Sitting of 24 March 1986

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

    Mold bypass
    Mr. Raffanasked the Secretary of State for Wales if he will make a statement on the starting date for the construction of the proposed Mold bypass.
    The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): Subject to the satisfactory completion of engineering design and statutory procedures we expect the scheme to be ready to start in the period January 1988 to December 1990. This accords with the provisional programme set out in "Roads in Wales 1985".
    Mr. Raffan: Is my hon. Friend aware that any delay in starting the construction of the Mold bypass will seriously hinder the industrial development and creation of jobs on the Bromfield park industrial estate and the Nercwys road industrial park at Mold? In view of the danger that that could mean the loss of industrial momentum in Delyn, which the Government have done so much to promote, will he seriously consider reverting to an earlier starting date?
    Mr. Roberts: I assure my hon. Friend that there has been no delay. However, it is not really a practicable proposition to advance the start of the scheme. We are already working to the earliest possible start date.

    Radioactive Discharges
    Mr. D. E. Thomasasked the Secretary of State for Wales how regularly his Department monitors radioactive discharges from nuclear installations into the environment in Wales; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Wales (Mr. Mark Robinson): Monitoring of radioactive discharges from nuclear installations in Wales is carried out by Her Majesty's radiochemical inspectorate on our behalf. Its programme includes quarterly sampling of liquid discharges from both Trawsfynydd and Wylfa power stations. This is in addition to monitoring by the operators themselves to meet Welsh Office requirements.
    The effects of discharges to the atmosphere and to the aquatic environment are monitored on our behalf by the food science division and the fisheries radiological inspectorate of the Ministry of Agriculture, Fisheries and Food.
    Mr. Thomas: I thank the Minister for his reply. Will he confirm the information that I have been given by the
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    Central Electricity Generating Board, that the discharge from Trawsfynydd, which included some radioactive particulate matter, did not present any radiological hazard to the public?
    Mr. Robinson: I am able to confirm that. The incident at Trawsfynydd is now under investigation, and reports from various bodies are expected in the near future.
    Mr. Grist: Will my hon. Friend see that his Department constantly gives every reassurance to the public on the safety of nuclear power generation? Nuclear power is of great advantage to many of our competitors and to the people of Scotland, who get cheaper electricity because 40 per cent. of it is generated by nuclear power?
    Mr. Robinson: I can give that assurance. My right hon. Friend the Secretary of State for Energy illustrated that point a few days ago when he said that the safety record of the nuclear industry in the United Kingdom continues to be second to none.
    Mr. Roy Hughes: Is the Minister aware that the public are becoming increasingly concerned about the hazards posed by nuclear installations? For example, does he realise that there is a recognition in the Severnside area that it needs another such power station like it needs a hole in the head? If the CEGB attempts to walk in the face of popular feeling, it will meet the strongest possible resistance.
    Mr. Robinson: I strongly refute the comments made by the hon. Gentleman. Authorisation of discharges in Severnside rests with my right hon. Friends the Secretary of State for the Environment and the Minister of Agriculture, Fisheries and Food. Aquatic monitoring of the Severn takes place regularly, and sites in Gwent are included in the station monitoring procedures. The Welsh Office keeps in close touch with all Departments concerned. The public can rest assured that monitoring is carried out effectively and continuously.
    Sir Raymond Gower: Is it not a fact that the nuclear power industry has had a remarkable history of safety rather than of danger? To that extent, has it not been much safer than other industries, including even the coal industry?
    Mr. Robinson: I thank my hon. Friend for that remark. I can confirm that that is the case. It is important not to get carried away by scare stories which do not have any basis in reality.

    EC Farm Prices
    Mr. Livseyasked the Secretary of State for Wales what representations he has received from Welsh livestock farmers about the negotiations on European Community farm prices; and if he will make a statement.
    Sir Raymond Gowerasked the Secretary of State for Wales what representations he has received from farmers in Wales and in the area of Vale of Glamorgan council, respectively, concerning negotiations on European Economic Community farm prices; and if he will make a statement.
    The Secretary of State for Wales (Mr. Nicholas Edwards): I and my officials have already met both farming unions on several occasions for substantive discussion on the European Community farm price

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    proposals for 1986–87. I have carefully noted their views, and they will be taken into account in the forthcoming negotiations. I have had no separate representations from farmers in the Vale of Glamorgan council area.
    Mr. Livsey: Does the Secretary of State agree with his right hon. Friend the Minister of Agriculture, Fisheries and Food that farmers in Wales should receive less in the current price review than they did last year?
    Mr. Edwards: I am sure that price restraint is necessary if we are not to continue to increase the already very large surpluses in the Community. Indeed, that position has been generally accepted by the farmers unions in their discussions with us. I should be interested to hear whether it is the view of the Liberal party that we should seek to boost the wasteful surpluses.
    Sir Raymond Gower: Is my right hon. Friend optimistic or otherwise about the outcome of the negotiations?
    Mr. Edwards: Clearly there is a difficult period of negotiation ahead. The Community has now enlarged. One of our principal objectives in the negotiations is to see that none of the measures discriminates against British farmers, but that British farmers are fairly treated alongside farmers in the other Community countries.
    Mr. Harvey: In view of the sharp fall in farm incomes last year, will my right hon. Friend guarantee that, in particular, the sheepmeat regime, which is vital for many hill producers in Wales, is preserved?
    Mr. Edwards: I share my hon. Friend's view about the importance of the sheepmeat regime. Indeed, it is because of the success of that regime and the fact that we are not so dependent on cereals in Wales that the fall in farm incomes in Wales was so much less than in the rest of the United Kingdom. The Commission's proposals envisage the continuation of the sheepmeat regime in substantially its present form.
    Mr. John: As reform of the common agricultural policy is intertwined with this year's price proposals, does the Secretary of State accept that the Commission's proposals on both beef and sheepmeat discriminate against the present United Kingdom farm structure and must be changed?
    Mr. Edwards: I agree that there are discriminatory proposals before us. When I started answering this question, I said that one of the Government's principal objectives was to resist the Commission's discriminatory proposals, which apply in the cereal sector as well in the two sectors mentioned by the hon. Gentleman.
    Mr. McQuarrie: Does my right hon. Friend accept that hill and upland farmers in Wales suffer the same problems as those in Scotland? Will he ensure that in any negotiations within the Community the beef premium is maintained, because it is essential for those rural areas?
    Mr. Edwards: I assure my hon. Friend that we attach the same importance to the beef premium scheme in Wales as he does to the scheme in Scotland. As he knows, there are proposals for reforming the beef regime generally. There may be a need for general reform, but we attach great importance to the beef premium scheme. However, it will be a difficult negotiation, because our views on the scheme are not shared by most other members of the Community.
    Mr. D. E. Thomas: Does the Secretary of State, who is responsible for agriculture in Wales, intend to take part in the negotiations?
    Mr. Edwards: I do not intend to go to Brussels because I do not believe that that would strengthen our negotiating position. The proper way to protect the interests of different parts of the United Kingdom is to see that we meet the farmers unions, discuss the proposals in detail and then present a single negotiating position within the Community. It is already difficult enough to present sensible negotiations in a Community of Twelve. I do not believe that we strengthen the Welsh case by trying to isolate ourselves. Anyone who thinks that simply does not understand either the nature of the Community or what is really important for Welsh farmers.
    Dr. Roger Thomas: the Secretary of State is prepared to travel abroad on behalf of Wales and to listen to the Farmers Union of Wales, why does he not do a proper job and visit Brussels on behalf of the farmers of west Wales? Is the right hon. Gentleman aware that 10 per cent. of farmers in west Wales are in dire financial straits and that they would be glad to see him go to Brussels and do a proper job for Wales?
    Mr. Edwards: I am flabbergasted by the hon. Gentleman's remarks. If there is one thing that the farmers of west Wales understand, which the hon. Gentleman does not, it is that they benefit from being part of the general arrangements for the purchasing of milk and for the support of agriculture. They know that they gain enormously from being part of the England and Wales arrangements and that it would be a total catastrophe for them if they were isolated or separated from arrangements which are of such benefit to them.

    Labour Statistics
    Mr. Roy Hughesasked the Secretary of State for Wales what are the latest unadjusted figures for unemployment in (a) Newport, (b) Gwent and (c) Wales; what were the equivalent figures in May 1979; and what was the percentage increase in each case.
    Mr. Nicholas Edwards: The unadjusted February 1986 figures for Newport, Gwent and Wales are 213,288, 30,602 and 188,405. Unadjusted figures for 1979 were produced on a different basis and cannot properly be compared with this year's figures.
    Mr. Hughes: Is the Secretary of State not concerned about the mounting redundancies and closures in the area? The recent example of Standard Telephones closing its electronics factory at Newport is but a case in point. On the Secretary of State's recent visit to Japan, was he able to capitalise, by way of new investment, on the good will which I found on my recent visit shortly before his?
    Mr. Edwards: I cannot say that all the Japanese industrialists whom I saw had the name of the hon. Member for Newport, East (Mr. Hughes) on their lips. I do not know what influence he may have had for goood or evil, but I am certain that in the coming months there will be further significant investment by Japanese companies in Wales and that that investment will far exceed the job losses to which the hon. Member referred.
    Mr. Raffan: When will the two pilot schemes announced in the Budget—job start and job counselling

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    —for the long-term unemployed be implemented and extended throughout Wales? How many extra staff will be taken on at jobcentres in Wales to ensure that job counselling is effective and covers all the long-term unemployed?
    Mr. Edwards: We shall put the new schemes into operation as quickly as possible. I am meeting the chairman of the Manpower Services Commission this week to discuss the detailed implementation and the exact numbers that are to be applied in Wales. In advance of that meeting I would rather not add to my general comments.
    Mr. Geraint Howells: Is the Secretary of State able to tell the House when the unemployment figures for Wales will take a downward trend, because during the past seven years they have been going up and up?
    Mr. Edwards: The hon. Gentleman has asked that question on so many occasions he should know the answer. I have no intention of making such forecasts. However, I can tell him that very substantial capital investment in industry is taking place in Wales. We are continuing to attract about 20 per cent. of the inward investment for the whole of the United Kingdom, and we have recently had some notable successes, such as attracting Renishaw to Cwmbran. We know of a considerable number of major new investments which will create jobs in Wales and which will be announced in the coming months.
    Mr. Gwilym Jones: Does my right hon. Friend agree that last week's Budget was the best prescription for the country continuing to generate more new jobs faster than all other countries in Europe?
    Mr. Edwards: I agree that the Budget will contribute to more new jobs. It also confirms that the Government's underlying policies are leading to continued growth faster than elsewhere in the Community, and to falling inflation. We have introduced a tripartite package of measures designed to help enterprise, the young and the long-term unemployed. They are in addition to the substantial range of measures that we have already announced to help the unemployed and to improve youth training.
    Mr. Rogers: Does the Secretary of State accept that the measures that he says have been undertaken are simply not working? Is he aware that on the Penrhys housing estate, which has a community of 3,000 people and unemployment of over 80 per cent. among both young and old, severe problems are being caused because the measures that the Government have introduced are not working? Why does the Secretary of State not accept that and do something positive instead?
    Mr. Edwards: The hon. Gentleman has asked me to do something positive. I remind him that the Government have introduced the priority estates programme, which is already beginning to result in improvements on the estate that he has mentioned. I hope that the hon. Gentleman is not running down an important programme which is designed to improve conditions on an estate which has been in its present state for some years, and which was not built under the auspices of this Government. We have taken positive measures, which have been greatly welcomed, and I believe that they will improve conditions on the estate to which the hon. Gentleman referred.
    Mr. Best: Contrary to what the hon. Member for Rhondda (Mr. Rogers) said, is it not a fact that the special
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    employment measures that the Government have introduced are working extremely well? For example, is it not a fact that 61 per cent. of those who become part of the enterprise allowance scheme are still trading two years after having joined it?
    Mr. Edwards: Yes, I believe that is right. I have no doubt that the scheme has been extremely successful.
    Mr. Rowlands: A couple of weeks ago the Secretary of State announced his valley community investment scheme, and there were high hopes that the Budget would bring additional moneys for the Welsh Development Agency and the construction industry. Why has the right hon. Gentleman been left so empty handed after the Budget? Our valley communities need new investment through the WDA.
    Mr. Edwards: If an earlier question had been asked, I would have said that the WDA, which has spent about £624 million between January 1976 and March 1986, will be spending about £76·8 million in 1986–87. That is substantial expenditure. There will be a great deal spent in the valleys, including expenditure on derelict land. As I told the House during the Welsh day debate, the expenditure of the WDA will be directed especially at making effective the valleys' initiative, which I launched and which the hon. Gentleman supported, and for whose support I am grateful.

