gains from this scheme, except over a very long time, will be virtually negligible, but they are not the people who will use this scheme, because the important thing to remember about it is that it is available to existing shareholders. They will put money into the scheme and every broker handling any substantial portfolio will be shoving money into the scheme because it is a tax-free shelter. For example, when the amount of their other investments means that they may be liable for

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capital gains tax, this is a way to ensure that they minimise that tax liability. The money can be put into the tax-free shelter and kept there, giving capital gains benefits while retaining the full amount of the £6,300 limit each year on capital gains tax on other investments.
The top rate taxpayer who puts money into the scheme when he gets his rebate on the dividends that he uses to reinvest in shares will be getting double what the basic rate taxpayer is getting. If that is taken in conjunction with the changes in capital transfer tax, which means that lifetime gifts are no longer taxable, that person could give money to his wife, children and family and put it into the tax free scheme. Considerable sums of money will be put into the tax free shelters, not by first time buyers or the man in the street, but by holders of already substantial holdings and those on the top rate incomes.
I do not mind schemes for wider share ownership being put forward by the Government. What I do mind is their being presented as schemes for the ordinary man in the street when they are nothing of the sort. It is not people's capitalism; it is top people's capitalism.
Mr. Freeman: Is the hon. Gentleman saying that he would scrap the scheme or extend it?
Mr. Blair: I will be even more generous with the hon. Gentleman. Why, if this is a scheme for first-time buyers, is it not restricted to first-time buyers of shares? The answer is that those who will benefit are those with substantial holdings.
That kind of sleight of hand—and it is sleight of hand—governed the Chancellor's remarks, particularly about the effect of the decline in oil revenues upon our economy. He said that if we could survive the loss of half our oil revenues in 25 weeks, this should make us feel perfectly complacent about the loss of the other half over 25 years. There were great trumpetings of "Hear, hear" from the Government Benches when he made that remark. Indeed, the hon. Member for Mid-Kent (Mr. Rowe), in an otherwise good and interesting speech, seemed to suggest that the Chancellor was absolutely justified in making that statement.
In fact, as the Chancellor well knows—and I hope that the Economic Secretary will answer this point in winding up—when he says that we have easily survived the loss of half our oil revenues and why should we not continue to show concern and then pours scorn on the report from another place he is deliberately eliding two things. The first is a drop in world oil prices, which may deplete our revenues but also gives a major supply-side boost to the economy and has all sorts of good counter-inflationary effects of boosting growth, and so on—in other words, as he said, has pluses and minuses. That is one thing. It is quite another thing to have a drop in British oil production, which is a minus for Britain because it is losing it the export earnings from oil, but has no plus because it has an immediate adverse consequence on our balance of payments. That is why the remarks made in the report from another place hold good. The Chancellor, as he well knows, was making a wholly false point.
The testing time for our balance of payments is not very far away. If hon. Members really think that the Government are looking at the long term rather than the short term, they should look at where the figures on our balance of payments are leading us. The figures show that
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even in the first half of 1987 the current account surplus will be down from an annual rate of some £3·5 billion to an annual rate closer to £1·5 billion.
If we look at page 27 of the Red Book, for example, we see that in fact the significant forecast is that growth in imports of manufactures in 1986 will be over 7 per cent., twice as fast as domestic demand growth. That is the problem that we are going to be facing, and facing soon.
The same type of nonsense—and it really is nonsense—is demonstrated when we discuss the general pattern of the British economy. We have had it again today—how rosy the British economy is and the Paymaster General saying that there is really nothing that we should worry about. But if we look at the Government's record we see a rather different picture.
I shall not go over the figures again—I have done that several times in debates such as this—but the truth of the matter is that whenever the Government talk about how the economy is doing they talk as if they came to power in 1981. They forget that they were in power from 1979 to 1981, when the industrial base of our economy suffered extraordinary damage very largely as a result of Government policy. We must start from the base of 1979 to show the sort of growth trends over the past four or five years. This is shown by the fact that manufacturing output is barely at 1979 levels and manufacturing investment is still way down.
It is that refusal even to acknowledge that there is a problem that is so wilful about the way in which the Government set out on their economic policy. It would be easier if we could acknowledge what the problem was and simply debate the remedies. The difficulty with the Government is that one must spend considerable time persuading them that there is a problem in the British economy.
If our oil revenues had increased, that would have added a further dimension to the parody of reality which is the Government's economic thinking. If we had had those oil revenues, the Government would have used them for tax cuts. The Budget that we did not have is every bit as bad as the Budget that we had. The Government's priority would have been for tax cuts. With 4 million unemployed, growing poverty, crumbling housing and infrastructure, and the desperate position in our inner cities, how can any reasonable person think that the priority is to cut taxes? Yet that is the priority at the heart of Government policy.
We know how next year's tax cuts will be paid. We know that the Government will give us tax cuts, and why. They will give us tax cuts in advance of the general election. That will be the bonanza — the pre-election spree. How will they finance them without oil revenues? They will probably flog off British Gas at an undervalue. So the £4·75 billion from that will pay for £4·75 billion worth of tax cuts. It is impossible to think of a more irresponsible way of running the nation's economy.
It is interesting that everything is geared up to the short term. The only principle that governs Government policy is the principle of expediency. It has been elevated to become the Government's sole principle. When one considers manufacturing industry and selling assets, it is illuminating to consider the Government's remedies when those problems finally catch up with us. One of the most important points in the report of the House of Lords Select Committee on Overseas Trade was the Treasury's view

503
about what should happen when North sea oil production declines. The Treasury believes that there should be an adjustment in the exchange rate. In other words, the exchange rate should be allowed to fall. That is the very thing that the Government have been refusing to allow to happen throughout last year, keeping interest rates high because of the inflationary impact. Yet that is what the Government advocate when the decline in North sea oil production catches up with them. In exactly the same way, when asset sales decline, the Government advocate an increase in borrowing. Yet at present they tell us that that would be irresponsible. We in the Labour party do not believe, addressing the long term, that those decisions can be postponed any longer.
The Government must play a role in the reinvigoration of the British economy. The Chancellor admits that in the international sphere it is right for Governments to intervene and to be active in regulating the international monetary system. In exactly the same way, I ask the Government to abandon this free market nonsense in our domestic economy. It is as if they believe that the problems of the 1980s can be solved by the remedies of the 1780s. To realise the importance of their role, we have only to look at what Government could do, for example, in research and development, education and training.
Our research and development will fall in real terms while that of our competitors is constantly rising. Scientific research is either staying level or perhaps slightly declining, while our competitor countries are increasing it by 20 or 30 per cent. Those are the implications of present Government policies.
There is one further implication and it is perhaps the most important of all. As I said before, the Government virtually accept that they will carry 4 million unemployed into the next election. In effect, they now budget for two Britains. I think of the time when someone of my generation will be the average age of the members of the Cabinet. That is a long way off, in the year 2010, but I wonder if it is contemplated that we should carry 4 million unemployed until that time.
A cynical electoral calculation lies at the heart of Government policies. The Government believe that if there are sufficient votes from people who are relatively well paid and in work they can abandon the rest. People who think that are not merely morally wrong but socially dangerous because if 30 to 40 per cent. of our population is cut adrift we will end up threatening democracy. Britain cannot be unified until our priorities change. Unfortunately, there will be no change in priorities until there is a change of Government.
9.42 pm
The Economic Secretary to the Treasury (Mr. Ian Stewart): This Budget comes at the end of a period of five years of continuous growth. It also comes at a time when international conditions have been unusually disturbed because of the sharp fall in the oil price and the movement of foreign currencies and so on. I heard what the hon. Member for Sedgefield (Mr. Blair) said about the consequences of a drop in oil production. I shall have to read his speech tomorrow, because I could not entirely follow his argument. It seems to me that the Labour party is rather disappointed that the economy was not knocked sideways when such a substantial part of the Government's revenue fell away because of the fall in the oil price.
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It is right at this time that we should have a cautious and careful Budget and one which does not put too much strain on the markets by over-borrowing. As we were reminded this afternoon, on Monday the Leader of the Opposition said that the Government had borrowed £60 billion in their first five years compared with borrowing by the last Labour Government of £40 billion in the five-year period when they were in office. The right hon. Gentleman is both wrong and misleading. He is wrong because we have borrowed only £50 billion, even in nominal terms, and he is misleading because at today's prices Labour borrowed twice as much.
As a proportion of the gross domestic product, Labour borrowed twice as much in five years as the Conservatives have borrowed in seven years. If borrowing were now as high a proportion of GDP as it was in 1976, the public sector borrowing requirement for the current year would not be around £7 billion but £33 billion or 9·25 per cent. of GDP. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) spoke about the scope for raising the PSBR and I suppose that is the sort of figure he had in mind. The right hon. Gentleman was an economic Minister at the time. Does he now repudiate the actions of the Government of which he was a member?
There is no doubt about what would have happened if there had been a large increase in the PSBR. We should certainly not now be seeing a fall in interest rates or in inflation. Instead, massive increases would be in prospect. As my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) said, the Budget has been received as an act of confidence by a reduction in interest rates. The 1 per cent. reduction has been estimated by the CBI to save British industry about £250 million per year, and the reduction in mortgage rates announced over the last two days by several major building societies will provide an additional benefit to millions of families buying their homes. The combined benefits of the Budget and the reduction in mortgage rates to the average family with two children and a typical outstanding mortgage of £15,000 amount to £3·76 a week.
We are already seeing the benefits of a steady reduction in the PSBR in declining interest rates. This year, the PSBR, as a proportion of GDP, will be the lowest for the past 14 years and it is no coincidence that long-term interest rates have now fallen below 10 per cent., and are at their lowest for many years. The end of overfunding as a policy instrument, which was announced by my right hon. Friend the Chancellor in October, will also ensure that a low borrowing requirement is fully reflected in low actual borrowing.
At this time of year it is customary to announce a funding "target" for national savings for the following financial year. Last October, my right hon. Friend the Chancellor announced that in future the Government's policy would be to borrow sufficient to fund the PSBR in each financial year. That means that there is now an overall net funding target of £7 billion for 1986–87. We have concluded that it is no longer appropriate to have a separate target for national savings within that total. Decisions about the best methods of funding will in future be made in the light of circumstances, including market conditions and the relative attractiveness and cost of different instruments.
National savings will continue to play a significant part in funding the PSBR. We will ensure that the attractiveness of national savings products to investors is

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maintained. Our aim over the coming year will be to keep national savings rates broadly competitive with other rates available to personal savers. In that context, I do not propose any immediate changes in national savings rates.
The Budget has brought again to the forefront of British politics the question of the basic rate of income tax. It is remarkable how Opposition Members have been put out by the fact that, despite the constraints of the current situation, my right hon. Friend the Chancellor has been able, in his Budget, to make a further reduction in the basic rate. We have now brought it down from 33p in the pound, which we inherited from Labour, to 29p in the pound today. It is our aspiration to reach a basic rate of 25p, but in reducing it from 33p to 29p we are already halfway there. Hon. Members such as the hon. Members for Bradford, West (Mr. Madden) and for Burnley (Mr. Pike) said that there was nothing in the Budget for any of their constituents. However, 24 million out of 25 million taxpayers in this country have a marginal rate of tax at the basic rate. We have raised the threshold for the starting point for tax by more than 20 per cent. after allowing for inflation, whereas the Labour Government reduced the starting threshold by 5 per cent. for a married man and 20 per cent. for a single man. Conservative Members should not take anything from them about helping those on lower incomes. That is the sort of nonsense that the Opposition peddle.
Mr. Blair: Is it not true that the total tax burden, including national insurance, amounts to about £30 billion more in real terms than when the Labour Government left office?
Mr. Stewart: We have raised the tax threshold and reduced the rate. The hon. Gentleman is really saying that people are better off under the Conservative Government, because those on higher incomes pay more taxes. I am glad to have that confirmation of the consequence of our Budget.
The right hon. Member for Sparkbrook made great play of the fact that a Labour Government would spend a lot of money on helping various members of society. He said that he would have to spend £3·5 billion in that connection. Where would that money come from? The answer is the higher paid and the rich. He said—and I hope that we can trust him—that he would not raise the basic rate of income tax. He said that when the basic rate of income tax was 30p in the pound. I hope that it still holds now that it is 29p in the pound. I shall give way if the hon. Member for Sedgefield wants to answer that point. He cannot answer it, however, and that is significant. The Labour party is not prepared to give a commitment to not raising the basic rate of income tax.
The Opposition have said that they will raise about half of the £3·5 billion which they want as extra spend for benefits by dealing with the higher rates of tax. I would like to give an example to Opposition Members of what that might mean. Supposing the Opposition were to impose a higher rate of 80 per cent. that would have to be placed on a taxable income of £22,800.
Mr. Prescott: Tell us about jobs.
Mr. Stewart: That is where the process would have to start, if the Opposition were to leave the 40 per cent. and
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45 per cent. thresholds unchanged. If the top rate of tax was to be no higher than 70 per cent., people would have to start paying it on a taxable income of £18,600. Is that a proper level of income to attract a rate of tax of 70 per cent? Alternatively, they could increase all the higher rates. If they did that, they would have to increase each level by 17 percentage points. The first high rate would not be 40p in the pound—
Mr. Prescott: Nobody is listening to the hon. Gentleman. Why not tell us about jobs?
Mr. Stewart: Instead, the first higher rate would be 57p in the pound. That is the sort of nonsense which Opposition Members peddle as their recipe for dealing with the Budget problems. They say that there is an enormous amount of money which they can obtain by taxing those on higher incomes.
In the present circumstances, it is right that the Budget should have a balance between the interests of taxpayers. That is why we have been able to make a further move on the basic rate and why that has been so widely appreciated and so popular in the country. That move has not been popular with the Opposition. The Opposition have said that they would not oppose the move as they realise that it would be ridiculous to do so when people want lower and not higher tax.
Mr. Prescott: They want lower employment.
Mr. Stewart: Listening to speeches from Opposition Members, one would think that people wanted ever increasing rates of taxation. That is, of course, what the people have always had when the Labour party has been in power.
Mr. Prescott: The people have had higher taxes under the Tory Government.
Mr. Stewart: High rates of taxation make an inefficient economy. One of the essential ingredients for making an efficient economy which can continue to provide jobs is that the burden of taxation on industry, business and individuals should be as low and not as high as possible. I am sorry that that sentiment is not shared by Opposition Members.
Mr. Wrigglesworth: Will the Minister study the comments made by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) on the Jimmy Young programme this morning in which he made it clear that he had no objection to people earning more than £20,000 a year and that he did not intend to increase income tax for those people?
Mr. Stewart: I listened to the comments made by the hon. Member for Stockton, South, and I have a transcript of what the right hon. Member for Sparkbrook has said. He said that the Opposition would have to call for a greater contribution from the people at the top of the wages ladder. He would then use the extra £3·5 million to help those people in most need. I have sympathy with the hon. Member for Stockton, South, as the right hon. Member for Sparkbrook changes his tune so often that it would not be at all surprising if he had said today the precise opposite of what he said yesterday. That would be precisely in tune with what he has been saying about public expenditure.
I would now like to discuss a subject which is perhaps a little less contentious than my previous points. It is

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important during the debate that we should have some consideration of the tax reliefs for charity which have received a welcome on both sides of the House.
Opposition Members sometimes find it amusing to portray Tory Ministers, and particularly Tory Treasury Ministers and Chancellors, as grim and Scrooge-like figures. That has always been a complete misrepresentation, and after this Budget the Opposition will find it impossible to argue that case.
It is fair to say that my right hon. Friend's proposals for tax reliefs on contributions to charity have met with a more enthusiastic welcome than any other Budget measure in memory. The charities VAT reform group has described the VAT concession as being the most substantial concession that the Chancellor has ever given on the charities VAT bill. The newly formed council for industry and higher education has been pressing for such measures on corporate giving here because such measures do so much to sustain and expand higher education in the United States. In the United States private finance alone is worth twice as much as the whole of the University Grants Committee's grant for higher education in the United Kingdom.
The director of the Association for Business Sponsorship of the Arts has said that the tax relief may mean as much as £10 million extra for the arts in the next financial year. The director of the Charities Aid Foundation has described my right hon. Friend's package as "breathtakingly radical". He has said that, according to his assessment, the combination of measures should double the £1 billion of private support currently going to charity. It is right that those measures should be strongly supported on both sides of the House.
Giving to charity is deeply ingrained in the British tradition. What my right hon. Friend has done, in a characteristically creative and innovative way, is to furnish the charities with a range of opportunities for self help. It is now up to them to realise them in an effective and organised way. In some areas—
Mr. Prescott rose—
Mr. Stewart: —of public affairs state action is appropriate and right but in so many others—
Mr. Prescott: Will the hon. Gentleman give way?
Mr. Stewart: —state action is second best to private initiative. I have every confidence that those opportunities will be seized with the energy and imagination which private initiative can generate.
Mr. Prescott: Will the hon. Gentleman give way?
Mr. Stewart: The extra funds should now be available. It will be up to the charities to make their pitch. I welcome the contributions of the hon. Member for Kingston upon Hull, East (Mr. Prescott) from a sedentary position—
Mr. Prescott: Will the hon. Gentleman give way?
Mr. Speaker: Order. One at a time.
Mr. Stewart: As a practice, I do not give way to hon. Members who behave in such an uncouth fashion and I do not propose to do so tonight.
Mr. Prescott: When are you going to talk about jobs?
Mr. Stewart: The Budget encourages the development of industry—
Mr. Prescott: When are you going to talk about jobs?
Mr. Stewart: —a drop in energy prices, a drop in interest rates and a drop in the corporation tax rate. All those have come together. A fall of a dollar in—
Mr. Prescott: You are a disgrace.
Mr. Stewart: —the price of crude oil is estimated to save industry over—
Mr. Prescott: When are you going to talk about jobs?
Mr. Speaker: Order. I say to the Opposition Front Bench that such behaviour is very unseemly.
Mr. Prescott: So are the unemployed. When are you going to talk about jobs?
Mr. Dixon: On a point of order, Mr. Speaker. I was under the impression that when a Member wound up a debate such as we have had today he would deal with the contents of that debate. We have been making points about unemployment in our constituencies which have been ignored by the Chancellor. Yet the person who is answering, that squalid little person there, has never once talked about—
Mr. Speaker: Order. The hon. Member for Jarrow (Mr. Dixon) knows perfectly well that he must not say things like that.
Mr. Dixon rose—
Mr. Speaker: Order. I am on my feet. Mr. Ian Stewart.
Mr. Stewart: It is not surprising that people in Britain do not regard the Labour party as remotely suited ever to take power—
Mr. Prescott: What about jobs?
Mr. Stewart: The behaviour of the hon. Gentleman has been simply disgraceful today. He held the Dispatch Box for nearly an hour. He tried over a long period to ruin the speech of my hon. Friend the Member for Stratford on Avon (Mr. Howarth) and he is now trying to prevent the Government from putting forward their comments on the Budget at the end of the debate.
Mr. Blair rose—
Mr. Stewart: I was talking about industry. The hon. Member for Jarrow (Mr. Dixon) wanted to try to prevent me having the time to address many of the issues which have been raised in the debate.
The best way that we can encourage further jobs in Britain is to have a strong and successful industry and commercial sector. Just because the 35 per cent. rate of corporation tax was announced and introduced two years ago, we should not forget that this, 1986–87, is the first year when we will have the lowest corporation tax rate for many years in Britain and one of the lowest among the industrial countries.
That is one reason why we can look forward to a continuing period of growth in the British economy in the coming year, building on the five years of continued growth that we have now had, despite the sharp shock which has been administered to the economy by the oil price.
Mr. Prescott: Tell us about jobs.
Mr. Stewart: That is why we can continue with our measures in the economy not only to help the company sector and investment, but also with the package of employment measures—
Mr. Prescott: Tell us about jobs.
Mr. Stewart: —which my right hon. and learned Friend the Paymaster General described so effectively earlier.
The Paymaster General pointed out that we had done a great deal to help those who are not fortunate enough to be in work—
Mr. Prescott: Tea and sympathy.
Mr. Stewart: That is an important part of this Budget as it has been of recent Budgets. I remind hon. Members that in the last Budget my right hon. Friend restructured the whole of the national insurance contributions in such a way as to give the greatest help to those at the lower end of the payments scale and to encourage people to take new jobs—
Debate adjourned.—[Mr. Lennox-Boyd.]
Debate to be resumed tomorrow.

Keynsham Hospital Maternity Unit
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]
10.1 pm
Mr. Jack Aspinwall: I am grateful for the opportunity to raise on the Adjournment the issues surrounding the proposal by the Bristol and Weston district health authority to close the Keynsham maternity unit.
I would first like to record my thanks to Doctors Tom Garrett, William House and Simon Lowe. I should also like to thank Michael Quinton, secretary of the Bristol community health council and its members, the Wansdyke district council and the 42 general practitioners in the Keynsham maternity unit catchment area who have given positive support. Thousands of people have signed petitions. I thank Mr. Leslie Baker, chief reporter of the local community campaign newspaper, the Keynsham Weekly Chronicle. Mrs. Pam Rocyn-Jones and Mrs. Andrea Hider have been hard-working in their campaign. I should also like to place on record my thanks to Malcolm and Christine Kempster, whom I met on Monday at their home. I also met baby Ellen, who was born at the Keynsham maternity hospital. The professional medical and administrative staff at Keynsham hospital have worked hard to keep a local, caring service.
It is the aim of Government to provide not only the most effective and cost-efficient system of health care but the most responsible. The Bristol and Weston district health authority's proposal to close Keynsham maternity unit negates all three aims. The closure was first proposed by the Bristol and Weston district health authority in September, 1985. In accordance with the appropriate Health Service circular, the Avon family practitioners' committee should have been invited to comment on such a proposal. It was not.
In view of this legal error, the Minister for Health rightly saw fit to defer consideration until the correct consultation process had been followed. The rectification of the error is now being pursued with the family practitioners committee, which firmly opposes the closure. The case is likely to return to the South-Western regional health authority in April. Due to this error a great deal of cost and loss of staff morale has occurred.
I feel obliged to inform the House of the misguided intentions of the Bristol and Weston district health authority. In 1985 total admissions to the Keynsham maternity unit numbered 667. This figure included 579 obstetric admissions and 88 convalescent cases. Of the 579 obstetric admissions, 434 were transfers in, for postnatal care and 113 were actual deliveries. The unit is used by the patients of the 40 GPs in the area and it is estimated, from the bookings made by 1 January, that there would be approximately 120 deliveries in 1986. This is consistent with the number of deliveries in the past four years, despite the uncertainty about the unit's future. Yet the Bristol and Weston district health authority says that the unit is underused. This is not the case. It can be argued that the unit is not reaching its full economic potential, but this is only because some GPs and consultants refuse to accept the change in medical and public opinion in favour of low technology births. There is also the uncertainty about the unit's future. The cost of the maternity unit has been based

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on it being an outpost of the Bristol maternity hospital and the cost per delivery has been distorted to some extent by that fact.
The cost per patient day at the Bristol maternity hospital is now about £120, whereas the cost per patient day for the whole of Keynsham hospital, including the maternity hospital is £50. If Keynsham were seen as a whole and regarded as a facility for the whole of Keynsham and the surrounding area, the cost for the maternity unit would appear in an entirely different light.
Keynsham maternity unit has a reputation for quality and progressive maternity care. In recent years, there has been new evidence showing that the GP-midwife team is as good as, if not better than, the specialist units. Although the setting and some of the issues are different, the Wendy Savage case is concentrating public and medical opinion on the issue of interventionist maternity care. This is practised by many consultant units, whether or not it is justified clinically or acceptable to most mothers.
A study of the Keynsham and Bristol maternity units undertaken by Doctors Garrett, House and Lowe showed that, for mothers selected as being of low risk and matched for the number of pregnancies they have had for social class, smoking habits, and so on, the perinatal outcome was the same. Intervention by doctors was significantly less in the Keynsham unit. Such intervention — for example, the augmentation of labour and foetal monitoring — is expensive and risky. Professional bodies, such as the British Medical Association, through the general medical services committee, and the Royal College of General Practitioners, now actively encourage GP obstetrics. I refer the House to the resolution approved at the annual general meeting of the Royal College of General Practitioners, which stated:
"That in pursuance of quality, the Royal College of General Practitioners actively encourage those General Practitioners who wish to provide complete maternity services (including intrapartum care) in General Practitioner Units."
The Royal College of Obstetricians and Gynaecologists implies an encouragement of GP obstetrics by insisting on the retention of standards and skills amongst practising GPs. Many papers have been published which suggest that, in cases selected at low risk, management is best given in GP units. A typical example is Marjorie Tew's article in the August 1985 edition of the journal of the Royal College of General Practitioners. Marjorie Tew is research statistician at Nottingham medical school. She has argued that, by the time of the 1970 national perinatal survey, the percentage of births taking place in consultant hospitals had increased by a third to 66 per cent., but the disparity between perinatal mortality rate there and in GP units had doubled since 1958 to become fivefold—for example the perinatal mortality rate in hospital was 27·8 per 1,000 compared to 5·4 per 1,000 in GP units.
It is clear that the trend of both medical and public opinion is back to "low technology" childbirth wherever possible. The Paulton maternity unit in the Bath district health authority is flourishing, with demand rising. The Keynsham maternity unit mothers' support group has made it clear that more women do not want "high technology" births, and, furthermore, do not want to go to the Bristol maternity unit. To close Keynsham would be to reduce the choice for expectant mothers. Moreover, it will reduce obstetric skills for GPs and once these have been removed, it is doubtful whether they will be recovered. Above all, in the light of new research and
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demands by mothers, it will be closing the door on what must be regarded as the way forward for maternity care. This is not the act of a responsible Health Service.
Financially, the Bristol and Weston district health authority hopes to save £68,400 with a net saving of about 11 staff. It is on this saving on which the Bristol and Weston district health authority and subsequently the South-Western regional health authority rests its case. That saving is unrealistic. The sum of £68,400 would be counterbalanced by additional expenditure at the Bristol maternity unit to which patients would be directed. In addition, supposed savings would be further lost on extra services to cover the hole left by the closure of Keynsham—for example, community midwives have to visit newly discharged mothers for the first 10 days. The Keynsham area consists of numerous outlying villages with a high mileage to travel for the midwife and further consequent expenditure. Moreover, given the initial delay with regard to the faulty consultation procedure, the hopes of the Bristol and Weston district health authority to be able to release £68,400 in the next financial year by closing the Keynsham maternity unit have already disappeared.
Although originally the Bristol and Weston district health authority made no proposals for the re-use of the space vacated by the maternity unit, which it should have done in the original consultation if the procedure had been properly followed, there is now a definite proposal for its re-use. That proposal is to move in the unit for the younger chronically sick—long-term physically handicapped—who are now accommodated in the inadequate Clara Jeffries unit in the hospital. That would be a short term measure until better long-term accommodation is created away from a hospital site in conjunction with specialist housing. Certainly, the Clara Jeffries unit is inadequate and new accommodation is needed, but the use of the maternity unit is not the answer. Another solution for the short term problem is the use of the Bristol General hospital, suggested by its managers, as a better short term solution.
Finally, to close Keynsham would not be practical. One has only to look at the geography of the area. If the Keynsham unit were to close expectant mothers would be forced to go to either Weston-super-Mare or central Bristol. The other nearest hospital the Royal United at Bath, is not in the Bristol and Weston district health authority region. Mr. Bamford, consultant gynaecologist at the Royal United hospital has said:
"the Obstetric services based at the Princess Anne Wing, Bath, have serious problems due to pressure on beds, Midwives and Medical Staff, these difficulties being more severe than in any other Maternity Unit in the Wessex Region. Inevitably, if the GP Maternity Unit at Keynsham is closed, some patients will look to Bath for intra-partum care and this will just not be possible. Quite apart from this consideration, it can be argued that it is positively detrimental to confine low-risk patients in high-technology units. I would, therefore, strongly support the campaign for retention of intra-partum facilities at Keynsham for low-risk patients."
The sheer difficulty of travel to and from other hospitals, not only by expectant mothers but by husbands, friends and relations, would be costly and extremely inconvenient. It is precisely at such a time that a new mother needs the support, care and close contact of a family. With increasing pressure on Bristol, new mothers would surely be discharged too soon without the support structure they would get at Keynsham.
I have already pointed out the Keynsham area contains a number of outlying villages and districts. For those

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communities and the surrounding areas of Longwell Green, Bitton, Hanham Abbotts, Oldland and Brislington, maintenance of the Keynsham maternity unit is even more crucial.
The alternatives to closing Keynsham are plainly unrealistic. Expectant mothers have to go somewhere. Currently, it is the practice of the Bath district to discharge patients from the Royal United to Keynsham after 48 hours. The Bath district has indicated that if the Keynsham maternity unit were to close it would not be prepared to accept patients from Keynsham. Still further, patients from Bath would not have the opportunity to receive the support of post natal care provided by Keynsham. The Bristol maternity unit would have the problem of combining high throughput with a high technology practice required by high risk patients.
Mr. Michael Cocks: Will the hon. Gentleman press the Minister in his reply to answer the point that his constituents are simply the latest in a long line to suffer from the gross distortion in hospital services which has occurred in the Bristol area through the over concentration on the wholly unsuitable St. Michael's hill site, condemned in the Zachary Cope report in 1945 but rebuilt at the insistence of the university and the private consultants in Clifton? Will he stress to the Minister the importance of answering that point in the interests of everybody in the area?
Mr. Aspinwall: I am grateful for the intervention of the right hon. Gentleman. That is a vital point in my representations to the Secretary of State.
I feel very strongly that the problems of inadequae general practitioner cover for home confinement, the demand for which would inevitably increase if Keynsham were to close, and the proposal to close the Keynsham hospital maternity unit, would condemn my constituents to ineffective, inefficient and irresponsible health care. Local general practitioners, the family practitioners committee, the Bristol community health council, the mothers support group at Keynsham and I are fervently opposed to the Bristol and Weston district health authority's decision. To maintain the Keynsham maternity unit would meet the growing demand by mothers for choice and provide the general practitioner-midwife team with a location for obstetrics practice. It represents what must be the future and it would provide an integrated system of health care for the Bristol maternity unit. Moreover, it could give possibly the best cost-effective and efficient structure of health service.
I urge the Minister to ask the Secretary of State to withhold his consent for the proposals of the Bristol and Weston district health authority and the South-Western regional health authority in order to ensure that the excellent service that is provided by the Keynsham hospital maternity unit and its caring staff and local general practitioners remains.
10.16 pm
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Ray Whitney): I congratulate my hon. Friend the Member for Wansdyke (Mr. Aspinwall) on his good fortune in securing this Adjournment debate. He is well known and recognised as a doughty fighter for all the services in his community. He
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has strongly and clearly represented to the House the very strong views that he holds about the future of the Keynsham hospital maternity unit. They are shared by the organisations to which he referred. The Government have very much welcomed the opportunity to hear my hon. Friend's views. The regional and district health authorities will take note of them, as will my right hon. Friend the Secretary of State for Social Services and I.
I shall address not only the Keynsham issue but also the wider context in which health authorities are having to plan the future pattern of their health services. I am particularly grateful and pleased that my hon. Friends the Members for Bristol, East (Mr. Sayeed) and for Westonsuper-Mare (Mr. Wiggin) and the right hon. Member for Bristol, South (Mr. Cocks) are in the Chamber this evening.
As my hon. Friend has said, the proposal by Bristol and Weston health authority is that deliveries and post-natal care at Keynsham should come to an end. My hon. Friend quoted a number of statistics. Perhaps I might in return be permitted to refer to a few myself, because undoubtedly there has been a continuing decline in the number of births at the unit: from 356 in 1976 to 188 in 1979, to 160 in 1980 and 1981 and to 116 in 1982, with a slight rise in 1983 to 123. Of these I understand that only 61 in 1983 were delivered to residents of Keynsham and the neighbouring district of Saltford. Indeed, of the 190 deliveries in 1983 to residents of these communities, 129 took place at other locations, including 60 at the Bristol maternity hospital and 11 at Southmead hospital. On average in 1983, occupancy of the 12 maternity beds was just under 50 per cent. In 1982, it was as low as 35 per cent.
These were trends which the district health authority felt it could not ignore. It was naturally concerned at the declining use of Keynsham, especially by local people. It was rightly concerned that the resources at its disposal should be used to the best possible effect. This is what we expect health authorities to do. The demand for health care and methods of delivering services are not static. There are demographic pressures and improved methods of treatment, including the development of care in the community. This means change and we expect health authorities to balance carefully all these aspects in determining the pattern of care that they wish to provide.
Since 1978–79 this Government have provided an extra 20 per cent. in real terms for hospital and community health services. In the coming year we expect to provide a further £650 million—or 6·7 per cent.—against an inflation forecast which is significantly lower than that, as my right hon. Friend the Chancellor of the Exchequer was able to underline when he spoke to the House on Tuesday. This represents a very significant increase in resources. This, together with the cash savings of £150 million which health authorities are planning to generate in the coming year, will enable all health authorities to implement a substantial expansion of services, but this will not absolve any health authority from the need to deliver services in the most effective manner.
In the south-western region the position is even brighter than in the country as a whole. A revenue increase in the coming year of 7 per cent. comes on top of above-average increases in every year since 1979. The fact that the Bristol and Weston district is relatively well provided for already means that under the region's RAWP formula—the process of Health Service resource allocation—it has received proportionately less than other authorities in the

515
south-west. However, it too has received regular increases year by year which have enabled a number of important developments to take place. These include the brand new general hospital at Weston-super-Mare and the expansion of cardiac surgery at the Bristol Royal infirmary.
Mr. Jonathan Sayeed: I trust that my hon. Friend realises that under RAWP, because Bristol is a teaching area, it is losing out as the cost of equipment had increased faster than the provisions under RAWP. Secondly, it seems to me sad that births in Bristol should be concentrated on areas with high technology which is at the convenience of the consultants rather than lower technology which is in the interests of those giving birth.
Mr. Whitney: I recognise the point about the teaching areas. I hope that my hon. Friend will agree that there are pros and cons in having a teaching hospital in the area. I should not like to be drawn at present on the clinical merits on one form of treatment or another. I think that the Health Service is flexible enough to cater for all.
All that I have been saying in terms of the expansion of the services has to be set in the context of what the south-western region hopes to achieve in the next 10 years. The region has established a very praiseworthy objective of achieving a relative shift in resources from hospital-based provision to community care for priority groups such as the elderly, the mentally ill and the mentally handicapped. These developments should, as a whole, greatly improve health care in the south-west, but they cannot be brought about without some alterations to existing provision nor by avoiding the fact that resources which may be used none too effectively at present will need to be put to better use in the future. As part of this exercise, the region is currently reviewing its entire acute hospital provision to ensure it can meet changing demands in the most cost effective manner.
It was against this general background that the Bristol and Weston health authority made its proposal for the future use of Keynsham. As my hon. Friend has said, a change of use at this hospital would have consequences for services other than just maternity. The health authority intends to improve accommodation for physically disabled patients at Keynsham. Community clinic services, including ante-natal services, would be transferred into the main hospital and the separate clinic building would be used as a base for mental handicap support teams. There will also be an eight-place day hospital for the elderly. Therefore, whatever view one takes about the future of the maternity unit, or the way in which the health authority has presented it, it would be wholly wrong to think of the proposal as an entirely negative step.
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We shall have to look very carefully at the arguments put forward by my hon. Friend about the particular type of maternity care that Keynsham provides, and to which my hon. Friend the Member for Bristol, East (Mr. Sayeed) referred, and also the social implications of any change, such as transport points and general accessibility to services. I understand that all the deliveries that currently take place at Keynsham could, if necessary, be accommodated at the Bristol maternity unit and that the proposal is not in fact dependent on any agreement by Bath health authority to take on some of the case load. There is also the community midwifery service. But obviously we shall want to examine the alternatives, and I shall bear in mind what my hon. Friend the Member for Wansdyke has said.
My hon. Friend will realise that I cannot comment formally on the arguments for or against retaining the maternity unit. Through the consultation process, the Bristol community health council has opposed the change of use an this means automatically that the final decision will rest with my right hon. Friend the Secretary of State for Social Services. At this point I must not pre-empt his decision.
As for the present position, my hon. Friend knows that the south-western regional health authority endorsed the Keynsham plans last September and forwarded them to my Department. My officials examined them carefully and were not satisfied that the consultation process had been followed to the letter. In particular, as my hon. Friend has said, the Avon family practitioner committee, which is now a statutory body, responsible to the Secretary of State, had not been consulted formally, although an attempt had been made to consult general practitioners through the local medical committee. This omission has been rectified and the family practitioner committee has now given its views. The district health authority is likely to consider its position at a meeting next month. If the authority still approves the change of use, the regional health authority intends to look at it again, probably in May, before it could come finally to the Secretary of State.
I should like to thank again my hon. Friend for expressing his views so clearly and forcefully. I assure him that my right hon. Friend will consider carefully the points made by him and by my hon. Friend the Member for Bristol, East before reaching a final decision.
Question put and agreed to.
Adjourned accordingly at twenty-five minutes past Ten o' clock.