    Killan Fach Farm, Dunvant, Swansea
    Mr. Gareth Wardellasked the Secretary of State for Wales when his Department delivered the letter sent on 24 February to the Parliamentary Under-Secretary, the hon. Member for Newport, West (Mr. Robinson) from the hon. Member for Gower to the inspector holding the public inquiry at the Guildhall, Swansea, on 5 and 6 March into an appeal for residential development at Killan Fach farm, Dunvant, Swansea.
    Mr. Mark Robinson: A copy of the hon. Member's letter was sent by first-class post from the Department's Cardiff office to the inspector's home address on 3 March.
    Mr. Wardell: To avoid any future possible embarrassment to right hon. and hon. Members, will the Welsh Office ensure that when Members of this place attend public inquiries steps are taken to enable inspectors to receive their submissions before the inquiries commence?
    Mr. Robinson: We do whatever we can in these matters. The inspector was informed that the representation was on its way. Unfortunately, its delivery was delayed and it did not arrive on time. The hon. Gentleman's original letter was received by the Department only on 26 February, so time was short in any event. I assure the hon. Gentleman that we are reviewing our arrangements to try to ensure that this sort of thing does not happen again.

    Ogwr
    Mr. Ray Powellasked the Secretary of State for Wales why he refused to meet representatives from Ogwr borough council to discuss the proposed return of Ogwr's regional development status and of related matters.
    Mr. Nicholas Edwards: As has been explained in various letters sent to the borough's chief executive officer

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    by my office, there is no possibility of the assisted area map being revised so soon after the major changes of November 1984. In the circumstances, a meeting with representatives of the borough council to discuss a change in the status of Ogwr would not have served any useful purpose.
    Mr. Powell: The Secretary of State will be aware that the council in its letter requested him or the Prime Minister to meet it, and it outlined the difficulties and problems in Ogwr borough. Does the right hon. Gentleman understand that there are 10,000 unemployed in the area and only 300 job vacancies? Every pit in the Ogmore and Ogwr borough area has been closed since the Governent came to office in 1979. Surely the right hon. Gentleman should have attended a meeting to discuss the problems which are besetting the coalfield area of Ogwr, or, in the interests of Ogwr, borough and its residents, prompted the Prime Minister, in the time that she is devoting to invest in stocks and shares, to attend such a meeting.
    Mr. Edwards: I am aware of the problems of that borough. We were asked to meet to change the arrangements under which regional policy is administered, and we have made it clear that now is not the time to do that. We have, however, approved an urban programme allocation for 1986–87 which is more than double the allocation given to 1985–86. I have therefore met my commitment to the hon. Gentleman on that point. Since the review of regional policy carried out in 1984, offers of assistance totalling more than £2·5 million have been accepted in the Bridgend travel-to-work area. Those projects will create 500 new jobs and safeguard more than 100 existing jobs.

    Rural Areas
    Mr. Bestasked the Secretary of State for Wales what guidance he gives to the Welsh Development Agency on the priority to be accorded to the rural areas of Wales in its various activities.
    Mr. Nicholas Edwards: The Welsh Development Agency's corporate plan confirms its commitment to the development of rural areas. I have recently discussed with the agency and with Mid Wales Development a strengthening of their rural development packages in co-operation with the Wales Tourist Board. Details of these new arrangements are being announced separately today.
    Mr. Best: Does my right hon. Friend accept that his answer will be warmly welcomed throughout rural areas in Wales, particularly in Anglesey, and by those of us who press consistently for greater assistance for rural areas within the WDA's remit? What resources will be made available following the initiative?
    Mr. Edwards: The initiative includes a much better presentation of the very wide range of measures already available. It includes a new grant scheme—the development of rural initiative, venture and enterprise, known as DRIVE—which is being introduced to stimulate private sector investment and to which £1 million has been allocated over the next two years. The initiative also involves the Welsh Development Agency broadening its definition of rural areas, introducing a low interest rural loans group scheme—which is to be streamlined throughout Wales—and improving the eligibility for grants to convert redundant rural buildings.
    Mrs. Clwyd: Does the Secretary of State recall 10 years ago describing the Welsh Development Agency as a Frankenstein monster and an extension of Bennery in Wales? Does he now regret those words, and does he agree that the WDA has, over the past 10 years, made a significant contribution to the economy in Wales?
    Mr. Edwards: If the hon. Lady had paid attention to what I have said over the past 10 years, she would know that I have frequently stated that I opposed the introduction of the agency because I was afraid that it would be used as an instrument of Bennery. I have always freely acknowledged that it was not actually used in that way by my predecessors, and I have always been pragmatic in my desire to make the most effective use of the agency. I believe that that is what we have done since the Government have been in office.
    Mr. Harvey: Does my right hon. Friend accept that the initiative will be warmly welcomed throughout rural areas of Wales? Will his Department consult Clwyd Fro in my constituency, which has extensive experience relevant to the proposed initiative?
    Mr. Edwards: Yes, the Department will do that, particularly as our new initiative will have a number of pilot enterprise groups which are not dissimilar to the organisation that my hon. Friend has described. We are introducing these on an experimental basis to bring in the maximum expertise, experience and advice for people who are developing business and other initiatives in the countryside.
    Mr. Foot: As the right hon. Gentleman has acknowledged one conversion about the WDA, may I encourage him to make another? Over the weekend he announced a number of increases in factory allocations, three of which are in my constituency. However, we need double that number to meet even our most elementary needs. How much extra money has he received from the Budget to carry out the kind of WDA programme needed in Wales?
    Mr. Edwards: I shall bear that in mind when I next make my allocations. It is, however, absolutely characteristic of the right hon. Gentleman that, whenever he gets anything, he asks me to double it. We have properly considered and assessed the needs of his borough. I have approved proposals by the WDA to construct two 10,000 sq ft and one 25,000 sq ft advance factories at Rassau, and I believe that that is the immediate need. However, the right hon. Gentleman is wrong to make demands that are not based on current need. He believes that we should double everything, on the basis that if money is thrown and scattered around, that must do good, even though it is not based on a proper assessment of need.
    Mr. Wigley: Is the Secretary of State aware that £500,000 a year will not solve the major problems of deprivation in many rural areas in Wales? In view of the initiative taken by the Development Commission in England to designate rural development areas so that they will be eligible for European regional development fund grants, can he give an assurance that in Wales, too, outside the Mid Wales Development area, rural development grants will be available through the ERDF as a result of his initiative?
    Mr. Edwards: The hon. Gentleman picks on one sum of money as part of a package. The scheme that we have

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    introduced is an additional one, as I have made clear. We have sought to bring together the wide range of schemes that exist—the large amount of money that is being spent by the development agencies, the tourist board and the ERDF—in a coherent and cohesive package. The hon. Gentleman is wrong to write down the importance of that initiative.
    Mr. Raffan: Will my right hon. Friend pass on to the WDA the thanks of the borough of Delyn for the funding that the agency has provided to prepare a No. 1 site at Greenfield for new factory units? At the same time, will he ask the agency to explore all possible means to provide advance factory units at Prestatyn where the unemployment rate is now almost as high as it is in Delyn?
    Mr. Edwards: I note what my hon. Friend said, and I shall see that it is considered by the WDA.
    Dr. Roger Thomas: There is a general welcome for the improvement and strengthening of the WDA's hand on rural areas, but has not the Mid Wales Development got a long lead for grants for rural areas in Wales? For too long we have had first and second-class rural areas. Would it not have been better to extend the boundaries of the Mid Wales Development?
    Mr. Edwards: No. We considered carefully whether to extend the boundaries and we concluded that the best way to proceed was to improve the arrangements that the WDA can make under its already extensive powers and allow Mid Wales Development to concentrate on its task in the area that was designated by the previous Government. The two agencies working together with the Wales Tourist Board can put a coherent package together.
    I want to check on the position with regard to the ERDF and I shall write to the hon. Member for Caernarfon (Mr. Wigley).
    Mr. Geraint Howells: May I ask the right hon. Gentleman one more question to clarify the financial position? How much extra financial aid will be given to the Development Board for Rural Wales, how much for the WDA and how much for the Wales Tourist Board?
    Mr. Edwards: The announcement of the rural package does not affect the overall financial provision that has been made and is being announced in the usual way for the agencies. What is specific in the rural package is the new DRIVE scheme, for which £1 million has been allocated for a particular set of grants. As the hon. Gentleman is also aware, the total resources of the WDA do not come simply from grant, but from receipts, and they make up almost half the total. Therefore, it is the total budget that is available to the agencies that is important in considering the resources that can be devoted during a particular year.

    Rate Precepts (County Councils)
    Sir Anthony Meyerasked the Secretary of State for Wales what has been the average increase in rate precepts by county councils in Wales this year.
    Mr. Nicholas Edwards: 22·9p, or 13·9 per cent.
    Sir Anthony Meyer: Is my right hon. Friend aware that that percentage would have been considerably higher, most notably in the county of Clwyd, had it not been for the firm way in which he handled the matter? Is he also aware that the present arbitrary and unpredictable methods
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    of allocating Government support by way of rate support grant make it difficult for county councils to plan ahead and that if they cannot plan ahead it becomes correspondingly difficult for them to make economies?
    Mr. Edwards: Bearing that in mind, I hope my hon. Friend will warmly support the measures for improving the system of local government finance that are contained in the consultative document that we have issued. It is because of the shortcomings in the existing system, which we freely acknowledge, that we are making major recommendations for reform.
    Dr. Marek: Will the Secretary of State accept that his continuing policy of draconian grant hold-back and draconian grant penalties for councils which wish to provide proper services for their citizens will lead, certainly in the case of Clywd, to the closure of many primary schools in rural areas and to the county council having to cease providing nursery education in the county? That is the shameful result of his policies.
    Mr. Edwards: I noticed with interest a report in the Daily Post headed "Too top-heavy with bosses". That article described reports that had been submitted by consultants to the Clywd county council which outlined the types of economies that could be made without leading to the consequences that the hon. Gentleman described. I suspect that, whatever the truth of that newspaper report, it is true that many improvements in efficiency can be made by the county council.
    Sir Raymond Gower: Is my right hon. Friend aware that these huge increases are regarded with horror and dismay by industrialists, business men and small shopkeepers? It is a terrible burden to place on people who work in difficult areas.
    Mr. Edwards: I wish that my hon. Friend had made that point absolutely clear to members of his own county council, the Labour-led county council, which has increased its rates precept by more than twice the rate of inflation. That is an increase for which I can see no possible jusitification.
    Mr. Roy Hughes: Bearing in mind the social distress experienced throughout Wales at present—so much directly due to the policies of the Government—does the Secretary of State not realise that this is hardly the time to put our local authorities in a straitjacket? Why does he not accept that they have many additional problems and commitments, which they are trying to handle in a most responsible fashion?
    Mr. Edwards: The hon. Gentleman knows perfectly well that this is a generous settlement for Wales, which allows for increases at least at the level of inflation. The people who are in the straitjackets are the unfortunate ratepayers, who are faced with demands which they cannot meet except by getting rid of employees or by increasing charges to their customers. That is the policy being advocated by the Labour Front Bench, and I hope that it is widely noted.

    Alcohol Abuse
    Mr. Gristasked the Secretary of State for Wales what proposals his Department has for lessening alcohol abuse in Wales; and if he will make a statement.
    Mr. Mark Robinson: The Government's policy on measures to tackle alcohol abuse is outlined in the discussion document "Drinking Sensibly". The efforts of health educators, hostels and support groups such as local councils on alcoholism have been aided by the Welsh Office for several years. Recent developments include the establishment of Alcohol Concern Wales and the publication by the Health Education Advisory Committee for Wales of a report "Dealing with Alcohol Problems in Wales". I expect to receive the committee's final strategy shortly and I shall then consider what further action needs to be taken.
    Mr. Grist: Does my hon. Friend agree that although, quite rightly, a great deal of attention has been directed to drug abuse and the growing threat that it poses, nevertheless the toll that alcohol takes in terms of broken families, misery, violence, murder and general social disorder is quite disgraceful and is often overlooked?
    Mr. Robinson: We have had a programme to tackle alcohol misuse over a number of years. The problems of drug misuse are very different, in the sense that we have to take action to prevent the stuff from coming into the country and to prevent the situation from getting worse. That, of course, is expensive.

    Housing Defects Act
    Mr. Ron Daviesasked the Secretary of State for Wales if he intends to announce an uprating of the grant limits set under the Housing Defects Act.
    Mr. Mark Robinson: It is clear that for some types of PRC houses the present eligible limit is adequate. There are categories where experience may prove this is not the case, and the limit will be kept under review.
    Mr. Ron Davies: I do not think the Minister needs any more experience because about two years ago his colleague, the hon. Member for Conway (Mr. Roberts) wrote to me stating that he was fully aware of the problem and that the Welsh Office was keeping the matter under review. I put to him the specific problem of Woolaway homes. The excuse used so far by the Welsh Office is that there is no PRC licence scheme available. Will the Minister confirm that there is a PRC licence scheme now available and there is no reason other than the obduracy of the Welsh Office why the grant limit should not be increased? The attitude of the Welsh Office seems to be that it will monitor schemes and review the limit in an upward direction if it proves necessary. That is no good at all. Unless the limit is raised there is no prospect of any work being carried out.
    Mr. Robinson: Reinstatement schemes have been introduced during the past two years. I can confirm that a scheme for Woolaway homes was approved on 3 March. As I have said, we continue to keep the expense limit under review in the light of experience. If the hon. Gentleman has evidence of such experience regarding Woolaway homes, I should be grateful if he would send it to me.

    General Certificate of Education
    Mr. Wigleyasked the Secretary of State for Wales whether his Department has had any discussions with the Welsh Joint Education Committee about the level of funding necessary to enable it to provide course materials
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    for the new general certificate of secondary education for those children taking such examinations through the medium of the Welsh language in June 1988; and if he will make a statement.
    Mr. Wyn Roberts: The responsibility for co-ordinating the introduction of GCSE rests with the Secondary Examination Council, acting in conjuction with the Welsh Joint Education Committee in Wales, and there has therefore been no discussion between my Department and the WJEC on that subject.
    The resourcing of individual schools, including the provision of course materials in Welsh, is a matter for local education authorities. However, following the Government's announcement on 13 March, an additional £1·18 million is being made available to Welsh local education authorities in 1986–87 and 1987–88 specifically for the provision of books and equipment for the GCSE.
    A further £15,000—additional to the £45,000 already provided—is being made available in Wales for teacher training for the new examination, and we are actively considering another WJEC written request for £150,000 for further teacher training in 1986–87 and 1987–88.
    Mr. Wigley: Is the Minister aware that, although the examination is generally welcomed, there is a real worry that teachers will not be trained in time to start the course in September this year? Gwynedd alone needs about £660,000 to launch the course. The money that has been made available is simply not adequate for the purpose. Will the Minister undertake to reconsider? Would it not be better to start the examination a year later than to make it a political football this year?
    Mr. Roberts: The money that has been made available for training is precisely what the WJEC requested of us. Training is very much up to the teachers. In Gwynedd, they have not been assisted at all by head teachers preventing them from attending training courses. There will be further opportunities for them, however, including the two days before the end of the summer term.

  CHURCH COMMISSIONERS

    Sunday Trading
    Mr. Peter Bruinvelsasked the Member for Wokingham, as representing the Church Commissioners, if the commissioners will make it their policy that all new leases granted by them for commercial premises prohibit their use for trading on Sundays.
    Sir William van Straubenezee The Second Church Estates Commissioner, Representing Church Commissioners: The Commissioners' standard form of lease provides that their shops should open
    "during the normal business hours of the locality".
    Should the current law be amended, the commissioners will consider the position.
    Mr. Bruinvels: Does my hon. Friend agree that there is a distinct, although sad, possibility that Sunday trading will be upon us? Is it not incumbent on the Church Commissioners to give a lead to the rest of the country by inserting in the leases of new businesses a provision which prevents them from trading on Sundays? I appreciate that the Church Commissioners already hold £26 million-worth of shares in companies that are likely to trade on Sundays, but does my hon. Friend agree that the best way forward is to set such a

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    requirement to ensure that the Church Commissioners are whiter than the rest of the country and that new estates which are to open in Ipswich, Kingston, Birkenhead and Stockport do not trade on Sundays?
    Sir William van Straubenzee: With respect to my hon. Friend, Sunday trading is with us, and has been for some time. That is not the issue. The issue is whether, in tidying up a wholly unsatisfactory law, the House should go as far as complete abolition. That matter goes wider than this question. As I have said, the Church Commissioners will consider the matter if and when the law is changed.
    Mr. Simon Hughes: Since we last had questions on this subject, have the Church Commissioners also received representations from the public about Sunday opening? If so, what steps have they taken, or do they plan to take, or to make it clear on behalf of the interests that they represent that there is increasingly widespread anxiety at the Government's continuing intention not to change their original plans but to ensure that there is a complete derestriction of Sunday trading?
    Sir William van Straubenzee: I am not aware, although I shall inquire, of any additional specific representations. If I am wrong on that, I shall inform the hon. Member. He is totally accurate in saying that the overwhelming view of the Church of England as a whole, to which the Church Commissioners have responded—it is for them that I answer—is hostile to the idea of the total abolition of trading restrictions.
    Mr. Aitken: Is my hon. Friend aware that until recently the cathedral shop in the precincts of Canterbury cathedral was vigorously trading on Sundays by selling beer mats and other tourist knick-knacks? Would it not be wiser for the Church Commissioners to correct the beam on ecclesiastical premises before they try to correct the mote in commercial premises?
    Sir William van Straubenzee: That is precisely why they did so. It came as a surprise to one or two senior dignitaries to discover that this practice was going on. I imagine that my hon. Friend discovered it because one of the books on sale is very useful in the purchase of beer.
    Mr. Ryman: Does the hon. Gentleman appreciate that this is a far wider issue, and that if the Shops Bill were introduced and passed into law—
    Mr. Speaker: Order. It cannot be wider than the new leases referred to in the question.
    Mr. Ryman: I am grateful to you, Mr. Speaker. The principle arises from the specific question. The Auld report recognised the anomalies in the law, but would it not be monstrous if the Government used their majority to force the Shops Bill through the House in the face of widespread opposition from the trade unions, acting to protect their members, and the Christian community throughout the country, when it would wholly alter the character of a Sunday? Does the hon. Gentleman agree—
    Mr. Speaker: Order. I gave the hon. Gentleman a good steer on that.
    Mr. Ryman: I shall throw some leases in.
    Sir William van Straubenzee: I am answering only about new leases as and when the law is changed. If it is
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    changed, the matter will have to be reconsidered. Meanwhile, the views of the Church are well known, and, needless to say, I share them and associate myself with them.
    Mr. Cormack: Before granting new leases, will my hon. Friend and his colleagues wait until the House has had time to deliberate? Does he agree that we do not want a high street Sunday, and therefore if the law as at present proposed is passed no new leases should be given to shops in high streets to trade on Sundays?
    Sir William van Straubenzee: I shall gladly consider that, in the light of my hon. Friend's penetrating comments.

    Clergy Stipends
    Mr. Greenwayasked the hon. Member for Wokingham, as representing the Church Commissioners, what account the Church Commissioners take, in calculating stipends, of congregational Easter offerings to the clergy; and if he will make a statement.
    Sir William van Straubenzee: The level of individual clergy stipends is a diocesan matter. However, I can say that dioceses do take into account any Easter offerings paid direct to the clergyman when they assess the amount of augmentation grant to be paid.
    Mr. Greenway: Is it not a fact that, throughout the land on Easter Sunday next, in accordance with ancient tradition, church people of all ages, including schoolchildren, will be invited to make personal contributions to their incumbents? Will they not be distressed when they discover that those contributions do not go direct to the vicars, but are part of the stipends? Will the Church Commissioners, with their £1·7 billion assets, look again at this to see whether they can ensure that Easter offerings intended for vicars are paid to vicars?
    Sir William van Straubenzee: In operating this policy the Church commissioners are responding to a strategy laid down in 1975 by the General Synod, which was designed essentially to have a greater element of fairness as between one incumbent and another. The laity of the Church have now overtaken the church Commissioners in providing their share of the stipends, while the Church Commissioners are wholly responsible for the money that is paid by way of pensions.

    Women
    Mr. Dubsasked the hon. Member for Wokingham, as representing the Church Commissioners, how many of those for whose pay the Church Commissioners are responsible are women; and if he will break down these figures by category of employment.
    Sir William van Straubenzee: There are 137 women on the commissioners' staff. The commissioners also contribute to the pay of 536 full and part-time deaconesses and female lay-workers and 100 women employed on the staffs of the archbishops and diocesan bishops. I have arranged to publish the full details in the Official Report.
    Mr. Dubs: Does the hon. Gentleman realise that many women wish to take holy orders, but are debarred from doing so, and look with gratitude to the General Synod's

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    recent decision that women should be allowed to become deacons? Will the hon. Gentleman do all that he can to expedite that matter?
    Sir William van Straubenzee: If I am entrusted with this issue, I shall do all that I can to place any necessary legislation before the House. The first measure will involve women as deacons, which is theologically quite distinct from women as priests. However, I have a feeling that the second measure will not fall to me during this Parliament.
    Mr. Frank Field: As most of the money raised in parishes is raised by women, what weight should the House give to the view that there should be no taxation without representation when it comes to consider the measure concerning women deacons?
    Sir William van Straubenzee: In accordance with tradition, I am sure that hon. Members will want to listen to representations from every side when that measure comes before the House. I am convinced of the arguments, but it is for the House to decide.
    Following are the details:

    28 February 1986

    Women on the Church Commissioners' Staff

    Administrative

    71

    Professional

    5

    Technical

    61

    *137

    Women in the Parochial and Diocesan Ministry (Towards whose pay the Commissioners contribute)

    Deaconesses (Full-time)

    310

    Deaconesses (Part-time)

    55

    Lay-workers (Full-time)

    139

    Lay-workers (Part-time)

    32

    536

    Women on the Staff of the Archbishops and Diocesan Bishops (Towards whose pay the Commissioners contribute)

    Secretaries

    94

    Others

    6

    100

    * 39 per cent. of the total.

    "Faith in the City"
    Mr. Chapmanasked the hon. Member for Wokingham, as representing the Church Commissioners, what initiatives the Church Commissioners are taking to implement those recommendations in the report entitled "Faith in the City" which cover matters within the commissioners' responsibility.
    Sir William van Straubenzee: The commissioners have offered to provide the secretariat for the proposed Church urban fund and they will give sympathetic consideration to the proposal that they should contribute £1 million per annum towards the fund. This, however, would require legislation.
    Mr. Chapman: I am grateful to my hon. Friend for that information. In hindsight, and in view of what was written in "Faith in the City", is it not a pity that so many churches in the urban priority areas were demolished, as they were
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    very much the focal points of their communities? Does the Church have any plans to have a physical presence once more in those areas?
    Sir William van Straubenzee: I must question the assumption that my hon. Friend has made. To my certain knowledge every case of proposed demolition, whether in an urban area or elsewhere, is given most serious consideration from all points of view, including that of pastoral care. If my hon. Friend does not feel that that has happened in a specific case, I should be happy to look at the matter. However, in general, great care is taken.

  THE ARTS

    Local Government Reform
    Mr. Tony Banksasked the Minister for the Arts if he intends to monitor the impact on the funding of the arts of the abolition of the Greater London council; and if he will make a statement.
    The Minister for the Arts (Mr. Richard Luce): I shall, of course, continue to take a close interest in the progress of the arts in the abolition areas, and I have confidence in their future.
    Mr. Banks: Is the Minister aware that in the GLC's so-called spending spree, £4·6 million is earmarked for the arts in London? Indeed, this issue is the subject of a case at present being dealt with in the other place. Is the Minister prepared to use his good offices, as a member of the Tory party, to persuade Westminster to drop its pernicious action against the GLC? If he is not prepared to do so and the case goes against the GLC, will he put pressure on the London Residuary Body to ensure that that money goes to the Richmond scheme so that the arts in London benefit?
    Mrs. Kellet-Bowman: Speech.
    Mr. Banks: It was a better speech than the hon. Lady will ever make.
    Mr. Luce: I note that the Court of Appeal has upheld Westminster city council's challenge as to the legality of the GLC's spending plans. I understand that the GLC has sought leave to appeal, and I cannot therefore comment on the court's decision. However, I must make the Government's position in general quite clear. We do not consider it appropriate that the GLC or the metropolitan county councils should, at this late stage, incur significant expenditure on new initiatives without the approval of the successor authorities. That is our position.
    Mr. Jessel: Does my right hon. Friend agree that real art, which excites, inspires, uplifts and enriches people's lives can be greatly benefited by a budget, whereas the hon. Member for Newham, North-West (Mr. Banks) and his friends on the GLC gave a significant part of their budget for the promotion of degrading and decadent rubbish?
    Mr. Luce: I agree with my hon. Friend. The hon. Member for Newham, North-West (Mr. Banks) should end his obsession with the past and look with a bit more optimism to the exciting things that can happen in future in the Greater London area. I also agree with my hon. Friend that the tax relief that is to be provided for single gifts to charities by companies will make a positive