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Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Leicester): The LORD CHANCELLOR on the Woolsack.

Self-employed Persons: Unemployment Records
Baroness Nicol: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how they propose to record the numbers of self-employed persons who are out of work.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, the monthly claimant count includes most previously self-employed people.
Baroness Nicol: My Lords, I am not quite sure that I fully understand the Answer which I have been given. My understanding was that self-employed people who are not in employment could not claim benefit. If this is not so, my whole Question is based on an incorrect premise. Will the Minister correct me before I go further?
Lord Young of Graffham: My Lords, I was trying to set a precedent for the shortness of an Answer! Self-employed people who claim supplementary benefit are included in the count. The only people who are not would be self-employed people who were not eligible for unemployment benefit, but, in the event that people do not have sufficient means, they would be included in the count. Indeed, the survey shows that some 30,000 previously self-employed people who were seeking work but were not claiming benefit were therefore excluded from the count, but, at the same time, that was offset by 50,000 others who said they were claimants but were not seeking work or who had some paid work during the week in reference.
Baroness Nicol: My Lords, I was simply clarifying the Minister's reply to my original Question. The Minister will recall no doubt that on 20th February when we last discussed these statistics he was very emphatic about the need to have accuracy in the figures, and he said that self-employed people from now on were to be counted in the interests of accuracy. Therefore I am not quite clear how he redresses the balance on this particular calculation. If self-employed people are now to be included in the numbers of those employed and are therefore to affect the percentage of employed, is he satisfied that the present system properly reflects those who are out of work, bearing in mind the fact that employers now expect so many tradesmen to become self-employed before they will take them on? I think the figure is being distorted.
Lord Young of Graffham: My Lords, I am grateful to the noble Baroness. The monthly claimant count is a count of all those who are claiming unemployment benefit or who, if unemployed and available for work, are claiming supplementary benefit. The employment statistics are the ones which we wish to ensure are correct. At the moment we only get those results either by the census, which is once in every three years, or by the labour force survey. I am looking to find ways of advancing the publication of the labour force survey so that we get a more up-to-date account of the number of employed people within the economy.
Lord Renton: My Lords, do those statistics sadly exclude briefless barristers?
Lord Young of Graffham: My Lords, I will inquire.
Lord Stoddart of Swindon: My Lords, but on the—
Noble Lords: No, no! The next Question has been called.
Lord Stoddart of Swindon: My Lords, that was a—
Noble Lords: Order!

National Freight Corporation: Workforce
3.5 p.m.
Lord Sandys: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what effect transfer to the private sector has had on the workforce of the National Freight Corporation.
The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness): My Lords, the transfer of NFC to the private sector was by means of employee ownership, the effects of which have been beneficial at every level of the business, from commitment at the workplace to involvement in strategic decisions.
Lord Sandys: My Lords, I thank my noble friend for a very encouraging reply. Can he say whether it is the present intention that there will be a public flotation after 1987 or whether this is, as at present arranged, strictly an employee participation in the shareholding?
The Earl of Caithness: My Lords, whether the company goes on to the Stock Exchange is up to the company and not up to the Government, but I can confirm that my noble friend is right, because the consortium's articles of association prevent it from going public before 1987 at the earliest.
Lord Underhill: My Lords, although everyone will be appreciative of the progress made by the National Freight Corporation, does the noble Earl agree that these are the same workpeople who were working when they were part of the nationalised industry? Does this not prove that the National Freight Corporation was a profitable enterprise when under public

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ownership and that it would have remained a very useful combination for an integrated national transport system?
The Earl of Caithness: No, my Lords. I disagree with the noble Lord on a fundamental point. It is not necessarily the same workforce because the numbers have increased since NFC was privatised. Before that, the numbers were going down.

"Hospital Watch": Television Series
3.8 p.m.
Lord Auckland: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what conclusions they have drawn from the BBC 1 television programme "Hospital Watch".
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, although Ministers never have time to watch television, I am told that this excellently made and interesting series of programmes gave a very good and true insight into the wonderful work being carried out in hospitals, not only in Portsmouth and the Wessex region but right across the country. It emphasised the dedication and skills of all the staff in the National Health Service who provide care and services to those of us who require treatment. The confidence that patients have in the National Health Service also came across strongly.
Lord Auckland: My Lords, I thank my noble friend the Minister for that helpful Answer. Will she not agree, whether she has seen the programme or not, that the BBC is to be congratulated on producing a programme with real nurses and real doctors taking part? Does she also agree that the programmes will be an enormous reassurance to those who have to enter hospital for an operation or for any other reason? Will she convey to her right honourable friend, when the next review body reports, the need for nursing sisters in particular to be remunerated more generously? Is she aware that in this programme there was a nursing sister who gave enormous reassurance to an old lady recovering from a corneal graft? Does not that, plus the very heavy pressure on the junior doctors, make the results of the next review body a most vital occasion?
Baroness Trumpington: My Lords, I hope that the programme will have helped to ease many of the anxieties that people have about needing treatment in hospital. I am sure that it will have reassured them about the care that they can expect. With regard to the pay of nursing sisters, as for all NHS and midwifery staff, it is determined following the recommendations of an independent review body. The Government have made it clear that we shall implement review body reports except where there are clear and compelling reasons for not doing so.
Lord Molloy: My Lords, is the noble Baroness aware that there is one small aggravation in the film which has grown enormously since, and which is causing grave concern not only to those who are sick but to the nurses themselves? Have we not now reached the appalling situation where, if a student nurse is successful in her examinations, becomes a state registered nurse or a state registered midwife and is living in what we call a nurses' home, she may get threatened with eviction? Does she not think that such practices ought to be looked at by her department?
Baroness Trumpington: My Lords, there has recently been a full debate in this House on nurses. There has been an equally full debate in another place. I would suggest to the noble Lord that I cannot go into such detailed information and perhaps he might turn to those two debates.
Baroness Masham of Ilton: My Lords, may I ask the Minister whether she is aware that one night during the programme there was an appeal for nurses because the hospital had a red alert because so many nurses and patients had 'flu? Are nurses offered 'flu vaccine and, if so, do they take it up?
Baroness Trumpington: My Lords, in a totally different context, I have been informed that 'flu vaccination is quite useless.
Lord Ennals: My Lords, while I disagree with the last conclusion of the noble Baroness, and while I did not see the television programme to which the Question refers, I should like to ask whether the noble Baroness is aware that my own personal hospital watch last week was involved with the proposal to close Westminster Hospital. Will the noble Baroness assure her right honourable friend that any such move would be vigorously opposed in this House?
Baroness Trumpington: My Lords, that question of the noble Lord, Lord Ennals, is wide of the Question on the Order Paper.
Lord Cledwyn of Penrhos: My Lords, the noble Baroness has just made a very important statement about 'flu vaccine, which is widely advised by doctors. Is she now saying on behalf of Her Majesty's Government that the anti-'flu vaccine is ineffective?
Baroness Trumpington: No, my Lords. My statement came after having visited one of the government laboratories. They have for many years carried out experiments in a certain school, using 'flu vaccination. As your Lordships will be aware, the 'flu bug is of a different nature virtually every year, and therefore they informed me that vaccination against 'flu was a rather pointless operation.
Lord Marsh: My Lords, does the noble Baroness not agree that her answer was wide of the original Question?
Baroness Trumpington: With gratitude, my Lords.
Lord Paget of Northampton: My Lords, is the noble Baroness aware that the National Health Service has

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been giving me 'flu vaccine, in which, until I heard the noble Baroness, I had the utmost confidence?
Baroness Trumpington: My Lords, I assume that the noble Lord is of the kind whom 'flu bugs do not love.
Lord Winstanley: My Lords, while I am reassured to learn that Her Majesty's Government are listening to professional advice on 'flu vaccine—advice with which, I may say, I agree—may I express the hope that the Government will also listen to professional advice about the Pertussis vaccine?
Baroness Trumpington: My Lords, I feel sure that the Government will listen.
Lord Cledwyn of Penrhos: My Lords, is the noble Baroness aware that noble Lords and the House are aware that there are various strains of 'flu virus and that this fact is taken into account? Is she further aware that a newspaper today reports that her department is working on the vaccine for the coming winter? Will she make it clear to the House that she is not condemning the 'flu vaccine absolutely? Will she consider this matter again and come back to the House to make a full and clear statement to relieve public anxiety, which is bound to be awakened by what she has said today?
Baroness Trumpington: My Lords, of course I am not condemning any 'flu vaccine. Of course research is being done into 'flu vaccine; and I stand by what I was told. If I am informed afterwards and if I have in any way misled the House, I will most certainly make a statement.
Lord Ennals: My Lords, can we get a little more clarification on this, because it was a very important statement that was made? Is it not the policy of the noble Baroness's department at this stage to ensure that certain categories of people who might be more in danger, including nurses and doctors, have 'flu vaccine available for them? If that is the policy, surely it must be thought by her department to be of some value.
Baroness Trumpington: My Lords, that latter question, like the former question of the noble Lord, Lord Ennals, is wide of the original Question.
Lord Nugent of Guildford: My Lords, is my noble friend aware that the position is that the vaccine which is given every year is based on the virus which has attacked us the previous year—and usually two—but that this year particularly some new sub-type came into this country and we were vulnerable to it? I was one of the victims. Is my noble friend aware that normally the standard vaccine does give protection?
Baroness Trumpington: My Lords, I am sorry that I have started such a hare, but I merely report what I have heard on my travels, which I take to be informed information. I will gladly come back, or perhaps in answer to a Written Question give the information. If I have given incorrect information, your Lordships can be sure that I shall be told so.
Lord Auckland: My Lords, reverting to the original Question, may I ask my noble friend the Minister
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whether she has had any contact with the regional health authority of the Portsmouth area in regard to this programme? If not, will she encourage her right honourable friend to obtain a report as to the happenings which were revealed about those particular hospitals?
Baroness Trumpington: My Lords, I am told that the programme was very successful with regard to those particular hospitals. If for any reason the health authority wishes to approach either the BBC or the department, I feel sure it will.
Baroness Masham of Ilton: My Lords, will the Minister read The Times of today, where an article refers to a vaccine from Russia which may cover all strains of 'flu?
Baroness Trumpington: My Lords, if I have time, I will gladly do so.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that no one who heard all the exchange during the past few minutes would think for one minute that she had made an official government statement on the question of the vaccine?
Baroness Trumpington: My Lords, I hope I made it perfectly clear from the start that I was speaking as a result of a visit to a laboratory.
Lord Cledwyn of Penrhos: My Lords, is the noble Baroness aware that the House has a good deal of sympathy with her on this issue, but in view of the anxieties that have obviously been raised will she now give an undertaking to make a serious, considered statement to the House at the first available opportunity?
Baroness Trumpington: My Lords, if the usual channels wish me to do so—I believe that is the way I should answer—I will gladly do so.
Lord Kinnaird: My Lords, is it not a perfectly clear case of many a true word being spoken in jest?
Baroness Trumpington: No, my Lords, I was not speaking in jest.

North Sea Oil Revenue
3.18 p.m.
Lord Dean of Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how far their economic strategy is dependent on North Sea oil.
Lord Young of Graffham: My Lords, the economy has taken the unprecedented collapse in the oil price in its stride—a tribute to its underlying strength and to seven years of sound and prudent financial and economic management.
Lord Dean of Beswick: My Lords, I am grateful for the Answer, but really, how can the Minister say that we have already adjusted to the decline in oil revenues when that has been taking place only over the past 25 weeks and there has been no cut in production as yet? Would the Minister like to say why the Chancellor has essayed a guess of 15 dollars a barrel—and it was only a guess—when the price of oil could go up to 20 dollars or, unfortunately, go down to 10 dollars a barrel? Will this not blow a hole in the Chancellor's calculations for the coming financial year?
Lord Young of Graffham: My Lords, when the Chancellor has to prepare a Budget he has to do that on the basis of certain assumptions about the levels of prices and other matters in the year to come. The past three months have been particularly difficult for the Chancellor and I think all your Lordships would wish to congratulate him on the skill and expertise he has shown in managing the economy in such a difficult time. The advice that the Chancellor has taken about the price of 15 dollars per barrel is his best assumption in the present circumstances. What will happen in the future is not known to anyone in your Lordships' House; nor even, I suspect, to Sheikh Yamani himself.
Lord Campbell of Croy: My Lords, does my noble friend agree that no British Government can count ahead upon any particular quantity of revenue from this source, as it is affected by both the world price of crude oil and the dollar exchange rate? But has not the Budget this week clearly demonstrated that government policies can be pursued, and indeed are being pursued, even when there is a large and unpredictable reduction in this revenue?
Lord Young of Graffham: My Lords, it demonstrates not only that government policies can be pursued and are being pursued but that they will be pursued in the face of future circumstances.
Viscount St. Davids: My Lords, does the noble Lord agree with the words used by the questioner who said that it was an unfortunate drop in prices? Is it not more true to say—and perhaps the noble Lord could advise us—that the drop in prices was of enormous advantage to this country, and indeed to the whole world?
Lord Young of Graffham: My Lords, I think that in the course of time circumstances will show us that that will be greatly to the advantage of Europe, and the United Kingdom is firmly part of Europe.
Lord Grimond: My Lords, may I ask the noble Lord the Minister whether he is aware that at least there should be congratulations for the Chancellor of the Exchequer on one point and that is on his strictures to the oil companies on their failure to reduce their prices in line with the reduction in the price of crude? Will the noble Lord assure us that it is the Government's view that lower oil prices actually give the economy great hope, can be a considerable boost to the economy and are not something to be deplored?
Lord Young of Graffham: My Lords, I agree with the second part of the noble Lord's question. As the months and years roll by, we shall see that the
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reduction in energy prices will constitute a great boost to our manufacturing industry and our export trade. The circumstances which the Chancellor of the Exchequer described when he gave evidence to your Lordships' Select Committee on Overseas Trade may well come about. So far as concerns the first part of the question the fact that two oil companies have decided to pass on the increase in costs may be confounded by other oil companies which might decide otherwise. In the end, the market will prevail.
Lord Williams of Elvel: My Lords, given the noble Lord's oft-repeated concern at the current rate of unemployment, which I shall accept as genuine (at least until I hear the answer to my question), and given that the Chancellor, after the fall in oil prices and by his own arithmetic has allocated £1 billion for tax cuts, does the noble Lord genuinely believe that the most effective use of those funds to reduce the unemployment level is to cut 1p off the basic rate of income tax?
Lord Young of Graffham: My Lords, that is another question; but to satisfy the noble Lord's curiosity about the shape of the Budget, may I merely say that the shape of the unemployment measures was all that I could have wished for.
Lord Barnett: My Lords, is the noble Lord aware that most people will accept that the Chancellor made a not unreasonable assumption of 15 dollars a barrel for 1986–87 and on the exchange rate that he had taken? On the other hand does he also accept that if it turns out that the Chancellor has been too pessimistic—which may well be the case—he will return to the House with a new Budget given that he has lost, on his assumption, £5.5 billion? Will the noble Lord on this occasion press his right honourable friend rather more than he did last time to ensure that he does something for the people for whom he has responsibility—namely, the unemployed—rather than for those on rather higher incomes?
Lord Young of Graffham: My Lords, I shall deal with the last part of that question, because it will be up to my right honourable friend to prepare his Budget in the normal way. I have no doubt at all that he will return to the other place in a year's time to deliver the next Budget, when everything will be going according to plan. I should like to break the linkage, which is shared by those opposite, that somehow unemployment and the expenditure of central government funds are inextricably linked. They are not. We have to look very closely at the quality of output and not the quantity of any input. I believe that the package we have and the improvements that we can make in our present expenditure on unemployment, which runs into many billions of pounds each year, will show that we can deal with unemployment. I know that it is a great temptation for your Lordships' House to deal with unemployment. It is the central issue of our day. This is the fifth Question in the past eight days, but the original Question was about oil.
Lord Tordoff: My Lords, do the Government accept that the reduction in oil prices should not be seen as a

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reason for reducing our efforts to save energy and introduce energy conservation measures both in industry and in the home in this country?
Lord Young of Graffham: My Lords, yes, I hope very much that those efforts will continue undiminished, because even with those price levels we will find that efforts to reduce energy consumption will pay for themselves in a very short time.
Lord Strabolgi: My Lords, arising out of the original Question and remembering that North Sea oil will last for only a few decades, may I ask the Government whether they have a systematic depletion policy which takes account of other energy sources, or is it all to be left in a spendthrift sort of way to market forces?
Lord Young of Graffham: My Lords, I do not think that market forces and being spendthrift can actually go together. It has seemed that the way governments have intervened in the past has resulted in policies more spendthrift than anything else.
Lord Molloy: My Lords, one of the things that follows from the reduction in oil prices—this may be a small matter but to millions of motorists it is important—is that there should be a reduction in the price of petrol at the pumps. The Chancellor has indicated that because of cheap oil he has added a few more pence to the price of petrol and that he was confident that the private companies which own the petrol stations would see that that was not passed on. It now appears that they have completely ignored the promise given by Britain's Chancellor of the Exchequer. Do the Government intend to do anything about it?
Lord Young of Graffham: My Lords, assuming that the price of oil does not change, I would invite the noble Lord to put down a Question in a few weeks' time to congratulate the Government on the then price of oil at the pumps.
Lord Molloy: My Lords, that was a very important question. Will the Minister make a big endeavour and really answer the question instead of dodging as usual?
Lord Dean of Beswick: My Lords, to get back to the price of oil, is the Minister not aware that due to the initiatives of the previous Labour Government, successive Conservative Governments have had the benefit of between £50 billion and £60 billion of financial assets from energy resources in the North Sea? Can he tell us what monument from the receipt of that money has been left us by this Government other than record unemployment and dole queues?
Lord Young of Graffham: My Lords, yes, gladly. In 1979, the net overseas investment of the United Kingdom was £12 billion. From the Chancellor's Statement, your Lordships' will realise that today it is £90 billion, the greatest amount of any industrial country in the world other than Japan. We are second. The dividends from those overseas investments will continue to flow long after the oil has run out.
Lord Rodney: My Lords, does my noble friend agree that the one thing the Budget has proved is that we are not an oil-dependent economy, as is contended so often by noble Lords opposite?
Lord Young of Graffham: My Lords, yes. I think that it will also show that we are entering a sixth successive year of growth, and it looks very much as if the seventh will also be in front of us.

Peterhead Harbours (South Bay Development) Order Confirmation Bill
3.28 p.m.
Viscount Davidson: My Lords, on behalf of my noble friend Lord Gray of Contin, I beg to move that the Bill be now considered on Report.
Moved, That the Bill be considered on Report.—(Viscount Davidson.)
Lord Kirkhill: My Lords, this Bill seeks to authorise the trustees of the harbours at Peterhead to construct extensive harbour works adjacent to their existing undertaking in the area commonly known as South Bay, Peterhead. Few private measures have evoked such bitterness in recent times, and the Bill should not pass the House unremarked. In essence, we have the trustees of the fishing harbour at Peterhead very properly seeking to improve their harbour to give greater protection to their harbour entrance and to provide for an expansion of port facilities.
Representations made to Parliamentary Commissioners sitting at Peterhead in May 1985 were to the effect that the trustees were seeking, first, to calm the waters of the inner harbour; secondly, to reduce the severe congestion which arises, particularly at weekends; thirdly, to provide for the expansion of the grain trade in the future; and, fourthly, to provide better facilities for fishing vessels.
These aims are eminently sensible and are worthy of the support of any prudent port manager, and indeed of Parliament itself. I should add that the commissioners, to whom I have referred, sat under the chairmanship of my noble friend Lord Hughes, who would have wished to be in his place today; but due to an inescapable prior commitment in the central area of Scotland, where he now lives, he is unable to be with us. However, he asked that I make his position clear to your Lordships' House.
Unfortunately, the scale of the proposed works went far beyond the stated aims and provided for an increase in commercial berthing capacity well in excess of 200 per cent. The plan deposited with the sheriff clerk at Peterhead in accordance with the terms of the Bill is capable of adaptation to accommodate ships of up to 24,000 tonnes deadweight. Clearly, this vast increase in total berthing capacity, and greatly enhanced ability to handle large vessels of a type never hitherto handled at Peterhead, placed the businesses of the other Scottish east coast ports very seriously at risk.
Not surprisingly, therefore, the ports of Aberdeen and Dundee and the Forth Ports Authority all objected, in company with the Transport and General

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Workers' Union, the Aberdeen Fishing Vessel Owners Association and the Aberdeen Stevedoring Company Limited. There were also petitions of objection from the North of Scotland Hydro-Electric Board, who operate a tanker terminal in the bay area, and from the Peterhead Bay Authority. Those objections were on the grounds of safety, having regard to the fact that the proposed works protrude into the bay harbour, and it was considered that they would put tanker traffic at risk. There were also, not surprisingly, strong complaints from the neighbouring residents, who still remain deeply concerned as to the effects upon their properties and upon their quality of life.
The Parliamentary Commissioners generally found in favour of the promoters, but effected some small modification by removal of the roll-on/roll-off facility and by placing some constraints upon the height of the development and upon blasting work with explosives necessitated by the need to remove rock in the course of dredging works. Consequently, the objectors petitioned Parliament. When the Bill was given its Second Reading on Monday, 16th December 1985, the great majority of speakers in the other place—representing all political parties, I might add—spoke strongly in favour of referral to a joint parliamentary committee of both Houses. Nevertheless, the Motion to refer the matter to a joint parliamentary committee of both Houses was defeated by a very narrow margin.
One of the objectors, Aberdeen Harbour Board, and acting on behalf of all the other objectors of Aberdeen, and with the encouragement and support of the Dundee Port Authority and the Forth Ports Authority, sought to meet with representatives of Peterhead Harbour Trustees to see whether one final attempt at compromise could achieve a solution mutually satisfactory to promoter and objector alike. It was in this somewhat difficult atmosphere that the chairman and the general manager of the Aberdeen Harbour Board finally met informally on two occasions with the chairman and the harbour master of the Peterhead Harbour Trustees. It has to be said that the two meetings which these parties held were conducted in a cordial and sincere atmosphere which had, as I understand it, been totally lacking from some previous discussions.
A new and completely modified construction plan was tabled by the representatives of Peterhead. This differs from the plan laid in accordance with the Bill before the sheriff clerk at Peterhead. The new plan provided for the major part of the works—the new south breakwater quay—to be constructed so as to provide a maximum depth of water of 8·5 metres. The plan also limited the dredged depth in works No. 1 shown in the order to 5·5 metres all over, instead of a part being dredged to a depth of 8·5 metres. The chairman and the harbour master at Peterhead categorically stated that they would be willing to enter into a written agreement not to handle offshore traffic—the principal cause of the concern at the other ports in the East of Scotland.
With the full approval of all the other objectors in Aberdeen and other ports to the south, the trustees were subsequently asked whether they could see their way to further limiting the depth and making other
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small modifications. No further concession was made, however, and the offer to enter into a legally-binding written agreement in regard to offshore traffic was not forthcoming. Indeed, such a legally-binding agreement in writing has been assiduously avoided.
I am advised that the chairman of the Peterhead Harbour Trustees has now sent to the Aberdeen Harbour Board a revised engineering drawing which shows that the depth of the principal new quay will be restricted to 8·5 metres, unlike the original plan. The chairman of the trustees has also given his word to Aberdeen Harbour Board that the trustees will not handle offshore traffic, and we must assume that this means that they will not only refrain from seeking such traffic but will positively decline any offers of such traffic. Similarly, he has given an assurance that, in accordance with the offer made earlier, dredging works No. 1 will be restricted to 5·5 metres. In some measure, this ameliorates the worries of the objectors and they have intimated that they are willing to accept that the word given by the chairman of the trustees will be honoured.
It has to be said that the enactment of this Bill will be contrary to the advice of the EC Court of Auditors, who are on record as stating that the ports of North-East Scotland are under-utilised and additional capacity in one port would be at the expense of all the others. Evidence before the commissioners confirmed that no new trade would be generated and there would be no net job gain for Scotland. On the contrary, evidence tabled on behalf of the promoters pointed to consequent job losses even as far afield as Inverness.
In my view, none of the objectors, and especially Aberdeen Harbour Board, would ever have stood in the way of an attempt to improve Peterhead Harbour for the benefit of the fishing industry, to reaccommodate their existing grain trade or indeed to improve the access to the harbours and give better weather protection. The bitterness of the past few months derives in part from the original engineering plan which has now apparently been superseded. Above all, it derives from the totally unjustifiable proposal, as I see it, to create a major new deepwater harbour within 30 miles of another major harbour which already has considerable surplus capacity. Even with the limitations upon which Aberdeen Harbour Board have now received recent assurances, the new facility would be physically capable of accommodating any ship which used Aberdeen or Dundee in 1985.
Furthermore, there can be little doubt that unfair competition will arise, since Peterhead currently depends upon casual labour who belong to no trade union and, unlike dockworkers in Aberdeen, Dundee and the Forth ports, are subject to no training scheme, have the benefit of no pension scheme and are not in regular employment.
At an estimated cost exceeding £13 million, substantial traffic must be generated to pay construction costs. The fishing industry contributes more than three-quarters of the ship dues and goods revenue of the Peterhead Harbour Trustees. It will, therefore, be the fishermen of Peterhead to whom the trustees will eventually be answerable if this grandiose development proves unviable, for it is they who will be paying.

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Time alone will tell whether Parliament has been wise in allowing this dubious measure to proceed. I hope that the worst fears of the objectors will not be fulfilled and that the danger of serious unemployment in ports to the south will not eventuate. But as the Bill now proceeds through your Lordships' House I have to express the hope that the trustees of the harbours of Peterhead will stand by their undertaking not to handle offshore traffic in the future. A failure of will by them in this regard would have the most serious repercussive effect upon the other ports of the east coast of Scotland.
Lord Campbell of Croy: My Lords, the noble Lord, Lord Kirkhill, started by saying that he agreed with the four aims, which he mentioned, which the trustees of Peterhead harbours have put forward as the reason for this confirmation Bill. Having just listened to what he has said, perhaps I may say that his objections appear to be, first, that the work proposed will be more extensive than is really necessary; and, secondly, that this will be at the expense of nearby ports, particularly Aberdeen. I understand entirely why the noble Lord has taken this line—among other things, he is a former distinguished Lord Provost of the City of Aberdeen—but I feel I must put briefly another point of view.
Peterhead has been, among the ports on the north-east coast, a very successful fishing port. The harbours there are meeting greater demand for providing berths for fishing boats but they are also experiencing a demand for the handling of grain and other bulk cargoes. At present, great congestion is being experienced in the harbours of Peterhead, particularly at times of the week when a lot of boats are there together.
The proposals in this confirmation Bill will, I understand, meet the demands of the success which Peterhead has been enjoying and will build upon it. In putting forward these proposals I believe that not only will the trustees be making sure that activity continues and is increased at Peterhead in accordance with the demand but that this will also have a good effect on the hinterland. Therefore I believe that the Bill ought to be supported.
3.45 p.m.
Lord Boothby: My Lords, as one who represented the burgh of Peterhead in another place for 34 years, who opened the present harbour which is rather too small, and who is the only surviving freeman of the burgh of Peterhead, I should just like to say that I warmly welcome this order. I think it is very necessary. I think that the promises and obligations made by the trustees of Peterhead harbour will be carried out.
It is to some extent a reflection of the expansion and growth of the inshore fishing industry not only of Scotland but of the whole of this country. I have spent over 60 years of my life in Parliament, and most of that time cursing successive governments to no particular avail although I think with good reason. It therefore gives me very great pleasure to say how warmly I support this Bill because it is in the result a reflection of the successful policy for inshore fishing generally, which the present Government have consistently pursued.
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The noble Lord, Lord Campbell of Croy, was perfectly right when he said that Peterhead deserves the success it now has, because of the services it has supplied. The two groups of people who have to be considered most in this matter are the fishermen and the public; and both want the expansion of Peterhead. The fishermen have proved for years now that they regard Peterhead as the best port of landing of the lot. The expansion of the industry as a whole and of the seafaring industry around the coast of Scotland is the justification for this order.
I therefore hope very much that the order will be given the welcome it deserves. I can assure your Lordships that I, who know them pretty well, am absolutely convinced that the trustees of the harbour of Peterhead will honour the obligations they have already given to Aberdeen.
Lord Ross of Marnock: My Lords, it is rather sad that we should have to have this debate because here we have a very deep controversy dividing a part of the North-East of Scotland—a tug-of-war between Aberdeen and Peterhead. I am beginning to think that the Government are in between them. I am very sorry for the Minister. He is neutral in this; he cannot say anything by convention. We are much freer on this side of the House.
I regret indeed that this is not a Public Bill; had it been, it would have gone on for quite a long time. The noble Lord, Lord Campbell of Croy, will remember that the last Bill we had on the extension of Peterhead was one that he raced through the House, but it was a Public Bill. I had the pleasure thereafter of opening the extension of the harbour. That was barely 10 years ago. It was an extension of the harbour of refuge. There are really two harbours in Aberdeen—the fishing harbour and the harbour of refuge. We now have this extension which is going to cost more than £13 million. That estimate was taken about two years ago and the cost is probably far higher now.
When one considers how much is going to be done and how much money is going to be spent, one can understand the concerns of other areas as to whether or not, in order to get a profit from that investment, they are going to extend their traffic, and that at a time when the EC already says that the underutilisation of the present facilities is about 50 per cent. We heard a Question today about the fall in oil prices and the effect that that might have. We heard how wonderfully we are doing without the profits and taxes from oil. If the price goes down and there is a laying-off in respect of the activities in the North Sea, which has been keeping both these ports and other ports in that area at a rate of prosperity greater than it has ever been, one can see the concern.
I read with very considerable care all that was said in another place just the other day. The Member of Parliament, Mr. McQuarrie, made great play of the fact—I am not quoting his words; I am not allowed to do that—that the facilities were intended primarily for the fishing industry. But the Minister, Mr. Ancram—or Lord Ancram, as he sometimes calls himself—who is neutral in this matter and merely explains it, had this to say:
"I understand that these facilities are intended primarily for commercial, that is, non-fishery, traffic".—[Official Report, Commons, 16/12/85; col. 87.]

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That is the difficulty. I do not believe that they are going to spend upwards of £13 million to make the harbour safer for the fishing industry. I wish that there had been much more come and go between Aberdeen and Peterhead in that respect.
Lord Boothby: There will never be that, my Lords.
Lord Ross of Marnock: Now, now, my Lords, we have heard plenty from the noble Lord, Lord Boothby, in the past, and we all know of the glories of Peterhead. Some of us have a soft spot for Aberdeen as well, despite what happened to its football team last night.
The Government may well be neutral but I believe it is true to say that the trustees at Peterhead asked the Government for some money. They asked the Government for some £12 million and did not get it. I wonder where all the money is to come from. Will it come from the Scottish Office or from the Ministry of Transport? If non-fishery harbours are supplied with cash by anyone, it is from that source. It does not look as though the EC is going to come across with the money if it thinks that there is already over-provision in that area. It is regrettable that those two areas and harbours which are so close and which have been so friendly over the years should be fighting over that matter.
I may explain to your Lordships who do not realise this that there was a heated argument in another place and there was very much a cross-party Division in the House. The Government's majority was only 18. Still, the matter has already been decided and we must accept it.
As I have said, I am sorry for the Minister because the convention is that the Secretary of State treats the recommendations from the Parliamentary Commissioners seriously and respectfully. Only in very exceptional circumstances does he set them aside. He has decided—rightly, I believe—that there are no exceptional circumstances in this case.
Although the Secretary of State is not to be regarded as expressing a view on the merits, because he incorporates the report in a Bill it means that the Government must be silent. I wonder whether they will be silent again when they are asked for money in respect of this matter, because then they will not be able to remain neutral.
Viscount Davidson: My Lords, as the noble Lord, Lord Ross of Marnock, said, the Government's attitude towards this Bill is one of total neutrality. I had not intended to intervene in this debate but I should just say to your Lordships that, as all the proper procedures have been observed, it is the Government's duty to accept the recommendations of the Parliamentary Commissioners and to submit to Parliament a confirmation order that has been the subject of an inquiry. That is what your Lordships are doing today.
On Question, Bill considered on Report.