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    contribution to the arts. Arts organisations should now go out and try to persuade businesses to give them their support.
    Mr. Buchan: Does the Minister recognise that if it were not for the malevolent and foolish actions of both his Government and Westminster council the GLC would now be able to save some of the arts described by the hon. Member for Twickenham (Mr. Jessel)? The GLC could come to the rescue of the Victoria and Albert museum in the same way as it came to the rescue of the Cottesloe theatre. Will the Minister fill the place of the GLC? Will he give the proper funds to the Victoria and Albert to repair the damage caused by the flood?
    Mr. Luce: The hon. Gentleman mentioned Westminster council. It should be strongly praised for agreeing to provide £3 million for the arts in the Greater London area. If other councils, such as Islington borough council, followed the Westminster example we would make some progress. I have a great deal of sympathy, as I am sure does the whole House, for Sir Roy Strong and his staff, who have done a magnificent job over the weekend following the tragic accident at the museum. I and my hon. Friend the Parliamentary Under-Secretary of State for the Environment, the hon. Member for Ealing, Acton (Sir G. Young) will, immediately after Question Time, go to the Victoria and Albert to see the scale of the damage and to discuss the situation with Sir Roy Strong. We are considering whether there should be an inquiry. This accident occurred because of leakage from a temporary joint on water piping. It is against that background that we are considering an inquiry.
    Sir David Price: Does my right hon. Friend agree that dealing with the flooding of the Victoria and Albert on Saturday is the most urgent artistic problem in London? On his visit today he will carry with him the full support of the House and will go in the knowledge that if he wishes to ask for extra money to fund the repairs the House will view the request sympathetically.
    Mr. Luce: I am grateful to my hon. Friend. As I say, in the next hour or so I will see the full extent of the damage. I take full account of what my hon. Friend has said.
    Mr. Chris Smithasked the Minister for the Arts what assessment he has made of the impact on the 1986–87 funding position of arts' organisations in Islington of the abolition of the Greater London council; and if he will make a statement.
    Mr. Luce: I refer the hon. Member to my reply of 10 February about Sadler's Wells theatre, for which the prospects are now good. Discussions continue between the Arts Council and Islington borough council about the funding of other arts bodies in the borough.
    Mr. Smith: Is the Minister aware that among the many valued theatrical institutions in the borough of Islington is the Almeida theatre? Is he also aware that many theatregoers, not just from Islington but from the whole of London, are greatly worried about the threat to that theatre? Will he make sure that the Arts Council looks favourably at future funding of the Almeida theatre, and will he also make representations to his right hon. Friend the Secretary of State to ensure that before insisting that Islington council picks up the bill, it is not ratecapped?
    Mr. Luce: Like other borough councils, Islington has been relieved of the rate precept and the bill that it had to pay for the arts from the GLC. That will apply in the coming year. I agree with the hon. Gentleman that the Almeida theatre is extremely good and has a high reputation. For that reason, it is not unreasonable to look to Islington borough council to play its part. On 2 April the Arts Council will announce its budgets for all those areas where borough councils have agreed to co-operate. The Islington council has not agreed to co-operate, but I hope that it will reconsider its position.
    Mr. Alan Howarth: Does my right hon. Friend agree that, since the Budget, the debate on funding for the arts has to be conducted in new terms, and that arts organisations which have been accustomed to look to central and local government for funding should look also for tax-favoured charitable donations? We on the Tory Benches offer our warmest congratulations to the Minister and to the Government on a creative initiative which will release significant additional sums for the arts.
    Mr. Luce: I strongly acknowledge the role that my hon. Friend has played and the strong views that he has expressed in previous months. I am convinced that the Budget measures will transform the arts climate and encourage still further the amount of giving, not only to charitable bodies, but to the arts world. I hope that all hon. Members will do their utmost to persuade businesses and, later, individuals to give to the arts.
    Mr. Buchan: Does the right hon. Gentleman realise that, not only in Islington, but in the surrounding boroughs of London and in the metropolitan counties, it is a sick joke to suggest that they have the moneys to replace the missing funding? There are at least half a dozen extremely important and major artistic events in Islington, including theatres. Does the right hon. Gentleman recall that his predecessor gave a pledge that the arts would not suffer and that the money would be replaced? Quite apart from what the right hon. Gentleman expects of the boroughs, will he fulfil that pledge?
    Mr. Luce: We have clear evidence, not only in Greater London, but outside London, that all these issues are being tackled sensitively and properly one by one. There are already agreements on these matters in Greater Manchester, Tyne and Wear and other areas. Only a few district council successor authorities are holding back the prospects of a sensible settlement. Islington borough council still has not made a clear decision. Other borough councils, including Hammersmith and Westminster, have agreed, and their lead should be followed.

    Wales
    Mr. Wigleyasked the Minister for the Arts when he next plans to meet the chairman of the Welsh Arts Council to discuss the funding of the arts in Wales.
    Mr. Luce: Mr. Mathew Pritchard has recently been appointed to be chairman of the Welsh Arts Council, and I hope to meet him as soon as a date can be arranged.
    Mr. Wigley: When the right hon. Gentleman meets Mr. Prichard, will he take up with him the position of the Welsh National Opera, which said last week that it could be £500,000 in debt by this time next year because the funding was not sufficient to cover inflation? Will the right

    609
    hon. Gentleman look at the recent reports of the Arts Council of Great Britain on the allocation of resources to opera to ascertain whether any of those resources could be directed towards the Welsh National Opera to alleviate the position?
    Mr. Luce: I am in no doubt that when I meet Mr. Prichard we shall discuss these and other matters. I should point out that the budget for the Welsh Arts Council for the coming financial year is being increased by 6·6 per cent. That is a positive contribution. I have already visited the Welsh Arts Council in Wales. It is doing an excellent job. Of course, I shall discuss the issue of the Welsh National Opera, which has a strong national as well as international reputation.
    Mr. Best: Will my right hon. Friend discuss with Mr. Prichard the funding of Opera Gogledd Cymru, which is a new venture to enable young people to train for a future operatic career, which will give the people of north Wales an opportunity to see superb opera?
    Mr. Luce: As my hon. Friend has raised this matter with me, I shall, of course, mention it in my discussions. I must point out, however, that it is for the Welsh Arts Council to decide how to disburse the money. The important point is that I have increased the amount by 6·6 per cent. for the coming financial year.

Evelyn Glenholmes
3.32 pm
The Secretary of State for the Home Department (Mr. Douglas Hurd): With permission, Mr. Speaker, I should like to make a statement about the recent regrettable failure to secure the extradition of Evelyn Glenholmes from the Republic of Ireland.
Nine endorsed warrants for the return of Miss Glenholmes were first issued on 31 October 1984 and submitted to the Irish authorities for endorsement in accordance with the United Kingdom-Irish extradition legislation. The offences covered by the warrants related to various terrorist offences committed between 1981 and 1982, including murder, attempted murder, firearms and explosives offences. The original warrants were returned by the Irish authorities, who asked for some technical changes to be made to their wording. Fresh warrants were accordingly submitted on 6 November 1984, but by that time details of the extradition request had been disclosed in the press and Miss Glenholmes disappeared from view.
Miss Glenholmes was later arrested in Dublin on 12 March 1986, and the hearing of the extradition request opened in the district court of Dublin last Wednesday on the basis of the warrants issued in November 1984.
Throughout last week's court hearing there was close co-operation between the Irish prosecuting authorities and officers from the Metropolitan police and the office of the Director of Public Prosecutions.
On Saturday morning, having heard submissions from defence counsel that the extradition warrants were defective, the court discharged Miss Glenholmes. I understand that the principal consideration which underlay the court's decision was that, whereas the standard wording printed on the warrants referred to information on oath as having been laid on the day the warrants were issued—which was 6 November 1984—the court considered that the relevant information was that laid when the original warrants had been issued on 31 October 1984. I understand that the magistrate in London treated the further application on 6 November as having been made under oath adopting the information already laid but not resworn. The information required for both sets of warrants was identical, but was not sworn again on 6 November, which could have avoided the difficulty which later arose.
Even before Miss Glenholmes was released, the United Kingdom authorities had made arrangements for the issue of a fresh warrant covering one of the charges of murder. On the basis of this fresh warrant, the Garda obtained a new provisional warrant for Miss Glenholmes' arrest. Once she had been rearrested, she was brought back to the district court. I understand the Miss Glenholmes was then released, this time on the grounds that the court was not satisfied, in spite of a telephone call from New Scotland Yard to the Garda, that there was evidence that a fresh warrant had been issued in London that morning or that Miss Glenholmes had in effect been at liberty between her earlier release and her rearrest.
Following Miss Glenholmes' second release, the fresh warrant was sent to Dublin this morning. Earlier today additional warrants were sent covering the eight remaining charges and will be sent to the authorities in Dublin later today.
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My right hon. and learned Friend the Attorney-General and I have looked carefully at the information so far available to us. On the basis of that information, it is clear that the extradition application failed because of a technical objection taken by the Dublin court. My right hon. and learned Friend and I regret that this technical objection was not foreseen in time and fresh warrants obtained. We are considering urgently the need for a review of procedures and the handling of this sort of case. My right hon. and learned Friend the Attorney-General has instructed the Directors of Public Prosecutions for England and Wales, and for Northern Ireland, to ensure personally that all outstanding warrants in respect of terrorist offences are checked at once for accuracy and sufficiency. Under the auspices of the Intergovernmental Conference, work has already begun on a range of legal matters relating to extradition; and lessons of the past few days will be studied in that context.
For the sake of completeness, I should also inform the House that our inquiries have shown that in giving evidence to the court in Dublin an officer from the Metropolitan police made an error in referring to the dates on which the warrants were issued. I understand that he sought to correct this error but that an opportunity for him to do so was not forthcoming. This does not, however, appear to have influenced the court in its decision to release Miss Glenholmes.
It is deeply disappointing that it has not so far proved possible to obtain the extradition of Miss Glenholmes to face justice in a British court. It is essential that we all learn the right lessons for the future from this failure.
Mr. Gerald Kaufman: That statement still leaves a number of extremely important questions to be answered. Will the Home Secretary confirm that throughout this lamentable episode the Irish authorities have behaved with complete propriety and that the Irish Government have fulfilled all their obligations?
We are told that Evelyn Glenholmes is Scotland Yard's most wanted suspect for alleged terrorist offences. In the light of the fact that the extradition of Brendan Burns failed through errors relating to warrants, and the further fact that two prior sets of warrants were prepared for Evelyn Glenholmes, one of which was found in the Irish courts to be faulty, not just technically—and the Florrie Secretary does himself no credit by harping on technicalities when matters of substance are involved—but in at least one serious material respect, and the second one withdrawn by the office of the Director of Public Prosecutions when found to be faulty, why was this third and crucial error permitted? Why were these warrants permitted to go forward without being meticulously checked? Why, during the nearly 18 months that were available, were the warrants not rechecked for accuracy? The Home Secretary says that they were originally checked with the Irish authorities, were found wanting and were corrected, but the right hon. Gentleman does not point out that the new ones—the allegedly corrected ones—also turned out to be faulty. Why were they not cleared in advance for accuracy and technical probity with the Irish legal authorities?
Who was in charge of this process in the office of the Director of Public Prosecutions? Is it true, as alleged, that this matter was dealt with at a junior level? Is it true, as further alleged, that other warrants that were sent to Ireland on other matters have also been found to be

613
defective? The Home Secretary says that new warrants in the Evelyn Glenholmes' case have now been issued. Is he sure that they are in order this time?
Mr. Dukes, the Irish Minister of Justice, said yesterday that after the court adjourned on Friday in Dublin further information and clarification were sought from the British authorities at that stage but, Mr. Dukes said:
"We were not able to get it."
What is the explanation for that serious lapse?
Why did an official from the office of the Director of Public Prosecutions then go to Dublin? What was his purpose? What did he achieve? What was the purpose of the telephone call referred to by the Home Secretary that was made to Dublin from a chief inspector of the Metropolitan police? What was that meant to achieve? Could the Home Secretary say how a British court would have responded to such a telephone call on a serious extradition case? Above all, taking into account the important and sensitive issues at stake, why did not the Director of Public Prosecutions ensure that he himself, or a high official, supervised meticulously all stages of the procedures? Why did not the Attorney-General, who is answerable to this House, take care to satisfy himself that the necessary procedures had been precisely observed?
The Home Secretary calmly tells us this afternoon that now, when the horse has bolted, there is to be a careful inspection of the stable. That is not good enough. A full inquiry is essential. It is also essential that those at the very top accept responsibility, are disciplined and, if necessary, are removed from the offices that they hold.
This disquieting episode has created serious difficulties for the Irish authorities in their determination to co-operate with this country over the delicate issue of extradition. What is more, the scenes on television have given the IRA a gratuitous propaganda triumph. Slackness, incompetence and complacency have brought about this discreditable botch up. May we have an absolute assurance that steps will now be taken to ensure that nothing like this can ever happen again?
Mr. Hurd: I confirm that we have no criticism of the co-operation that we have received in this matter from the Irish authorities. I am glad of the opportunity to make that clear.
In response to the right hon. Gentleman's second point, the difficulty on which this case foundered on Saturday was a technical difficulty. I think that my statement made that clear. It was concerned with the question whether, when a second and revised warrant was sought from the same magistrate, the identical information which was laid when obtaining the first warrant needed to be laid under oath all over again. Whatever view one takes of it, that is a technical point. As I said in my statement, I believe that a great deal of trouble could have been avoided if that had been foreseen and acted upon in the autumn of 1984.
The second set of warrants which were held to be defective on Saturday were given to the Irish authorities and no objection or criticism was raised on them. However, I think that it is fair to add that it would not have been reasonable to expect the Irish authorities to have spotted the particular point on which the court in Dublin found the warrant to be defective on Saturday. But the warrants were available to the Irish authorities for their comments.
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I am advised that it is perfectly normal in these circumstances for news of the issue of a fresh warrant to be conveyed, either way, by a telephone conversation between the police forces concerned. That has happened before, and I understand that it is normal. It happened on this occasion, although it was not accepted by the court for the reasons I have given. I agree with the right hon. Gentleman that it is essential that we find ways, through the Anglo-Irish conference and in other ways, to ensure that such difficulties do not recur.
Mr. Ian Gow: Is there not a high duty resting on the Director of Public Prosecutions in all cases of extradition warrants to ensure that those warrants are validly and properly prepared? Is not that duty even greater when we are dealing with a matter of the gravest importance such as terrorism on a massive scale of which the person concerned is suspect? Is my right hon. Friend able to assure the House that the warrants taken to Dublin this morning have been seen and approved by the appropriate legal authorities in Dublin and that he has received an assurance that the new warrants sent over today are in order?
Mr. Hurd: I agree with the first part of my hon. Friend's comments. It is our responsibility to ensure that warrants of this kind are in a form which arms them against all possible difficulties and criticisms, whether of a substantial or technical kind. The new warrant and the other warrants which I mentioned being sent to Dublin today are identical to those previously sent, with the crucial exception that the information concerned has been relaid before the magistrate concerned.
Mr. J. Enoch Powell: Has it occurred to the Government that the incompetence of those acting on their behalf in the matter of extradition may have been exceeded by the incompetence of those who negotiated the Anglo-Irish agreement and who advised the Government to enter into it?
Mr. Hurd: I anticipated that the right hon. Gentleman would raise that point. However, I do not think that he has proved its relevance to the matter we are discussing.
Sir John Biggs-Davison: Since my right hon. Friend has reasonably pointed out that there is no relevance to the Anglo-Irish agreement in this unhappy matter, it is not the case that the commendable and exceptional exertions of the Garda Siochana, to which I pay tribute, have no connection with that agreement either?
Mr. Hurd: As I said in my response to the right hon. Member for Manchester, Gorton (Mr. Kaufman), we have no criticism of the behaviour of the Irish Government or of their agencies, including the Garda, in that respect. Therefore, I associate myself with what my hon. Friend has said. The relevance of the Anglo-Irish agreement is that discussions are taking place under article 8 of the agreement to review procedures. Obviously the lessons of this event will be relevant to those discussions.
Mr. Merlyn Rees: Surely the purpose of a statement in this House is to enable us to question the responsible Minister. The Home Secretary is not responsible for extradition warrants and he is not responsible for the Director of Public Prosecutions. We should be questioning the Attorney-General. The Opposition will have to take the matter further.