Appropriation (Northern Ireland) Order 1986
3.53 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell) rose to move, That the draft order laid before the House on 19th February be approved.
The noble Lord said: My Lords, I beg to move that the Appropriation (Northern Ireland) Order 1986 that was laid before this House on 19th February be approved. Your Lordships will be pleased to learn that the order is being made under paragraph 1 of Schedule 1 to the Northern Ireland Act 1974.
The draft order appropriates the sum of £72·7 million for the 1985–86 Spring Supplementary Estimates. Your Lordships will find the detailed allocations of that amount by both Class and Vote in Part I of the schedule to the draft order. That sum is in addition to some £3,056 million which has already been approved by your Lordships for the 1985–86 financial year. A simple addition will show that that brings the total Estimates provision for 1985–86 to £3,129 million.
Part II of the schedule gives exact details of the issues for which the Vote on Account for the next financial year of £1,365 million is required. That provision is necessary to enable services to continue until the 1986–87 Main Estimates are considered by your Lordships later in the year in the traditional way. Full details of all the provisions sought in the draft order can be found in two volumes, copies of which have been placed in the Printed Paper Office. Those are entitled the Spring Supplementary Estimates and Statement of Sums Required on Account.
As is usual on an occasion such as this, I shall say a few words about the general economic position in Northern Ireland. The trend for both total industrial production and manufacturing outputs remains upward; output for those sectors in the first three quarters of 1985 was up by around 2 per cent. When compared with the same period of 1984. However, that is still some 9 per cent. below the level obtaining in 1979 in the case of manufacturing.
On the employment front, in the year to September 1985, which is the latest period for which information is available, total employees in employment in Northern Ireland fell by 1,490, as against falls of 2,100 and 5,850 in the two previous 12-month periods. There is evidence that the numbers of self-employed may be rising. For the period 1981–84 the increase in self-employment is estimated at 7 per cent.
Unemployment remains the main economic problem in the Province and the statistics go to prove that. In January 1986, the rate of unemployment was 21·6 per cent. compared with 13·9 per cent. in Great Britain and 19·5 per cent. in the North of England, which is the worst affected region after Northern Ireland. The Government will continue to do their best to relieve that problem through the job creation efforts of the IDB, LEDU and the various training and retraining schemes. The events in Ulster on the day of the loyalist strike, which, regrettably, were televised throughout the world, will not have helped the efforts being made by our industrial development agencies to attract inward investment, as your Lordships will appreciate.
In my remarks on the Estimates before the House this afternoon, I shall be using the term "token estimate", as is traditional. In fact, of the 22 Votes that require supplementation, nine are token estimates for £1,000. The purpose of a token estimate is to bring important changes within a Vote to your Lordships' attention where, in strict accounting terms, additional funds are not required.
The first of those token estimates appears in Class 1, Vote 1. In that Vote, an increase of some £200,000 is sought for the payment of student awards at Loughry, Greenmount and Enniskillen agricultural colleges, thus bringing them into line with other student support arrangements in Northern Ireland. However, additional expenditure has been more than offset by receipts from board and lodging charges in student halls of residence at those colleges. An additional sum of £600,000 is sought for scientific equipment to test meat for residues, including hormonal content, and for research into the potential of using irradiation for the preservation of food. Finally, within that Vote we have found it necessary to increase provision under the milk outgoers scheme by some £900,000 to meet the cost of compensation to those producers who have given up production.
In the light of the supplementary provision that is being sought on milk, I shall comment briefly on the quota situation. I know that this matter will interest the noble Lord, Lord Dunleath, and others who are interested in the agricultural scene in Northern Ireland. The additional amount of money brings the total provision for payments to milk outgoers to £1.3 million and represents the purchase of some 32 million litres of Northern Ireland quota that has been reallocated. In addition, a further 2.5 million litres has been made available through transfer of direct sales quota. Regrettably, that represents only about half of the Northern Ireland tribunal determinations in respect of exceptional hardship claims and allows some limited provision for small producers. However, the resolution of the quota shortfall difficulties in Northern Ireland is not, as your Lordships will be aware, a simple matter. Nevertheless, I am able to stress that there is presently a new EC outgoers scheme under consideration in Brussels and this may go some way towards solving the problems.
In moving to Vote 3 it will be seen that some £300,000 in aid from the European Community under the urban renewal regulation is being appropriated in aid in respect of expenditure on drainage infrastructure projects in the Belfast urban area.
Class 2, Votes 1 and 2, relate to the activities of the Industrial Development Board. In Vote 1, headed Industrial Support and Regeneration, an extra £518,000 is sought, £450,000 of which is to meet additional expenditure on factory building and estate development. The balance is to cover increased administration costs. In Vote 2, General Support to Industry, £20.6 million is required to meet claims for grant assistance arising from the IDB's activities in recent years in promoting and maintaining employment in Northern Ireland. Your Lordships may wish to note that in 1984–85 alone the IDB entered into agreements to provide selective financial assistance totalling some £133 million. The additional
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requirement in the current year is partly to meet that commitment.
In Class 2, Vote 3, Miscellaneous Support Services, an additional provision of £26 million is sought. This is made up of £1 million for the Local Enterprise Development Unit, £4 million for Harland and Wolff and £20.6 million for capital investment grants. The substantial increase for investment grants stemmed from changes to this scheme announced in March 1985. These included a reduction in the overall rate of grant from 30 per cent. to 20 per cent. with effect from 1st May 1985. Therefore, there has been some acceleration of investment by industry to take advantage of the higher rates of grants under the former scheme and also to benefit from the higher capital tax allowances which are being phased out, as your Lordships will be aware.
Class 2, Vote 5, covers expenditure by the Department of Economic Development on services such as youth training and employment. On the training side, an additional £1.82 million is required for the youth training programme and £1.48 million for the training on employer premises scheme. Your Lordships will be pleased to note that this year almost 16,000 young people benefited from the YTP compared to 14,000 in 1984–85. While we are still considering employment services, I should add that the action for community employment scheme, better known as ACE, provides temporary employment for the long-term unemployed. This very worthwhile service requires an increase of £1.75 million. However, by the end of this financial year the number of employees is expected to increase from 3,050 to some 4,400. The figure should exceed 5,000 by June 1986.
In Class 4, Vote 1, Roads Services, a net additional provision of £ 1.6 million is being sought for operation and maintenance of roads, street lighting and public liability claims. This additional expenditure is partly offset by additional receipts from sales of surplus land and the recoupment of VAT and EC receipts under the urban renewal regulation.
Moving on to Class 5, Vote 1, under the heading Housing Services, the net increase of some £6.1 million is attributable largely to a technical adjustment relating to changes in the pattern of government recoupment of the Housing Executive's expenditure on house renovation grants and to an increase in the number of grant applications.
Token provision of £1,000, which I referred to earlier, is sought in Class 6, Votes 1 and 2, headed Water and Sewerage Services and Improvement of the Environment, respectively. In Vote 1 an additional £1.6 million for operational and administration costs is offset by savings in computer costs and additional receipts, mainly from metered and other water charges. In Vote 2 your Lordships will be aware that major conservation legislation bringing Northern Ireland into step with the rest of the United Kingdom came into operation during the current financial year. This, together with the acceptance by the Government of the main thrust of the recommendations of the Balfour Report, A New Look at the Northern Ireland Countryside, has meant the commitment of an additional £0.7 million. The offset in this Vote is mainly from European Community receipts, again

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under the urban renewal regulation, leaving a token provision of £1,000.
I turn now to education. Supplementary Estimates are being sought in Class 8, Votes 2, 3 and 4. In Vote 2, Higher and Further Education, an extra £2.5 million is sought mainly for redundancy and compensation payments made to staff who were prematurely retired under university restructuring arrangements; some additional expenditure on computers and the cost of the 1985 pay award to further education lecturers. Under Vote 3, Miscellaneous Services and Administration, a token vote of £1,000 is sought to bring to your Lordships' attention the expenditure of £0.7 million on the installation and running costs of computer equipment and, on the income side, some £1.2 million from VAT refunds and EC receipts.
Vote 4, Education and Library Boards, is the final education item. Of the total £900,000 sought some £550,000 is required for increased capital expenditure on essential minor works in schools, including a number of health and safety schemes. The balance of £350,000 is a net figure resulting from a rephasing of estimated receipts from the European Social Fund, some of which are not now expected until 1986–87.
Class 9 covers health and personal social services and, in Vote 1, I should like to draw your Lordships' attention to a new Mental Health Commission which is provided for in subhead C7. The commission, which will begin formal work later this year, will be an independent body established under the draft Mental Health (Northern Ireland) Order 1986 which your Lordships will remember we were discussing earlier this week. The commission will safeguard the rights of patients in mental hospitals. The provision in the current financial year is to meet essential advance expenditure.
The other changes in Vote 1 cover increased expenditure of some £3.5 million, £1.1 million of which is to assist with the transitional costs of opening the new Belfast City Hospital. As your Lordships may know, the first in-patients were admitted to the new hospital early in January this year and the transition from old and (we have to call them) exhausted buildings to this splendid new hospital is now gathering momentum. Other significant increases are proposed in capital expenditure to take account of essential health and safety work and in grants to voluntary bodies.
In Class 10, Vote 2, Non-Contributory Benefits, a token estimate brings to your Lordships' attention increases amounting to almost £3.5 million which are, again, offset by savings and increased receipts. In Vote 4 an additional sum of about £3 million is sought for administration and miscellaneous services, covering salaries, wages and charges for agency services.
I briefly also draw your Lordships' attention to amendments to the ambits of Votes 2 and 4 and consequential changes to Section G and A of the respective Votes. These changes clarify the relationship between the Department of Health and Social Services and the Northern Ireland Housing Executive in the payment of housing benefit. They were made following criticism by the Comptroller and
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Auditor General in his report on the 1984–85 Appropriation Accounts.
In Class 11, Vote 3, Other Public and Common Services, some £4.1 million is sought mainly to finance the on-going reorganisation of the efficiency services and the related costs of the computer hardware.
I am glad to say that I now have the word "finally" in my brief. In Class 12, Vote 1, under the heading Office and General Accommodation Services, an increased provision of some £2 million is required mainly to meet additional costs in the new works and maintenance subheads arising from the repair of bomb damage to government premises in Belfast.
I have gone galloping through this Spring Supplementary Estimate and your Lordships have been remarkably patient. I have brought out the points which seemed to us to be of greatest importance and worthy of your Lordships' attention. I trust that I have covered the main items and the main threads in this draft order, and I promise that I shall listen attentively and deal expeditiously with any questions and queries which your Lordships may raise. I commend the draft order to your Lordships.
Moved, That the draft order laid before the House on 19th February be approved.—(Lord Lyell.)
4.10 p.m.
Lord Prys-Davies: My Lords, we on these Benches thank the noble Lord, Lord Lyell, for having taken the House through the Votes and the divisions which are particularised in the draft order which is before the House and for having singled out the items which the Government consider to be of particular importance. However, the noble Lord the Minister acknowledged that in Northern Ireland unemployment has continued to rise. Would the Minister confirm whether or not there is also an emigration problem in the Province or whether we can forget about that? We have been told that unemployment is at its highest level and as usual the Province has a much higher rate of unemployment than is suffered in any other part of the United Kingdom; moreover, sadly 40 per cent. of the unemployed are under the age of 25. I think that this kind of evidence shows clearly that the employment policies of the past seven years have not broken down the core of the unemployment difficulty. It remains the biggest single problem and the central one which faces the Province.
The debate on the Motion for approval of the draft order must be seen in this context and in the light of the contribution that the proposed expenditure can make to the creation of jobs. We on this side of the House are therefore very glad to give our full support to the proposed additional expenditure by the independent development board, the local enterprise development unit and the training and re-training schemes, in order to enable them in combination to press on with their industrial development policies and to produce jobs.
This order brings out how vital it is that the policy of attracting foreign capital and investment should not be put at risk. I understand that there are some grounds for believing that the IDB has found it more difficult during the past 12 months to attract foreign investment, and perhaps the Minister can confirm

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whether or not that is the case. I also assume from what he said that there may be firm evidence (though it is early days) that the destructive events of 3rd March and the threats of more days of protest to come have either produced or are likely to produce repercussions on inward investment. Perhaps the Minister can confirm this. It seems to me that everyone who cares about the future of Northern Ireland has a heavy responsibility not to damage the image of the Province around the world.
Whether the jobs which are available are being fairly distributed between Catholics and Protestants is quite another matter. I was not entirely surprised to read a worrying report from the recently established Fair Employment Trust, pressing home its attack on the Fair Employment Agency and its failure to correct employment inequality in the Province. I am not sure whether I am doing justice to the report of the trust, but surely it is a trenchant criticism of the agency. I should be interested to learn from the Minister whether the Government regard it as fair criticism. Do they accept that the existing religious inequality in employment is a matter of pressing concern in Northern Ireland? In particular, in the light of this report will the Minister assure the House that the agency is not subject to undue constraints on its resources? And, if the resources are there, how can the agency adopt a more vigorous role in bringing about religious equality in the place of work?
There is no question of a lack of vigour or failure of will at the Northern Ireland Equal Opportunities Commission, which is concerned with sexual inequality in the place of work. Of course this is another area of importance to the Department of Economic Development. The department will know that the commission is pressing for more funds to enable it to discharge its statutory functions effectively and to cope with an increasing workload. The commission tells me that a small additional increase of no more than about £10,000—we are talking about that kind of money—would make a world of difference to the commission. It is to be hoped that this modest additional expenditure can be found somehow or other. The Northern Ireland Office obviously covers a wide range of activities in health, education, housing, agriculture and environment as well as industry, and the Minister has highlighted the achievements which have been secured, which we do not seek to deny.
The Minister has also referred to the increased allocations for the various Votes, but the point that I and other noble Lords are making is that they fall far short of what is needed if services to people are not to be curtailed. The health boards, the education boards and the housing executive are still faced with major problems. As I understand it, every board and the housing executive will have to effect savings, and they will have to curtail services in order to live within their budgets during the next financial year. One has only to read the Northern Ireland newspapers and the bleak warnings in their letters columns to know that there is a lot of anxiety about the provision and the standard of services, and that there is a growing belief that the shortage of funds is biting deep. One reads of action committees bringing together local citizens to defend their services.
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All this has been highlighted in the debate on this draft order in another place, and in the time that is available to me I do not propose to go over the same ground. We on these Benches are bound to accept that one of the prime concerns of any department of state must be to ensure the cost-effective use of public funds, and it is right that every undertaking or board should constantly review and examine its pattern of expenditure and policy assumptions. But it must also be accepted that in seeking to achieve savings a board may sometimes get the arithmetic wrong. It may demand savings, when none should be demanded, or indeed a unit may be asked to bear an unduly heavy share of the burden.
That brings me to the savings which are required of the physiotherapy department of the Royal Victoria Hospital, which is a major teaching hospital with specialities which serve the entire Province. I should like to dwell for a minute or two on the difficulties facing this department. The Minister of Health for Northern Ireland believes that there is too little control of the budget in this particular hospital. He seems to base his belief on comparisons with expenditure in hospitals in Great Britain. I am not sure that that is a fair comparison because we are not necessarily comparing like with like. But if the department wishes to make that kind of comparison, then it ought to be with the teaching hospitals on the mainland and taking into consideration the multi-million pound endowment funds which are available to some of the teaching hospitals on the mainland. That has a bearing on your pattern of expenditure.
About six months ago, as part of the drive for economies, the Eastern Health Board required the physiotherapy department of the Royal Victoria to produce savings of £65,000 in the financial year 1985–86. So in a full year the savings could amount to about £80,000 to £100,000. In order to secure this target of £65,000, the board placed an embargo last summer on the filling of vacant posts. Eleven posts have not been filled and in the result the staffing of the physiotherapy department has been reduced by about 25 to 30 per cent. That is the problem.
Those working at the hospital who have a feel for the situation have made it clear to the hospital administrator that the savings required are totally unacceptable. That is the considered judgment of at least seven consultants at the hospital, including a consultant surgeon, consultant physicians, and, very importantly, a consultant physician in geriatric medicine. Those eminent men consider the decision to be shortsighted because the rehabilitation of patients and their discharge to the community to live an independent life will be delayed. Indeed, some of the consultants claim that it may no longer be safe to admit patients to some wards if they are denied access to adequate physiotherapy facilities.
We know that the Department of Health has received many critical letters about the decision since last August, but to no avail. The Minister has adopted the line that he will not interfere with a decision of the board, although the board is his agent. In the replies which have emanated from his office over the months, copies of which I have seen, the Minister does not even bother to question how his agent has arrived at the target of £65,000. He appears to assume that the target

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is correct. But, my Lords, is it? And what is the position if that target is wrong?
So we should be grateful if the noble Lord, Lord Lyell, will speak to his colleague and persuade both his colleague and the department to question critically the validity of the target of £65,000 in the light of the following three specific considerations. First, physiotherapy, compared with the other units at the hospital is being asked to shoulder an unduly heavy proportion of the cutbacks. I understand that the planned physiotherapy staff cuts are of the order of 25 to 30 per cent. while the reduction expected of other units at the hospital are no more than 5 per cent. If my information is correct, that comparison suggests in itself that something may be amiss.
Secondly, it is thought that the decision pays inadequate attention to its adverse effects on the service to patients, even though at least seven consultants at the hospital have testified that the effects on standards are not acceptable to them. In the Department of Health, surely the testimony of the seven consultants is worthy of note. Thirdly, the decision fails to recognise that an effective department of physiotherapy in an acute hospital is essential for the working of a dynamic geriatric and rehabilitative service, which in turn will have a significant spin-off for the community health service.
It would make nonsense of planning and policy statements if the action taken in this one department in order to save £65,000 in the short term weakens the long-term strategy of the Minister of Health, a strategy which we believe to be correct and which is to prevent or reduce long-term dependency wherever possible. So here we have an instance where a short-term policy appears to be in conflict with a sound long-term policy.
I should like to move on to one other subject. The debate takes place against the background of the Hillsborough agreement. In Northern Ireland, one requires not only political co-operation and security co-operation between two sovereign states but economic co-operation as well. Indeed, this is promised in Article 10(a) of the agreement. Is the Minister able to give an indication to the House whether consideration is now being given to joint initiatives to assist the economic and social development of the Province, and in particular the border counties, the border areas? I understand from EC literature that the border area has been hard-hit by international recession. The EC seems to acknowledge that almost by definition it is in need of cross-frontier co-operation and joint development programmes, and indeed in the past the EC has considered that the problem is worthy of special investment. Is the department giving consideration to joint co-operation between the two sovereign states to improve economic and social development in the frontier area?
I have also read that some knowledgeable people in Strabane and Dungannon believe that the competition between the two main promotional bodies north and south of the border might be working to the detriment of this particular area. Indeed, a leading trade unionist in Northern Ireland has called for the integration of the IDB and the IDA. Is this too sweeping a suggestion? Even if it is, is the department examining
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the case for evolving reciprocal arrangements between the IDB in the North and the IDA in the South, which could lead to mutually satisfactory developments?
Britain and France have co-operated to make Concorde. Is there any valid reason why Britain and the Republic cannot co-operate in the shipyards of Belfast? Or is the room for manoeuvre still too limited? I believe that the fact that one can ask these questions in March 1986 suggests that we are able to think afresh, and that is due to the political initiative of last year. I have taken up more than my allotted time. With those few remarks, and one or two caveats, we approve the order.
4.30 p.m.
Lord Hampton: My Lords, I, too, should like to thank the noble Lord the Minister for introducing the order. There was a significant debate on Monday on the Local Government (Temporary Provisions) (Northern Ireland) Order which I was unfortunately not able to attend. I hope that it will be in order therefore for me now to make a few general comments on the critical situation that the Province faces before moving on to some questions more immediately linked to the present order. Of the 15 Unionist MPs in the other place, only one, I believe—an honourable exception, I feel—Mr. Enoch Powell, attended to take part in a debate there last week on this order. It is good, however, that there are speakers from Northern Ireland here today. I shall, of course, pay careful attention to what is said.
I was shocked, in the literal sense, to read in an article in the Sunday Times of 9th March by Michael Jones and Chris Ryder the following:
"The Reverend Martin Smyth, the Belfast South MP and contender for the Official Unionist leadership said on 22nd February 'Today is the 100th day of Dublin rule over Ulster"'.
The article went on:
"To those who have not actually read the modest and cautious Hillsborough text or taken on board the Irish Government's treaty commitment that the status of the Province can be changed only with the consent of the Ulster people, it makes a powerful rallying cry".
I find it depressing that a man of intelligence and integrity—I do not believe that Mr. Smyth deliberately sets out to deceive—can so totally misrepresent the position. What, I would ask him, does he think that we are doing here in this Chamber this afternoon? I should like at this stage to recall the response to the Statement by the Secretary of State, repeated in your Lordships' House on 4th March, about the day of disruption in the Province the previous day. At col. 104, the noble Lord, Lord Maude of Stratford-upon-Avon, said:
"My Lords, may I as one who has for long supported the Unionist cause ask my noble friend whether the Government can do anything to convey to the leaders of the Unionists in Northern Ireland that they are rapidly losing all the goodwill which over many years has been built up on this side of the water?".
The noble Lord, Lord Lyell, was rather guarded in his reply. Can he now tell the House whether this message has been brought home to the Unionist leaders with maximum force? For the Unionists, I submit, seem bent on a tragic course, and their actions, paradoxically, seem more likely to damage the union that they so determinedly espouse than all the activities of the IRA over the past 16 years.

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Secondly, have the Government been able to make any progress in convincing the Unionists that the Hillsborough agreement is much more modest and cautious than they seem to think? I read in yesterday's Irish Times that Dr. Paisley and Mr. Molyneaux have been invited to talks with the Prime Minister but that they insist that the Anglo-Irish agreement must be torn up before they accept. Is the noble Lord, Lord Lyell, in a position to give the House any further information on developments here?
I come now to some questions more immediately linked to the order that we are considering. Under Class II, paragraph 3, on page 7, we read,
"For expenditure by the Department of Economic Development on the Local Enterprise Development Unit"—
that is, LEDU—
"aircraft and shipbuilding industries, energy efficiency",
and so on, the sum of £35 million. I wish to ask, at this stage, two questions relating to matters on which the noble Lord, Lord Prys-Davies, has already touched. Is it not true that the valuable work done by LEDU to ease the unemployment situation by helping small businesses will be seriously threatened by a widespread policy of disruption? Secondly, is it not true that Harland and Wolff is hoping to win the order for an auxiliary oiler replenishment vessel for the Ministry of Defence in open competition, and that this order also would be seriously threatened by any resort to stoppage of work? I understand, however, that excellent industrial relations have been maintained there over the past 10 years. We must trust that good sense will prevail.
Under Class VI, paragraph 2, we read of grants towards environmental services. This brings me close to the subject of tourism that I wish to raise. Would the Minister agree that visits from outsiders to the Province are sadly all too few and that tourism, which could be a valuable boost to the Province's economy, is already at a low ebb and would be completely knocked out if disruption went ahead? At a time when it is particularly vital to maintain close contact between the Province and the mainland this would seem particularly tragic. Can the Government do anything to help here?
Under Class XI, paragraph 1, on page 9, we see, for the expenditure of the Northern Ireland Assembly, the sum of £1,452,000. I believe, sadly, that the Assembly is no longer sitting. Can the Minister kindly inform the House whether this figure will be adjusted? Will he also remind us whether those elected as Members who choose not to take their seats are still entitled to claim payment?
We read that it may be necessary to send more troops to Ulster. I would only say that I support what my noble friend Lord Donaldson said on Monday—that the present form of direct rule is not an altogether satisfactory form of government. We must continue to look forward to an agreed form of devolved government when the people who live in the Province and who know the problems first hand can run their own affairs. In the meantime, we must continue as at present. We, on these Benches, support the order.
4.36 p.m.
Lord Fitt: My Lords, let me at the outset reinforce the remarks of the noble Lord, Lord Hampton, when he draws attention to the incongrous situation in which only one, or at the most, two representatives from Northern Ireland took part in the debate on this order in another place. As your Lordships will know, the order makes provision for the financing of almost every facet of life in Northern Ireland—jobs, homes and all the social services that are necessary in a modern state. Yet those elected to represent their constituents were unavailable. I understand why they were not there. I realise the very real depth of feeling that exists within the Unionist community against what they see as a betrayal by the signing of the Anglo-Irish agreement.
I notice, the longer I continue to live in Britain, the totally different atmosphere that prevails here in this island and the reality that exists for the people who have to live in Northern Ireland. It hinges on this great word "perceived". People on this side of the channel see the agreement as a step forward to bring about better relations between the Republic of Ireland, the two communities and the people in this island. In Northern Ireland, it is not perceived in that way. That may be wrong. It may be silly. The agreement may be totally misunderstood. Lies may be told; untruths may be told. But the vast majority of the people in Northern Ireland feel that it is an encroachment on the government of that country as they have known it hitherto.
Your Lordships will have heard in this House, and particularly in another place, that the Unionist Members are misleading their followers and that they are telling them untruths about what is contained and what is not contained in the Anglo-Irish agreement. But the Unionist Members are not the only people giving expression to those sentiments. For example, the Belfast Telegraph is by no stretch of the imagination an extremist newpaper, yet daily in its editorial columns the leader writers express great reservations as to whether the Anglo-Irish agreement will do what it was intended to do and bring about reconciliation.
It has to be conceded that since 15th November there has been very little sign of any reconciliation taking place in Northern Ireland. I think that this will be an on-going situation into the summer months. In Northern Ireland the summer months can be a very dangerous time when all the marches and demonstrations take place by both sides. I have seen them on all too many occasions. Both sides try to assert their supremacy and superiority over what they regard as the other "tribe". It is a potentially very dangerous situation. All the people of Northern Ireland would do well to sit back and take stock of the position they are in, and how much that position could deteriorate by unwise words or acts by leaders of the two communities.
In relation to this order there are only three items to which I should like to draw the attention of the House. First, I am not living in Northern Ireland but I have a telephone here in London. Hundreds of representations have been made to me recently about the massive cutbacks in the budget of the Northern Ireland housing executive. From that budget £44

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million have been cut away. That means that 1,000 fewer houses will be built, many more thousands of houses will not be repaired, and many more hundreds—if not indeed thousands—of houses will not be rehabilitated. Northern Ireland still has a waiting list of nearly 25,000 people who are living in deplorable conditions. It means that they will have to continue to live in these conditions until the Government reassert their policies, or discover new ones, and take into account the very real hardship that has been caused by this massive cutback.
In yesterday's Official Report, in answer to a Question by my noble friend Lord Blease regarding the Government's policy in relation to the provision of nursery schools, the noble Lord in his reply said that it was the Government's policy that nursery schools should be made available for the whole population. That was the Government's intention. In fact in this order there is a cutback. In an area where it is very necessary that expenditure should not be cut back 3,000 places are being cut from two nursery schools. These two schools are desegregated schools. If the Ministry were looking for any schools to close—and I would not concede that they should close any—they should have been much more sensitive than they have in this case.
The reason I rose to my feet this afternoon is to reinforce what has already been said and to make a further personal plea on behalf of Harland and Wolff, the Belfast shipyard. Many people throughout these past few weeks have referred to the sad events of 3rd March when industrial disruption took place in the city of Belfast. That had not happened in the Belfast shipyard since 1974. It is 12 years since a day's industrial production was lost. That was lost because of another appendage of the Sunningdale agreement—in other words, the Council of Ireland. I suggest that other shipyards in the United Kingdom which are in competition with Harland and Wolff do not have the enviable record that we have in that shipyard.
Harland and Wolff have produced both Royal Navy and merchant ships for this nation. I have had the pleasure to sail in some of them throughout my years as a merchant seaman. I do not think that there can be any question about the ability of the workforce in Harland and Wolff to take on this project. Indeed, Harland and Wolff would not be the sole beneficiary if its consortium were to be successful because 30 per cent. of the consortium's activity would be based in Belfast, 35 per cent. in Glasgow, and 20 per cent. in other parts of England. It would therefore bring work and employment to a spread-out workforce throughout the United Kingdom.
The dangerous thing about what is happening and what people are saying is this. Some people are saying that because Harland and Wolff went on political strike—like many of the other industries—on the 3rd, the Ministry of Defence may take the attitude, "You are not going to get this order because you engaged in industrial disruption against the Government's declared policy of support for the Anglo-Irish Agreement".
I should not like to attempt to blackmail the Government. However, Harland and Wolff, I believe,
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is entitled to receive this order. Let me put on record—as most of your Lordships and I hope most of the elected representatives in another place will know—the unremitting activities on behalf of Harland and Wolff by its managing director, Mr. John Parker, and his public relations officer, Dr. Maria Moloney. They have spent night after night, and day after day, trying to make people on this side of the water, both in this House and another place, aware of the great potential. They are not trying to sell a pig in a poke. They are not trying to over-sell Harland and Wolff. They are quite aware of the abilities of their work force. If Harland and Wolff are successful in getting this order—as I sincerely hope they are—I believe that every man jack who is employed in the Belfast shipyard should express his thanks to the present managing director.
I therefore ask the noble Lord to take into account the linchpin that Harland and Wolff has always proved to be in industry in Northern Ireland, and in particular its relationship with the city of Belfast. I ask the noble Lord to do everything he can to ensure that the shipyard is given the order, on ability, and that no attempt would be made to blackmail the workforce of Harland and Wolff by saying that they were not to engage in industrial disruption or they may not get the order. In fact, if orders were to be given on that premise there would be a lot of shipyards—particularly Harland and Wolff s main competitor—who would not be in a very favourable position.
In replying to these three questions, I hope that the noble Lord will be able to give some kind of satisfactory answer, with particular regard to housing, the provision of nursery schools, and the AOR delivery to Harland and Wolff.
4.48 p.m.
Viscount Brookeborough: My Lords, I should first like to welcome this order and to thank my noble friend for the way he has introduced it. I should like to say how much I support the noble Lord, Lord Fitt, in his remarks about the general situation in Northern Ireland. It is to that effect that I should like to attribute my remarks.
In politics 24 hours is a long time, and in the time of Northern Ireland politics at the moment it is a very long time. I therefore think that it is absolutely right and proper that the situation in Northern Ireland should be debated in this House at this time because it may be some time again before we have an opportunity of looking in a calm way at what is a very difficult situation. Following the approval by this House and by the Government of the Anglo-Irish accord, the Government appealed to Unionists to delay their judgment because on looking at it in the cold light of many the day, Unionists would eventually see the advantage of this accord.
I am reporting to you the results of those reflections. They are my own as well as those of all the people to whom I have talked. As the noble Lord, Lord Fitt, has said, almost every citizen of Ulster believes that their status has been changed by the accord. Some are delighted with the change. They see it as the eventual end of the United Kingdom and of the Union. However, all the people to whom I have spoken, who

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believe in the Union—both Protestants and Catholics; and there are many Catholics who believe in the advantage of the link with the United Kingdom—feel shocked, shattered and betrayed, as do I. There is total unanimity among business people, professional men, farmers and workers—people who have never taken part in politics feel the same. If the CBI and the various organisations appealed for people to take no action on that day of action, it should not be taken that they approve of this accord. They do not, and privately they have made their recommendations to my right honourable friend the Secretary of State implying exactly what I have said.
It is impossible for me to describe the deep hostility that is felt. This is not due to bad or dishonest leadership on the part of the elected representatives; it is total gut reaction. I deplore many of the actions taken by some of the elected representatives. I especially deplore the insulting and extreme language which has been used. But no one should doubt the depth of feeling.
However, it is four months since the accord was signed; and what a condemnation of the Government there has been, because in those four months, in spite of enormous efforts, they have so far failed to convince the good people of Ulster that their original judgment was wrong. Day by day all who I meet are more than ever convinced that the accord is bad for Ulster.
Perhaps I may remind this House that in the days of the debates on devolution for Scotland and Wales the Conservative Party led the way to establish consent within those devolution Bills. Indeed, in Article 1(a) of this accord the two governments affirm that any change in the status of Northern Ireland would come about only with the consent of the majority. In 15 out of the 17 Northern Irish constituencies where an election was held in January, 420,000 people voted "No". If the Government cannot see that as a failure to reach a consensus, we should have a referendum.
In Ulster there is a widespread view that the accord is the result of two things: 14 years of murder and violence by the IRA, and many years of abstention and obstruction by the SDLP. Without those we should not have this accord. To me it is quite ironic that in English eyes the SDLP, who have spent many years in abstention, are the bright-eyed boys, the favourites; and the Unionists, who have soldiered on supporting the Government and the forces of law and order through all these difficult years, are the baddies. The ideas behind the accord were, first, to establish a reconciliation, a reconciliation what would allow the SDLP to get back into government within Northern Ireland. That good man, the Archbishop of Armagh, Dr. Robin Eames, has said that his finding is that reconciliation is far more difficult than it was, and I agree with him.
The agreement was an attempt to appease the minority and in fact has totally alienated the majority. The SDLP now have no incentive to participate in government in Northern Ireland. They have a 50 per cent. input into the conference, backed by the Dublin secretariat. They have no reason to move; they have got what they wanted.
The next part of the agreement was the intention to improve security. In fact, it must have made security
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far worse, because it must now be realised that the extra burden placed on the Royal Ulster Constabulary is immense and will be seen to be more unbearable as the summer season progresses. We have always been told that policing is possible only with the consent of the population, and we should not forget that 98 per cent. of the Royal Ulster Constabulary or the police come from the Protestant community which feels so betrayed. The fact that the number of Roman Catholics within the police is so low is not because anyone wants it that way; it is because the IRA has been incredibly accurate in their ability to murder gallant members of the Royal Ulster Constabulary who happen to have been Roman Catholics. Secondly—and this should not be forgotten—it has been due to the attitude of the SDLP and the Irish Government in their failure to support the Royal Ulster Constabulary and encourage the participation of the members of that community in the force. Something must be done politically before the lack of consent damages that magnificent force. There are powerful elements in the SDLP itself who look with considerable glee at the prospect of damaging the Royal Ulster Constabulary.
While I do not believe that it was the Government's intention to inflame Unionist opinion with the stationing of Dublin civil servants in Hollywood and the holding of the conference meetings at Stormont, the fact must be faced that it is inflaming Unionist opinion. At the last meeting (and I do not know how many noble Lords saw this on television) the castle was surrounded by police, and the policing cost £300,000.
A Member of the lower House said of the violence which was going on at Wapping that to print newspapers behind razor wire was unacceptable in a democracy. To me, to confer from behind those same sort of fences with rows of the Royal Ulster Constabulary must be more unacceptable. Is there not some room here for someone to do a little manoeuvring?
I appeal to noble Lords to understand that the Unionists have a case. A foreign power claiming sovereignty over part of British territory has been ceded power without the consent of or without the consultation of the majority of Northern Ireland. It is worth speculating what the position would have been if the minority had disapproved of this accord and not the Unionists. I do not believe that it would have been approved. It is a question of "minority rules".
I know—and it has been said here today—that Ulster lost all sympathy over the rupture of the Downing Street talks and the disastrous strike. However, if the newspaper reports are correct that the Prime Minister has asked to see the Unionist leaders, there is a ray of light. I beg the Government that, having misjudged the reaction of the Unionists—and my right honourable friend the Prime Minister said that they had misjudged the reaction—they must do all that they can to help the Unionists back to the table. They must be magnanimous.
I also appeal to the Ulster Unionist Party to find a formula which leads back to Downing Street. To fail to talk will lead to bloodshed and independence.
4.59 p.m.
Lord Dunleath: My Lords, I should like to thank the noble Lord on the Government Front Bench for his letter once again kindly inviting us to give him notice of any points that we might want to raise. I regret that, since I replied to the noble Lord, some water has flowed under the bridge and the points that I shall raise may not be entirely consistent with what I had anticipated when I wrote to him.
First, I turn to Part I, Class VI, Vote 2, which concerns grant aid to historic monuments and in particular listed buildings which are used for ecclesiastical purposes. I was one of those who put a certain amount of pressure on Her Majesty's Government to get them to expedite legislation to enable listed church buildings to be grant-aided. Eventually I welcomed the fact (and said so in the Northern Ireland Assembly) that this grant-aid was approved, even though we were unanimous in our view that the total sum of £150,000 per annum was inadequate for the task. But we welcomed it just the same.
Now it has become apparent that whereas grant-aid may be given towards restoration work required by the Department of the Environment, the amount of that grant aid may be more than offset by the amount of VAT charged. To quote an example, there is an appeal at present for the restoration of Down Cathedral, Downpatrick. This current year, if we are lucky, we may be given £25,000 in grant-aid, the maximum amount available to any one building used for ecclesiastical purposes, but we are going to have to pay out £30,000 in VAT. It is a question of "The Lord hath given, the Lord hath taken away"—and of course I do not refer personally to the noble Lord on the Front Bench.
It has since been put to me, and I had not thought this before, that it might save public money if, instead of grant-aid from the Department of the Environment, VAT were to be zero-rated, which would save administration and would mean that the saving in VAT would be proportional to the amount of money being spent on the restoration of that historic building. I should be grateful if the noble Lord would give some thought to that.
Turning to Class VIII, Vote 3, the Department of Education, I am aware that regional museums are not high on the list of priorities. But, if I may, I should like to make a brief plea for Carrickfergus. The borough council there were given to understand some years ago that there might be grant-aid available for a regional museum, but this has now been deferred indefinitely. The same is the case in other parts of the Province. But in the case of Carrickfergus it leaves the combined Cavalry Museum in an awkward position because they have been requested by the Department of the Environment to vacate the keep of Carrickfergus Castle, and, having hoped to be able to move into the new regional museum, they are left more or less between two stools. I would ask the noble Lord to be good enough to keep his eye on this. If it is not possible to grant-aid a regional museum in the near future, would he at least use his good offices so that the combined Cavalry Museum can remain in the keep of Carrickfergus Castle?
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Also in the same class, the Department of Education, Belfast Education and Library Board are cutting, I think, £100,000—about 25 per cent. —from the budget of the Belfast School of Music, which is leaving this institute in a difficult position. Similarly, the South-Eastern Education and Library Board were going to cut £75,000 from the budget of Ballynahinch Music Centre, though I understand since that this has been reduced to £50,000. I shall not go into the detail of this, except to say that I am sure that your Lordships who read the papers, watch television, and listen to the radio will mostly hear bad news about Northern Ireland. I like to try to take the opportunity whenever I can to say that that is not all the news. There is good news as well.
One of the bits of good news is the renaissance which has taken place since the war in the field of music. Quite apart from the well-known names such as James Galway, the flautist; Heather Harper, the singer; for that matter Desmond Hunter, our organ man; George Chambers, our New Orleans jazz man—a socialist in whom there is no guile—there are lots of musicians who have made it to the international scene as singers or members of well-known orchestras.
Music is a common field in which people from all social strata and denominational strata can come together. Those of us who make music in however amateurish a way know the sense of fellowship which exists when you get together with other people whom you probably did not know before, and with whom you may not have anything else in common, or when you get together and sing in a choir, however badly, or play in an instrumental ensemble, however badly. I would ask the noble Lord to have a look to see whether the education and library boards could be so funded as to avoid what I understand would be swingeing and damaging cuts to the two musical institutes to which I have referred.
May I turn quickly to Part II, Class IV, Votes 1 and 2. Again, I would venture to mention the rail service and the Department of the Environment. I have raised this matter before. The cross-Lagan rail link, I genuinely think, would be a good investment. It would make more viable the existing track mileage of Northern Ireland Railways. As the noble Lord will be aware, Northern Ireland Railways has recently invested in new trains for the Lame line, and I suggest that there would be much greater patronage of those new trains if the Larne line were directly linked to Central Station and the line to Bangor. I sincerely hope that when—I do not say "if"—it is possible to fund this rail link, the bridge will be made strong enough to be able to carry a certain 440 compound No. 85 called Merlin, which I hope will be having occasion to cross that way.
Part II, Class XI, Vote 1, refers to the Northern Ireland Assembly. I have in the past been presumptuous enough to say a few words about the Assembly every time a vote comes up relative to it, because I am the only Member of your Lordships' House privileged to be able to give a first-hand report on it. I am sorry to have to say on this occasion that the Assembly is no longer doing the work that it was appointed to do in the 1982 Act. Since late November it has not been scrutinising legislation; the committees

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have not been sitting and doing the work they are supposed to do and reporting to Ministers.
In fact, the Assembly has been used as a platform for the two Unionist parties to voice their discontent with the Anglo-Irish agreement. My party, the Alliance Party of Northern Ireland, felt that they could not, in all conscience, participate in this irregularity. Therefore, there is no alternative other than to face up to the fact that at the moment the Assembly is a waste of money. There is a sum voted here for it, and that money at the moment is not being properly spent. However, I respectfully ask that the Secretary of State should perhaps hold his hand for a little while, perhaps withdraw staff who were previously servicing the committees because there is nothing for them to do at the moment, but delay prorogation if possible.
I follow that with another suggestion which may perhaps be surprising to some of your Lordships. In fact, it is consistent with what I said in November just after the signing of the Anglo-Irish agreement. I said then that I should like to see the agreement work, but I doubted at that time that it was workable. I am afraid that I still have that doubt now. But consistent with my desire and the desire of my party to see something work, because we applaud and salute the objectives of the agreement, I ask the noble Lord to convey to Her Majesty's Government—and he will not enjoy doing this—the suggestion that they should in fact put the inter-governmental conference on ice for four months to allow consultations and talks to take place with the leaders of political parties and their representatives in Northern Ireland.
I realise that if Her Majesty's Government were to do this, they would be accused of weakness. They would be accused of being bullied by the day of action; of giving in to rhetoric and sabre rattling, and so on. But it takes a strong man, or for that matter, a fearless lady, to be brave enough to stand up to the risk of being accused of weakness, because in any dispute you have to be seen to be more than reasonable. Many is the industrial dispute that has lost public sympathy because one side has not been seen to be reasonable. Her Majesty's Government, to those with eyes to see and ears to hear, would be seen to be strong if they were to do that.
After all, what difference would it make if the governmental conference were suspended for four months? Let us for the moment look at the list which we received the other day of the topics to be discussed: tourism, industrial relations, industrial design, motor vehicle administration and road safety. You do not need Maryfield and an inter-governmental conference to discuss that sort of thing. Such matters have been discussed for years between the governments, north and south. It is not going to make the slightest difference to what goes on in any way. The main thing is cross-border security co-operation; and the two heads of police, the chief constable and the commissioner, have already got together. In the time-scale of the whole thing, four months is not going to make much difference. And I deliberately say "four" months. Noble Lords who have a diary on them will realise why I say "four" rather than "three". But otherwise we are faced with the situation of an irresistible force up against an immovable object, and that can lead to nothing but confrontation.
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If there is no outcome over the four months that I suggest, Her Majesty's Government can then say that every opportunity has been given for devolved government and for the politicians of Northern Ireland to work out their own destiny; and yet that has been turned down. Then, with every strength, justification and evidence of reasonableness behind them, they can say, "All right. We have done our best. It is direct rule for the foreseeable future and commissioners to run the councils which decline to do their work".
But, parallel with that, I think that three things are needed to convince the majority; and I still hope and believe it is most necessary to try to convince the majority which the noble Viscount, Lord Brookeborough, represents and speaks for. First, the South of Ireland must deliver. We have not seen reciprocal action either from the Republic of Ireland or from the SDLP yet. The SDLP has not come into the Assembly; the South of Ireland has done nothing about Article 2 of its constitution. I am not so worried about Article 3 because it is completely incomprehensible. But Article 2 certainly should be reviewed, as, indeed, its 1967 commission recommended that it should be, but it has done nothing about it.
Secondly, there is security. We have seen no substantial signs of improved security since the agreement was signed in November. If that were to happen, that would be very convincing to the majority. Thirdly, if the inter-governmental conference has to proceed, please let us have it more public; let us have the agenda made clear in advance and the minutes of proceedings made public in the same way as in the European Parliament which impinges much more on our sovereignty than does the Anglo-Irish agreement. but at least in the European Parliament the public have a right to know exactly what is going on and not just what the communiqué says afterwards.
I am a member of the Alliance Party whose objective is to build and not destroy, but I am not speaking for my party at the moment; I am speaking personally. I am sorry to have had to say what I have said, but I genuinely think that this is the only way forward. We cannot allow the situation to trail along indefinitely.
5.15 p.m.
Lord Moyola: My Lords, I am grateful to the noble Lord the Minister for what he said in introducing the appropriation order. I am afraid that I am not going to cover the wide field that he covered, because the only thing in my mind at the moment and the only thing that is taking priority as far as I am concerned is trying to resolve the extremely unpleasant political situation that exists in Northern Ireland today as a result of the Anglo-Irish agreement. I am not here to excuse or to condone in any way the events of March 3rd. I was abroad at that time so that what I know about it is only second-hand, but, at the same time, I know enough to know that it was an utterly deplorable day and probably did more harm to Northern Ireland than any other day in the course of my lifetime.
But I think it was a predictable outcome after the way in which the Anglo-Irish agreement came about and in view of its contents, bearing in mind that it came about without any Northern Ireland voice

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having a say in the matter at all. I say again that I am not here to condone what happened but I should certainly like to support the noble Lord, Lord Fitt, and the noble Viscount, Lord Brookeborough, in what they said about the feelings of the Unionist population. They feel completely affronted, very offended, and offended because they believe that those who have been upholding them for so many years against IRA efforts to push them into a foreign country have suddenly allowed that country to have a voice in their affairs. There is a feeling of absolute incredulity and disbelief; of being let down. It is not too strong to say that there is a feeling of betrayal that this should have happened. The crying need now is for something to redress that situation and to try to give support to the moderate opinion which still exists and which wants to see this matter dealt with in a democratic, reasonable and sensible way.
There are lots of people in Northern Ireland who are saying at the moment: "Why can't the British Government abrogate the agreement?". Those of us who live in reality know perfectly well that a sovereign Parliament is entitled to make what agreements it likes without asking anyone and that once they are made they are not normally abrogated without some extraordinarily good reason. To my mind, the idea of passive resistance, or any kind of resistance, with that object in view is complete, total and utter folly.
That is why I was so glad to see in the papers today that there are talks at least in the offing between the Unionist Party and the Prime Minister. I hope, if it is possible that the noble Lord when he replies may be able to tell us a little more about the prospect of this. Talking is what is needed. Talking is needed urgently, talking is what the moderate people of Northern Ireland want and talking is what the business people in Northern Ireland want so that they can at least keep intact such employment as still exists in the Province. I can only say that I hope that these talks will take place quickly, without any preconditions, and that, as a result of them, the agreement can be improved so that, while I doubt that it will ever be wholly acceptable, at least it can be made more palatable.
I think it should be borne in mind when entering into the talks that a lot of people have got themselves into positions which they cannot get out of at the moment without drastic loss of face. Great efforts to try to resolve this particular difficulty must be made on both sides. I say "both sides" because I honestly suspect that Her Majesty's Government had no realisation at all of what a storm this agreement was going to create.
I still believe that the worst feature of the agreement is the fact that there are no Northern Ireland voices or representations in the conference. In my view, this is what has been lacking all through and very little, if any, notice has been taken of the advice coming out of Northern Ireland. I am sure that the right and proper thing now is for there to be representatives of both communities at least sitting in on the conference and preferably taking part in its discussions. It must be quite plain now that secrecy has bred all this wild extremism. I am quite certain that the more secrecy there is the more extremism there is bound to be; and if things are to be cooled down, like the noble
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Viscount, Lord Brookeborough, I feel very strongly that it would be much better if the conference were held anywhere but in Northern Ireland.
I believe, too, that the secretariat in the building at Holywood is nothing but a focal point for disorder and ought to be removed. The same applies to holding the conference in Northern Ireland. It is possible that Her Majesty's Government may feel that to move the conference elsewhere would be some sort of a climbdown, but I am bound to say that I think it might well be worth it simply to obtain a measure of peace and to take the heat off the Royal Ulster Constabulary, who are at the moment a sort of "pig in the middle" between both sides of the community.
If I may digress at this point, like the noble Viscount, Lord Brookeborough—I will not labour this point because he has covered it very adequately—I feel that as a result of the agreement the Royal Ulster Constabulary are no longer policing with the consent of the Unionist population. I will not labour that point but I would say we all know that to do proper police work the consent of the population is absolutely vital.
Like the noble Lord, Lord Dunleath, I should like to mention the question of security, which was so much stressed in the Anglo-Irish agreement. I should like to ask the noble Lord whether there is any information he can give us—and of course I respect the fact that he may have a lot of secret information which he cannot give us—to show whether security on the southern side of the border has improved. My information is that there is really no change and, perhaps being wise after the event, it is obvious that there is not going to be any change, because certainly we in the North know, as I am sure many of your Lordships' know, that there is a massive law and order problem in Dublin in regard to drugs and mugging. Therefore most of the southern Irish police are very heavily committed in that field and so cannot be deployed effectively along the border.
I shall make one further point about the agreement itself, if I may. As I understand it, the aim of the agreement is to try to establish a devolved government in Northern Ireland which is acceptable to everyone. That is an aim with which no one could possibly disagree; but I certainly think, and I believe many others would agree, that the method of trying to arrive at it is probably self-defeating. The agreement makes plain that once a form of devolved government is established and various departments have been, so to speak, delegated to it, the matters delegated cease to be subjects for discussion in the Anglo-Irish conference. Put very simply, the difficulty here is that members of the minority may well think (and quite justifiably) that the Dublin Government are far better equipped to represent their views than would be their elected representatives in a devolved government. If I am right in this thinking, then it seems to me that there will be no devolved government and one of the prime aims of the agreement will have been defeated.
These are simply a few suggestions to try to deal with a very difficult situation. All I know is that if it is not dealt with urgently and the present impasse is not resolved, we are on the road to a major disaster. I can only say that it seems to me that this is a time for magnanimity rather than defiance on the part of Her Majesty's Government, and I hope that my noble friend will be able to indicate when he replies that this

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is the view they are taking. I would just add that I hope the talking will be given top priority and that no effort will be spared to bring that about.
5.26 p.m.
Lord Hylton: My Lords, I start by paying tribute to the powerful and responsible speech made earlier today by the noble Viscount, Lord Brookeborough. I should like also to agree with the noble Lord, Lord Moyola, in what he said about the importance of having a Northern Ireland voice in the conference of Ministers. I do not think I would go so far as my noble friend Lord Dunleath, when he talked about putting the agreement on ice for a period, but I should like to underline the importance of what the noble Viscount, Lord Brookeborough, was saying about the symbolic importance of the Maryfield office.
The general situation in Northern Ireland was well debated on 17th March, when your Lordships considered the Local Government (Temporary Provisions) (Northern Ireland) Order. I hope very much that the Hansard report of that debate will be widely studied in Northern Ireland. I will not go over that ground again except to say that I believe there is an urgent duty upon we English people to seek to understand the Unionist mentality. We need to enter into the shock and the shattered outlook which was described by the noble Viscount, Lord Brookeborough. We in England need to realise that many in Northern Ireland have been brought up, as the expression goes, to "look to your border"—in a similar way as so many white South Africans have been brought up in the tradition of the laager.
But while one can make that point, I have also to make the parallel point that it is equally the duty upon Unionists to understand British traditions—traditions based on notions of fair play, cricket, and the Queensberry Rules. Unionists have to recognise that the British public will not tolerate relationships of dominance and subservience within the United Kingdom. It is well known that there are two traditions and two cultures in Northern Ireland. Each is entitled to equal respect and equal opportunities, so long as each obeys the law and keeps the peace. People in Britain will not, I suggest, put up with the dominance of one tradition over the other any more than the rest of the world today would accept a continuation of British colonial rule in Africa. It is in this context that the recent speech of Mr. Frank Miller, the general secretary of the Official Unionist Party, was made, in which he mentioned that a better alternative agreement is so greatly to be welcomed.
Many of your Lordships call yourselves Unionists, or have Unionist sympathies, and I beg of you to use your influence with the Apprentice Boys organisation to prevent violence in the town of Portadown on Easter Monday. Some marches may be traditional, but they are no longer acceptable if they infuriate local inhabitants. In a democratic society, respect for one's neighbours' feelings is essential. Provocation is completely out.
I come now to the nuts and bolts of today's order. I have given notice to the noble Lord the Minister of a number of points that I wish to raise. The matter of grants to Citizens' Advice Bureaux, community associations and voluntary organisations has already
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been raised. It was explained in considerable detail by Mr. Stuart Bell, speaking from the Opposition Front Bench in another place. That will be found in Hansard of 11th March at cols. 683–4. The situation is also well covered by two parliamentary Questions for Written Answer put down by the noble Lord, Lord Melchett, on 11th March. I entirely appreciate that the noble Lord, Lord Lyell, probably cannot tell us much today on that subject. As he rightly pointed out on Monday, Belfast City Council will meet on 27th March. I am sure that we all hope that it will take the steps necessary to protect common and community services which are as vital to ordinary people in Unionist areas as to everyone else elsewhere. As we still have 11 days in hand, I shall assume that contingency plans are well advanced.
I turn briefly to education. I submit that Lagan College and the three new integrated schools which opened in Belfast last September have established beyond all possible doubt the strong parental demand that exists for integrated schooling. I think that the "Dunleath Act", if I may call it so, which my noble friend piloted through Parliament some time ago envisaged that existing schools would from time to time opt for integrated status. Experience now seems to show that that is unlikely to happen. The demand is for new integrated schools with new governing bodies—new wine skins for new wine—although it may well be that some of those new schools will be able to use existing school premises.
I therefore plead with the Government to reduce to the minimum the probationary period during which new schools have to pay all their capital costs, as well as 100 per cent. of the teaching costs. As each new integrated school is saving the Government money, could it not be conceded that at least the tuition costs should be met from public funds from the very start?
As to prisons, I very much welcome the news that the new prison in Maghaberry has opened and has already absorbed all the women prisoners from Armagh. I should like to ask the noble Lord when the first wing for men will open on that new site and what effect that will have on the existing overcrowding in the Crumlin Road prison?
The noble Lord may be aware that I have a certain fondness for the city of Derry and its walls and, indeed, a remote family connection with the Bishops Gate. That rather splendid monument, which I can well believe to be a listed structure, at the moment is crowned with a very unsightly army post made of concrete blocks. Surely with modern, sophisticated electronic and other means of surveillance that post could be removed. To do so would give access to the whole circuit of the walls to visitors and tourists whom we all wish to encourage. The Government, I think, missed the opportunity to remove the post in advance of the international gathering of the clan Doherty. I hope that they will soon remedy that omission.
In conclusion, it would be helpful and enlightening if the noble Lord could say something about recent progress in Northern Ireland towards a two-year youth training scheme for people aged between 16 and 18. Will he also say what the prospects are for a two-year period for the ACE (action for community employment) scheme? At present, the one-year scheme means that people have to be laid off by

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voluntary organisations at the very moment when they are beginning to become really useful.
5.35 p.m.
Lord Lyell: My Lords, I, the Government and, I am sure, your Lordships will be immensely grateful for the very high level of debate and the concentration that there has been on wide aspects of the order that we have before us this evening and for the wide-ranging subjects which were covered by two of my noble friends, my noble friends Lord Moyola and Lord Brookeborough. He has once again caught me out. I am afraid that this afternoon I am not wearing one of my proudest possessions. My County Fermanagh tie is packed ready to go with me on various journeys. I assure him that my love affair with the county of Fermanagh is undying and as strong as ever.
The replies to my opening comments were led by the noble lord, Lord Prys-Davies. We were grateful for his forthright support and his party's support for the promotion of Northern Ireland's economic well-being. The noble Lord began by asking me what I thought was a fairly simple question, but he and your Lordships will be aware that one must be careful and try to get the details right. He asked me about the effects of immigration in connection with unemployment levels in Northern Ireland. I am advised that Northern Ireland has experienced what we classify as net out migration—he may make of that what he wishes—since before 1871. I hazard the hypothesis that 1871 is a statistical benchmark. There has been out migration since 1871, although its level has, for obvious reasons, varied.
The 1970s were a period of relatively high migration outwith the Province. We have some evidence that that has dropped to very low levels at present. One potentially more serious problem is that many of the best qualified students from the Province do not necessarily return after studies at universities in Great Britain and, thanks to Northern Ireland's immensely high standard of education, at universities and institutes throughout the world. From my visits to various institutes, I have found a gratifyingly high rate of return of students who have had experience and training throughout the world. They have taken their qualities and spread the fame of Northern Ireland throughout the world.
The noble Lord, Lord Prys-Davies, asked me about the Fair Employment Agency and the criticism of that agency from the Fair Employment Trust. I understand that the Fair Employment Trust has written to my right honourable friend the Secretary of State on that matter and that he will reply shortly. But I stress that the Government fully support the work of the Fair Employment Agency which seeks to achieve equality of opportunity and eradicate discrimination in employment in Northern Ireland.
The noble Lord also raised the matter of the Equal Opportunities Commission and its request for a modest increase in funding. Once again, my right honourable friend the Secretary of State for Northern Ireland is corresponding with the chairman of the Equal Opportunities Commission, and I hope that once we have a definite result from this correspondence we shall be able to let the noble Lord know. But the point is being taken on board.
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The noble Lord, Lord Prys-Davies, raised the matter of the day of action and the image of Northern Ireland that it gave throughout the world. This point was put strongly by my noble friend Lord Brookeborough. We understand that there has been considerable negative feedback—which means that there has been a bad impression—from the overseas promotion officers of the IDB all over the world, and their own very praiseworthy and strong efforts to promote inward investment have become more difficult as a result of the so-called day of action. As I stressed before, the events of that day received widespread adverse publicity and the effects will become fully known in the immediate and near future.
The noble Lord, Lord Prys-Davies, raised the question of physiotherapy—something which has concerned me personally—in connection with the Royal Victoria Hospital. All of my limbs have been great beneficiaries of physiotherapists, following various efforts of mine on the ski slopes. So I speak with heartfelt gratitude to the noble Lord for raising this point. The closure of the out-patient service at the Royal Victoria Hospital is temporary. Some posts will be filled as an interim measure and the hospital's medical executive committee is to set up a small subcommittee to draw up plans for the physiotherapy services. This is a local management issue and I hope the noble Lord will accept that it will be dealt with at unit level. I take the noble Lord's point about the various comparisons. He mentioned the sum of £65,000. He and the noble Lord, Lord Dunleath, will know that the figure of 65,000 is graven on my heart. I thought, at first, that he was referring to the tonnage of the milk quota. I cannot answer the other three points raised by the noble Lord this afternoon, but I will see that he receives a swift and efficacious reply to them.
The noble Lord mentioned development in border areas. The Government are fully committed to alleviating social and economic problems throughout Northern Ireland. The machinery that we have developed for dealing with public expenditure priorities is designed to ensure that the very substantial level of expenditure in the Province, which on a per capita basis is about 30 per cent. higher than anywhere else in the United Kingdom, is allocated in a way that ensures that taxpayers' money is spent in areas of greatest need. To the extent that it makes economic sense to co-operate with the Republic in any particular project, we shall do in the future, as we have done in the past.
The noble Lord mentioned our initiatives on unemployment. The entire thrust of the Government's economic policy for Northern Ireland is dictated by the need to tackle this problem. We have always said that there is no simple or easy solution and our strategy is many-faced and comprehensive. There are three main elements. They are, first, to strengthen and diversify so far as we can the industrial base through assistance for new investment and expansion and maintenance of existing firms in Northern Ireland; secondly, to equip the workforce with the skills which are needed in modern industry; and, thirdly, to give useful work and training opportunities to everybody in Northern Ireland.

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The noble Lord also asked about the IDB and its opinions on attracting inward investment over the last year or so. I am advised that in the calendar year 1985 the IDB managed to promote approximately 4,000 new jobs in Northern Ireland. Those included some 1,900 new jobs in companies with a parentage outside Northern Ireland. The IDB managed to secure those new job promotions in spite of the very difficult economic background in Great Britain and western Europe. On the inward investment side, competition for internationally mobile investment continues to intensify and we have to fight very hard. But we believe that the IDB has all the tools it needs to represent Northern Ireland to the best of its ability. We believe it is doing a fine job and we undertake to see that the IDB will receive all our support in that objective.
The noble Lord raised the question of constraints on resources for the Fair Employment Agency. The budget for the agency in 1985–86 shows an increase of 63 per cent. in real terms since its inception in 1976. I am able to tell the noble Lord that additional resources will be provided in 1986–87, as soon as agreement has been reached with the agency on the recommendations arising from its recent review of the staffing structure.
The noble Lord referred to the general constraints on public expenditure. I am not able to accept the thrust of what the noble Lord said, which was that all social services in Northern Ireland are suffering expenditure cuts. I shall give two examples. First, expenditure on health services in the six years 1979–80 to 1985–86 has grown in cash terms by 82 per cent., which is 13 per cent. when measured against the general rate of inflation. Secondly, we shall be spending more in real terms on housing in 1986–87 than in any of the years 1980–84 inclusive. I hope that that covers most of the points raised by the noble Lord, Lord Prys-Davies.
The noble Lord, Lord Hampton, was kind enough to warn me that he would be asking one or two questions about tourism. The tourist industry in Northern Ireland has, I am afraid, undoubtedly suffered from the poor image of the Province over the past 16 years, but the industry has proved to be exceptionally resilient and it has maintained a tremendous level of activity. But we have not yet returned to the level of the peak years of tourism in the late 1960s. In those days, over 1 million tourists were recorded per annum, but, with the exception of 1981 which proved particularly difficult for the tourist industry in Northern Ireland, the numbers have strongly increased since the mid-1970s. In 1985, we recorded 912,000 visitors to the Province who spent just under £90 million. The Northern Ireland Tourist Board will continue, strongly and vigorously, to promote the Province as a tourist destination with the aim of ensuring that tourism continues to increase and to bring economic benefits to the Province.
The noble Lord, Lord Hampton, and others of your Lordships, including the noble Lord, Lord Fitt—who alas, told me that he had to leave the Chamber for the very good reason that his wife is unwell; and I hope that she soon recovers—referred to Harland and Wolff, and expressed the hope that it will be successful
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in its bid for the auxiliary oiler and replenishment ships for the Ministry of Defence. Your Lordships will be aware that the decision on the placing of this order is a matter for my right honourable friend the Secretary of State for Defence. I hope that a decision on the order will be taken shortly. We are all very grateful indeed, and I am sure Harland and Wolff will be grateful too, for the kind and generous tributes paid by the noble Lord, Lord Fitt, to the capabilities of the yard which are known world wide, and also for the tribute to its chairman and to the managing director and his assistants.
The noble Lord, Lord Hampton, had one other query on LEDU. Since its inception in 1971 LEDU has promoted more than 20,000 jobs, including 4,000 in the last financial year. This is the highest number of jobs promoted in Northern Ireland in any single year since 1971. It maintains the performance of recent years in which a succession of record job promotions has been achieved by the agency. We regard this as a marvellous achievement which has been attained in the face of a very difficult economic background. I am sure all of us would hope that the future performance of LEDU will not be affected by the recent day of action. It is much too soon to say, as I expressed in an earlier reply, whether this day of action will have affected LEDU in any way, but we shall have to wait and we may have to see.
The noble Lord, Lord Dunleath, raised a number of points, some of which I shall be able to help him with; others not. I noted with interest the noble Lord's query on VAT. I am afraid that I am not able to give him an answer this afternoon. He will accept that it is a very complicated matter, but I shall certainly bring his comments to the attention of Her Majesty's Customs and Excise, and I hope that, expeditiously, either that department or I as one arm of the Government will be in touch with the noble Lord.
The noble Lord raised the question of the railways and the cross-harbour bridge. He and other noble Lords who go to Northern Ireland will be aware that a firm of consultants was appointed in the middle of 1985 to review Belfast's strategy of transport. This review is being carried out as part of the statutory development plan for the Belfast urban area for 1986 to 2001. A major element of that review will be the reappraisal of the investment proposal included in the present strategy—the new cross-harbour rail and road bridges downstream of the three main central Belfast bridges over the Lagan. I am given to understand that the review is proceeding on schedule with a report which is expected towards the end of this year, 1986. I hope that ere long we shall have some better news for the noble Lord.
The noble Lord raised the question of the Carrickfergus Museum. He will be aware that there is a Question down on the Order Paper to be answered orally. I think it is still there and will be answered later. He will know that the castle is maintained by the Department of the Environment as one of our most important historic monuments. There is a need for urgent restorative works in the portion of premises currently used by the museum, but the provision of local museum facilities is a matter in the first instance for the Carrickfergus District Council, and it need not necessarily be dependent on the availability of central government funds.
Lord Dunleath: It is, my Lords.
Lord Lyell: I said "need not necessarily", my Lords. Perhaps we can leave it there. I am sure that if the noble Lord wants to take part in the deliberations that might be carried on at a later date in your Lordships' House he may elicit a little further information.
Finally, the noble Lord referred to the funding of the Belfast School of Music and also the one at Ballynahinch. I would agree that Ulster musicians have made and continue to make a very significant contribution to the music scene internationally. Perhaps I may study the noble Lord's comments on this question and write to him in due course. I am sure that he will accept that and we would be very grateful.
My noble friends Lord Brookeborough and Lord Moyola raised the central core theme to Northern Ireland politics at the moment. I refer to the agreement and the developments since 15th November. Perhaps I may say to all noble Lords, and especially to my noble friends, that the Government have made it very clear that they will not be deterred from implementing the Anglo-Irish agreement. We believe that the agreement provides the best hope of ending the estrangement of nationalists from the public institutions of Northern Ireland. We also hope that it will enhance cross-border co-operation against terrorism. But it offers hope to Unionists as well as to Nationalists. It reinforces the constitutional guarantee that the status of Northern Ireland as part of the United Kingdom cannot change unless the majority of the people in Northern Ireland so wish.
The Government are well aware, and nobody could fail to be aware, of the strength of feeling against aspects of the agreement in parts of the community. The people of Northern Ireland—I stress this and I am sure that my noble friend Lord Moyola will take it on board—can themselves, through their political leaders, reduce the scope of the activities of the conference by devising arrangements for a devolved administration. Matters which were devolved to an adminstration would no longer be for discussion in the inter-governmental conference. I believe that that is a very important point in the agreement.
We, and I am sure the huge majority of the people in Northern Ireland, really want to find a way out of this present impasse. I assure your Lordships that that objective can be achieved only through constructive dialogue. That is why I am so grateful for the thoughts and the comments of my noble friend Lord Moyola. I hope that the Unionist leaders will be able to take up the offer of discussion on the suggestions which were made at the meeting with my right honourable friend the Prime Minister on 25th February.
Perhaps I may remind your Lordships of what those suggestions were. The Prime Minister said then that she would welcome talks with the leaders of the Democratic Unionist Party and the Ulster Unionist Party about new arrangements for enabling Unionists to make their views known to the Government on affairs in Northern Ireland. My right honourable friend further went on to offer consultation with the Unionists on the future of the Northern Ireland Assembly and on the arrangements for handling Northern Ireland business in your Lordships' House
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and in another place. Further, my right honourable friend the Prime Minister agreed to consider positively a suggestion for a round-table conference to discuss devolution. That offer remains on the table. I am sure that my noble friend Lord Brookeborough will accept that; I hope that will be accepted in Northern Ireland. The Government believe that the way forward for the whole of Northern Ireland is through political dialogue and certainly not through violence, disruption and what, regrettably, too many of us saw on 3rd March. We were grateful for the points raised by my noble friends Lord Brookeborough and Lord Moyola.
The noble Lord, Lord Hylton, raised a number of points. He started with a reference to the position since 15th November. He all but took me back 15 years when my first speeches in your Lordships' House were on what I called the British position in Northern Ireland; but if the noble Lord wishes to go back and look in the Official Report for those days it might be interesting to see what I said then beside what I say now. I do not think they are vastly apart.
The noble Lord raised the question of integrated education. I hope he will accept that the position of the Government is quite clear on this matter. We shall support integrated education where there is clear local demand for it. He will accept that it could be counterproductive if that demand were to be generated at the central rather than at the local level. For that reason, we shall give general encouragement and support for the establishment of integrated schools, but we shall not be able to consider them for grant aid until they have proved their potential viability.
The noble Lord raised two points concerning Maghaberry prison and on the army's blockhouse on Derry's walls. I am not able to give the noble Lord a good reply this afternoon. I will write to him on those points, and I will take into account also the other point that he raised concerning the first wing of Maghaberry and the men in connection with Crumlin Road. I am not sure that I can write to the noble Lord about the clan Doherty. Doubtless the reunion in the maiden city will be one of the events that will come to my notice next summer or perhaps in the early spring.
The noble Lord mentioned also the two-year youth training programme. The Northern Ireland programme has always offered two years' training since it was introduced in 1982. However, in line with the rest of the United Kingdom, Northern Ireland has guaranteed a YTP place to 16 year-olds who would otherwise have been unemployed. Since 1982, there always has been an offer of two years' training.
As far as the two-year ACE scheme is concerned, the noble Lord will be aware that its object is to provide temporary employment for the long-term unemployed. He will bear in mind the large numbers of people in that category in Northern Ireland who number in the region of 60,000. We consider that an extension of the period of ACE beyond one year would reduce the numbers of those who could benefit from that provision.
Finally, the noble Lord asked about the facilities that are provided by voluntary and community organisations in Belfast. I cross my fingers and I pray that some solution will be found. I stress again that which I said earlier this week: there is to be a meeting of the Belfast City Council on 27th March to consider

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that point. We must hope that some acceptable solution and reassurance will be found. We cannot give the reassurance sought by the noble Lord this afternoon, but we consider it regrettable that the actions taken by the Belfast City Council have created those problems and the fears that have been so eloquently expressed by the noble Lord. I repeat, we are unable to give any reassurance but I hope that we may see some developments after the meeting on 27th March.
I am conscious that I have tried to answer as many questions as I can. I shall take up any points that I have missed and will write to those of your Lordships to whom I have promised to write. With that, I commend the order that is before the House.
On Question, Motion agreed to.