615
In any event, is the right hon. Gentleman aware that this is not the only example of a defective extradition warrant recently? It was brought to my notice by the chief constable of Yorkshire on Friday that a defective warrant was served on a man called Anthony Kelly, who is wanted for questioning for 18 armed robberies and the murder of a Leeds policeman. Will the right hon. Gentleman use his powers as Home Secretary to tell the Attorney-General that when the warrant is served again we in Yorkshire will want better results?
Mr. Hurd: The matter concerns the police and the prosecuting authorities in this country, so it seems sensible that I should make the statement today. No doubt the right hon. Gentleman will have ample opportunities for asking questions of my right hon. and learned Friend the Attorney-General if he wishes to do so. [HON. MEMBERS: "When?"] I do not doubt that there will be opportunities.
I refer to the case that the right hon. Gentleman mentioned. The gentleman concerned, Mr. Kelly, is serving a sentence of imprisonment in the Republic for offences committed in the Republic. Perhaps, therefore, we are not at the end of that story.
Mr. Ivan Lawrence: Would it not have been unthinkable for a British court not to have granted a reasonable adjournment when such a technicality arose—particularly one which emerged only in the course of cross-examination—and which must have been known to the Irish authorities and thought by them to be utterly unimportant?
Mr. Hurd: I do not want to get drawn into that. It is true that those concerned on our behalf asked for an adjournment and the court did not grant it. My hon. and learned Friend and his colleagues will be able to judge whether a British court would have taken a different decision.
Mr. Alex Carlile: In dealing with this extraordinary example of sloppy, incompetent professional negligence, will the Home Secretary tell us whether in future we are to regard the failure by a court to administer an oath as a mere technicality? Why in a case as serious as this did not the Director of Public Prosecutions personally examine the warrants before they were sent to Ireland?
Will the right hon. Gentleman tell us why the mistake was not corrected properly before Saturday morning, and whether anybody will take responsibility for this shambles in the way that he should?
Mr. Hurd: The hon. and learned Gentleman misunderstood the point that was at issue. It was a question not simply whether the information was on oath, but whether the information needed to be relaid, although it was identical to the information that had been provided on oath a week before. That is the point. I maintain that it is a technical point.
The Director of Public Prosecutions is responsible for the conduct of that office, and for the extent to which he delegates to senior advisers and officials the handling of particular cases. The organisation of that office is, of course, a matter for my right hon. and learned Friend the Attorney-General.
Mr. Michael Mates: Far from this sorry affair being used as a criticism of the Anglo-Irish agreement, does not my right hon. Friend agree that it is
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a reason for those involved to try harder to make absolutely certain that the co-operation that was begun three months ago becomes more effective so that this sort of incident will not be repeated? Will he specifically ensure that those responsible get together in a working party specifically to make sure that this sort of misunderstanding will never happen again?
Mr. Hurd: I entirely agree with my hon. Friend. That is exactly what is happening. Of course, as right hon. and hon. Members on both sides of the House know, this process has always been a subject of extraordinary difficulty and complication, and the failure in this case is simply a further illustation of that fact. I do not complain about the criticisms that have been made this afternoon, but that is an argument not for despairing of that process but for continuing strenuously with it.
Mr. A. E. P. Duffy: (Sheffield, Attercliffe): The Home Secretary persists in trying to minimise the incompetence of those responsible by putting forward legal objections when he is really dealing with due process. Is he not aware that this is the fourth major embarrassment in extradition cases with the Irish Government in the past two years because of blunders and inadequate presentation of cases by the British and Northern Ireland authorities? Why has it suddenly become so difficult in London to prepare an adequate legal presentation?
Mr. Hurd: As I said in my last answer, this is an area which has proved to be difficult over the years. This is the latest example of it. I maintain—I think that my statement bears it out—that the difficulty on which this case fell was essentially a technical one and not one of principle.
Sir Eldon Griffiths: Is there not a very painful contrast between the detailed, careful, and often dangerous work by the police service of the Irish Republic, of the Metropolitan police and of the RUC in obtaining the necessary information, sometimes at the risk of their lives, and the comparatively slipshod and careless way in which the matter was dealt with in the Director of Public Prosecution's office? Who precisely was responsible in the DPP's office for establishing the sufficiency and accuracy of the warrants? What hope does my right hon. Friend hold out of bringing this most wanted person to justice in the near future?
Mr. Hurd: It would be neither customary nor in order to give the names of officials. The structure of responsibility is clear. It is through the Director of Public Prosecutions to my right hon. and learned Friend the Attorney-General.
Mr. George Foulkes: Since this statement is principally about the DPP's office, since on a number of occasions the Home Secretary has said that this is a matter for his right hon. and learned Friend and since he has sometimes said "I am advised" after the Attorney-General has whispered the answer in his ear, why is the Home Secretary making the statement and not the Attorney-General?
Mr. Hurd: If the hon. Gentleman had been listening to my reply to the right hon. Member for Morley and Leeds, South (Mr. Rees) he would have realised—[HON MEMBERS: "Answer."] I did answer the question. I explained that the matter which is the subject of the

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statement covers part of the area of my responsibility—that is, the police and the general conduct of policy against terrorism—and partly a matter which falls within my right hon. and learned Friend's responsibility, that is, the DPP's office. Since we could not both make the statement, one of us had to, and the lot fell to me.
Mr. John Wheeler: Although my right hon. Friend and his Department are not directly responsible, does my right hon. Friend agree that the degree of incompetence involved is such that there must be the most searching inquiry into the way that these issues are handled to ensure that a proper administrative machine is put into place so that this does not happen again?
Mr. Hurd: I agree.
Mr. Robert Maclennan: Is not the essence of the matter that the Home Secretary has attempted to suggest to the House that this is a matter of extraordinary complexity and that he has tried to weave a web to protect those responsible? Is not the reality that which is set out in the Government's Green Paper on extradition last February which described extradition by warrant as a "comparatively simple and expeditious procedure"? In the light of the evidence of the Director of Public Prosecutions' inability to manage such a comparatively simple and expeditious procedure, should he not resign, or, if not he, the Attorney-General?
Mr. Hurd: I do not think that that is fair of the hon. Gentleman. The advantage of the procedure which we follow with the Republic is that it avoids some of the difficulties involved in our other extradition legislation, in particular the prima facie case which the House might be asked to consider next Session. It should be a comparatively straightforward procedure, but that assumes that everybody on both sides is armed effectively against the procedural difficulties, whether of substance or technical. That did not happen in this case.
Mr. Ivor Stanbrook: May I ask my right hon. Friend not to accept too readily that there has been any incompetence on the part of the DPP or his staff? If true reciprocity existed, as it should, the document would not necessarily have been ruled defective. Given the nature of the technical objection, would it not have been sufficient in this country for the court to adjourn the case for consideration before making an announcement on the application and thus releasing into the community a notorious wanted criminal? In these circumstances, should we not address our criticism to the spirit with which the Dublin court operated this business?
Mr. Hurd: I hope that the House has noted carefully the point which my hon. Friend has made with his experience of these matters. Choosing my words with care, and as I have already said in answer to an earlier question, I think that it would have been possible for the court to take a different decision on the request for an adjournment.
Mr. Michael Foot: As the House is clearly quite dissatisfied with the answers given by the Home Secretary, will the right hon. Gentleman make representations to the Leader of the House that a statement should be made to the House tomorrow by the Attorney-General?
Mr. Hurd: My right hon. Friend the Leader of the House will have noted that request. As I have said, there are ample opportunities to put questions to my right hon. and learned Friend the Attorney-General on aspects of the matter which concern him especially. There are wider aspects, however, and several of the questions which have been addressed to me have covered them. I repeat that I think that it was entirely right that I should make the statement.
Mr. William Cash: Does my right hon. Friend deplore the irresponsible attempts of a vociferous minority to use this regrettable incident as a means of denigrating the Anglo-Irish agreement?
Mr. Hurd: Yes, Sir.
Mr. John Ryman: Normally the standard of professional work of the Director of Public Prosecutions is extremely high, so why was it that the revised warrant of 6 November 1984 was not sworn? What was the reason for not taking the step of swearing that warrant? It contained revised facts and was amended to an extent that made it obvious that it had to be sworn again to conform with the law.
Mr. Hurd: The magistrate did not so require.
Sir Anthony Grant: Instead of merely showing the second lot of warrants to the Dublin legal authorities, would it not have been more sensible specifically to have asked the authorities whether the documents were in order? After all, the Dublin authorities should know more about Irish law than we do. Does my right hon. Friend agree that they should have been just as keen as the British authorities to bring criminals to justice? Also, has my right hon. Friend noted the apparent glee with which some Opposition Members have greeted the escape of a notorious criminal? Whose side are they on?
Mr. Hurd: The revised warrants were available to and shown to the Irish authorities, and they raised no comment or objection to them on the ground of Irish law. As I have already said to the right hon. Member for Manchester, Gorton, (Mr. Kaufman), it would not have been fair or reasonable to expect the Irish authorities to spot the technical defect—
Mr. Stanbrook: Why not?
Mr. Hurd: This involved the relaying of information between one week and another in this country. It would not be fair to expect the Irish authorities to spot the alleged defect, which was thought to be decisive by the court.
Mr. Andrew Faulds: Since Scotland Yard is blameless in this matter, although the Home Secretary made an adverse comment on a Metropolitan officer, why has he been put up to protect the Attorney-General, whose responsibility the Director of Public Prosecutions comes under, and who should be making the statement and who should now proceed in any case, after this series of errors, to dismiss Sir Thomas Hetherington?
Mr. Hurd: I have answered that question twice. The hon. Gentleman will excuse me for not attempting to do so a third time.
Mr. Richard Ottaway: Will my right hon. Friend explain why the Irish courts were not satisfied that a new warrant was issued for the second hearing on Saturday afternoon?
Mr. Hurd: I sought to explain that. There were two reasons, and I do not wish to comment on them particularly. One reason, as has been mentioned already, was whether it is sufficient evidence of a new warrant having been provided that the news of that warrant is communicated by telephone between police forces. I gather that that is normal practice, but it was not accepted by the court.
The second question was directed to Irish law, on which I am not competent. The issue raised was whether the release of Miss Glenholmes on that morning was, in effect, a release to liberty under Irish law.
Mr. A. J. Beith: Are there to be any resignations or any disciplinary action at any level in the department concerned, or does nobody take any responsibility for anything any more?
Mr. Hurd: I do not think that the hon. Gentleman could have listened to what I said in my statement on that issue. Both my right hon. and learned Friend the Attorney-General and I regretted the failure in this case, and that was stated specifically in my original statement. The internal arrangements of the office of the Director are a matter for my right hon. and learned Friend.
Viscount Cranborne: Can my right hon. Friend tell the House what sanctions are available to Ministers when they are convinced of the incompetence of public servants?
Mr. Hurd: They vary, but they exist.
Mr. Kaufman: The House is clearly highly dissatisfied with the Home Secretary's faltering attempts to answer the basic points that have been raised. The right hon. Gentleman harps on the alleged technicality of the failure on Saturday, but the magistrate who signed the warrant signed it "Sworn this day" when it was not sworn that day. Was that statement, which was palpably untrue, merely a technicality? Above all, the right hon. Gentleman has not told the House who was responsible. Who was he seeking to shield by himself making this statement? Was it the
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Director of Public Prosecutions? Was it the silent Attorney-General? Or, in accordance with the Government's style, will no one accept responsibility for this almighty mess?
Mr. Hurd: The right hon. Gentleman is repetitive. As I said in my statement, my right hon. and learned Friend and I have expressed our regret that this occurred. Therefore, we accept our share of the responsibility; and that, I think, is what the right hon. Gentleman would expect.
The point at issue was whether identical information which had been laid under oath on one day was required to be laid under oath on a second day before the same magistrate. The magistrate did not so require and it was not done. It is clear that if it had been done this particular difficulty would have been avoided, although everyone who has studied the case knows that even then there were further difficulties further down the road.
Mr. Anthony Nelson: Is my right hon. Friend aware that, despite the opportunist and derogatory response of the Opposition, he and my right hon. and learned Friend the Attorney-General continue to enjoy the confidence of the House and the country for the way in which they discharge their responsibilities to hound terrorists and to bring them to book?
Mr. Hurd: I do not think that my right hon. and learned Friend and I expected that a statement on this subject would be received with enthusiasm, and I do not wish to understate the importance of this failure. I have tried to be open with the House about exactly what happened. I am grateful to my hon. Friend for what he has said.
Mr. John Morris: On a point of order, Mr. Speaker. In view of the disquiet on both sides of the House about the role of the Director of Public Prosecutions and his office, may we expect a statement tomorrow from the Attorney-General, the Minister responsible, on the reorganisation that he has effected of the director's office for the avoidance of further difficulties, technical or otherwise?
Mr. Speaker: That patently is not a matter for me.