Human Rights and Fundamental Freedoms Bill [H.L.]
6.2 p.m.
Lord Broxbourne: My Lords, I beg to move that the House do resolve itself into Committee on this Bill.
Moved, That the House do resolve itself into Committee.—(Lord Broxbourne.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AIREDALE in the Chair.]
Clause 1 [Short title and interpretation]:
Lord Silkin of Dulwich Lord Silkin of Dulwich moved Amendment No. 1:
Page 1, line 20, at end insert—
(" "infringement" means an act which by virtue of proceedings under the Convention has been held by the Court of Human Rights established thereunder to be an infringement of any of the fundamental rights and freedoms and "infringe" shall be construed accordingly;").
The noble and learned Lord said: I wish to begin by making two points absolutely clear. First, although I speak from this Dispatch Box, this amendment is put down in a personal and not in a representative capacity. Secondly, although the noble Lord, Lord Broxbourne, and others, might take the view, on reading the amendment, that it is a purely wrecking amendment—indeed, it would be if effect were given to it—such is not my intention. My intention is to enable some discussion to take place about other possible ways of giving effect to the desire of the noble Lord, which I strongly share, that there should be some way of enabling the citizen to raise within this country breaches of the convention.
The noble Lord's method is by giving the citizen the right of action in the courts or in tribunals, as I understand his third schedule. However, there are other ways, and it may be that those other ways will be thought to be both better and more acceptable to opinion generally.
By way of preparation for what I am about to say, I remind the Committee of the discussion paper that was published nearly 10 years ago on this very subject, and of the foreword that was written by the then Home Secretary, Mr. Roy Jenkins, in which he stated:
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"There has recently been growing public debate about the adequacy of existing safeguards for fundamental human rights and freedoms. The Government welcomes and shares the interest expressed in this important question. Last year we set up a working group, representing the various Departments concerned, to study the implications of any new legislation on the subject. Their report provides a useful summary and analysis of the issues raised by any attempt to frame general legislation for the protection of human rights—issues not only regarding the scope and extent of the rights to be protected, but also affecting the functions and relationship of parliament and the courts. As a means of illustrating these general issues in more concrete form, the working group examined in some detail the likely consequences of incorporating the European Convention on Human Rights into our domestic law, but their report makes it clear"—
and these words I emphasise—
"that there are other possible approaches which should also be considered".
One of the possible approaches was to enable complaint to be made to a commission for human rights. That was a view that I personally welcomed because something over 15 years ago, as a private Member of another place, I myself introduced the Protection of Human Rights Bill, the purpose of which was to give that very remedy; to enable the citizen to make complaint to a commission for human rights that would operate very much in the way that the Parliamentary Commissioner and, since he was established, other commissioners in other bodies, have operated—so that Parliament, although not obliged to follow the findings and recommendations of such a commission or commissioner would, in the normal way, do so.
That Bill was never discussed in this House because, unhappily, after my own opening speech and half a speech by my right honourable friend Mr. Peter Archer, in support of it, the House was counted out. I always like to think that that was because there was so little opposition to the Bill that the vast majority of Members did not consider it worthwhile to attend. I do not believe that the noble Lord, Lord Broxbourne, was present on that occasion. If he had been, we should have benefited not only from his words of wisdom but also from the number one, which would have enabled the debate to continue—because it was only by one that we did not secure an adequate number.
At any rate, it is not my purpose to resume that debate 15 years later in your Lordships' House. I mention it partly in the hope of thereby establishing my own bona fides in relation to this subject, if that be necessary, because I have for a very long time felt that we should improve our methods of making remedies available in cases of breaches of human rights. It is totally unsatisfactory that a British citizen, or one indemnified by what may be done in breach of our obligations under the convention in this country, should be unable to raise the matter here unless it is covered by legislation and should be compelled to wash the dirty linen in Strasbourg. That is the effect of the present situation.
The noble Lord's Bill seeks to remedy the matter, as I said, by giving a right to remedy in the United Kingdom courts. I think the noble Lord will probably agree that there are difficulties about that method. In principle the major difficulty about that method is that the convention was certainly not drafted by the founding fathers, having in mind that it would be introduced lock, stock and barrel into the English

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common law system—our statutory system—and that it would be subjected to the methods of interpretation of statutes which are used in this country. Indeed, had that been the intention, no doubt steps would have been taken by successive governments to accomplish that at a very much earlier date than now. Because the difficulties of doing that were realised, that has never been done.
One can perhaps illustrate the difficulty by reference to some of the articles, and particularly the exceptions to some of the rules which the convention lays down. A very large part of the convention is already part of United Kingdom law as a result of statutes which deal specifically with the subjects concerned; for example, equality between the sexes, race relations, and so on. Our own statutes deal with those matters. But there are a great many exceptions to certain fundamental rights which the convention allows. One can take as an example Article 9 which relates to the right to freedom of thought, conscience and religion, and Article 10 on the right to freedom of expression. Article 11 refers to the right of freedom of peaceful assembly and association with others. All are very much part of the same general concept. One finds the exceptions include that they are subject to such limitations as are prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health or morals, or the protection of the rights and freedoms of others.
I do not for one moment suggest that our judiciary is incapable of deciding what is in the best interests of society and in the interests of those various headings, wide as some of them are, particularly the term "morals". What I suggest is that it has not been the tradition of our courts to do so, that many of these matters are very much questions of political judgment and that our courts have traditionally eschewed making political judgments, certainly based on extremely wide-ranging and uncertain provisions.
My personal difficulty about the noble Lord's method of dealing with this matter is not so much that I take the view that the courts would be unable to find answers, but that in finding answers they would be entering into what is for them a new field, and as a result of that would be subjected to a great deal of criticism which I wish to avoid. Because of that criticism, particularly on delicate matters of judgment of this kind, the independence of the judiciary might well be eroded and certainly attacked. That is the main problem that I see about the proposals made by the noble Lord.
6.15 p.m.
There is a subsidiary problem which is perhaps technical but nevertheless has some importance. It is one to which I referred when I was privileged to give the Macdermot lecture at Queen's University many years ago. It is a peculiar situation and I stand to be corrected if my reading of the convention is wrong. My understanding is that if the noble Lord's Bill is enacted in the way that it is drafted—indeed, in any other way as I do not think this can be circumvented without an amendment to the treaty—then a citizen could place his complaint before the courts and appeal right to the House of Lords. If he is dissatisfied he could then petition the European Commission at Strasbourg. On
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the other hand, if the decision of the House of Lords went against the Government there would be no means by which the Government could take the matter to Strasbourg. That is a most odd situation. I gave it much thought at the time and I could see no way out of it other than an amendment of the treaty. It would certainly be a very unbalancing factor. However, that is very much a subsidiary point.
It is in the light of those difficulties that I hope the Committee will give some consideration to the fact that there are the alternatives to which Mr. Jenkins referred, and particularly the possibility to which I referred and sought to bring into effect in the Bill that I promoted in the Commons; that is, enabling a citizen to make his complaint to a human rights commission which would examine the matter with every possible thoroughness against the background of the convention and then make a recommendation and give a decision of its own, not having the force of law.
As I think I said earlier, I cannot recall an occasion when a complaint to the Parliamentary Commissioner, which the Parliamentary Commissioner has held to be well-founded, has not, in practice, given rise to compensation and perhaps to a change in the law, where that is necessary, on the part of the Government of the day. Therefore, although there would not be the force of law which the noble Lord's Bill provides for, in the judgment of the courts there would be something so very near it that there would be very little lost, so far as I can see.
I do not suggest that that is the only alternative. There are other options and the fact that there are ought not to be lost sight of during the Committee stage of the Bill. It is against that background that the effect of my amendment, if accepted, would be to enable the courts to deal only with matters which have already been adjudged by the European Court of Human Rights. I am not sure whether that ought anyhow to be inserted into the Bill of the noble Lord. He will have to think about that, because I am not sure whether the Bill as it stands requires effect to be given to those judgments. That is a matter for him to consider. However, it would not enable the citizen to make complaints to courts before that stage had been reached.
Having said that, I hope I have said enough to make clear that it is not my intention to wreck this Bill. I want to hear what Members of the Committee say about this matter, because it is a very important issue. Certainly it is my intention, when the debate on this amendment is concluded, to ask leave to withdraw my amendment.
Lord Campbell of Alloway: I share the view expressed by the noble and learned Lord, Lord Silkin, that there should be some means of providing a remedy in our courts. I also share his view that there should be some improvement in our methods and that we should avoid the laundry exercise at Strasbourg. I further agree with him that there are many alternatives.
The amendment itself does not propose a Parliamentary Commissioner, but suffice it to say that it has been mentioned as an alternative. It is certainly worthy of consideration. I agree with my noble and

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learned friend. In this difficult exercise I think one has to start on common ground and I agree that the introduction of the convention, lock, stock and barrel into our law, is simply not feasible, for the reasons given at Second Reading, and that much of the convention at any event is part of our law.
Though the noble and learned Lord says that this is a vehicle for alternatives, and it certainly has served that very useful purpose, if the amendment were to be accepted it leaves the Bill open to the main objections taken on Second Reading and to some of the objections to which the noble and learned Lord, Lord Silkin, referred. First of all, it would leave a Bill, with his amendment, with entrenchment by derogation from the sovereignty of Parliament. Secondly, it would still stand, with his amendment, as a form of new constitutional settlement dressed up as a sort of Bill of Rights. Also, if you accept the amendment into the Bill as it stands, it would still leave delay, confusion and want of predictability in our law as administered in courts and tribunals, which would clog the system and render it unworkable.
In fact, this amendment introduces these words into the definition clause, Clause 1(2), and this means no more and no less than that under Clause 3(1) there would be no remedy in our courts unless our courts decided that the European Court of Human Rights had already delivered a judgment which covered the issue in question. This would lead to lengthy and detailed submissions in our courts as to whether a previous decision of the European Court of Human Rights was or was not distinguishable, and that is not a satisfactory situation, as all the decisions of the Court of Human Rights are related to the facts of the case.
Indeed, if this amendment were accepted in anything like its present form, there would be few cases in which it would be totally plain that it has been held (those are the words of the amendment) that the act in question constituted an infringement. If we are to have any remedy at all in our courts, it should be available without artificial and academic rigidity. The jurisprudence of the court and the Commission ought to be interpreted by our courts as being applicable to the question at issue with the ultimate degree of flexibility, and above all the remedy should be available without the wholesale entrenchment provisions as proposed by this Bill, which, as I read it, the amendment in no way seeks to excise.
For those reasons, I oppose the amendment, though I am grateful to the noble and learned Lord for introducing a vehicle for the discussion of alternatives.
Lord Denning: I hope that Members of the Committee will not accept this amendment, which is contained simply in the definitition clause. I have looked for the place where the word "infringes" comes into the body of the Bill, and it comes into Clause 3(1):
"no person shall do any act … which infringes any of the fundamental rights"
If one puts in this definition then a decision must be obtained from the court at Strasbourg before one can start applying it at all. That is quite impracticable. It would take too long, and so far as I know there is no machinery for doing it in a hypothetical case. I hope that the Committee will not accept this amendment.
Lord Scarman: I also hope that the Committee will not accept this amendment, for the reasons which have been given very effectively by the two noble and learned Lords who have preceded me. It was entertaining to listen to the observations of the noble and learned Lord, Lord Silkin, in proposing this amendment. Very wisely, I think, he refrained from explaining the implications of the actual amendment for this Bill. He used the opportunity to enlighten us with what I thought were some very interesting observations about the possibility of a Parliamentary Commissioner for Human Rights and about other ways of enforcing the European Convention.
None of that helps us to understand whether this amendment can stand in this Bill; and it cannot. Indeed, there may possibly be the extraordinary result that, the court at Strasbourg having ruled that such-and-such is an infringement, someone—presumably the victim—who has fought his way to Strasbourg (and it takes a very long time to get there) in order to get that sort of ruling, is then supposed to come back here and begin proceedings in our courts, where he will have the happiness of telling our courts that they have to treat this matter as an infringement because Strasbourg has already done so. There is nothing in this Bill which is as revolutionary or as protracted as that. I think we have had an interesting discussion but I cannot see that this amendment can possibly assist toward a clearer or more coherent Bill
Viscount Davidson: Perhaps it will be helpful to the Committee if I intervene very briefly at this stage and say a few words about the Government's general attitude to this Bill.
As the Committee will know, the Government usually adopt a neutral position during the passage of Private Bills through the House. But as my noble friend Lord Glenarthur explained at Second Reading, the Government cannot support this particular measure. Therefore, I have to say to the Committee that though I may be making certain comments that I hope are helpful as to the value or otherwise of particular amendments, in no sense should this be construed as a change of mind on the part of the Government. The Government remain firm in their opposition to the aims of the Bill, as my noble friend Lord Glenarthur expressed so clearly at Second Reading. In passing, I should like to say that my noble friend very much regrets that he is unable to be present in the Committee tonight.
So far as this amendment goes, its effect would be that, as now, it would be for the court in Strasbourg first to decide whether an act had infringed the rights and freedoms guaranteed by the convention and only then could the matter be the subject of a decision of the United Kingdom courts. It is hard to see, under the terms of this amendment, any meaningful role for the United Kingdom courts, since they would apparently simply rubber-stamp the Strasbourg decision.
In practice, therefore, the amendment would appear to remove discretion from courts in the United Kingdom to interpret the provisions of the convention even though those provisions had been incorporated into United Kingdom statute law. This would be a curious result, and it is difficult to see what merits there would be in incorporating the convention in such circumstances.
6.30 p.m.
Lord Broxbourne: The noble and learned Lord, Lord Silkin, has moved his amendment with his customary clarity, cogency and charm. Having made that initial conciliatory and, I hope, agreeable and acceptable tribute, it will come as no surprise to the Committee, and certainly not to the noble and learned Lord, when I next say that unfortunately I cannot extend to the content of the amendment the approbation which I extend to the style of its presentation.
The main argument with which the noble and learned Lord appeared to seek to commend this amendment to the Committee was that after all it does not mean what it says. That is a novel argument and, though as we know, the noble and learned Lord has great and distinguished experience in his forensic capacity, I do not think he would ever really have opened a case in the courts by saying, "Of course, your Lordships will appreciate that the strength of my case lies in the fact that it is not what it seems to be."
This amendment, although it nestles coyly in the interpretation clause, nevertheless goes to the very heart of the matter, for reasons that have already appeared in the speeches of your Lordships. It does so, as the noble and learned Lord, Lord Denning, explained, because of its effect upon Clause 3(1) of the Bill, which prohibits acts which infringe any of the fundamental rights and freedoms. If the amendment were carried, it would mean that the remedy in the United Kingdom for infringement would be limited to cases where the act in question was subject to an express decision of the Court of Human Rights in Strasbourg. That is a very artificial concept and would undermine the purpose of the Bill, as explained in the Long Title, in giving British judges a role in the interpretation of the convention and its rights and freedoms. It would reduce our judges, in effect, to the position of registrars, simply dealing with the judgments already arrived at in Strasbourg.
It would also, as my noble friend Lord Campbell of Alloway pointed out, impose delays and complexities in what is designed to be a simplification procedure. One can well imagine the lengthy and semantic submissions of ingenious counsel in seeking to distinguish decisions in the Strasbourg courts from decisions in the instant case before the British courts.
The noble and learned Lord has not found much support in your Lordships' Committee for this amendment and indeed it must be contrasted with Amendment No. 7 in the name of the noble and learned Lord, Lord Denning, which would deny to the European Court any role at all, and which specifically states that British courts should not be bound by the interpretations of the European Court.
So I find myself, the promoter of this Bill, in a very comforting position, occupying the middle ground between these two extreme positions of the noble and learned Lords. Perhaps the noble and learned Lord, Lord Silkin, and the noble and learned Lord, Lord Denning, could come to some sort of arrangement. They might, for example, in the language of that other House of which Lord Silkin was for long so great an ornament, arrange a pair or perhaps, more appropriately to this legal concept, they might appoint an
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arbitrator, or conceivably what Continental lawyers know as an "aimable compositeur". I would, without fee, be willing to volunteer to act as such an arbitrator, but when I look at the Cross-Benches and see the wealth of talent there, I see others who would fill this role more acceptably: the noble and learned Lord, Lord Scarman, or the noble and learned Lord, Lord Templeman, whom it is so good to see here today.
But I hope it will not be necessary to have recourse to these matters. I hope and understand it to be the case that the noble and learned Lord will not press this amendment, though we have all, of course, listened with great interest, attention and respect to what he has to say. It has given us food for thought which will help us in the processes through the Committee.
I should not perhaps resume my seat without one very brief comment upon the—not strictly relevant, if I may respectfully say so, to the content of the amendment—contribution from my noble friend on the Front Bench. I should not like it to be thought because of my silence on such a matter that I accept the propriety of what he said. I am sorry that the Government should have jumped so quickly to a hostile position in regard to this Bill. Indeed, the enthusiasm of the Front Bench opposite, as I understand it, is also, in the classic phrase, restrained within the bounds of decorum. I take comfort from the fact that we have who have been in politics and in Parliament for some time realise that when you have a measure which does not commend itself to either Front Bench, it must have very considerable merit indeed. So perhaps my noble friend will be good enough to take that message back to his colleagues in whichever House they may serve.
We shall now await the decision of the noble and learned Lord whose speech we have so much enjoyed.
Lord Silkin of Dulwich: I am grateful to those noble Lords who have taken part in this discussion. To quite a large extent they have perfectly properly, and not unexpectedly, regarded this amendment as an Aunt Sally. I do not object to that at all because I think that putting forward the amendment has helped a great deal in finding what common ground there is. I was particularly gratified by the opening words of the speech of the noble Lord, Lord Campbell of Alloway, in which he set out very clearly the areas where he and I find ourselves in agreement. No doubt there will be other noble Lords who echo what he has said. I think it has probably also been of value in disclosing clearly at a very early stage the position of the Government through the remarks of the noble Viscount, so that future amendments will no doubt be viewed against the background of the policy which the Government have announced.
I should not like it to be thought from what the noble Lord, Lord Broxbourne, said that the Front Benches are ad idem in the sense that both have a clear and fixed policy. The Government evidently have. As far as the Opposition are concerned, I do not think that we have got much further, if at all, than the discussion paper to which I referred, which is now 10 years old. Since that time, we have lost office. I have been greatly helped by what has been said. I indicated in my opening remarks that it was not my intention to press the amendment but merely to open up discussion.

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That discussion has taken place. I beg leave to withdraw the amendment.
Lord Harmar-Nicholls: Before the noble Lord in the Chair puts the withdrawal to the Committee we should, I believe, cheer up my noble friend a little. I should have thought at this early stage of the Committee proceedings that government neutrality does not necessarily mean government hostility to the Bill as a whole during its passage. At any rate, I hope that they will listen.
Viscount Davidson: To reply to my noble friend, I was reminding the Committee of what my noble friend Lord Glenarthur said on Second Reading.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Convention rights and freedoms to have force of law]:
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 2:
Page 2, line 13, leave out ("have the force of law in the United Kingdom") and insert ("be taken into account only in proceedings for judicial review and in any appellate proceedings arising therefrom and subject to the provisions of this Act.").
The noble Lord said: In moving the amendment, I wish, by leave of the Committee, to speak to Amendments Nos. 3 to 6 and 10 and 11 that also stand in my name, all of which are related and consequential. If my Amendment No. 2 was accepted on a Division, my noble friend Lord Broxbourne agrees, subject, of course, to the wish of the Committee, that Amendments Nos. 3 to 6 and 10 and 11 be moved formally. Per contra, if my Amendment No. 2 is negatived on a Division, I shall not move Amendments Nos. 3 to 6 and 10 and 11. Further, when we come to the Question, Whether Clause 2 shall stand part of the Bill—the very kernel of the Bill—I shall oppose it formally, without repeating anything that I have said in my speech on this amendment. If that is convenient to the Committee, it will save a great deal of time.
This is not at all an Aunt Sally. It is a vehicle for an alternative, yes, but an alternative that it proposes. At Second Reading, it was all too plain that the Bill was not acceptable to noble Lords on all sides of the House. Notwithstanding the intervention of my noble friend Lord Harmar-Nicholls—I do not see my noble friend in his place—it was made plain at that time what the attitude of the Government was. And it has been made perfectly plain what is the attitude of the Government today. It is, I would suggest to your Lordships, thoroughly laudable that we should all know where we stand.
I, for one, am grateful—I can only speak personally—to know the attitude of the Government, in particular when they are hostile. It is rather like having an indication from a judge who is against you. It is very helpful. You cannot deal with a situation if the judge does not indicate. I am therefore very grateful. I wish to have it recorded that I am grateful to my noble friend the Minister for having, so to speak, come clean on this issue, so that we know where we stand.
6.45 p.m.
It was not only the attitude of the Government but the attitude of your Lordships on all sides of the House on Second Reading that the Bill, as it stood, was not acceptable. The question is whether there should be some effective remedy in our courts. Although that was canvassed at Second Reading, it was not fully discussed. As to whether there should be an immediate, effective remedy in our courts, I am, on the ideological principle, 100 per cent. behind the noble and learned Lord, Lord Scarman, my noble friend Lord Broxbourne and also it appears, the noble and learned Lord, Lord Silkin, and, indeed, others who hold such a view. That there must be some remedy is common ground among all of us.
There was common ground at Second Reading. There is already some common ground today. But there is also this irreconcilable conflict as to the means of implementation. To digress for a moment, this is why it is so helpful that the Government have stated their view. The means of implementation proposed in the Bill are not acceptable to the Government. That does not mean that the alternatives, whatever they may be—I am speaking only to the amendment—will not be, and can never be, acceptable to the Government.
The set of amendments to which I am speaking proposes a limited remedy by extension and adaptation of the process of judicial review, our type of administrative court. I wish to make something plain in exchange for the Government's candour. If the amendment were accepted on a Division, any form of amendment introduced by the Government to produce a remedy in our courts on Report would assuredly be acceptable to me.
This is a difficult subject. I have done my own drafting without assistance. Obviously, there is scope for amendment and considerable scope for improvement. But the principle involved remains a remedy in our courts, our common ground. That is of great importance. It is of great importance to any government. There is no political bias whatever involved here. It is a question of orderly administration, consistent with avoidance of the horrors of wholesale entrenchment.
What is the justification for this? As your Lordships' Committee perhaps knows, since 1975 there have been a series of adverse rulings, 12 out of 14, against Her Majesty's Government. As a result, we have to carry inconsequential piecemeal amendments to our law. That is but one of the reasons for providing the remedy in the courts. It may be said by my noble friend the Minister that this is how we work and this is what happens when there are adverse decisions of the Court of Justice of the European Communities. But the two situations are wholly dissimilar.
A decision of the Court of Justice of the European Communities is based upon the concept of contravention of Community law that we have accepted by statute as having supranational effect. A decision of the European Court of Human Rights is based upon the absence of a remedy in our courts. It is a problem that arises under Article 50 of the convention—a convention that we have never accepted by statute as having supranational effect. In a

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sentence, as regards Community law, there is a remedy in the courts. As regards the convention, there is not. And there should be one.
These amendments ensure that the convention and its relevant jurisprudence shall be taken into account to provide this remedy in our courts without the wholesale incorporation by which the convention and its jurisprudence shall be made binding in our courts and tribunals throughout the land. The Select Committee found that there was no way in which this could be properly done: to make the convention binding by wholesale incorporation. One should defer to some degree to their findings upon that.
With regard to the method of implementation proposed—enlargement of the process of judicial review—in other countries a domestic remedy is available in their forms of administrative court. We have in strict parlance no administrative court, but some of the functions of administrative courts are discharged by judicial review. Since the end of the war the scope of the remedy of judicial review has been enlarged by a series of case law decisions and amendments to the rules of court. In its present form it is practically unrecognisable, because of its wide scope and enlargement, if one compares it with the old prerogative writ structure from which it evolved.
If we are to provide a remedy in the courts it would surely be appropriate to extend and adapt the scope of judicial review to meet this purpose. Amendments Nos. 2 and 3 to Clause 2, consequential Amendments Nos. 4 to 6 to Clause 3, Amendment No. 10 to Clause 8—the interim relief, and reference to Crown proceedings—are all intended and designed to adapt and extend the process of judicial review to provide this remedy. In this the judges are wholly competent and wholly to be trusted to discharge such functions. If it were the wish of Parliament that they should discharge such functions it cannot be imagined that they would be unwilling to do so.
It may take a little time to work out the machinery for implementation. In that, my amendment is consciously defective. The reason for that is that there would have to be full consultations, at all events with the Lord Chancellor and the noble and learned Lord, Lord Lane, the Lord Chief Justice, and no doubt many of the Law Lords. Consultation would be vital in order to get the machinery right; and draft amendments to the rules of the Supreme Court would have to be prepared. Amendment No. 3, in subsection (4), deals with that.
As proposed, these amendments would have to be laid before the Houses of Parliament for approval. It would be quite impracticable to give effect to these amendments until the appropriate rules of procedure had been approved after detailed consultation—hence the need for Amendment No. 11, the new clause after Clause 9. That is the structure. Those are the reasons in support of the amendment. As there is a stark, irreconcilable conflict between this set of amendments and the Bill as it stands, and as it appeared on Second Reading that there was opposition to the Bill on all sides of the House—
Lord Broxbourne: And support.
Lord Campbell of Alloway: No. Do you wish to intervene?
Lord McGregor of Durris: Before the noble Lord sits down.
Lord Campbell of Alloway: I have not. May 1 start this final speech again?
Lord Broxbourne: My noble friend courteously asked whether I wanted to intervene. All I wish to say is that no doubt there was opposition expressed on all sides to the Bill. There was also support expressed on all sides. Indeed, I think that it goes a little further than that, because there was support from the episcopal Bench; and I do not think that there was any opposition from that Bench.
Lord McGregor of Durris: It was also stated in terms from these Benches that the Alliance supports the Bill. There are no grounds for saying that opposition is shared by all parts of the Committee.
Lord Campbell of Alloway: Subject to correction, it is perfectly right that there was opposition, as I understood it, from all quarters. As I also understand it, there is no Whip on any party on this Bill. Everyone is speaking free of a Whip. I may be wrong; that is how I understand the position. My understanding of the situation was that there was opposition from all sides of the Chamber to this Bill. There was also support from certain quarters for this Bill.
If I had been given the chance to continue, I do not think that there would have been cause for complaint. In those circumstances, as at present advised, it would be appropriate, particularly in view of the intervention of the noble Lord from the Cross-Benches, to seek the opinion of the Committee on this amendment before we reach the Question as to whether Clause 2 shall stand part. I was seeking to be frank with the Committee and to say that, as at present advised, that was my intention because there is a division of opinion.
The question is whether we should have the benefits of some remedy by way of judicial review without the burdens of wholesale entrenchment, as certain Members of the Committee would wish. I beg to move.
Lord Denning: I have every sympathy with the amendment that is proposed by my noble friend Lord Campbell of Alloway. However, I am afraid it would wreck the Bill if it were carried. It goes completely against the principle which I gather was supported at Second Reading that the convention on fundamental rights and freedoms shall have the force of law in the United Kingdom. That is what all the supporters of human rights have said from the beginning: let us have something in our law to make human rights have the force of law. That is the fundamental object of this Bill.
Perhaps I may go back to the original words of the convention signed by us in 1950 or 1952. It said:
"The High Contracting Parties shall secure to everyone within their jurisdiction the rights and freedoms defined in Section 1 of this Convention."