Auxiliary Oil Replenishment Vessel (Order)
4.9 pm
Mr. Nicholas Brown: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the Royal Navy's order for the auxiliary oil replenishment lead vessel."
The matter is urgent because an announcement is about to be made placing the order at Harland and Wolff in spite of the representations made at the weekend by Swan Hunter to the Ministry of Defence and in spite of the representations made by myself and by my hon. Friend the Member for Wallsend (Mr. Garrett) when we met the Prime Minister last Thursday.
The decision should be delayed before such a disastrous course is embarked upon to allow Parliament the opportunity to consider the strategic issues involved. Is it Parliament's wish that privately owned warship yards—such as Swan Hunter—should compete against the massive public subsidies—£37 million last year—which have been given to Harland and Wolff? As there is enough work for both yards, why will the Government not place the order for the lead vessel at Swan Hunter and the order for the follow-on vessel at Harland and Wolff? Harland's has work until 1987 but Swan Hunter's has a shortfall. Why should the people of Tyneside have to accept a further 2,000 redundancies, which would give that area the highest level of unemployment in the country, including Northern Ireland, as the price for the Anglo-Irish agreement?
Mr. Speaker: The hon. Member for Newcastle upon Tyne, East (Mr. Brown) asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the Royal Navy's order for the AOR lead vessel."
I have listened with great concern to what the hon. Member has said, but I must say that I do not consider the matter that he has raised is appropriate for discussion under Standing Order No. 10. I cannot therefore submit his application to the House, but I hope that he will find other ways of raising the matter.

Evelyn Glenholmes
4.12 pm
Mr. Ian Gow: I beg to ask leave to move the Adjournment of the House, under Standing Order No 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the failure of the Director of Public Prosecutions to secure the extradition from the Republic of Ireland of Evelyn Glenholmes, suspected of the gravest terrorist offences, despite the Anglo-Irish agreement of 15 November 1985."
This matter is clearly specific and relates to events which are within the knowledge of the House, which took place as recently as last Saturday. It is undoubtedly important. You have heard, Mr. Speaker, the deep concern expressed by hon. Members on both sides of the House about the statement made by right hon. Friend the Secretary of State for the Home Department.
The matter is also urgent. You will have noticed, Mr. Speaker, that my right hon. Friend the Home Secretary did not answer the third question that I put to him this afternoon, and say whether he had satisfied himself that, in the view of the Irish legal authorities, the third warrant sent over this morning to Dublin did conform, and conform in every respect, with the legal requirements of Irish law so that there could be, if Miss Glenholmes should be apprehended, a proper extradition of the kind that was attempted twice on Saturday.
There is a third aspect which I would like to draw to your attention, Mr. Speaker. Our proceedings this afternoon take place four months after the signing of the Anglo-Irish agreement. On 11 March, less than a fortnight ago, there was a meeting of the Intergovernmental Conference at ministerial level. I wish to remind you, Mr. Speaker, of what took place as recorded in the official communiqué:
"The Conference welcomed the development of contacts between officials concerned with security questions, and the plans for these contacts to continue."
Later in that communiqué it states:
"The conference heard a report of the meeting held on 13 February to discuss legal matters including the administration of justice."
The communiqué also stressed that:
"The Conference agreed that at its next meeting it would consider … progress reports from the groups of officials set up under Article 8 of the Agreement to discuss extradition."
It is clear that the matters which were the subject of the terrible events in Dublin on Saturday, and which were the subject of my right hon. Friend's statement this afternoon, were also considered at the last meeting of the Intergovernmental Conference.
The House is about to rise for the Easter recess. There is no other opportunity, save through an emergency debate, for us to discuss these matters which are so clearly of importance to the House. I ask you, Mr. Speaker, to agree to an emergency debate.
Mr. Speaker: The hon. Member for Eastbourne (Mr. Gow) asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"The extradition from the Republic of Ireland of Evelyn Glenholmes, suspected of the gravest terrorist offences, despite the Anglo-Irish agreement of 15 November 1985."
I have listened, as has the whole House, to what the hon. Gentleman has said and I listened, of course, to the

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earlier exchanges on the statement. I regret that I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House.

Courtaulds Clothing Ltd., Seaforth
4.16 pm
Mr. Allan Roberts: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"The threatened closure of the factory, Courtaulds Clothing Ltd. at Seaforth in my constituency."
This is a specific matter because on Friday the whole work force of 220 people was called into the canteen and given 90 days' notice of the closure of the factory. Of that work force, 58 per cent. are women and the sole breadwinners in their homes and 57 per cent. are under 21 years of age and in their first real job.
It is urgent because the House, by debating the issue, can prevent the closure of this viable factory which makes clothes for such companies as Mothercare and Marks and Spencer. It is urgent because the factory has a full order book and is being closed only for reasons of internal politics at Courtaulds. An urgent debate is needed because the work force has issued a statement saying that it will consider any method of non-violent, direct action to secure the future of their jobs and prosperity.
The House must ensure that the company opens the books to the work force and that, if Courtaulds does not want to continue to operate that factory, a workers' cooperative is able to do so in co-operation with the companies for which the factory now produces goods. The issue is especially urgent because it is happening on Merseyside, where unemployment is at its highest ever and already running at 30 per cent. in Bootle and Seaforth. If the redundancy notices stand, the highly flexible, skilled work force is likely to be on the dole for some considerable time.
Mr. Speaker: The hon. Member for Bootle (Mr. Roberts) asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"The proposed closure of the Courtaulds factory at Seaforth in the constituency of Bootle."
I regret that I must give the hon. Member the same answer that I gave to the other hon. Members making Standing Order No. 10 applications. I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and I cannot therefore submit his application to the House, but I hope that he will find other methods of raising the matter, which is of concern to his constituents.

Prime Minister (Share Dealings)
4.19 pm
Mr. Dennis Skinner: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"Prime ministerial conflict of interests in relation to share dealings."
The matter is specific, Mr. Speaker, because it refers to the head of the Government in the United Kingdom dealing in shares from 10 Downing street and using that building as an arm of the stock exchange.
It is also specific because it has always been generally understood in the House that, like councillors and others who represent the public in matters of accountability, Government Ministers, including the Prime Minister, do not become involved in dealing in shares because they are privy to inside information that the ordinary public does not have. In these days of privatisation, there have been countless instances when the Government and the Prime Minister have been and were privy to such information and could have made millions.
The matter is important because there is a conflict of interests. It is not right and proper that in these days of massive speculation on the stock exchange, when the Financial Times index has gone through the 1,400 barrier, we should dismiss lightly the fact that a Prime Minister has been dealing in shares.
The matter is important because No. 10 Downing street does not belong to the Prime Minister but to the nation, and it is used for Cabinet meetings every week. It is also used for Budgets, and announcements are made by the Prime Minister and many other Ministers with advance information that could lead to a lot of money being made
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by a lot of people. That is why it has been generally agreed over the years that Ministers and Prime Ministers do not become involved in speculation. The matter is also important because it is set against a backcloth of City fraud that has been unsurpassed in these many years. I do not have to go further down that road.
The matter is also important because of the public disquiet about it and because many people—I am among them—believe that there should be a full and independent public inquiry into the whole matter so that the people can judge for themselves.
The matter is urgent because it has occurred since the House last met on Friday and because the Prime Minister has refused to come to the House today, as she should have done, to make a Prime Ministerial statement to explain the matter. It is also urgent because the Committee considering the Financial Services Bill is meeting upstairs and one of its jobs is to clear up the question of conflict of interests as it applies to people in the City of London and Ministers.
The matter is important, urgent and specific. We might have gone to the Director of Public Prosecutions but we have no faith in him.
Mr. Speaker: The hon. Member for Bolsover (Mr. Skinner) asks leave to move the Adjournment of the House for the purpose of discussing an important and specific matter that he thinks should have urgent consideration, namely,
"Prime ministerial conflict of interests relating to share dealings."
I have listened with care to what the hon. Gentleman has said, but I regret that I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 10 and, therefore. I cannot submit his application to the House.
Mr. Skinner: It will not go away.

Parliamentary Language
4.22 pm
Mr. Richard Hickmet: On a point of order, Mr. Speaker. On Thursday, during exchanges between the hon. Member for Islington, North (Mr. Corbyn) and my hon. and learned Friend the Minister of State, Home Office, the hon. Member for Islington, North suggested that some hon. Members might be persuaded not to take up immigration cases because they were racist. Such language is unparliamentary, and I would invite you, Mr. Speaker, to ask the hon. Gentleman to withdraw that allegation. I raised the matter with you on Thursday and you informed me that you had not heard that remark. I must inform you that Hansard did, and it appears in the official record.
Mr. Speaker: I thank the hon. Gentleman for giving me notice of his point of order. As I said on Thursday, I did not hear that remark. Indeed, I do not think that many did, because the matter was not raised with me at the time. However, as the hon. Gentleman said, it is now printed in Hansard. I repeat what I said on Thursday and add that in the words of "Erskine May":
"Good temper and moderation are the characteristics of parliamentary language"
I hope that we shall conduct our debates on that high plane.

BILL PRESENTED
  SEXUAL OFFENCES ACT 1956 (AMENDMENT)
  Mr. Graham Bright, supported by Mr. Alex Carlile, Mr. Ken Weetch, Mr. Nicholas Lyell, Mr. Gareth Wardell and Mr. Jerry Hayes, presented a Bill to amend section 6 of the Sexual Offences Act 1956: And the same was read the First time; and ordered to be read a Second time upon Friday 11 April and to be printed. [Bill 118.]
Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [18 March].
  WAYS AND MEANS

    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).]
    Mr. Speaker: No fewer than 27 right hon. and hon. Members have applied to speak and eight of them are Privy Councillors. In fairness to the House, I propose to interleave the calling of Privy Councillors with Back-Benchers and I propose to adopt a 10-minute limit on speeches between 7 pm and 8.50 pm. I hope that the Privy Councillors who are called before that time will bear that limit broadly in mind.
    4.25 pm
    The Chancellor of the Duchy of Lancaster (Mr. Norman Tebbit): My right hon. Friend the Chancellor of the Exchequer has presented to the House a Budget which carries forward the objectives of this Conservative Government.
    No Budget can stand alone, and I am glad to see that many commentators have noted the manner in which, in many respects, this Budget has taken further the aims and reforms of earlier Budgets. It is a Budget that continues the drive towards the kind of economic way of life—a freer way of life—which has been endorsed twice by the electorate of this country, and will be endorsed again.
    No one on this side of the House has ever deluded himself into a belief in instant prescriptions. When we set out in 1979, we said that we were setting out on a long and difficult task. The world recession made the task more difficult, as did that final futile spasm of the old guard antidemocratic union bosses, the coal strike. They have both been overcome.
    We had a coherent view of how the reversal of our relative economic and industrial decline could be achieved. It is a view which experience has reinforced. The cornerstone of the work has been the reduction and control of inflation. Friday's figures for the retail price index and my right hon. Friend's forecast of 3½ per cent. inflation by the end of this year, when compared with an average level of inflation at 15½ per cent. during the previous Labour Government, underline this achievement.

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    Of course, our success on that front has led some to forget the dangers of inflation. Indeed the question is sometimes put, should not we be prepared to accept a little more inflation to create more jobs? Memory should not be so short. It is not that long ago that, in that graphic phrase of the day, Britain was drinking in the last chance saloon, and yet even now there are those who would dash straight back in and call for another round—a round of spending and borrowing that would give us another inflationary hangover—[Interruption.] The hon. Member for Middlesbrough (Mr. Bell) may not be old enough to remember it, but it was fewer than 10 years ago.
    Those were the days so rightly condemned by the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) who in 1976 said:
    "Higher inflation, followed by higher unemployment. That is the history of the last twenty years".
    He was speaking of the 20 years from 1956 to 1976.
    The right hon. Member for Leeds, East (Mr. Healey) spoke for almost everyone when, according to The Times of 18 March 1976, he told the Labour party:
    "There is a direct relationship between the level of pay received by those who have a job and the number of jobs the economy can support".
    My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) put it in even harder and clearer terms when he said that
    "inflation, if left unchecked, presents the biggest single threat to the standard of living of every person in the land".
    In contrast to our Labour predecessors, we have not been limited to occasional pious thoughts on these matters. We have taken the necessary actions, consistently over a period. To defeat inflation requires a consistency of purpose, a consistency of action, and yields a consistency of effect. Too many Chancellors in the past have been forced into mismanagement by the call for instant solutions. They converted economic cycles into roller-coaster rides that left the stomach in the mouth.
    As we know, for many years in each successive cycle the peak of inflation was higher than its predecessor. My right hon. and learned Friend the Foreign Secretary, in his Chancellorship, broke that precedent. My right hon. Friend has built upon his success.
    There is no safe level of inflation. It is the job of Government, through sound monetary and fiscal policies, to ensure—
    Mr. David Winnick: Oh!
    Mr. Tebbit: I shall read the figures to the hon. Member for Walsall, North (Mr. Winnick) if he is not clear about it.
    It is the job of Government to ensure that there is both consistent downward pressure on inflation and room for growth in the economy. Of course, success in overcoming inflation cannot guarantee a fall in unemployment, but a rise in inflation will certainly lead inexorably to an increase in unemployment. Cause and effect are not near simultaneous. Jobs are not lost as soon as prices go up, nor are they recreated quickly when prices are brought under control. None the less, the benefits of a steady and consistent approach can be seen. Since the sharp and deep recession, we have seen five years of economic growth alongside a sizeable reduction in inflation. As my right hon. Friend said, 1986 is set for output growth of 3 per
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    cent. and inflation falling to 3·5 per cent. It is a record many ex-Chancellors would have dearly wished for during their term of office.
    Mr. George Foulkes: It is an economy for the whizz kids.
    Mr. Tebbit: In real terms, we now have an economy, and an industry, including manufacturing, which is growing, not declining. It suits the Opposition not to hear the facts. The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) in particular finds difficulty in hearing while he is talking, and I suggest he stops talking.
    Total fixed investment in the economy last year was at an all time record in real terms. The CBI's latest trends inquiry gives the best combined response on prospects for output and prices since the inquiries began in 1975. Manufacturing exports are at an all time high. Of course the right hon. and learned Member for Monklands, East (Mr. Smith) will no doubt remind us that we have a deficit on our trade in manufactured goods. That is a tendency which has been growing—consistently exports were growing less quickly than imports—during the period of the last Labour Government as well as this Government. Manufacturing profitability is at its best since 1973 and productivity has increased by an average of 6 per cent. a year over the past five years.
    Mr. John Smith: I am grateful to the right hon. Gentleman for giving way so early in his speech. In the interests of accuracy, will he point out that there was a substantial surplus on the balance of trade in manufactured goods when the Government took office? Now, for the first time in our history, there is a substantial deficit, and we are heading for a deficit of £4·5 billion. Can the right hon. Gentleman tell us how, under this wise Government, this has come about?
    Mr. Tebbit: I said that there was a long established tendency in that direction because manufacturing exports were growing less quickly than manufacturing imports. That is not a new feature. It has continued and, not unnaturally, if such a tendency continues for long enough one moves from surplus into deficit.
    In the meantime, in contrast to the Labour Government, we have maintained consistently a surplus on balance of payments.
    Mr. Smith: What about oil?
    Mr. Tebbit: Here we go again. I wonder whether the right hon. and learned Gentleman would say that in such a dismissive way if it was coal? What is wrong with exporting oil? It is not many weeks since the right hon. and learned Gentleman was saying that the whole of our strategy depended on revenue from oil. We have lost half of that in a matter of weeks. The economy still looks to be in very good shape.
    It is only fair to recognise that some industrial capacity has been lost. It is only fair to agree that our competitors have not stood still waiting for us to catch up. We have begun to close the gap. Of course there are effects on unemployment. Our competitors have shed labour in manufacturing industry as they have raised productivity faster than demand has expanded and we have had to go faster still to close the gap in competitiveness.
    A sign of the strength of the recovery is shown by recent figures for the mechanical engineering industry. This strength of recovery is most notable in the output of the

    631
    machine tool industry—a business in which the Opposition would have written us off years ago. Output rose by 20 per cent. last year, and that was the first rise for a long time.
    Those in industry see good prospects and are encouraged by the Budget, despite the halving of oil revenues. It is fair to ask, in the light of what the right hon. and learned Gentleman and others have said on the matter, how the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) would have reacted to the dramatic change in oil prices had he been Chancellor. I imagine that, as usual, he would have over-reacted. People often do under stress, and he would have the stress of commitments to an extra £24 billion a year of public expenditure—alongside self denial of £4 billion to £5 billion of revenue from privatisation. He would have to wheel out the whole dreary paraphernalia of state intervention—the National Enterprise Board, the National Investment Bank, planning agreements and the like, with reactionary union bosses forced on to company boards while the right hon. Gentleman's penal tax policies would drive our most talented managers either to despair or to California. For luck he would direct pension funds money into a new generation of Meriden co-operatives, Scottish Daily News's, and the like. We know how he would react. We have seen him in office in the past when he was Secretary of State for Prices and Consumer Protection or, as his local newspaper the Birmingham Post referred to him, "Mr. Rising Price".
    In an article in the Birmingham Post the right hon. Gentleman said:
    "We spent a lot of time in the last month looking at potato prices … once the drought has worked its way through and the pound has stabilised, we can expect a period when the inflation rate is going to move down again. We are on course, but we are travelling more slowly than we would have wished to".
    Thus it would be back to the consideration of the price of potatoes by some wretched board and some other unfortunate Minister spending more time on that than ministerial duties warranted. [Interruption.] The right hon. Member for Sparkbrook says he would like to attack his record and is most willing to do so. We now have the prospect of stable prices and low taxes—the right hon. Member for Sparkbrook could not control the price of potatoes—with individuals and companies able to take their decisions in a free market, with fewer state monopolies, less state intervention, less fiscal bias and freedom to allow incentives to work and rewards to be available for hard work and success.
    It is free enterprise and free consumers, not Governments, that will continue the process of creating jobs. The measures we have seen in this Budget and earlier Budgets show clearly how the prospect can be realised.
    Mr. Richard Hickmet: Why is my right hon. Friend being so selective in his attack on the Opposition Front Bench? Would he care to comment on the proposal of the right hon. and learned Member for Monklands, East (Mr. Smith) to double the expenditure of the Trade and Industry Department? Will he comment on the effect of that and its cost upon our national finances and economic situation?
    Mr. John Smith: Watch out, it is a trap.
    Mr. Tebbit: Perhaps the right hon. and learned Gentleman will be kind enough to allow me to answer the question. I am always extremely selective in what I say
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    about the Opposition Front Bench. I select each of them in turn. I treat them with great courtesy and I tell the truth about them, which is a sad thing to have to do. My hon. Friend is right. The right hon. and learned Gentleman has proposed a massive increase in spending through the DTI.
    Mr. Smith: Not doubling the expenditure.
    Mr. Tebbit: I do not know whether it is double or merely 50 per cent. I do know that when the right hon. and learned Gentleman's Government left office there was massive spending in the DTI, not on new technologies or on bringing forward new industries, but on loss subsidies on the old fashioned state industries because they could not bear to deal with those industries' problems.
    It is essential that tax reductions should be made where they do most good and that they should be matched by tax reform to ensure that tax does the least possible damage to incentives and enterprise and the maximum possible to promote a growing, flexible and responsive economy. One welcome consequence is the cut in tax on unincorporated businesses and the matching cut in corporation tax for small companies. This is only the latest in a series of reforms that have transformed the tax environment for business.
    Perhaps most important, the business tax reform of 1984 is now coming fully into effect—a cut in special tax reliefs, matched by a cut in corporation tax rates. The main rate in 1986–87 is down to 35 per cent., which is the lowest rate in any major industrial country, and the small companies rate is only 29 per cent., which is the marginal rate for about 90 per cent. of unincorporated businesses. The result is not a fall in revenue—far from it.
    The aim of the reforms is to reduce distortion, to improve the quality of investment and to strengthen incentives to enterprise and growth. Of key importance is the aim to see the basic rate of taxation down to 25 per cent. I understand that that aim is shared by the Social Democratic and Liberal parties. I take it that that is why they will vote against the 1 per cent. cut in the basic rate tonight.
    Many of our critics may say of our tax policy, "Jam tomorrow". We already have a lower basic rate than at any time since the second world war. It is four percentage points down so far and there is the prospect of more to come. It is jam tomorrow—just like yesterday and today. Under this Government, the incentives to enterprise will grow. Schemes to encourage employee shareholders will bring a greater identity of interests between workers and their firms. It is dividends in the pockets of workers that may do more to increase harmony in the factories than union bosses in board rooms. These Budget measures will help to create jobs in the economy. At the same time, more direct help will be given to help the long-term unemployed back into work by individual advice, training and allowances for those who take jobs on less than £80 a week.
    The hon. Member for Kingston upon Hull, East (Mr. Prescott) must be easily patronised—he said that he found these measures patronising—if he finds these measures patronising. They are a positive reponse to those who must feel left behind as others—some 400,000 in February alone—enter and leave the unemployment register. The increase of 55,000 in the community programme and of 35,000 in the number of enterprise allowance places offer renewed scope for those on the unemployment register to get back into work.
    Mr. Foulkes: Rubbish.
    Mr. Tebbit: There are limits, however, on how far it is possible to substitute Government schemes for jobs created in the market place without destroying more jobs. For many years, the United Kingdom suffered economic decline relative to our competitors. That has been halted or reversed.
    Mr. Foulkes: Rubbish.
    Mr. Tebbit: The hon. Gentleman says, "Rubbish". He should examine the facts. Since 1979, we have grown at the same rate as France and Germany.
    Mr. Eric S. Heffer: A real comedian.
    Mr. Tebbit: In 1983 and 1985, the United Kingdom topped the European Community growth league. Productivity growth in the United Kingdom's economy as a whole since 1980 has been much higher than that in France or Germany. Those are the facts, although Opposition Members may not like them.
    Our growth in manufacturing productivity since 1979 has been second only to Japan among the seven major industrial countries. Since 1981, United Kingdom manufacturing exports have grown at least as fast as world trade. The average of United Kingdom inflation, as compared to inflation in the OECD, has fallen from being 60 per cent. higher under the Labour Government to only some 10 per cent. higher between June 1983 and December 1985. In absolute terms, the average level of inflation in the United Kingdom under Labour stood more than six percentage points above that of our competitors, whereas in this Parliament it has been only one fifth of 1 per cent. higher.
    Mr. Winnick: If there is such a success story, and if enterprise culture, as the Chancellor described it last week, works, why does mass unemployment continue and why are many of our fellow citizens denied the opportunity to work? Why is the number of people who have been jobless for one year or more increasing? Is the right hon. Gentleman saying that unemployment will be substantially lower by next year's Budget?
    Mr. Tebbit: The hon. Gentleman knows better than to try to tempt an ex-Employment Minister of any party to forecast unemployment.
    Mr. Winnick: Answer my question.
    Mr. Tebbit: I have explained more than once that jobs can be lost very swiftly and that they take a long time to regain. [Interruption.] That certainly applies to Labour Governments. They never last long and take a long time to get back into office.
    Perhaps I might explain to the hon. Member for Walsall, North (Mr. Winnick) once again that, in 1979, our average productivity levels, especially in manufacturing industry, were way below those of our rivals. We would have had to shed many jobs just to reach the level that they were at in 1979. Since then, they have got further ahead. We are still pursuing them and having to shed jobs in many areas to reach the new levels. If the hon. Gentleman does not understand that, he has understood very little of his life so far. He has only to ask that great patron of the Labour party, Mr. Robert Maxwell, how many people he will have to dismiss from his newspaper
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    to achieve productivity levels found in the rest of the world to get an answer to part of his question about unemployment.
    Mr. John Townend: How does my right hon. Friend explain the fact that there are more long-term unemployed in the south of England than in the north, where I come from, when it is clear to everyone that the south is far more prosperous?
    Mr. Tebbit: That is a matter which may be explained better as my right hon. and noble Friend the Secretary of State for Employment's plan for counselling and advice for those who have been unemployed for more than a year works through the country.
    Our record on inflation is far better than that of the Labour Government, when the right hon. Member for Sparkbrook and Mrs. Shirley Williams tried to control prices. So, as the hon. Member for Walsall, North asked, are the jobs that we would expect to be generated by the growing and more productive economy appearing?
    Mr. Foulkes: No.
    Mr. Tebbit: On the contrary. To an extent they are—680,000 new jobs have been created since June 1983. That is better than the rest of the Community put together. [HON. MEMBERS: "They are the wrong jobs."] They are, none the less, jobs which people are very pleased to have. However, that is plainly not enough. The past five years of manufacturing output growth, now 13 per cent. above its lowest point in 1981, have been reflected not in gains in new jobs but in long overdue gains in productivity, without which there would have been even more closures and even more job losses, as I have just expained to the hon Member for Walsall, North, although I doubt whether he has yet caught on to the point.
    The major obstacle to translating that productivity performance into new jobs is the tendency of unit labour costs, fuelled by high wage increases, to outstrip those of our competitors. The problem is not peculiar to the past few years. From 1974 to 1979 there was a relative decline of 25 per cent. in our international competitiveness. Our better performance recently is still not good enough. Industry must control its unit labour costs.
    Faced with reality in 1976, the right hon. Member for Leeds, East (Mr. Healey) called for a cut in living standards. He limited pay rises to 5 per cent. when inflation was running at more than 20 per cent. That would be the equivalent of a 10 per cent. pay cut with inflation at 5 per cent. as today. My right hon. Friend is certainly not asking for that, but we cannot exploit our improving productivity and output performance to create enough new jobs until earnings come back more closely into line with increases in productivity and our unit labour costs match those of our main competitor countries. That does not mean wage cuts. Those in work can enjoy an improving real level of earnings, as they have done under this Government—some 2·1 per cent. growth in real earnings per annum compared to less than half of 1 per cent. during the period of the Labour Government.
    However, although those pay increases must be related to productivity and competition, as taxes are cut and inflation reduced, low pay rises can still mean a sharply improving standard of living. Moderation in pay helps, above all, the unemployed to be priced back into work. [Interruption.] The hon. Member for Carrick, Cumnock