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Article 13 says:
"Everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before"
our national courts. Those are the very words of the convention which the then Government signed. I am afraid that if this amendment is carried, there would be no effective remedy at all for any violation of any of the rights. One only has to look at the words; they are simply that the courts shall take it into account.
7 p.m.
I am afraid that from my point of view, having sat in the Court of Appeal (I am not sure whether my noble and learned friend Lord Scarman was with me) on many occasions we have said that we would look at the convention and take it into account when we come to our decision, but that we will not give it the force of law. This amendment is simply doing what we have said many times in the Court of Appeal: that the court takes it into account but does not give effect to it. Therefore, this amendment goes no further than the courts have done. We have always allowed remedy by judicial review for anything that went wrong. In a way the amendment does nothing more effective than we have already done, and it would really torpedo the case of the promoters of this Bill.
Lord Scarman: I have frequently sat on the left flank of my noble and learned friend Lord Denning in the Court of Appeal, and I have as frequently agreed with him as I have disagreed with him. On this occasion I agree completely. The amendment denies the primary purpose of the Bill for the reasons that my noble and learned friend has given, and I shall not go over them.
However, there is a further weakness in the amendment, a legal weakness, upon which my noble and learned friend touched and which I shall amplify a little. The clause as it stands is quite clear. The fundamental rights and freedoms set out in the schedule shall have the force of law in the United Kingdom. They become by law, rights and freedoms in the United Kingdom.
What happens in relation to the amendment of the noble Lord, Lord Campbell of Alloway? They become matters that can be taken into account in proceedings for judicial review. The European convention has been taken into account by the Court of Appeal and the House of Lords in proceedings for judicial review and otherwise for a very long time. In fact, what is happening is that these which were, by Clause 2, rights and freedoms having the force of law, become matters which may be taken into account; they are no longer legal rights protected by law, but matters which, in discretionary proceedings known as judicial review, can be taken into account by the judge if he thinks fit.
Not only is that a denial of the whole purpose of the Bill, but if this amendment is allowed to stand and the only proceedings in which the European convention rights and freedoms could be taken into account were discretionary ones I very much doubt whether it would ever be possible to persuade the court at Strasbourg or elsewhere that such a provision in itself provided an efficient remedy in the United Kingdom. Discretionary: no longer rights or freedoms, but matters to be taken into account. Of course matters can be taken into account and not given effect to. The
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whole point of a Bill of Rights is that the individual has certain rights and certain freedoms which the courts are bound to enforce if he proves a violation.
I am sorry to say that the whole of this amendment is misconceived. I say that because I fundamentally agree with the noble Lord, Lord Campbell of Alloway, when he moved this amendment and said that there must be some remedy in our courts. This was his preferred choice. I hope, not too discourteously, that I have indicated shortly, following my noble and learned friend Lord Denning, that this remedy, if it be the only remedy—and it is under the amendment—is not enough. It is not enough to meet the requirements of either Article 1 or Article 13 of the convention. It is not enough to give the citizen any rights. It merely gives him a legitimate expectation that, if he goes to a judge on application asking for leave to bring proceedings, he may get it. I say to the Committee that that is not good enough.
Lord Meston: Perhaps I may also respectfully urge noble Lords to reject this amendment. If the United Kingdom is to incorporate the convention, it should incorporate the relevant articles in full, and that as I understand it is what this Bill intends. In appropriate cases, with, if necessary, appropriate safeguards, the courts at all levels and in all types of proceedings should be able to have regard to and give effect to, the convention. The courts should be able to consider alleged breaches of the convention and provide remedies where deserved.
This amendment and the earlier one of the noble Lord, Lord Silkin, moved us from the theory to the practice of incorporation of this convention. In particular the noble and learned Lord, Lord Silkin, raised the serious question, as does this amendment, of how the provisions of this Bill would work in practice. As I read Clause 3 of the Bill—and I hope that the noble Lord, Lord Broxbourne, will correct me if I am wrong on this—it creates a form of statutory tort. The question is therefore where and how can that be litigated; should it be in some separate tribunal—as is now the case in race relations law and industrial relations law—perhaps with a collateral commission like the Commission for Racial Equality or even ACAS? If so, I suspect that the manpower implications in the Explanatory Memorandum to the Bill would need to be revised. Alternatively, as I read Schedule 3 to the Bill, can the convention be raised by and in ordinary litigation, with of course necessary safeguards to weed out unmeritorious cases? I suggest that it should be possible to raise the convention in any court or tribunal.
As several noble Lords have pointed out, in effect this amendment is a wrecking amendment because it seeks to emasculate the Bill. It would mean that any point touching on the convention could not be raised in ordinary first instance procedings, and further it would mean that in ordinary proceedings the convention would have to be disregarded. Under this amendment, there must be separate proceedings for judicial review, and in those separate proceedings it is only necessary, as the noble and learned Lord, Lord Denning, pointed out, to have regard to the convention.
The provision of a separate procedure for judicial review would obviously create duplication and delay,

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often at public expense, and it would be little better than the existing long-range, time-consuming litigation in the European tribunals. The procedure of judicial review, notwithstanding its enlargement in recent years, is at present primarily geared to questions of administrative law. It is usually concerned with how administrative decisions are reached, and not with the merits of the decisions themselves. The convention is much wider. It touches on criminal law and family law, and in such areas people should be entitled to raise the convention in ordinary litigation. Even an enlarged version of judical review is not enough. To accept this amendment would be to put the provisions of the convention on a procedural back-burner. I ask noble Lords not to accept the amendment.
Lord Templeman: I also oppose these amendments but for a slightly different reason. As I understand the noble Lord, Lord Campbell of Alloway, he is not trying to wreck the Bill. He agrees, as I understand it, that there should be some machinery in our law for enforcing the convention. What he now proposes is that it should be done by way of judicial review. Judicial review is carried out by two judges of the divisional court of the Queen's Bench Division. What this amendment says is that none of Her Majesty's judges shall have jurisdiction to hear the convention except two judges of the Queen's Bench Division, subject to an appeal to the Court of Appeal and then to the House of Lords.
That really is a curate's egg. Either none of the judges should be able to do anything about the convention and we should leave the law as it stands, or, if the convention becomes part of the law of this country, then, of course, all the judges may take cognisance of it. But to take out and to segregate the judges of the Queen's Bench Division exercising their judicial review function is neither one thing nor the other.
Lord Hylton: I hope that this amendment will not be accepted. At Second Reading I mentioned the special case of Northern Ireland, from which have come, incidentally, many of the appeals which have eventually gone to the European Court. Northern Ireland is a very divided society, and even more so than this country, but the one thing on which nearly all the political parties are agreed is the need for a Bill of rights. If this amendment were accepted, we should not have a Bill of rights.
Lord Broxbourne: Where such authoritative contributions have been made to this discussion by the noble and learned Lords, Lord Denning, Lord Scarman and Lord Templeman, all in agreement, all showing that this amendment is not acceptable, it is perhaps an act of supererogation for me to say anything further on the matter. I make a few observations only out of courtesy to the Committee and to my noble friend who moved the amendment.
As the noble and learned Lord, Lord Scarman, said, this is not a question of whether judicial review as such is a good thing. It is limited in its application, as the noble and learned Lord, Lord Templeman, has so clearly shown just now, but certainly the Bill is not intended to exclude its consideration in the processes of judicial review in those proceedings defined by
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Section 31 of the Supreme Court Act 1981. As the noble and learned Lord, Lord Templeman, said it should be comprehensive, and that is what it is sought to be made in this Bill.
What is not acceptable is that there should be a monopoly, an exclusive right, restricted to the judicial review procedure, and I should submit that the onus must be on those who so suggest, and a heavy onus it is. It is true that there is no express obligation on the contracting states to incorporate the convention into their domestic law, but the European Court of Human Rights has said that by doing so a state ensure that the intention of the convention is "faithfully reflected in its law". That, I should think, is a clear hint as to the propriety and desirability of such a course.
Other countries have taken the hint. They have incorporated the rights and freedoms of the convention into their national law by means suited to their own constitutional position and without the restriction of qualification such as is here proposed. The convention has now been incorporated by all the member states of the EC except ourselves, Ireland and Denmark. In Austria, Belgium, Cyprus, Germany, France, Greece, Italy, Luxembourg, The Netherlands and Switzerland the convention forms part of the internal domestic law. Indeed, in the Federal Republic of Germany the legislature approved it by statute which expressly gave the convention the status of federal law.
7.15 p.m.
There are many precedents for incorporation in the way suited to particular countries, and there seems to be no good reason why we should be the odd man out. Article 26 of the convention prescribes as a condition precedent to recourse to the commission that all domestic remedies have been exhausted. Does not this sensible provision suggest and require for its efficacy that all domestic remedies should be as clear and as comprehensive as possible?
That is what the Bill is designed to do, and that is what the amendment would prevent it from doing. Indeed, the amendment would exclude proceedings in the lower courts, all closely concerned with the lives of ordinary citizens, with the wrongs they suffer and the rights that should be theirs, are theirs internationally under the convention and would be theirs in our courts under the provisions of this Bill.
This is a wrecking amendment, as it has been described. Whether it is by intention or inadvertence does not really matter very much. After all people are presumed to intend the natural consequences of their acts, and the natural consequence of this, as the noble and learned Lord, Lord Denning, made so clear is to undermine the purpose of the Bill and erode its effect. I hope that my noble friend will, twixt the stirrup and the ground, follow the good example of the noble and learned Lord, Lord Silkin, and not press his amendment. If he does so, I hope that the Committee will reject it.
Lord Campbell of Alloway: I am grateful to all noble Lords who have spoken in this debate. Assuredly the object of this amendment is to reduce the incidence of this Bill so as to avoid the unwelcome consequences

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which require no repetition, while at the same time creating some remedy within the concept of Article 50—which, because there was no remedy in our courts, was the basis of the string of those adverse decisions—and to do that without wholesale incorporation into our law of the creation (as this Bill seeks to create) of some new Bill of rights; a new constitutional settlement to which I am utterly opposed.
The noble and learned Lord, Lord Scarman, says that my proposed amendment is not good enough. Of course, he would say it is not good enough because he supports a Bill which proposes wholesale entrenchment, and so there always will be the unbridgeable gulf between the noble and learned Lord and myself.
It is clear that the alternative proposed by me is no more acceptable to your Lordships than the alternative proposed by the noble and learned Lord, Lord Silkin. In a thin Committee at this time of night it would be quite improper to divide your Lordships' Committee. But when it comes to the Question, Whether Clause 2 shall stand part of the Bill, those who, like myself, are utterly opposed to a new Bill of rights entrenched in our law may take such course as appears appropriate. In those circumstances, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
Clause 2 agreed to.
Clause 3 [Liability for breach of fundamental rights and freedoms]:
[Amendments Nos. 4, 5 and 6 not moved.]
Lord Denning Lord Denning moved Amendment No. 7:
Page 2, line 28, at end insert—
("(4) This section shall be construed as covering any violation of the Convention or the Protocol by the United Kingdom or by any person within the jurisdiction of the United Kingdom, and as giving a domestic remedy for any such violation.
(5) Henceforward no-one shall petition the Secretary-General of the Council of Europe alleging any such violation; nor shall the European Commission of Human Rights, nor the European Court of Human Rights, have any jurisdiction to consider or deal with any such alleged violation.
(6) The interpretation of the Convention, the Protocol, or the Reservation, as set out in Schedules 1 and 2 to this Act, shall be for the Courts of the United Kingdom to decide; and the Courts shall not be bound by any interpretation given by the European Commission or the European Court.").
The noble and learned Lord said: I hope that the Committee will find this one rather intriguing because I have deliberately accepted everything: that the convention shall have the force of law in the United Kingdom and any violation of it is actionable in our courts. We have fulfilled completely our treaty obligations in those respects which I read out, Article 1 and Article 13. So, if there is any violation of these rights, go to our courts and get the remedy! Before I speak further, I should like to draw a distinction between this Convention on Human Rights and the Community law under the Treaty of Rome which is enforced by the European Court at Luxembourg.
The Treaty of Rome specified many provisions such as equal rights for equal pay and equal pay for equal work and so on; and by our own statute, the European
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Communities Act 1972, that treaty and all its provisions were made part of our law and so were the directives and the regulations under it which have been issued by Brussels. All that is part of our law and, by judicial decisions, it is clearly established that that Treaty of Rome has priority or supremacy over our individual laws. Furthermore, any one in our courts can go to the national courts and get a remedy for it. That is because that Treaty of Rome in every detail has been made part of our law.
This will be made part of our law, but what is to be done about it? What I object to is this. The treaty-making power of the Crown is part of the prerogative of the Crown but it is not absolute. As recent cases have shown, it is limited. I would suggest that the treaty-making power of the Crown does not extend to limiting the sovereignty of Parliament or to limiting the sovereignty of our courts over our English law. The other provisions of this convention which the Government have signed do limit the sovereignty of Parliament, do limit the sovereighty of our courts because—and many times it has happened—after a case has been decided, the individual says: "Oh! I am going off to the European Court of Human Rights". And off he goes! Even in a case decided by the House of Lords, the Sunday Times case, they go off to the European Court of Human Rights. And the House of Lords' decision was reversed by 11 to 9. That was a decision of our court, the highest court in our land.
And then there was the case of the three railwaymen who refused to join a trade union. Under our legislation, by statute, they had no right to claim for unfair dismissal. They took their case, if you please, to the European Court of Human Rights and then they found that our statute, passed by a Labour Government, it may be, violated human rights. So, in effect, they overuled our statute and we had to make another statute. I could go on with case after case which we have had on different articles. There was the one a little while ago, a most interesting one, about the children and the schools and corporal punishment. Corporal punishment by a master was quite lawful under our laws as long as it was reasonable and the circumstances justified it; but, if you please, that state of our law was taken before the European Court of Human Rights and they said that it was unlawful if it was done without the parents' consent.
They relied on Article 2 of the protocol saying that the state must respect the rights of parents to ensure that such education and teaching was in conformity with their own religion and philosophical convictions. They extended that clause beyond question, so as to say that you could not beat a boy or cane a boy at school without the parents' consent. The English judge, Sir Vincent Evans, dissented. The court decided by six to one that it would be a violation of human rights to cane a boy without his parents' consent. The Committee may remember that the Government brought in a Bill to try to implement that decision of the European Court but your Lordships, I am glad to say, refused to do so.
There it is. I give those illustrations to show that at the moment a person can go from our courts or from Parliament—although it has to go through the Commission—straight to the Court of Human Rights, which can inquire into the matter to say whether our

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courts were right or our Parliament was right or whatever it may be; and can reverse our decision—not reverse it actually; but clearly the Government must implement those decisions afterwards.
This is my important point. If we incorporate this convention into our law, as this Bill will do, if we make any violation actionable in our courts, as this Bill will do, then there is no need whatever for anyone to chase off to the European Court of Human Rights or to the European Commission and say that they were wronged. It is an infringement of our sovereignty. Therefore, once we get this Bill of Rights, through and incorporated into the law, then I say for goodness' sake let us stop any further petitions to the European Court at Strasbourg. Let us do it on our own; let us not have those clauses which say it can be negatived—and that is No 4, which is there to negative any of our statutes or anything like that.
Let us not have our courts, as under Clause 6, bound by what they say at Strasbourg. In other words, once we get this Bill of Rights through and enforceable in our courts, let us have no more truck with the European Commission or the European Court as at Strasbourg. Let us manage our own affairs on our own. I beg to move.
Lord Silkin of Dulwich: I oppose this amendment very strongly and I do so for two reasons. The first is that I find it quite extraordinary that an amendment can be moved the purpose of which is to give effect to the Bill in making the convention part of the law of the United Kingdom while at the same time that same amendment is removing from the law of the United Kingdom a major part of that very convention. It is an inherent part of the convention to provide the remedies which are referred to in subsection (5) and to follow the procedures in subsection (6). One cannot possibly profess to be bringing the convention within our law while at the same time removing the remedies which it contains. That is the first point.
7.30 p.m.
The second point is a much more fundamental one. It is that, in my view at any rate, the major benefit to humanity achieved by the European convention—of which I think we were the originator, through Sir Winston Churchill, and to which we acceded and by which we have given the right of individual petition over many years through the agency of successive governments on both sides of this Chamber—is that it has enabled states to accept for the very first time in history that their own domestic law and the way they treat their own citizens should be subject to the general views of what is right throughout Europe as a whole. That was an immense leap forward. The noble and learned Lord, Lord Denning, wishes us now to take a leap back, and I for one would not accept it.
Lord Scarman: I have already reminded the Committee that I am accustomed to being on the left flank of the noble and learned Lord, Lord Denning, and the Committee has seen me in that position agreeing with him. The Committee will now see me in that position disagreeing with him, and disagreeing profoundly, for the reasons indicated by the noble and learned Lord, Lord Silkin.
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I wish just to develop those a little. There is no infringement of our sovereignty by any provision of this Bill other than perhaps Clause 4(2), about which we shall have a discussion later. There is no other infringement. Equally, there is nothing in this Bill which compels our courts, if the Bill is enacted, to accept as correct the decisions of the European Court of Human Rights in Strasbourg. There is no challenge in this Bill to the independence of our courts. I say it with great hesitation, but I have said something like it before in other contexts. The noble and learned Lord, Lord Denning, has not fully analysed the complex problem that arises when there is a treaty—and this European Convention would not be the only one—which is binding on the United Kingdom in international law and which has been incorporated for municipal law purposes into our domestic law.
Whatever is said in this Bill, the United Kingdom has ratified the European Convention. It is therefore under an international obligation—not of course enforceable in our courts—to secure all the rights and freedoms listed in the convention within the United Kingdom. If there is a difference of opinion arising between the European Court of Human Rights and, let us say, the House of Lords sitting in its judicial capacity, that does not mean that the House of Lords sitting in its judicial capacity has immediately to accept as correct a decision of the European Court of Human Rights. If the Government take the view that to persist with our municipal law as laid down by the House of Lords would involve them in a breach of their international obligations under the treaty, then their correct course is to introduce legislation overruling the House of Lords sitting judicially. That is the only way in which one could operate to make a decision of Strasbourg legally binding upon our courts.
Similarly, the convention gives to the United Kingdom, as a member state, the opportunity if it so wishes of giving its citizens a right of petition to the European Commision and giving the Commission jurisdiction to entertain that petition. The United Kingdom, to its great credit, has exercised that option and has done so ever since 1966. It did so again as recently as a few months ago when it renewed the right of petition for another five years. If this amendment became law, one would have the strange position of an Act of Parliament saying that no one shall petition the Secretary General of the Council of Europe alleging a violation—that would be the domestic law—the Government having already obliged themselves to allow such petitions. If the Government decided that that is what they should do and if they have done it, subsection (5) in this clause would itself implicate Her Majesty's Government in a breach of international obligations.
The same is true of subsection (6) of the amendment. This deals with the acceptance of the jurisdiction of the European Court of Human Rights to give the authoritative interpretation of the convention. Again, our Government have accepted, under Article 46, and have renewed their acceptance of the compulsory jurisdiction of the European Court of Human Rights. Again, what does that mean? It does not confer upon the European Court of Human Rights the power to give a decision which is immediately binding on our House of Lords, or indeed of any of our

1107
courts. All it means is this. The United Kingdom Government have accepted that if the European Court of Human Rights construes one of these rights or freedoms in a certain way and that way is not met by our municipal law either because there is a statute against it or because there is a decision of the House of Lords against it, all that means is that in order to comply with their international obligations under the convention, the United Kingdom Government will take steps (of course by legislation) to correct our law.
Therefore in a sense this amendment is Don Quixote having a happy time—and one always does have a happy time when one goes out with that warrior, the noble and learned Lord, Lord Denning—tilting at a windmill that does not exist and tilting in such a way that by inadvertence we shall be putting our Government in breach of their international obligations. I say with the respect and affection that I have and always will have for the whole of my days for that magnificent entertaining advocate, the noble and learned Lord, Lord Denning, that his amendment is a bag of delightful and comic nonsense.
Lord Harmar-Nicholls: The noble and learned Lords, Lord Scarman and Lord Denning, can continue their debate on the technicalities of the law and the words that should be used, and may the best man win. I wanted to come in because I believe that the amendment is vital and good and should be accepted. This amendment is not a windmill, as the noble and learned Lord, Lord Scarman, suggested it was. It is much more important than the technicalities of the law and the argument about what words should be used. The minute that the people of this country think that the United Kingdom courts are not supreme as regards matters that happen within the United Kingdom, then I believe that we risk weakening ordinary people's acceptance of Parliament with all its statutes. I believe that there is a risk of that happening.
For five years, I sat as a Member of the European Parliament. While the Treaty of Rome has nothing to do with this amendment, it gave one closer contact to the general reaction of how law, applying to this country, but applied by a court outside this country's boundaries, was being accepted. There is a reaction. I found that the acceptance by ordinary people of a decision from a European court was unpalatable, particularly on matters such as those outlined by the noble and learned Lord, Lord Denning; matters which were very human and day-to-day in their application. The fact is that the final word on getting justice from a court which does not reside inside this country's boundaries is not accepted deep down. The more that the people become aware of that, the more it will show itself in a form, more fundamental, such as not accepting laws at all. I believe that the message this amendment would give would go a long way towards removing some of these feelings that are begining to show themselves.
I found that many people who were very "pro", for example, the Treaty of Rome and joining the Euroean Community now have many doubts, and their doubts have nothing whatever to do with the actual working of the European Commission, the Council of Ministers and the European Parliament. They feel that
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matters which are their personal concern are not being finally dealt with by their own courts and judges inside their own country.
I do not agree with the noble and learned Lord, Lord Silkin. I believe that it would be quite possible and desirable to accept the convention, but allow the interpretation arising from it to be in our judges' hands. For that reason, I do not look upon this amendment as tilting at absent windmills. I believe that it is very far-seeing and likely to call a halt to a trend that may eventually upset many of the wider decisions on international matters that the country has to make.
When my noble friend Lord Broxbourne intervened earlier, he gave the impression that he put the amendment of the noble and learned Lord, Lord Denning, on one extreme, the noble and learned Lord, Lord Scarman, on the other, and that he was coming in the middle. I hope that he will come down on the side of this amendment. I would not presume to enter into the technicalities, but I believe that the message that flows from the amendment is much more valuable and important than perhaps the comments that we have so far heard about it have led us to believe.
7.45 p.m.
Lord Broxbourne: When the merits of the amendment are put forward in such attractive speeches as those of the noble and learned Lord, Lord Denning, and my noble friend Lord Harmar-Nicholls, it is indeed difficult to withold one's acquiescence with what they say. I always like to agree with my noble friend Lord Harmar-Nicholls because I know the extent of his experience both in Westminster and in the European Parliament and the great contribution that he makes. He says that he would like the Committee to accept the amendment because he wants to give the interpretation of these matters to the British courts, but that is exactly what the Bill is doing.
The amendment of the noble and learned Lord, Lord Denning, goes further than that. It would exclude the right of petition and the jurisdiction of the court altogether. My noble friend Lord Harmar-Nicholls said that he would not go into the technicalities of these matters, but the word "technicalities" is perhaps not a very precise description. These are not technicalities; they are treaty commitments, binding in law and faith. The first part of the amendment, the new subsection (4) of Clause 3, appears to be declaratory. I have no objection to that. Subsection (5), which does away with the right of petition and the jurisdiction of the European Court, raises different and substantial questions.
If we had not, under Article 25 of the convention, made a declaration accepting and renewing the right of individual petition, there would be no impediment to the amendment, irrespective of whether it is desirable. I am sure that the noble and learned Lord will readily agree that we must take the matter rebus sic stantibus. It is only within the past few months that the Government have renewed this right of petition and, therefore as I understand it, we cannot lawfully do away with the right of petition within the specific period identified in Article 25. In this case it is five years.

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Meanwhile, we have undertaken under the terms of Article 25 not to hinder in any way the effective exercise of that right. I am sure that the noble and learned Lord will agree that the amendment would clearly be in breach of that provision and Article 46. I would ask the noble and learned Lord and the Committee whether it is not a better approach to rely upon the common sense of the citizens to prefer the simpler, quicker and cheaper remedy of access to the British courts, rather than the complex and cumbersome procedure of petition, and thereby allow the petition to Strasbourg to fall into natural desuetude without any violation of our treaty commitments. As the Committee knows, there are formidable and practical difficulties in petitioning Strasbourg.
Why should any sensible citizen embark on a course that is costly, complex and cumbersome when he has the quicker, cheaper and more effective remedy to hand at home, as he would have under this Bill? In the famous phrase of a very distinguished noble learned Lord, who is credibly understood in his personal capacity to be not unfavourable to this Bill, the citizen would indeed be honkers if he took that course.
I hope that the noble and learned Lord, despite the attractive support he has had from my noble friend Lord Harmar-Nicholls, will think on reflection that we can place reliance on the sense of the citizen to prefer the jurisdiction of our courts, as given by the Bill, without it being necessary to exclude, in breach of our commitment, rights to go to Strasbourg.
Lord Denning: I should like to make a few comments. First, it must be remembered that when the Government extended the time and allowed a petition to the European Court of Human Rights, it was not part of our law. What we are doing by this Bill is to make it part of our law and any violation could be enforced in our own courts. The Government have no power to take away our liberty or our sovereignty. It is the power of treaty which commits us to that. That is what they have done. But they did it at a time when there was no remedy in the English courts for many of the violations and when it was not part of our law.
What I am suggesting here is that once we make it part of our law, and once a person can get full redress in our courts for any violation of the Convention on Human Rights, there is no need whatever to retain this petition to the court, which, incidentally, has gone wrong several times, in the opinion of our English judge sitting there. There is no need whatever to preserve that executive step when the matter is considered by Parliament, and when we make the whole violation of rights subject to our own courts. So there it is. We have these differences of opinion between the lawyers. I do not know what to do about the amendment. May I have some help? Is it worthwhile having a Division?
Lord Harmar-Nicholls: Let it go on this occasion.
Lord Denning: I still press my amendment.
On Question, amendment negatived.
Clause 3 agreed to.
Clause 4 [Effect on enactments]:
Lord Lloyd of Hampstead Lord Lloyd of Hampstead moved Amendment No. 8:
Page 2, line 35, leave out subsection (2) and insert—
("(2) No provision of an Act passed after the passing of this Act shall be construed as authorising or requiring the doing of an act that infringes any of the fundamental rights and freedoms, or as conferring power to make any subordinate instrument authorising or requiring the doing of any such act, unless such a construction is unavoidable if effect is to be given to that provision and to the other provisions of the Act.").
The noble Lord said: In moving this amendment, I venture to draw your Lordships' attention to the fact that my noble friend Lord Allen of Abbeydale, whose name is also to this amendment, has asked me to say that, owing to a prior engagement which he could not possibly defer, he is unfortunately unable to be here himself this evening. But he wishes the Committee to know that he is strongly in favour of the amendment in question.
The other point that I venture to make, which is of a general character, is that a number of amendments that have been moved so far have been described as being in the nature of wrecking amendments. I indicated on the Second Reading of this Bill and on a number of previous occasions, that I object very strongly to the principle of this Bill, but I am not seeking in any way to rehearse all those arguments which were dealt with at length on Second Reading in relation to this amendment.
This amendment has the sole object of attempting to bring the Bill into line, as I venture to see it, with the correct constitutional position. My submission to your Lordships is that Clause 4(2) of this Bill is contrary to the constitutional position, and therefore it would be highly unsatisfactory if it were embodied into the Bill itself.
As the Committee has seen, Clause 4 purports to deal with two situations. First, there is the effect of this Bill on legislation already in existence. Then it directs its attention to its effect on enactments which are passed after the passing of this Bill. What it purports to do, as I see it, is to provide a rule of construction for the court in each of those cases. As regards previous legislation, that is to be treated as always subject to the fundamental rights in the Bill. If that earlier legislation is contrary to the fundamental rights in the Bill, then this Bill when it becomes an Act will override those contrary provisions.
As I said, I regard that provision as in itself undesirable, but I am not proposing to raise that point or the arguments in the context of this amendment. What I am concentrating on in this amendment is the purported effect of the Bill on subsequent legislation. What the Bill states is that a later Act is to be subject to the present Bill unless that subsequent Act expressly directs that the present Bill shall not apply.
What then is this Bill seeking to achieve? It seems to me that it is an attempt to entrench this so-called Bill of Rights. A subsequent Act is only to be overridden by an express provision to that effect. The court would thus be obliged to declare a subsequent Act of no effect in the absence of an express provision that the Bill was not to apply. I suggest to your Lordships that this just will not do, because it flies in the teeth of a well-established constitutional principle; that is, that one

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Parliament cannot by its own Act of Parliament bind a subsequent Parliament.
This follows from the basic principle of our unwritten constitution, which is enshrined in the doctrine of parliamentary sovereignty. That doctrine requires that any existing legislation, including such a Bill as the present one, must yield to subsequent legislation, and Clause 4(2) as now expressed is inconsistent with that doctrine. It is inconsistent because it proceeds on the assumption that, though the Bill of Rights cannot protect itself against being expressly overridden by a later Act, it is not to be overridden by implication.
What the framers of this Bill hope to achieve, as I understand it, is entrenchment in practice, because they have in effect created an unrealistic scenario. The scenario is based on the thought that no subsequent Parliament can be expected to declare expressly that its legislation is intended deliberately to contravene a provision embodying the terms of an international treaty to which the United Kingdom has acceded. The result of this will be to leave us in a highly confused constitutional situation which could only serve to place an English court in an unacceptable position and, at the same time, it would create great uncertainty in the minds of lawyers and litigants alike.
8 p.m.
The whole question of entrenchment and its limits under our constitution was fully explored by the Select Committee of your Lordships' House which reported in 1978. That committee, as your Lordships know, was not unanimous on the basic issue of the merits of a Bill of Rights. But it accepted unanimously the conclusion expressed by our then specialist adviser, who was no less a person than the very distinguished counsel to our Chairman of Committees, Mr. David Rippengal. His conclusions were set out in a detailed memorandum in the minutes of evidence attached to our report, which your Lordships will find on pages 1 to 10. The matter was also fully discussed on pages 22 to 30 of the report itself.
Perhaps I may quote from the actual report. It states:
"There is no way in which a Bill of Rights could protect itself from encroachment, whether experessed or implied, by later Acts".
On a note to page 22 it is stated that the specialist advisers's paper received general support from the Law Lords who gave evidence to the Committee and also from the noble and learned Lord, Lord Wilberforce, in a letter addressed to the committee. I can tell your Lordships that the noble and learned Lord, Lord Wilberforce, who was present at the beginning of the Committee stage, told me that unfortunately he was unable to stay, but he intimated to me and authorised me to tell the Committee that he still adhered to the opinion that he expressed in that letter to the Select Committee.
There is one further point of which I must endeavour to dispose. It has been suggested—indeed I think it was suggested on the Second Reading of this Bill—that in some way the European Communities Act 1972 provides support for the proposition that a Bill of Rights can effectively control a later Act.
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Reliance is placed, of course, on the crucial section in that Act, Section 2(4). This argument was again fully discussed and rejected in the report. The unanimous conclusion was reached that that Act provides no precedent for what is sought to be achieved by the sort of provision in the present Clause 4 of the Bill.
The matter is a somewhat complicated one. The Committee will not wish me to go into the details at this time. The gist of the matter is that even if it were ultimately held—it has not so far been held by our courts after the European Communities Act has been in existence for some 14 years—that the 1972 Act could and does produce the result of controlling future enactments of our own Parliament subsequent to the 1972 Act, this could be on only one basis: namely, that by our accession to the Treaty of Rome—and here I quote from the report—
"a structural change had been effected in our constitution, given that we had become part of an international community having its own legislative, executive and judicial organs".
The report adds:
"The same could not be said of a Bill falling within the committee's remit".
My amendment is aimed solely at bringing the present Bill into line with the established constitutional position. I indicated on Second Reading that I oppose the principles of this Bill but I am not restating them now. For that reason I have not sought in this amendment to interfere with or delete Clause 4(1) but only Clause 4(2). I understand from the Marshalled List that the noble and learned Lord, Lord Denning, is seeking to delete the whole of Clause 4.
Lord Scarman: The noble and learned Lord, Lord Denning, has had to leave. He has authorised me to say that he does not intend to move any of the subsequent matters on the Marshalled List. Now, unless somebody else moves, we are left with the noble Lord's amendment to Clause 4(2).
Lord Lloyd of Hampstead: I am very much obliged to the noble and learned Lord, who has saved me from making what is now an otiose observation. I do not need to refer further to that. I hope I have clarified the limited objective of my amendment. I beg to move.
Lord Scarman: I find myself in agreement with much that has been said by the noble Lord, Lord Lloyd of Hampstead, on his amendment. Perhaps I may say at once that I accept the basic principles of our constitution as described in the report of your Lordships' Select Committee on a Bill of Rights. The question therefore has to be whether Clause 4(2)—Clause 4(1) is quite unexceptionable—is an infringement of the principle of our constitution—the legislative sovereignty of Parliament—or whether it is merely an interpretive provision.
There is no doubt that Parliament can legislate giving directions to the courts as to the way in which they will exercise their function of interpreting statutes. As the noble and learned Lord the Lord Chancellor said in evidence to the Select Committee, a good illustration of that is the Interpretation Act itself. I would be prepared to argue—but the hour is late and I do not think the matter is of sufficient importance—that Clause 4(2) as it stands in the Bill is

1113
interpretation and not a breach of the constitution. However, I follow the points made by the noble Lord, Lord Lloyd of Hampstead. I happen to be perfectly content myself with subsection (2) which the noble Lord's amendment suggests should take its place. Therefore I say no more than that I leave this to the good sense of the Committee. The safe way forward undoubtedly is the way suggested in this amendment; the bold way forward is as suggested in the Bill. I prefer the bold way but I am prepared to be knocked on the head.
Lord Broxbourne: In the language of the courts, I respectfully adopt the argument of the noble and learned Lord, Lord Scarman. I too appreciate the purpose behind this amendment and sympathise with it—the preservation of the sovereignty of Parliament and the avoidance of entrenchment. As the noble Lord, Lord Lloyd of Hampstead, will know, I sought to make clear at Second Reading that this was the intention behind the drafting of this clause. I said:
"Subsequent legislation will be subject to the implication that nothing is required to be done which would infringe any fundamental rights and freedoms, unless the subsequent legislation expressly excludes this provision. Of course this is necessary to preserve our constitutional principle that Parliament cannot bind its successors, but the provision as drafted will guard against any inadvertent conflict with the rights and remedies prescribed in the Bill".—[Official Report, 10/12/85; col. 158.]
I yield to nobody in this Committee in my respect and affection for the principle of the sovereignty of Parliament. After all, I have been elected a Member of Parliament in many elections, and I had something to say on the question of the sovereignty of Parliament in our debates on what became the European Communities Act.
The noble Lord will appreciate that the sovereignty of Parliament has in fact been changed, for better or for worse, by our adherence to the European Community—not least because, by that act, we accepted the provisions of Article 189 of the Treaty of Rome, whereby the regulations of the Community take direct effect in this country. They take direct effect whatever the Parliament at Westminster may say. We are therefore in a somewhat different situation from that of 1972, although I do not for a moment seek to diminish the principle and its importance.
On balance—and like the noble and learned Lord Lord Scarman—I prefer the wording of the Bill as drafted to that of the amendment. I find the words in the amendment,
"unless such a construction is unavoidable"
to be difficult of interpretation. They would certainly impose a considerable burden on the judges and give very wide scope for judicial interpretation—which is, perhaps, a little ironic, because one of the main criticisms voiced of the Bill on Second Reading was that it would tend to increase the power of the judges.
While being very grateful to the noble Lord for the clarity and cogency with which he has expressed his views, I ask him not to press his amendment but to accept the wording of the Bill as it stands.
Lord Silkin of Dulwich: I agree with the arguments put forward by the noble Lord, Lord Lloyd of
1114
Hampstead, and would not intervene at this late hour but for one point that needs to be considered in any amendment of Clause 4(2) as it stands at present. Subsection (2) begins with the words:
"Any enactment made or passed"
and so on, and an enactment is defined as including,
"any Order in Council or instrument made under any enactment".
The proposed new subsection begins with the words,
"No provision of an Act passed".
It goes on to refer to that Act as possibly,
"conferring power to make any subordinate instrument",
but it does not apply directly, so far as I can see, to subordinate instruments themselves. I wonder therefore whether it would not be desirable, in view of what has been said by other Members of the Committee, to leave that point in abeyance; accept the principle of what has been said by the noble Lord and hope that between now and Report stage, an acceptable version can be agreed.
Lord Broxbourne: I certainly give an undertaking to study most closely what has been said by the noble and learned Lord. There is in the interpretation in Clause 1 the definition that enactment,
"includes any Order in Council or instrument made under any enactment".
Those are wide words and I would have thought that they were wide enough to cover the subordinate instruments to which the amendment expressly refers, without the necessity of incorporating the words in the amendment itself. Of course I shall look sympathetically, and I hope intelligently, so far as I am able, at what has been said. If we come to the conclusion by Report stage that the wording can be improved, I shall of course be very happy to put down an amendment at that stage.
Lord Lloyd of Hampstead: I should like to express thanks for the generous treatment that has been accorded to my amendment by the noble and learned Lord, Lord Scarman. The only comment I would venture on his suggestion that it might be treated as a mere clause of interpretation is that it seems to me, with all deference, to be inappropriate—not to use a stronger word—to have a rule of interpretation in a statute that appears to run counter to the established constitutional principle that an Act of Parliament by one Parliament shall not bind a successor Parliament. It therefore seems to me far more appropriate that the proposed change should be made.
8.15 p.m.
As regards the point raised by the noble and learned Lord, Lord Silkin, I venture to think that it was completely answered most helpfully by the noble Lord, Lord Broxbourne, when he pointed out that the definition appears to cover the difficulty envisaged by the noble Lord, Lord Silkin.
The noble Lord, Lord Broxbourne, has in effect invited me to withdraw the amendment on the basis that he will consider very carefully whether to insert a clause on the lines of the draft that we have put forward. I confess that I do not find that entirely satisfactory. If the noble Lord were to undertake to propose a clause on the lines I have suggested, with any

1115
adjustment of wording that might be found necessary after closer scrutiny of the wording of the clause, then I would be happy to withdraw Amendment No. 8. However, if the noble Lord does not feel that he can go that far, then I would like at least to hear whether the Committee is content or not content with the amendment that I have ventured to put before it.
Lord Broxbourne: I do not feel that I can go any further at this moment. I must say to the noble Lord that I am a little disappointed with his reaction to what I thought was a reasonable and perhaps even a generous offer on my part. I shall of course study the whole question. I shall study the noble Lord's speech and the possibilities. If it seems as a result, and after taking consultation where I can, that we can improve the Bill on the lines of the noble Lord's amendment, or indeed in any other way, then I will be very happy to put down an amendment to that effect.
I assure the noble Lord that I have no obstinate pride of draftsmanship or copyright in these matters. I am only anxious to get a good and workable enactment on the statute book. I hope that the noble Lord, with that assurance and explanation, will see fit to withdraw the amendment.
Lord Lloyd of Hampstead: I have no desire to weary your Lordships with a vote at this time of the evening—particularly after the very fair discussion that we have enjoyed on this particular amendment. I am prepared to withdraw the amendment now, but I reserve my right to reintroduce it on Report if the noble Lord, Lord Broxbourne, forms the view, after further consideration, that he is unable to reintroduce the amendment in a verbally-modified form, on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 agreed to.
Clause 6 [Proof of Convention instruments, etc]:
Lord Campbell of Alloway Lord Campbell of Alloway had given notice of his intention to move Amendment No. 9:
Page 3, line 12, leave out ("Protocols") and insert ("Protocol as defined in section 1(2) of this Act").
Lord Broxbourne: My noble friend Lord Campbell of Alloway has had to leave the Committee, and so we are denied his assistance in what remains of this discussion. I am very grateful to him for the help that he had given hitherto. He asked me to say that he will not be moving this amendment. Indeed, he will not be moving any other amendment which stands in his name. On this amendment, Amendment No. 9, my noble friend has given me a short note as to the basis of it which I shall certainly study with care between now and Report. On his behalf, therefore, if I am in order in doing so, I confirm that this amendment is not moved.
[Amendment No. 9 not moved.]
Clause 6 agreed to.
Clause 7 agreed to.
[Amendment No. 10 not moved.]
Remaining clauses agreed to.
[Amendment No. 11 not moved.]
Schedules agreed to.
House resumed: Bill reported without amendment.

Museums and Galleries (Prohibition of Admission Charges) Bill [H.L.]
8.22 p.m.
Lord Jenkins of Putney: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Jenkins of Putney.)
Lord Simon of Glaisdale: My Lords, before the Question is put formally I venture to protest at the Bill coming into Committee at this late hour. It was half an hour ago that my noble and learned friend Lord Scarman remarked on the lateness of the hour. When the House debated the Second Reading, your Lordships were pressed to give the Bill a Second Reading so that it could be properly discussed in Committee. The Bill was given a Second Reading and now it is presented for discussion in Committee at this very late hour in a virtually empty Chamber. It is not too strong to say that it is treating your Lordships with less than proper respect and certainly treating the subject matter of this Bill with less than proper respect.
On Second Reading a number of speeches were made saying that the Bill expresses a matter of principle, of crucial principle, of fundamental principle, and yet your Lordships are now asked to discuss it at this late hour with a virtually empty Chamber. Obviously the noble Lord, Lord Jenkins, has no hope of carrying this Bill into law this Session, and so it will fall at the end of the Session. However, he would be less than human if he did not wish to say that it had been approved in principle by being given a Second Reading and, as he no doubt hopes, passed unamended through Committee.
I say again that that is no way to treat your Lordships and certainly no way to treat a matter of fundamental principle. Even if it is not a fundamental principle, it is of high importance to issues that your Lordships hold supremely valuable.
Lord Jenkins of Putney: My Lords, I am in the hands of your Lordships' House. If the view expressed by the noble and learned Lord, Lord Simon of Glaisdale, is widely held in the House, it would perhaps be more appropriate if I sought to bring the matter forward on another occasion. However, it seems to me to be essentially a matter for the House more than for me personally to decide. I merely say that if the House is persuaded by what the noble and learned Lord, Lord Simon, said, I would not seek to persuade your Lordships to go ahead at this time if it is the general wish to postpone the matter to another occasion.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, the only difficulty is that the order has been agreed

1117
through the usual channels and the noble Lord, Lord Jenkins, therefore has this position on the Order Paper which, although late, has been facilitated to some extent by my noble friend Lord Massereene and Ferrard withdrawing his business.
If we do not proceed this evening, as it is a Private Member's Bill, and with an increasingly busy agenda on the Order Paper as the weeks go by, the noble Lord will be in increasing jeopardy in getting the Bill into a good position on the Order Paper on another day. I felt that I should point out that to the House as it is an argument for proceeding.
Lord Harmar-Nicholls: My Lords, I agree with every word said by the noble and learned Lord, Lord Simon of Glaisdale. It is a pity that a matter which is of supreme importance, as was said on Second Reading, should be dealt with at such a late hour, both on Second Reading and now. I believe a fuller House at Second Reading might have given a different view than the one we are saddled with now.
Having said that I agree that the protest from the noble and learned Lord, Lord Simon of Glaisdale, is justified and absolutely right, I feel that now we are here, and particularly in the knowledge that this is not a Bill which is likely to reach the statute book for all sorts of other reasons, those of us who are here can perhaps put our views on record.
I would not say, as the noble and learned, Lord, Lord Simon of Glaisdale, seemed to suggest, that there will not be a Division. In the event that the noble Lord does not accept at least one of my amendments, I hope to put it to the test in the Committee, small though the attendance may be. Having got so far I should have thought it better to proceed now that our protest has been put on record.
Lord Jenkins of Putney: My Lords, it seems to me that there is not absolute unanimity in the House in support of what was said by the noble and learned Lord, Lord Simon of Glaisdale. In all the circumstances, it seems to me that unless there is a widespread view that we should not proceed, on balance, and with due deference to what he said; perhaps we should proceed with the Committee stage of the Bill. I leave the matter in your Lordships' hands.
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
8.30 p.m.
Clause 1 [Repeal of 1972 c. 73]:
On Question, Whether Clause I shall stand part of the Bill?
Lord Harmar-Nicholls: I gave notice that I would oppose the Question, That Clause 1 stand part of the Bill. In order to avoid any confusion, I shall not push that to a vote because I feel that, having obtained a Second Reading, tiny though the attendance was when we gave the Bill a Second Reading, the convention should be adhered to of not interfering in Committee with Clause 1 when it is a fundamental part of the Bill.
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I still hope that, with the argument that I want to put to the Committee, the noble Lord, Lord Jenkins, may on consideration withdraw Clause 1, because it looks to me as though he was under the misapprehension when he included Clause 1 as part of this Bill that the Museum and Galleries Admission Charges Act 1972 should be repealed.
The main burden of this case all through Second Reading was that the noble Lord did not want charges to be levied on anyone going into museums and galleries. I understand that; it is a point of view which he is entitled to have. I do not agree with it, for the reasons which I gave on Second Reading. The Act of 1972 does not interfere with that at all. The 1972 Act gave no power to charge for entering galleries and museums. The object of the 1972 Act was to clear up an untidy situation under the law. It was felt—it was not even established as a fact—that because of the small print in various parts of the Act, four out of the 16 museums and galleries involved were slightly different from the other 12. Twelve of them were quite free of any obstacles to the trustees putting on a charge if they wished to. However, four of them—the British Museum, the British Museum's Natural History Museum, the National Museum of Antiquities of Scotland and the National Galleries of Scotland—for technical and detailed reasons which are not important for us to consider now, were in a slightly different category. So the 1972 Act had nothing whatever to do with what the noble Lord has in mind in trying to prevent charges being levied. It was merely a tidying up operation for a untidy law situation. Even now, if the Bill is left as it is, it gives no power actually to charge, which is the real burden of what the noble Lord had in mind when he presented this Bill.
If he had not appreciated the point which I have just put to him, I should think that the noble Lord would be quite entitled to say so, since it in no way affects the real message which his Bill wants to give, and would be prepared to withdraw Clause 1 and leave the tidying-up 1972 Act to do its job of removing what is a possible inconsistency and removing a possible quirk in the application of the law. There were 16 museums and galleries involved. Twelve of them do not come under the scope of the Act at all and for four of them, for detailed, rather obscure and not proved reasons, it was felt right to tidy matters up.
Lord Ross of Marnock: Does the noble Lord realise that we had a Bill last year that covered the National Galleries and the National Museum of Antiquities of Scotland, and the position is not as he now says?
Lord Harmar-Nicholls: If the noble Lord will read the debates when the 1972 Act was still a Bill and passing through the House, he will see that it was my noble friend Lord Eccles who placed it on the statute book as the Minister in charge. He will find that the whole burden of that Act was a tidying up of four establishments which did not come into the same category as the other 12.
I do not wish to waste time. I am merely saying, because I do not wish to put it to a vote, that the Motion in no way interferes with the fundamental purpose behind the present Bill, which has to do with charges. I shall come on to that issue when I move the

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next amendment. I believe that this one ought to be removed so that we do not again upset a clean situation which came about as a consequence of that 1972 Act.
Having opposed the acceptance of Clause 1 in order to make that point, it may well be that the noble Lord, Lord Jenkins of Putney, will indicate that before this Bill goes much further he is prepared to withdraw that particular clause.
Lord Jenkins of Putney: I cannot go quite as far as the noble Lord suggests but I am grateful to him for agreeing not to press this Motion further. I think there is a slight difference between us on the question of what actually was the effect of the 1972 Act. I think it was rather more substantial than he imagines.
On the other hand, I think it may be argued on reflection that Clause 2 in the Bill might have a similar effect to Clause 1. On this point at any rate and indeed following what the noble Lord has said, I think it would be a very good idea if I were to take advice between now and the later stage of the Bill. In the meantime I am grateful to the noble Lord for not pressing the matter tonight.
Lord Harmar-Nicholls: From my point of view I am most happy to accept the undertaking that the noble Lord will look at it and, if what I have said can be substantiated, he himself may possibly want to withdraw Clause 1.
Lord Simon of Glaisdale: I was present for the Second Reading of this Bill. I had attended for one and a half hours of the previous debate on the universities, with great advantage to myself. But unfortunately the very moment the noble Lord, Lord Jenkins, got up to speak I was called out of the Committee by a telephone message so I missed the whole of his opening speech, as well as the first half of the speech of the noble Lord, Lord Harmar-Nicholls. Under those circumstances I did not feel that it was right for me to intervene in the debate. However, I would have wished to say some things, if only in praise of the noble Viscount, Lord Eccles, and his Bill.
My own connection with and responsibility for the arts was many years ago—a generation ago—and then anomalously as a Treasury Minister, because at that time the museums and galleries were a Treasury responsibility. In fact that worked very much better than it ought to have done on any rational machinery of Government. I very much welcomed, though I was then out of the House, the appointment of the noble Viscount, who was such an outstanding Minister of the Arts. In fact, it was in my time at the Treasury that the great breakthrough came in the grants for funding the museums and galleries. I am sure that the noble Lord, Lord Hutchinson, will bear in mind that it was at that time that the momentous decision to increase the Tate Gallery grant was reached. That was by no means easy. The buying of modern art by the Tate Gallery trustees at that time did not command much popular enthusiasm or much parliamentary enthusiasm. Nevertheless, that was the time when the grant of £2,000 a year, which had to cover the British collection, the modern foreign collection and the modern British collection, was increased from £2,000
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to £40,000. To me that was a very great satisfaction. I well remember the delighted smile of Sir John Rothenstein when he heard that news.
Having said that, perhaps I may deal with the point made by the noble Lord, Lord Harmar-Nicholls, and considered by the noble Lord, Lord Jenkins. I am afraid I did not altogether agree with Lord Harmar-Nicholls, I do not think the noble Lord, Lord Jenkins, can be expected to withdraw Clause 1 at this stage. As I understand it, what the 1972 Act does is to remove a number of minor clogs on the museum trustees exercising their discretion to make entry charges.
If the amendment of the noble Lord, Lord Harmar-Nicholls, Amendment No. 1, is carried, that provision is still necessary. If Amendment No. 1 is not carried, then Clause 1 is not necessary. But no doubt the noble Lord, Lord Jenkins, will want to see what happens because he can always deal with the matter at the Report stage, as I understand it. So I do not think he can really be asked to withdraw the amendment at this stage.
The 1972 Act gives a discretion to trustees to take what course they think right in the interests of the museum of which they are trustees. It does not compel them to do anything, it is not coercive, as this Bill is. It seems to me that quite apart from the technicality, the Act ought to remain on the statute book, if only for the exiguous purpose of backing up Amendment No. 1 which I hope the noble Lord, Lord Harmar-Nicholls, will move and which I hope will be carried.
Clause 1 agreed to.
Clause 2: [Prohibition of admission charges]:
Lord Harmar-Nicholls Lord Harmar-Nicholls moved Amendment No. 1:
Page 1, line 11, at end insert ("without the approval of the Arts Council of Great Britain")
The noble Lord said: This is an amendment which I hope again the noble Lord, Lord Jenkins, may find it possible to accept. The real difference of view properly held on both sides, was that Members of the Committee who did not agree with charges wanted to make it statutory that nobody could charge for going into museums and galleries. They felt that it was detrimental to the proper use of those museums and galleries and they did not want what they considered to be an obstacle to their use by making a charge. Everybody seemed to accept that there was not enough money for the museums and galleries to be kept at the level that they wanted them to be kept at. We had to accept that the Government had made it quite clear that while they were prepared to maintain and indeed to some extent improve the level of their grant, it would be kept at a certain level. We all knew that in anticipation of inflation—however small it might be—with rising costs and new acquisitions which might be necessary in the future, it was quite clear that if we wanted to maintain the museums and galleries at the level which would be truly desirable to all of us, more money would have to be found.
The museums, with the authority of their trustees, have already tried to find alternative ways of getting that very desirable extra money. They run shops, they run restaurants, they sell certain items from the museum at some sort of profit. The profit is retained in

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order to be able to improve the general standing and excellence of the museums.
Some of them decided that it would be a good thing to charge entrance fees, as almost every other country in the world already does. It was felt that for the millions of people who use our museums, having paid the cost of getting there and all the expenses that are necessary before walking through the door, to pay the same sort of money in relation to what they will get when they go inside was not objectionable.
8.45 p.m.
Then we have the other point of view which I share that we ought to give to the trustees the power to use their own discretion as to whether or not they should charge for people to go into museums. It is really a Second Reading point all over again, but it is right to remind ourselves that we charge for the ancient monuments. When I was at the Ministry of Works, I was responsible for the ancient monuments for something like three-and-a-half years, and I remember the great trouble that we used to go to to make it more attractive, to justify the money we took from people who went through the turnstiles.
People pay to go to the Tower of London, the Labour Government itself, when it spent money on the Jewel Tower, doubled the entrance charge. There is nothing wrong with that.
So the general principle that you should, under certain circumstances, be prepared to charge in order to get the money to make the museums and galleries even better is a principle that has been generally accepted. I could not understand the absolutely adamant way in which the noble Lord, Lord Jenkins, and his supporters, although they had accepted this in all the other cases such as the ancient homes, the museums, Apsley House, the Tower of London, where we make the same sort of contribution to upkeep—as well as the Coliseum and the Festival Hall—pay to go in to all those places. Yet, for some reason, with these 16 museums and galleries, full of treasures of such value, they are not prepared to do the same. I could not understand that decision, but it was pursued, we put it to a vote in a very thin House and on this Bill it got its Second Reading.
I wanted to suggest, in support of my amendment, that if the Committee did not have confidence in the discretion of the trustees, if it felt those who were already charging or those who contemplated charging were people who ought not to be left with that power, then this Bill would take it away. I felt it might meet some of the reactions if we said, "Under this Bill we will not leave it only to the discretion of the trustees. We will not leave it that they make the ultimate decision alone. But before they can use the power to charge they would have to get the approval of the Arts Council of Great Britain. There would then be the situation that where governments of all complexions of the day had accepted charging since they already charged at the Monument, the Tower of London and all the other places, the trustees themselves who knew the day-to-day problems of their museums and galleries and knew what was wanted, would have agreed to it. In addition, you would have the extra
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safeguard that the Arts Council of Great Britain itself had to approye it before they could charge. Then I would have felt that with all those reasonable safeguards, knowing that this freedom to do that would not be abused, any reasonable person ought to want to accept this.
So my amendment on Clause 2, which is the powerhouse of the Bill, is that we leave Clause 2 as the noble Lord put it through its Second Reading, with the added words that they have the power to charge, if they think fit, providing the Arts Council of Great Britain supports them. I think it is a move in the direction for which the noble Lord, Lord Jenkins, was asking, a move in the direction of seeing that we are safeguarding this great heritage of ours. I believe that this amendment would not interfere with the fundamental principle behind the Bill and it ought to find support with your Lordships when we come to make a decision on it.
Lord Jenkins of Putney: The noble Lord, Lord Harmar-Nicholls, knows that just as I could be required reasonably to take another look at his opposition to Clause 1, it would not be proper for me to give a similar undertaking on this amendment. I shall explain why. The noble Lord indicates that he has this knowledge because he made what amounted to a Second Reading speech in support of the amendment. The noble Lord knows as well as I do that, in another place, he would have been pulled up long before he was able to complete the speech that he has just made. We are, of course, easier in this Chamber. I make no complaint about that.
The noble Lord would, I believe, agree that the amendment goes to the heart of the Bill. In my view, he would be entitled to seek to go to the heart of the Bill under his next amendment, which I trust the Committee will resist. But to adopt the approach that he has taken on this amendment seems to be a course of action that should not obtain the support of the Committee. Even those noble Lords who have some doubts about the Bill will take the view, I believe, that the noble Lord has gone the wrong way about it.
The noble Lord the Minister will say, I believe, that it would be improper in a Private Member's Bill to seek to put upon the Arts Council a power that the Arts Council would reject out of hand. It has no right to fulfil such a function. The money that goes to museums is not Arts Council money. As the noble Lord will be aware, money in support of museums does not travel through the Arts Council. It travels direct from the ministerial office. Therefore, the Arts Council has no standing in this matter.
If the noble Lord wishes to argue his case again, as he has shown he is capable of doing, the proper place to do so would be in support of his next amendment. I hope therefore, for all these reasons, that the noble Lord will allow the amendment now under discussion to fall. I can see that the noble Lord thought to himself that this was not a bad idea. I hope that, on reflection, he will conclude that it is not such a good idea after all and that he will not press the amendment.
Viscount Eccles: I hope I shall be forgiven if I speak only to the amendment—and in very few words. I oppose the amendment. It would be wrong to give the

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Arts Council the power that my noble friend wants it to have. The Arts Council is overburdened. It would be a good idea if the Arts Council was no longer to have responsibility for the great national companies and that these were financed directly by the Treasury, as they used to be. That would allow the Arts Council to pay proper attention to a vast number of artistic activities up and down the country. I do not wish to be rude. If, however, one compares the councillors of the Arts Council with the distinguished trustees of museums, it would clearly be ridiculous to give the Arts Council power to override the museum trustees.
Lord Belstead: I should like, if I may, to add my voice on behalf of the Government. The amendment is a reasonable attempt by my noble friend Lord Harmar-Nicholls to relieve museum trustees of the effects of this Bill. But it does not fulfil the important point of principle that trustees should be free to exercise their judgment in the discharge of their responsibilities. It is right that we should take to heart what my noble friend Lord Eccles has said about the distinguished people who form the bodies of trustees in our institutions.
This is an occasion when I feel that my noble friend Lord Harmar-Nicholls is being characteristically too reasonable. In endeavouring not to put down an amendment that would strike at the fundamental principle of the Bill—a measure that has after all received a Second Reading—he has moved an amendment that I cannot support. I do support, however, all that my noble friend said in moving the amendment.
Lord Harmar-Nicholls: The noble Lord, Lord Jenkins, is vice-chairman of the Theatre Trust which carries out precisely the function that I say the Arts Council could carry out. I do not have what is perhaps the slight prejudice that my noble friend Lord Eccles seemed to display against the Arts Council in his few words. The object of the Theatre Trust was to prevent planning authorities removing a theatre and turning it into something other than a theatre. It was seen as an extra bulwark against a theatre being flippantly changed into something else.
I believe that we should find some body—I can think of none more suitable than the Arts Council of Great Britain which provides some of the funds and whose membership includes those who have an under-standing of this sort of thing—to carry out the same function as the Theatre Trust, which resulted from a measure that I sponsored through the House and which now has the noble Lord as its vice-chairman.
We should have on the record from this Committee stage an attempt to find some way of removing the absolute embargo the Bill puts against the opportunity to charge if trustees so wish. The next amendment has nothing to do with charging. It is concerned with something quite different although the idea behind it is similar. I should therefore like to put the amendment to the test. If, at Report stage, in deference to the special knowledge of my noble friend Lord Eccles and taking into account the points made by the noble Lord, Lord Jenkins, we can find another body that is better than the Arts Council, the replacement could be
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made at that time. I should, however, like to put the amendment to the test, just as we did the Second Reading. I shall therefore insist on pressing the amendment.
8.57 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 3; Not-Contents, 19.

DIVISION NO. 1

CONTENTS

Harmar-Nicholls, L. [Teller.]

Rodney, L. [Teller.]

Sanderson of Bowden, L.

NOT-CONTENTS

Airedale, L.

Hutchinson of Lullington, L. [Teller]

Ardwick, L.

Birk, B.

Hylton-Foster, B.

Broadbridge, L.

Jenkins of Putney, L. [Teller.]

Bruce of Donington, L.

Kilbracken, L.

Craigavon, V.

Ponsonby of Shulbrede, L.

Dean of Beswick, L.

Ritchie of Dundee, L.

Ezra, L.

Ross of Marnock, L.

Hacking, L.

Underhill, L.

Hanworth, V.

Ypres, E.

The Chairman of Committees (Lord Aberdare): There have voted: Contents, 3; Not-Contents, 19. As it appears that fewer than 30 Lords have voted, in accordance with Standing Order No. 55 I declare the Question not decided, and, pursuant to the Standing Order, the House will now resume.
House resumed.

Competition Policy
9.6 p.m.
Lord Hacking Lord Hacking rose to ask Her Majesty's Government whether they will, as a matter of urgency, establish a fair and coherent competition policy to operate in the interests of the British economy and of British industries at home and abroad.
The noble Lord said: My Lords, with your Lordships' leave I shall pause, or take my early comments fairly slowly, because the noble Lord the Minister is not yet in your Lordships' House and he will be replying to the Question that I have tabled.
I stand before your Lordships to beg leave to ask the Question that stands in my name on the Order Paper. It may be of assistance to your Lordships if I remind you and the noble Lord the Minister of the terms of my Question. They are as follows:
"To ask Her Majesty's Government whether they will, as a matter of urgency, establish a fair and coherent competition policy to operate in the interests of the British economy and of British industries at home and abroad."
From the terms of that Question, your Lordships and the noble Lord the Minister may detect an element of criticism against government competition policy. Indeed noble Lords may think that there is a suggestion in the Question which I have tabled that the Government have no competition policy, whether it is either fair or coherent. However, before the noble

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Lord the Minister feels too wounded by the terms of my Question, let me start, I hope, with some sympathetic words towards the Government.
Probably no government's competition policy has been under such pressure as this Government's competition policy now is. It is under tremendous pressure because of a recent spate of colossal takeovers. I refer to the Allied-Lyons takeover and the threat of a takeover by Elders IXL, although it appears from a recent development in the market that that takeover may have gone away. I refer to the rival takeovers of the Imperial Group by United Biscuits on the one hand and the Hanson Trust on the other. I also refer to the rival bids for Distillers by Argyll on the one hand and by Guinness on the other—a takeover of a company whose assets are currently valued at no less a figure than £2·4 billion. There are also other takeovers which are putting this Government's competition policy under pressure. In each of these takeover battles the Government's merger policy is being tested to the full, and in each of them the Government have thought it necessary to intervene and to order referrals to the Monopolies and Mergers Commission.
The starting point of this debate is where the last and excellent debate of 22nd January of this year ended. This was the debate which was so well introduced by the noble Lord, Lord Gallacher. Regrettably, I was unable to participate in it because I was in the United States of America.
Without going through the arguments again, I should like to adopt much of what was said in that debate by the noble Lord, Lord Bruce-Gardyne, who is happily joining us this evening in this debate, the noble Lord, Lord Williams of Elvel, and the noble Lord, Lord Gallacher. I therefore adopt the expressions of concern over the arrival of the US-style leverage bids, otherwise called LOBs. It may be that colourful language will enter into our market-place, such as "poison pill", "shark repellant", or "golden parachute". However, with the structure of these debt-financed bids being based not on the bidder's balance sheet but upon its target's balance sheet, with the blatant motives in them of the stripping of assets, I believe that these forms of takeover should be treated by us with worry and concern.
I also share the concern expressed by the noble Lord, Lord Gallacher, over the interests of shareholders and workers in recent takeovers. I share too the concern over the basis upon which the Government exercise their decision whether or not to refer a takeover to the Monopolies and Mergers Commission.
Therefore, it may be helpful if I run briefly through the procedural mechanics for examining these takeovers. These are partly to be found in the Fair Trading Act 1973 and partly in established government procedural policies. It goes roughly like this. There is an announcement of a proposed merger. Sometimes it is in the form of a bid and sometimes it is in the form of a statement of intention to bid. There is of course the other circumstance when there is an existing merger or an existing perceived monoply which can also be investigated. However, I am taking
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it when there is an announcement of a proposed merger.
After that announcement, there is an investigation by the Office of Fair Trading; and following that investigation there is a confidential report which is submitted by the Director-General of Fair Trading to the Secretary of State. After that report has been submitted, the next event is the Government's decision on whether to refer the proposed merger to the Monopolies and Mergers Commission. If the Government decide to refer the proposed merger, they set out for the Monopolies and Mergers Commission the terms of the commission's reference.
Then there is a long pause. It is obligatory under the terms of the statute to include the time frame. The time frame in almost every proposed reference is one of six months. In other words, the Monopolies and Mergers Commission is asked to report within six months, although there is a further extension which is sometimes granted by the Secretary of State of another three months. That is why I refer to the long pause between the referral and the report by the Monopolies and Mergers Commission.
The next event therefore is the report some six or nine months later. When the Government have received that report—if it is an adverse decision by the Monopolies and Mergers Commission who report that the proposed merger is against the public interest—the Government have an independent decision of whether to accept or reject the report. If it is the other way round, if the Monopolies and Mergers Commission reports that the proposed merger is not against the public interest, curiously under the statute the Government have no decision to make and have no right to overrule the decision. This is a feature of our current competition statutory law which the noble Lord, Lord Bruce-Gardyne, criticised when he spoke in your Lordships' House on 22nd January.
I would also remind your Lordships of the tests upon whether a referral is made which are set out in Section 64 of the Fair Trading Act 1973. Those tests are whether there is a quarter share of the market or whether the assets to be taken over exceed the value of £30 million. There are also public interest tests which are applied by the Monopolies and Mergers Commission. These are set out in Section 84 of the Fair Trading Act 1973. I give one example:
"the desirability … of maintaining and promoting effective competition between persons supplying goods and services in the United Kingdom".
I am quoting from Section 84(1)(a) of the Fair Trading Act.
Out of this background I want to focus upon two serious problems which recent takeovers have painfully highlighted. First, the test of the market is a domestic test. Nowhere in the statute is this test set out in an international context. It is true that governments have frequently stated their regard for the international context. I quote, for example, the statement on mergers' policy by the then Secretary of State for Trade and Industry, Mr. Norman Tebbit. He wrote in these terms in a Written Answer to a Question put to him in the other place on 5th July 1984, at col. 213:
"In evaluating the competitive situation in individual cases I shall have regard to the international context: to the extent of competition

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in the home market from non-United Kingdom sources and to the competitive position of United Kingdom companies in overseas markets".
It is true also that the Government have repeated on a number of occasions their regard for the international context of the market share test. I refer, for example, to an admirable speech by the Minister, Mr. Michael Howard, on 29th October 1985. I refer to recent letters written to Mr. Bryan Gould and Mr. David Steel—which have been made public—by the Secretary of State for Trade and Industry. I can even refer to a Written Answer provided by Mr. Howard on the 17th of this month; in other words, only about three days ago.
The question is: how much are the Government taking into account the international context in the share of the market test? Your Lordships may recall that Sir Michael Edwardes wrote a letter to The Times on 19th February expressing considerable concern about the apparent failure of the Government to have sufficient regard for the international context of bids. I cite another example. Although 90 per cent. of the sales of the Distillers Company are abroad, the proposed merger, under the first Guinness bid, for the Distillers Company was referred to the Monopolies and Mergers Commission.
The second problem on which I wish to focus your Lordships' attention arises out of the current speed and force of movements in the market. As has been shown in recent takeovers, the market simply cannot wait for the Monopolies and Mergers Commission to report. Just look at what happened in the Imperial Group takeover! Just look at what happened in the Distillers takeover under the first offer of Guinness! Immediately those two proposed mergers were referred by the Government to the Monopolies and Mergers Commission the bids were withdrawn and large divestments were offered by each of those companies without any investigation as to the public interest and without any conclusions whether the proposed mergers were against the public interest. The problem is that a referral of one bid and not the other results in a one-sided intervention by the Government into the market.
The point was drawn to the attention of the Minister, Mr. Howard, and he made certain replies in an article reported in the Observer. I am unable to quote the exact replies of the Minister but, in substance, he questioned whether there should be concern over an "even-handed" approach. Of course, one understands the Minister when he is saying that when one proposed merger has been considered by the Office of Fair Trading and by the Government and a decision has been taken not to refer that proposed merger to the Monopolies and Mergers Commission, it would be wrong then to bring that first proposed merger under consideration again because a second bidder came on to the market.
Nonetheless, the statement by the Minister, in my submission to your Lordships, is a worrying statement. If the Government know that the consequence of a referral is to intervene in a one-sided manner into the market-place then, in my respectful submission, it is beholden on the Government to act fairly. We all know why it takes six months or even longer for the
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Monopolies and Mergers Commission to come to report, but that does not absolve the unfairness of a one-sided intervention into the market-place. Perhaps in the fullness of time other mechanics may come forward. Perhaps legislation could be passed for a temporary freeze on all bids while one bid is being considered by the Monopolies and Mergers Commission. But, until other mechanics come forward, I urge upon the Government, at this critical time when they are taking decisions on whether to refer the new bid for Distillers and the new bid for Imperial Group to the Monopolies and Mergers Commission, to take consummate care to act with fairness.
It is, after all, a wholly unsatisfactory result that referrals are now being used as part of the strategy of bidders to gain the prize in a takeover. This is not to criticise the companies who are legitimately using all rights available to then at law, but it is to recognise that the enthusiasm, for example, of the Argyll company to hold the Government to the earlier reference of the Distillers and Guinness merger to the Monopolies and Mergers Commission was part of their strategy to tie down the other bidder in the market-place. In general, it may be that at this present time, during this spate of takeovers—particularly those which have the characteristics of the US-style leverage bids—there should be more referrals to the Monopolies and Mergers Commission. But under present government policy there is unfairness if not clumsiness, and that is the reason why I have put down this Unstarred Question in your Lordship's House.
9.25 p.m.
Lord Ezra: My Lords, the Question that has been posed by the noble Lord, Lord Hacking, is particularly approprite at the present time, even though it was only in January that a similar Motion was debated. I believe that it is very appropriate for two reasons: first, because there is a massive amount of change going on in the commercial and industrial world; and, secondly, the Secretary of State for Trade and Industry has decided that there should be a full inquiry into competition policy. I think it right that in advance of that inquiry the views of this House should be made known clearly on the subject, just as I hope that when the inquiry has been completed we shall have a full opportunity for debating its conclusions or recommendations.
The noble Lord, Lord Hacking, concentrated in his remarks on the recent crop of major mergers, but I believe that this whole question of reviewing competition policy should go beyond that. The mergers undoubtedly are attracting public attention, but questions of competition are raised by the increasing tendency for privatisation to be transferring monopolies or quasi-monopolies into the private sector. The professions are being progressively liberalised, and that raises questions of competition of a sort which previously did not arise.
There is the impending regulation of the financial markets which in due course we shall be debating here; and that again touches on the question of competition. Also, as recently as 11th March, Sir Gordon Borrie, the Director General of Fair Trading, raised the question of the need for the revision of the Restrictive

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Trade Practices Act 1976. Therefore I very much hope that when this review by the Secretary of State and other Ministers is undertaken it will cover competition in a wide sense. I feel that the value of this debate will be to draw attention to some of the issues which we hope will be looked at.
Perhaps I may just comment on one or two of those aspects. The question of privatisation of monopolies or quasi-monopolies is something which creates very special problems. The solution which has been proposed in the Bills that we have so far debated, or will be debating, is the creation of new regulatory bodies. A number of your Lordships who participated in the debate on the Telecommunications Bill will recall that we spent some time debating the relationships between Oftel, on the one hand, and the existing body, the Office of Fair Trading, on the other, to decide who exactly was responsible for what. As more of these regulatory bodies are created for special purposes, more of these problems of the delimitation of responsibility are likely to arise.
The whole panoply of organisations dealing with the question of competition is already pretty complicated. It will become increasingly complicated as these new bodies are created Yet what we should be going for, if they are to be effective, is simplification rather than complication. I think there is a real task here to review the whole range of these bodies and see how they inter-relate.
When we come to the question of mergers, a number of very important issues were raised in the debate on 22nd January. The noble Lord, Lord Hacking, has referred to some of them. I should like to refer to one or two other points that were raised during the course of that debate. It was suggested, for example, by the noble Lord, Lord Williams of Elvel, that the way in which the merger policy was working at the moment tended to favour conglomerates being extended in their diverse operations rather than to encourage justified industrial concentration. I think that that is a really serious issue and I fully agree with what the noble Lord, Lord Hacking, said about the international dimension.
We are, after all, meant to be an integral part of the European Community market, and to look at a particular bit of the market, in respect of the impact that it could have as to one part of a firm's operation within just the United Kingdom, does not seem to me to be particularly relevant these days in the case of major industrial organisations. We should be gearing ourselves up to be fully competitive in the European and world context and not to look at matters merely in the United Kingdom context. That issue needs to be looked at again.
The role of the Monopolies and Mergers Commission when referrals take place was also mentioned by the noble Lord, Lord Hacking. It seems to be a weakness of the whole procedure that the inquiry takes so long. I believe that it takes so long because the Monopolies and Mergers Commission is probably not particularly geared up for the task. One point that should be looked at is whether it should continue to have the remit to carry out inquiries into nationalised industries.
As was said during the debate on 22nd January, I believe by the noble Lord, Lord Gallacher, the sort of
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inquiry which it carries out into the efficacy, or otherwise, of the nationalised industries could be carried out by any one of a large number of very efficiently organised consultants. The job could be put out to tender, and it could be done quite adequately by those people. The monopolies and mergers resources could be reserved for the special type of work which could not, of course, be put outside government organisations.
There is the question of what happens in the case of a bid when a referral is made about one of the parties involved and another bidder is left free to proceed. It seems wrong that that should be possible. If the inquiry by the Monopolies and Mergers Commission could be speeded up, it would not be unreasonable for the situation to be frozen while the inquiry took place so that at the end of the inquiry it would be clear what was the outcome of the referral.
The noble Lord, Lord Bruce-Gardyne, who will speak in a moment, also raised some very interesting issues about the onus of proof and whether the onus of proof as to the public implications of a bid should not be transferred to the bidder. I think that here, too, one might have a very careful inquiry.
Let me turn next and finally to the financial services which are presently being considered. The Financial Services Bill is going through its Committee stage in another place and will shortly be coming to your Lordships' House. We shall have a whole panoply of new regulatory bodies. I hope that they will be as simple as possible and clearly defined in their operation; but that remains to be debated. What is relevant to our discussion tonight is the relationship which that new grouping of regulatory bodies will have with the Office of Fair Trading. I believe that that is another aspect which needs to be gone into pretty thoroughly when the Secretary of State conducts his inquiry.
I hope that this inquiry—I fully support the intentions behind it—will roam wide over this field which has changed very considerably since the last inquiry was held in 1978. I hope that as result of it, we shall have a system which links together the various bodies which are in the process of being set up at the moment to deal with various aspects of competition, and that we will be provided with a system which is comprehensible, reasonably flexible and fair.
9.35 p.m.
Lord Sanderson of Bowden: My Lords, at the outset I feel bound to take issue with the inference in the Question asked by the noble Lord, Lord Hacking, that the Government's present policies and arrangements on takeovers are unfair or incoherent, except perhaps to say, as far as unfairness is concerned, that the timing problem raised by the noble Lord, Lord Ezra, just now, and by the noble Lord, Lord Hacking, deserves a lot of inquiry when the inquiry gets down to business.
It seems to me that the policies at the moment are neither unfair nor incoherent. The present policies were formulated by the then Secretary of State for Trade and Industry in July 1984 and reaffirmed by my noble friend Lord Lucas of Chilworth as recently as 10th March here in your Lordships' House. They seem perfectly fair, coherent and easy to understand by all parties concerned in a takeover bid or merger.

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I can tell your Lordships that a few years ago I myself had to go before the Monopolies and Mergers Commission. I know only too well that the drill is understood, but it takes a long time and a lot of work is involved, which is very upsetting, particularly to smaller companies which have to go before the Monopolies and Mergers Commission. There are already adequate safeguards in place for most situations. There is a review in the first instance by the Office of Fair Trading, which reports its findings to the Secretary of State, who may then decide to refer the matter to the Monopolies and Mergers Commission.
However, we now live in the days of so-called mega-bids and we read of private detectives and dirty tricks; our newspapers are full of what can only be described as knocking-copy advertisements. None of these things, I hasten to add, is unlawful, but some may feel as I do that they are of doubtful ethics. So in these circumstances there are grounds for a review of the present policies and attitudes and, as I understand it, the review which is about to take place and which is promised for later this year will sort out a lot of the problems and should be debated by all interested parties.
But the main points that I should like to make are these. It seems to me that the Government's present policies on takeovers are fair and workable in most aspects, though there are perhaps some areas for relaxation and increased flexibility. The noble Lord, Lord Hacking, asked whether the present policy is fair, but is it not true to say that if, in the name of fairness, any or all bids for a company were referred as a matter of course, then it could become a standard defence for any target company? The target would simply find a suitable and amenable friend with a similar product base to make a false or friendly bid qualifying for referral, thus excluding the more serious bidder, perhaps to the detriment of the target company, its workforce, its shareholders and, in the final analysis, the national economy—which brings me to my next point.
Are takeovers beneficial to the nation and to the economy as a whole? If the answer is yes, I would ask your Lordships to consider the two most common kinds of takeover; that which is little more than a marriage of convenience and that which will revitalise or re-energise a complacent company which is merely drifting along.
The first example is this. In such a merger, neither partner seriously believes that it can improve the actual performance in any dramatic way. They are merely pooling resources with the hope of eventual world domination in their product; in other words, they are deliberately trying to create a monopoly. Their argument is that bigger is not only better but best. Monolithic monopolies will argue that like should join like without regard for the differences in quality, cost and market penetrations of their products.
We have a classic example in the shape of British Leyland. Here we had several profitable manufacturers of different types of vehicles which were amalgamated and, as we all know, have been struggling ever since. What of the marriage of Dunlop and Pirelli whose dreams of world domination in
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rubber-related products nearly brought them to their knees? It is only under the sound and considered management of BTR over the past year, an industrial management company not previously known for its expertise in rubber products, that Dunlop is now recovering and enjoying a new lease of life, which in places like Barnsley, where a factory which was just about closing is now doing extremely well, is very obvious.
Let us take the second example, the so-called hostile or contested takeover. In this instance, one company perceives that another company is under-performing and would do better with new and more vigorous management. It believes that with its own particular brand of knowledge and expertise it can revitalise both boardroom and line managers alike who through a complacent lack of motivation have become set in their ways and sluggish in their methods. The bidder believes that its expertise can maximise the target's assets and heighten performance for the benefit of employees, shareholders and local communities alike. There may be no product match but there are sound management principles which will ultimately benefit everyone, including the nation and the economy.
Perhaps I may summarise the position as I see it. I must concede that there may be some case for a review, and I think it is proper that the public interest policy should be carefully re-examined. The market framework rewards efficiency and makes incompetent management vulnerable. This serves everyone well. Such regulation as is necessary must be clear, fair and strong. It is important that information is made equally available to all shareholders. It is wrong that the Office of Fair Trading procedures can be steered round and loopholes sought out by sharp practitioners. It is essential that the role of the merchant banks in the takeovers of these mega-bids should be carefully examined.
We should also clarify those policies on mergers which do not compare favourably with other countries and contain many ambiguities which foreign investors may not understand and which may impede their much-needed investment in the future of this country. Industrial investment these days crosses most national boundaries at will. That is why we see a larger investment now by British companies in the United States of America than the other way round. I look forward to hearing the results of the review that is about to take place, which I believe is very essential for the future wellbeing of the competition policy of the Government.
9.43 p.m.
Lord Bruce-Gardyne: My Lords, I should like to join other noble Lords who have welcomed the debate which the noble Lord, Lord Hacking, has initiated this evening, for although we discussed these matters only a few short weeks ago, we live in fast-changing times and a fast-evolving climate. Like my noble friend Lord Sanderson, I think that the wording of the noble Lord's Question is a little astringent towards the Government. For precisely the reasons which my noble friend has advanced, I have doubts about the possible consequences of, as the noble Lord, Lord Hacking, suggested, putting contested bids on freeze. I am not as convinced as the noble Lord, Lord Hacking, seemed to be, and indeed the noble Lord, Lord Ezra, too, about

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the undesirability of referring bids under circumstances which appear to take little notice of the international environment.
It seems to me that the essential consideration for the MMC can quite legitimately be the impact on domestic competition. The MMC itself is of course empowered to approve a takeover. Indeed, it has frequently done so, notwithstanding the resultant large market share in the United Kingdom, precisely on the grounds of the international market place and the degree of international competition. I do not see that the existence of the international market place and international competition should be regarded, as the noble Lord, Lord Hacking, almost seemed to be suggesting, as a good and sufficient reason for waving a particular takeover proposition through.
I, like my noble friend Lord Sanderson, would not indict the Government's present policy on those matters on the grounds either of unfairness or of lack of coherence. I am less sure about that policy's appropriateness under present circumstances. I listened with great interest to the response of my noble friend Lord Brabazon to the previous debate, to which there have been several references made. I looked at it again in preparation for tonight's discussion. I must admit that my noble friend was conceivably slightly complacent. He put forward essentially three propositions in support of the Government's attitude to takeovers and mergers as it currently stands.
The first was that it had the advantage of stability and predictability, which the markets like. On the whole, I would be prepared to accept that argument, although one must always remember that there is only perfect tranquility in the grave. My noble friend pointed out also that there was a substantially smaller volume of takeovers currently, although we were occasionally staggered by the mega-bids that sometimes follow each other from day to day. He stated that there was a somewhat smaller volume of takeovers and acquisitions occurring now than in 1972. I am bound to recall that the sequel to that large rash of acquisitions was not entirely happy.
Thirdly, my noble friend pointed out that it was appropriate to assume under normal circumstances that the shareholders would know best. I would agree with that if it were the shareholders who were essentially taking the decisions. Nowadays, however, the decisions are essentially taken by investment managers, who are in loco parentis for the shareholders. Very small numbers of them determine the fate of massive bids, and I sometimes feel that they are open occasionally to somewhat dubious influences.
Here I turn to the role of the financial intermediaries, to which reference has already been made. I noticed that the other day Sir Gordon Borne wondered about the problems arising from what he termed the steady drip of encouragement and over-encouragement to borrow from so many quarters. He was referring to the competition for our custom from the building societies, banks, and now, even the "Pru" in consumer lending.
I sometimes wonder whether there is not a similar and possibly dangerous pressure building up in the corporate sector. Tonight there has been reference
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made to the whole business of leverage bids. We are reaching a condition where some of the merchant banks are almost appearing to play in the role of what are know as "ambulance chasers"' among the learned attorneys of the United States. Such people go to a possible punter in the bids scene and say: "We have a marvellous suggestion for you to take over Amalgamated International. If it is successful, we shall charge you only £1 million for our fees. If it is unsuccessful, we shall charge you only £½ million. In any case, with luck we will persuade United International to foot the bill". It seems to me we have the financial intermediaries playing the role of innovator and sponsor to an extent which must be open to question.
More fundamentally—and we discussed this issue to some extent on the earlier occasion in January—to my mind it is not primarily the question of whether Argyll makes a better suitor for Distillers than Guinness or whether Hanson makes a better suitor for Imperial than United Biscuits which should be worrying us. It is whether in any of these cases it is necessarily logical to assume that the sum will be greater than the separate parts. However much the management of the Imperial Group may protest, I do not think it has convinced anyone very much that it is keen to fly into the arms of United Biscuits out of a sense of mutual admiration so much as out of a sense of mutual fear. That is the climate in which, to my mind, increasingly corporate decision-making is being impelled to take place.
In his Budget Statement my right honourable friend the Chancellor suggested, I think, that one of the expectations of enchanced future employment should stem from the acquisition of a larger market share both at home and abroad by British businesses, encouraged by the considerable fall in the exchange rate against the deutschemark and the yen. I wish him well in that and I should like to hope for the best, but the fact is that the management of a corporate quoted company, with predators lurking round the door, is going to find it very hard to opt for a larger market share, whether at home or abroad, and the consequent potential employment increase that might follow therefrom, when the alternative of a larger margin is the one, and the only one, that is likely to keep the predator away. That is why I must say I still feel that we are perhaps too complacent in our attitude towards the great merger boom when one considers the impact that it is liable to have on corporate management motivation.
I made clear during our previous debate, and the noble Lord, Lord Ezra, was kind enough to refer to this, that I have for long felt that there is at least a case to be examined for switching the onus of proof in these situations from the Little Red Riding Hoods defending their independence to the wolves to defend their justification for making a meal. I still hold that view. I hope, at least, that the review which is proceeding in my noble friend's department will embrace that consideration and also, as other noble Lords have already suggested, the somewhat exotic role which the banking system and the financial intermediaries apparently play in the market-place today.
9.54 p.m.
Lord Bruce of Donington: My Lords, it would seem that I have read an almost totally different subject for

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debate from the text of this Motion than has so far been discussed in your Lordships' House. The Question reads:
"To ask Her Majesty's Government whether they will, as a matter of urgency, establish a fair and coherent competition policy to operate in the interests of the British economy and of British industries at home and abroad".
I have no doubt that the noble Lord, Lord Lucas of Chilworth, will be able to reply to the somewhat specialist contributions, if I may call them that, that have been made in your Lordships' House this evening. If I may say so they were highly skilled and informed contributions, but they dealt essentially with a very restricted part of the whole economic picture of this country.
Personally speaking, I should have preferred to discuss questions of takeovers and mergers and matters of that sort within the wider context of the Bill on financial services that will shortly come before your Lordships' House, or, in a more specialised sense as applied to a particular monopoly industry, when the gas privatisation Bill arrives in your Lordships' House for detailed consideration.
Therefore, with your Lordships' permission, I propose to range a good deal wider than the terms of the highly skilled speeches that have been made to your Lordships tonight, which dealt with matters affecting primarily the City: questions of who is the predator, which powerful interest will take over another more or less powerful interest, whether there is leverage finance which is solicited or otherwise, and whether, if it is leverage, it will lead to asset stripping in order to pay off the original loans from which the finance was derived. These are very important questions and the Government have undoubtedly devised certain rules in order to deal with them. I prefer not to go into details about any of these particular matters, which are highly specialised and which affect the City in particular and those with very powerful financial resources who, if I may say so, are somewhat remote from the ordinary people who form the great bulk of the population of the United Kingdom.
I therefore propose to touch on competition policy in a much wider context, where these matters simply represent the froth on top of the underlying trends with which I propose to deal. The Question asked the Government to enunciate a fair and coherent competition policy. Of course, there is no coherent competition policy at all. In broad general economic terms the policy of the Government is to leave everything to market forces and to allow firms to compete. That determines the whole level of the economy, including the prices at which people may buy, the level of employment, the extent to which our exports are acceptable abroad and the extent to which there is or is not a flood of imports.
What the Government have by way of competition policy is policy by declamation. I am quite sure that the noble Lord will confirm that the policy consists in having to be more competitive. That is really the entire essence of the Government's policy. Time after time we are told that the nation has to produce at prices that are competitive—particularly for its manufactured goods, as we all well know—in order that we can pay our way in the world.
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This is the ostensible policy—nothing more—uttered with ever-increasing emphasis by the Prime Minister in the substitute for any coherent industrial policy: "We have to be more competitive". Indeed, in elaboration of that, we had from the Chancellor of the Exchequer, in the course of his Budget speech, the fact that unit labour costs were continuing to rise and that the greed—he had the impertinence to use the word "greed"—of the wage-earner was lying at the base of not being able to tackle unemployment effectively—greed!, when greed is the main motive force behind these massive moves within the City by people who have thousands of millions at their disposal and want to have further aggrandisement and increase their power.
I want therefore this evening, if I may, to deal clinically with the whole question of competitiveness. As I see it, competitiveness is being able to supply goods and services at prices—I emphasise the word "prices"—which find a ready market, either at home or abroad. I take it that I will carry your Lordships with me in that simple proposition.
May I take your Lordships a little further? The price is essentially made up of cost and profit. There can be little argument about that. The cost is automatically reflected in unit labour costs; costs per article, costs per job, costs per batch—whatever it may be. Unit labour cost in itself is comprised of a number of items. There are the wages paid; the factory on-costs; the variable overheads and the fixed overheads. Included in the factory on-costs must be the amount of depreciation of the plant and machinery and, if it is prudent, replacement.
It is immediately clear, therefore, that when unit labour costs are referred to, the extent of the true wage content of unit labour costs is very much dependent on the machinery and plant for which labour is applied to produce the article. Perhaps I may say straight away (and your Lordships will agree with me) that if, for example, an employee is paid 100p to punch 100 holes in separate pieces of metal with a machine that will punch one hole at a time, then there is a cost of 1p. If, however, instead of being able to punch one hole that machine punches two, then the productivity goes up and the unit labour cost goes down and is in fact halved.
Therefore, when the Government refer, as they do, to the necessity to reduce unit labour costs in order that our goods may be priced more effectively, more competitively, they must admit (but they do not say) that the extent of investment in plant and machinery upon which labour is required to work for its wage is a very vital factor indeed in determining unit labour cost. Over the past seven years—seven years following upon the advent of this Government—investment in manufacturing industry is still 18 per cent. below what it was in 1979. Small wonder, then, that there is continued complaint about unit labour costs rising!
What is never said is that the reason for that lies not merely in the level of wages to which the Chancellor of the Exchequer is unscrupulous enough to give his continued attention and emphasis, for the sake of his admiring fellow Members of Parliament, but also that the level of British competitiveness is in part a reflection of the gross under-investment in British

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manufacturing industry that has occurred in the past seven years. Indeed, whatever figures the noble Lord, Lord Young of Graffham, may selectively produce covering a convenient two or three-year period since 1982 or since 1983, the fact is that wage levels as such in the United Kingdom are still below those in Germany, in Italy and in France. To blame the lack of competitiveness upon the wage levels of this country—the wages paid to the ordinary people in the little streets of Britain—is entirely unscrupulous and unworthy of people who carry out any intelligent research into the facts.
What is not realised is this. I come back to my original statement of price being a combination of cost and profit. I have already dealt with costs in terms of unit labour costs. What is not mentioned, although it is boasted about by the party opposite within a different context, is that profits have gone up by between 30 and 40 per cent. over the past three or four years. Things are extremely prosperous. And profits together with costs are the determinants of prices. It is wise, I believe, to clear up the point clinically, clearly and beyond any doubt so that we can avoid in future blaming the level of the wages of the ordinary individual in this country as the reason for British goods proving uncompetitive abroad.
There is another reason, too. It lies in the exchange rate. The Government now accept, although they do not formally admit it—save indirectly—that the forcing up of the exchange rate in this country to a point where the dollar in November 1980 stood at 2·45 dollars to the pound following the absurd rise in interest rates that took place in the previous year—the daftest step undertaken by any Chancellor of the Exchequer for about the past 100 years; a really idiotic effort combined with the abolition of exchange control—meant that competitiveness in terms of competitive price, expressed in overseas currencies, made exports virtually impossible save in extremely exclusive goods, in respect of quality, delivery and anything else.
Lord Bruce-Gardyne: My Lords, will the noble Lord give way?
Lord Bruce of Donington: My Lords, I shall give way in a moment. I wish to complete this point.
This was so much so that in the five or six years to the end of 1985 there were 106,590 bankruptcies and liquidations in the United Kingdom, 71,000 of those being companies. The current rate in January 1986 is still maintained at about a level of 21,000 bankruptcies and liquidations a year. These are all matters which have an impact on competitors. I shall now give way to the noble Lord.
Lord Bruce-Gardyne: My Lords, I wondered whether the noble Lord could explain to the House his references to exchange rate policy in 1979. Are we to understand that had exchange controls been retained it is the judgment of the noble Lord that the exchange rate would not have risen so far or as fast as it did? Are we also to understand that something like the 25 per cent. appreciation in the sterling/dollar exchange rate which occurred before May 1979 was attributable to
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the expectation of a rise in interest rates under the Government which took office in May 1979? I am not altogether clear about either of those two points.
Lord Bruce of Donington: My Lords, I am very pleased to answer the noble Lord. I think that the removal of exchange controls in itself was not such a valid factor. What I am concerned with—and what was clearly revealed in evidence before the Select Committee of your Lordships' House—is the very substantial rise of interest rates from 12 per cent. in May 1979 to around 17½ per cent. later on in that year which caused an influx of money into this country that had to be re-lent. The influx itself, together with the growing production of North Sea oil, helped to force up that rate of exchange to an unacceptable height. That very severely inhibited our competitiveness. Moreover, it had its side effects in the United Kingdom. From the point of view of the Chancellor of the Exchequer it was extremely advantageous because the rate of exchange encouraged imports into this country at a price with which it was virtually impossible for many manufacturing firms in the United Kingdom to compete. Hence there was the spate of bankruptcies and liquidations at that time.
If any noble Lord cares to argue against that, or against any of these propositions, he has only to refer to the Select Committee Report on Overseas Trade which was recently debated in your Lordships' House. It is there amply documented.
I raise the point simply on the basis of being competitive and having competitive prices abroad. I seek to lay once and for all the allegation that it is wage rates in this country which are responsible for British goods being uncompetitive in overseas markets. Indeed, it is somewhat obscene in many ways that those people in the City of London—the big cohorts who are busily giving themselves rises in salaries of 20 per cent. and 30 per cent.—have the audacity to refer to the extremely minor rise in real wages which has taken place in this country over these years. It is 17 per cent. in real terms since 1979 we were told, somewhat boastfully but in a different context, by the Financial Secretary speaking in another place last night.
Competitiveness is supposed to be a virtue. So long as everything is left to market forces and to competition and to price, this is the answer to the problem. The difficulty for the Government is that they cannot reconcile these policies as being universally applicable.
I shall put this one point to the noble Lord because I do not want to detain him or the House very much longer. If competition is such a virtue, why is it not applied in the agricultural sector? It is alleged that Government subsidy, help, and co-operation somehow corrupt any industry which they touch. The farming industry in the United Kingdom has received aid equivalent to £50 billion in 25 years. It is subsidised very largely at the expense of the consumer but to the extent of £1 billion by the Government themselves, and it has achieved increases in productivity of 67 per cent. in those years.
It seems that the Government are two-faced about this. If competition and the weakest go to the wall with the devil taking the hindmost is really the correct

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philosophy for Britain, if that is the way in which the whole of the economy may be salvaged, why is it not practised here? Why does agriculture not have the benefit of this wisdom? The answer is that the Government are two-faced about it.
So far as concerns the shire counties, from which the bulk of the Government's political support comes, it is quite in order to give massive aid through the common agricultural policy itself, which costs this country roughly £1 billion per annum anyway, while other areas are exposed to free competition. However, there is no free competition for agriculture. There is no question of over-production there; there is no question of the over-capacity which they talk about in the steel industry and in various other industries. All that happens is that everything it produces is sold into intervention at a price which is already fixed, whether or not there is any demand for it whatever. Therefore, in this respect the Government suffer from a political schizophrenia.
We require from the Government an intelligent and coherent policy; one that stands up to the needs of the country. If the Government can enunciate a constructive policy, if they can enunciate a consistent policy as regards agriculture, which employs 2 per cent. of the population, as against industry and the services which supply the remainder, the House and the nation will be greatly obliged. I wish the noble Lord luck in enunciating it.
10.17 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, luck I do not need! What I need in your Lordships' House when I am answering the noble Lord, Lord Bruce of Donington, is a reasonableness in attending to the facts that lie before us. I feel quite sure that the noble Lord opposite will give me that tonight.
I was a little sorry that the noble Lord, Lord Hacking, in his Question on 10th March drew particular attention to a number of specific issues in connection with mergers, which I answered in part at col. 397 of Hansard of that date. I am sorry to tell the noble Lord—and I mean this quite sincerely—that apart from some generalisation to which I shall refer a little later, I can add nothing to that which I said on that date.
Vigorous competition in the world market-place is by far the most effective means yet devised to ensure that prices are kept down, that businesses are run efficiently, that the advances of science and technology are incorporated in innovative products which are offered in the market-place, and that consumers, whether they be prime consumers or ultimate consumers, obtain the products that they want from as wide a choice as is available to them.
The underlying objective of competition policy is to contribute towards those goals by fostering vigorous competition wherever possible. In that, I agree totally with the noble Lord, Lord Bruce of Donington, because (and he will forgive me for saying so) I thought that that was the most honest part of his speech tonight. Very much later he went on to invite me to
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agree to the simple proposition that prices were the real element in competition within the context in which I am quite sure we are both speaking. No, not price alone, and he well knows it, because quality comes into it. I shall return to the noble Lord's point if I have time about unit costs, but quality and competition go hand and hand and price is not the only factor to be considered.
If I may borrow the words of the noble Lord, Lord Hacking, in his Question, I agree that we need:
"a fair and coherent competition policy to operate in the interests of the British economy and of British industries at home and abroad".
I think though that I should have preferred to say that the policy should operate in the interests of British industry and commerce at home and abroad and of British consumers. I return again to the point I have just made, that a consumer can well be the buyer of the raw product as well as the manufactured item. Where I part company with the noble Lord is in his suggestion—and of course some noble Lords this evening will not be surprised that I do part company here—that we need to establish such a policy. I do not claim that existing policy is perfect in every possible respect. I do not claim that it is not capable of further improvement. But I claim that we have a policy which is fair and coherent and which, on the whole, has served the economy well.
The noble Lord, Lord Bruce of Donington, widened the discussion quite considerably, and I am grateful to him for that, but I am certainly not going to enter into any discussion with him tonight about agricultural policy. What I would say is that while the noble Lord opposite has widened it a little extravagantly, the noble Lord, Lord Hacking, has been a little too narrow in his dealing with the Question he has put down. I believe that for a debate of this nature there has been too much talk of mergers policy. I understand the reason for that. There is no denying, as my noble friend Lord Brabazon of Tara said a couple of months ago, that we are experiencing a peak of merger activity.
I think though that it is worth reminding your Lordships that the current level of merger activity falls way short of the peak reached in the early 1970s, but of course mergers dominate the financial pages of the press other than, if I may say so this evening, the news which every newspaper carried on its front page today, that of the engagement of His Royal Highness and Miss Ferguson. This was, I am quite sure we would all agree, delightful. We wish both these young people much happiness in the future. When I saw this on my return from East Germany this morning, what a welcome relief it was from some of the headlines that have dominated our press in the last few weeks.
Having said that, let me return to the subject of our debate. Of course news of mergers dominates the press, and of course government decisions in relation to them also attract attention. But the question before us this evening is about competition policy as a whole; about the need for a coherent policy. This takes us far wide of the merger field. It takes us into unsung areas where nevertheless much valuable work is being done. I trust that the House will allow me for a few moments to range a little wide of the points of the noble Lord, Lord Hacking, because I need to demonstrate, having answered three Questions in your Lordships' House

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over the last three months, that we have that coherent policy which some noble Lords complain that we do not.
A key objective of competition policy as a whole is to prevent unwelcome distortions which can arise when a firm abuses a dominant position in a market. One way in which firms can acquire dominant market positions is by merger, and our mergers policy provides a way of dealing with this. I will return to that point shortly. But, equally important, we have powers to act against the monopolistic practices of companies already in a dominant position in the market and against the practices of companies who seek to reduce or to eliminate competition. In the normal course, it is the Director General of Fair Trading who initiates investigations into these questions under the provisions of the Fair Trading Act and the anticompetitive practice provisions of the Competition Act 1980.
There has been a steady stream of investigations under these powers. In some cases, the commission has found no detriments to the public interest. In others, the director general has identified ways in which firms have abused their positions and whether business has been affected as far as customers or consumers are concerned. In many cases, appropriate undertakings have been negotiated by the Office of Fair Trading and conscientiously put into effect by the companies which have been in discussion with him.
The other major plank of our competition policy is the restrictive trade practices legislation. It would be wrong of me at this late hour to go into full details. The essence of this legislation is the control of cartels; its particular targets are price fixing and market sharing agreements and other collusive arrangements. This has worked, particularly in the service sector agreements which have been embraced by the 1976 legislation. This has been done by a process of negotiation with the parties and has resulted in a modification of their attitudes. In this field, as in the field of monopolies and anti-competitive practices, there is a steady level of painstaking activity at the Office of Fair Trading which is, if I may say so, making a very worthwhile contribution to the maintenance of fair competition—and I underline the word "fair"—in the United Kingdom. Frankly, I pay tribute to the work which is done in this field by the Director General of Fair Trading and his staff.
The noble Lord, Lord Ezra, and my noble friend Lord Bruce-Gardyne, raised the point which I think was contained in the Director General of Fair Trading's speech a short while ago when he was describing some of the influences that had been brought to bear on him, some of the effects of his decisions and some of the ways in which the Office of Fair Trading might move. He has been in charge of the day-to-day implementation of the Act, and it is not surprising to me, anyway, that he should not give views as to how this might be improved. Let me say directly to the noble Lord, Lord Ezra, who I think really raised this particular point that, as Sir Gordon rightly says, the Government will be taking proper account of, and will give consideration to, the issues he raised.
I said that I would return to the point about mergers, which was essentially the noble Lord's main thrust in
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opening this debate this evening, which, as he said, is timely. I do not think that I should expand overly in detail about our general policy so far as mergers are concerned because I think that is well known. It was ably set out to your Lordships by my noble friend Lord Brabazon of Tara less than two months ago.
At its briefest, the policy is that references to the Monopolies and Mergers Commission are made primarily, though not exclusively, on competition grounds, and in assessing the situation in a particular case the Government take into account the international dimension. Again, the noble Lord, Lord Hacking, and the noble Lord, Lord Ezra, referred to what I might describe as an even-handedness of approach in these matters. Some of your Lordships may believe—and I recall debates in your Lordships' House earlier—that even-handedness requires that either both bids or neither must be referred in such cases. I naturally accept the case for even-handedness, if by that is meant that each case is considered in an impartial manner, taking into account all the relevant circumstances, including the existence of a competing bid where there is one.
In this sense, my right honourable friend the Secretary of State for Trade and Industry has certainly demonstrated an even-handedness of approach. But would it be right to take even-handedness to the extreme of suggesting that whenever there are competing bids they must either both be referred, or neither? In fact, we frequently have the situation where no two competing bids are the same: they invariably differ very widely in the range of public interest considerations to which they give rise. For example, one may have clear implications for the degree of competition in a significant part of the United Kingdom market, while the other may have no such implications but an alternative. It would be quite wrong to treat each in an identical manner because if that were done the treatment would be quite arbitrary and would lead to absurd results.
I want to touch very briefly on the international dimension. In assessing the competitive situation in a particular case, we take into account the extent of competition in the home market from United Kingdom sources as well as from non-United Kingdom sources. For example, in a market in which the competition from non-United Kingdom sources was particularly strong, we would take a less serious view than in other circumstances of a merger which increased the concentration of United Kingdom producers. Similarly, if there were a clear and undisputed case that a proposed merger would enhance the competitive position of United Kingdom companies in overseas markets, this would be a factor to be weighed in our consideration.
The matter is essentially one of judgment, of weighing a range of factors and reaching a balanced decision. This means inevitably that a decision in any particular case can be finely balanced and open to argument. What is not open to argument, I suggest, is that in all recent controversial cases where it has been relevant, the international dimension of competition has been carefully taken into account, along with all the other relevant circumstances, before a decision was reached.

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The noble Lord, Lord Hacking, raised in particular the leveraged takeover bid. I just want to say this to the noble Lord. He was kind enough to write to me, and I thank him for that. He knows that we do not agree. I think it would be important to tell him essentially why, on his main point, we do not agree. The Elders bid for Allied-Lyons was referred to the commission precisely because its method of financing raised potential public interest issues. My noble friend Lord Bruce-Gardyne mentioned that in his contribution. On the other hand, the financing of the Argyll bid for Distillers turned out on examination to be very much more conventional. My right honourable friend took the view that public interest issues were not raised in that case.
Let me give an assurance to the noble Lord that we are keenly aware of the issues that are raised by virtue of his Question and we shall, of course, take that aspect into account in our consideration. My noble friend Lord Sanderson, in what I must say was a speech that was helpful to me anyway, raised one or two interesting points. He spoke about what I translate as some of the dirty tricks that the City is perhaps up to, or put in a kinder way, some of the devices that the City is now using. As he knows, procedures are available under the law for illegal practices.
Merchant bankers' activities have been subject to recent changes by the Bank of England as well as the Stock Exchange. I do not wish to dodge the issue that the noble Lord, Lord Bruce of Donington, raised, but we shall have an opportunity to discuss those wider issues when the Financial Services Bill comes to your Lordships' House.
If your Lordships will allow me, I want to touch for two or three moments on a couple of the points that the noble Lord, Lord Bruce of Donington, made. I always like discussing matters with him. He asked in his speech whether we were going to allow the devil to take the hindmost. I find it odd that he should ask me that as he has picked up the devil and thrown him at me. I pick up the tail and throw it right back at him, because he talked to me about unit labour costs. How can he ask me that in a debate of this kind? I ask him: what about the print unions, which insist upon still being hired to do jobs which do not exist, and which will not allow natural competition and the evolution of technology to move forward to advance their members' careers and jobs and the betterment of the newspaper industry? He talks to me about unit labour costs! I shall certainly give way, but he should not think that I have finished with the matter because I will not allow him to get away with that tonight or any other night.
Lord Bruce of Donington: My Lords, I am most grateful for the noble Lord's vigour in replying to that
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point. With the permission of the House, may I point out to him that I was merely giving a technical analysis? That is all. What I want from the noble Lord, if he can be constrained to give it to me, is any dissent he may feel from the technical analysis that I gave, without for one moment discussing its implications for the printers or, indeed, anyone else.
Lord Lucas of Chilworth: My Lords, if the noble Lord would provide a technical analysis instead of making a political attack, I should be delighted to deal with it, because in the earlier part of his speech he spoke about the greed—I think that he spoke of the City and other issues—that was demonstrated and fortified by the speech of my right honourable friend the Chancellor of the Exchequer in another place last night. My noble friend opposite has worked extremely hard and we have been right through Hansard between the two of us, but there is no mention whatsoever of greed. So I ask the noble Lord not to tell me things like that in a debate of this kind.
I do not think that I can offer anything more in setting out the Government's policies. I suggest that the existing range of instruments available to regulate competition adds up to a coherent whole. I admit that the policy is not perfect. Indeed, my noble friend Lord Bruce-Gardyne asked me about the onus of proof. Yes, I take his point and certainly that is something which we ought to consider a little later. But our policy adds up to one of fairness.
I said earlier that the policy is not perhaps perfect and it is right that it should be subject to review. I have told the House on a number of occasions that my right honourable friend the Secretary of State intends to announce the terms of reference of a review of competition law and policy later this year. But I again say to your Lordships that the existing policy provides a sound basis for action in dealing with the many threats which can, and do, arise to the efficient operation of a competitive market, whether from restrictive agreements between firms, from abuse of existing monopoly positions or from proposed mergers which may create dominant positions. I believe I have demonstrated this evening that we have a policy and that it is a coherent policy. I admit that it has gaps and we hope to plug those gaps as a result of our review. I give that assurance.

Bournemouth-Swanage Motor Road and Ferry Bill [H.L.]
Committed to a Select Committee.
House adjourned at eighteen minutes before eleven o'clock.

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