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    and Doon Valley may sneer, but I shall return to this point later. This Budget, like its predecessors, improves the climate for job creation, but neither it nor any Budget can create—
    Mr. Heffer: Rubbish.
    Mr. Tebbit: The hon. Gentleman is going on a little. He may one day learn something, and, even if it takes us from the time that he is seven until he is 70, we shall keep trying.
    This Budget improves the climate for job creation, but neither it nor any Budget can guarantee that jobs will be created. Foolish pay increases, strikes, poor management, bad product design or indifferent after-sales support, obsolete technology—any one of these can destroy existing jobs or abort new ones. Nor is the process immediate. A customer may be quickly lost and it may take years to regain his favour. The economic facts of life do not change with changes of Government, much as the Opposition Front Bench would like us to believe.
    It is instructive to look back 10 years and to see how a Labour Government fared. From his sixth Budget in April 1976, the right hon. Member for Leeds, East careered on through that year along to his ninth Budget in December, swinging from wild and foolish boasting of success to come to dire threats of disaster just ahead. A Labour party press release captures the more windy and vainglorious mood. It says:
    "The right hon. Denis Healey, Chancellor of the Exchequer, speaking at the Annual Dinner of Edinburgh East Labour Party … said:—'The new 4½ per cent. pay agreement between the Labour Government and the TUC can transform our prospects … It means we can be on top of inflation within eighteen months from now. It means more jobs and more in the shopping basket'"
    every prediction was wrong. He went on:
    "Already the tributes to this achievement are pouring in from all over the world".
    He might have added, "except from the TUC and the trades union members."
    As we look back on the sad tale of broken pledges, we can see the huge borrowings and humiliation that came to the right hon. Gentleman at the hands of the International Monetary Fund. Hence the calls that he made for savage cuts in the standard of living for millions of ordinary workers. The deficit on our invisible trade grew, unemployment grew and the whole mess grew worse until it collapsed in the winter of discontent. Would it be any different next time?
    Mr. Stuart Bell: Yes.
    Mr. Tebbit: It would be worse. In those days, the Leader of the Opposition was one of a small minority undermining the then Chancellor. Next time, he would be in No. 10 undermining his own Chancellor, if he had the chance.
    On Tuesday last, the Leader of the Opposition was put up to say that this Government have borrowed more than any other Government in history. Of course, I am sure that his scriptwriters knew, even if they did not tell him, that in real terms they have done nothing of the sort. The PSBR has been brought down from 9·5 per cent. of GDP in 1975–76 to a Budget forecast of 2 per cent. in 1985–86. Inflation has fallen from 26·9 per cent. in August 1975 to about 5 per cent. for a comparable period 10 years on. The two sets of figures are not coincidental.
    Mr. Bell: What would be the public sector borrowing requirement without asset sales?
    Mr. Tebbit: Higher, but there is nothing wrong with asset sales.
    In contrast to the strictures on borrowing, on Wednesday of last week, the right hon. Member for Sparkbrook sought to remove what he termed our prejudice against borrowing. He and the Leader of the Opposition should get their act together. Are they for more borrowing or for less? Are they set once again to go down what the right hon. Member for Cardiff, South and Penarth called the primrose path together, hand in hand?
    They are for more borrowing—and not just a little more but a lot more. Last Wednesday my hon. Friend the Member for Lewisham, West (Mr. Maples) asked the night hon. Member for Sparkbrook by how much borrowing would go up. The right hon. Gentleman said he would give the figures, but failed to do so. As he has had some time to think since last Wednesday, I am prepared to give way to him so that he can let us have the figures now. By how much would borrowing go up under a Labour Government? If the right hon. Gentleman will not tell us the answer, we have to do the sums for him, and we shall keep doing the sums and adding them up.
    During the debate over the past few days, Labour Members have criticised the Budget, but how proud the right hon. Member for Leeds, East would have been if he could have presented a Budget that was so popular and effective. Labour Members have said that the Budget does nothing for the poor, nothing for jobs, and is all for the rich. Nothing could be further from the truth. The Budget continues the attack on inflation, the cruellest tax which falls most heavily on the poor, not on the wealthy, who have assets to set against it. This tax is one of the worst agents of job destruction. Labour Members ignore the growing economy, which is the source of new jobs. They ignore the further direct employment measures that add to those announced in the autumn statement.
    From time to time the Opposition have given us some glimpses, obscure and contradictory, of their economic policies. The right hon. Member for Sparkbrook does not want to tell us about the key to it—how much they would borrow. He refuses every invitation to give us those figures. We have seen it all before. The hon. Member for Kingston upon Hull, East said:
    "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 "—[Official Report, 20 March 1986; Vol 94, c. 438.]
    The right hon. and learned Member for Monklands, East will not thank the hon. Gentleman for that, and nor will the right hon. Member for Sparkbrook. The right hon. and learned Member for Monklands, East said that it is important to cost everything in detail—he would say that, would he not?
    Nor will we allow the right hon. Member for Sparkbrook to present only those aspects of his policies which he believes would appeal most—that is his call to the many to confiscate from the few. It would not be a joke if the right hon. Gentleman's borrowings and taxings ever came to pass, any more than it was when the right hon. Member for Leeds, East was calling for savage cuts in the standard of living. We shall make sure that all the measures proposed by the Labour party will be considered together. We shall see to what levels of taxes or borrowing they would bring us.

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    I notice that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) has not managed to attend the debate today. He has a plan for sneaking through the middle unnoticed. He expects to give a stimulus to the economy, modest in size but far-reaching in its effects. He just cannot let go of that old demand lever. He and his colleagues would take back the 1p reduction in the basic rate of tax, and they would be back into the game of demand management.
    The alliance foresees a 50 per cent. increase in the size of the PSBR. Since the Budget there has been a fall of 1 per cent. in interest rates. How adverse a reaction—by contrast with that vote of confidence, and that of the stock market—would there be on interest rates and inflation if we were to follow the course advocated by the right hon. Member for Hillhead? He would not carry the confidence of industry or the markets. Nor would industry welcome his incomes policy proposals. The hon. Member for Stockton, South (Mr. Wrigglesworth) says that we must not have a low-paid, low-skill economy. I agree. But by putting Government controls in place of a free market for jobs and skills, that is what he would bring about.
    Mr. Dennis Skinner: The hon. Member for Stockton and Barclays.
    Mr. Tebbit: I do not think that I need any interventions from the hon. Member for Bolsover (Mr. Skinner). I am looking forward to the uncouth sneer being swiped off his face when his attack on the Prime Minister is put in its place very firmly indeed. He will regret having made a fool of himself, just as the right hon. Member for Hillhead will do.
    We can see plainly the alternatives to the skilful Budget of my right hon. Friend the Chancellor. The Labour party's approach would be to go straight back to 1976 as fast as it could and straight back to a siege economy. The Liberals and the SDP would get there by a more devious and slower route—what those with long political memories would call the Bassetlaw by-election approach.
    Mr. Robert Maclennan: Those with not so very long political memories recall that when my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) was Chancellor of the Exchequer there were 600,000 unemployed and we had a negative PSBR.
    Mr. Tebbit: Those with long political memories will also remember the conduct of the right hon. Member for Hillhead. We recollect the Bassetlaw affair, which was typical of the style of that Government and of the right hon. Gentleman. Two days before the Bassetlaw by-election Mrs. Castle swore that there was no economic freeze on the way. But, just a matter of weeks later, the right hon. Member for Hillhead, as the Labour Chancellor of the Exchequer, announced £250 million of additional taxation, new action to tighten the credit squeeze and all the normal paraphernalia of a Labour Budget. That is the Bassetlaw factor, and it is typical of SDP policies.
    We have no urge to go back to the policies from which our ills have sprung. The right hon. Member for Sparkbrook is familiar with this story as he was a supporter of that Labour Government and of the right hon. Member for Hillhead. By contrast, our policies will bring us to
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    where we can see not only an improvement in this country's relative economic position but steady growth in the economy. That is the only way—although nobody would deny that it is a slow and difficult road—to generate enough new jobs to overcome rising unemployment.
    Our objectives, to which the Budget is addressed, are to further the development in this country of a new economic liberalism, or people's capitalism—call it what one will. It means people setting up in their own businesses—and 750,000 have done so under this Government. It means people owning the homes in which they live—and more than 800,000 former council tenants now do so in the teeth of opposition from Labour Members. It means people owning shares, joining in the task of providing the capital to build our industry, and determining its future and theirs. Under this Government the number of those owning shares has more than doubled, and this Budget will mean that more can do so.
    It means more people owning a stake in the firm in which they work, sharing in its risks and its rewards. More than 1 million employees now take part in share schemes—[Interruption.] Opposition Members may sneer and laugh. They do not like people owning shares in businesses. Above all, they do not like trade unionists doing so. But we want many more to own shares.
    The Budget means people keeping more of their income to determine for themselves how it should be saved or spent. It means more individuals and more companies contributing their own money to charities, and helping one another directly. It means more people owning their own pensions. It means more people running their own trade unions. That is something that the Labour Front Bench refuses to accept. It means people knowing that they can seek work without closed shop restrictions, or finding that employers are forced to pay too much, and cannot afford to take them on. It means people being free to choose where and how to invest, without restrictions and distortions, so as to create the wealth that is needed and to create the jobs that are needed.
    Those are the Government's and the Budget's objectives. They are the right ones for the country. The Budget takes us in the right direction, towards those objectives, and I commend it to the House.
    5.4 pm
    Mr. John Smith: I shall try hard to avoid being drawn into all the irrelevancies of the peroration of the Chancellor of the Duchy of Lancaster, but I am sure that he will forgive me if I touch lightly on one point. He commended a change in trade union attitudes, for which he accepted responsibility. On behalf of the whole Labour and trade union movement, may I say a very genuine and warm "thank you" to him for instituting the political fund ballot? I think that all the ballots have now been held, and every single one of them has confirmed by a large majority the decision of British trade unions to have political funds. Indeed, some trade unions, which had failed to get political funds before, were able, in the wave of opinion generated by the Chancellor of the Duchy of Lancaster—[Interruption.]
    Mr. Tebbit: I am most grateful to the right hon. and learned Gentleman for seeing the good sense of my plans, which he and his colleagues opposed. However, if the facts had been set out fairly in any of those ballots, the

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    result might have gone the other way. But that is the rub of the green. I accept the democratic process, and I hope that the right hon. and learned Gentleman will also accept it when it goes against him.
    Mr. Smith: If the right hon. Gentleman has any complaint about the conduct of those elections, and if that is his excuse, he should take up the matter with the Chief Registrar of Friendly Societies. I am sure that he will listen to any complaints. But instead of congratulating the trade unions, the right hon. Gentleman has to concoct another smear. That is typical of him.
    There is a rumour among trade unions that there is a trophy called the Margaret Thatcher challenge trophy, which was to he given to the union with the highest yes vote in the ballot. The union is now wondering what to do with it. I suggest that it should present it to the right hon. Gentleman, with the grateful thanks of all concerned.
    Mr. Winnick: Does my right hon. and learned Friend agree that it is widely believed that companies should do precisely the same as trade unions, and should have a ballot before donating to political causes? Is it not remarkable that the Chancellor of the Duchy of Lancaster should lecture everyone about democracy when he has not been elected to his position as chairman of the Tory party? Why is there no elementary democracy in the Tory party?
    Mr. Smith: I am grateful to my hon. Friend for reminding me about that. The Chancellor of the Duchy of Lancaster is always saying that what is sauce for the goose is sauce for the gander, so now that he is chairman of the Tory party perhaps he will tell us—[HON. MEMBERS: "Talk about the Budget."] The right hon. Gentleman distracted me and I am sure, Mr. Deputy Speaker, that you will bear witness to that. I do want to deal with the Budget. But the right hon. Gentleman has an opportunity now, as chairman of the Conservative party, to acquire a reputation for consistency and fairness and to propose, in the next legislative Session, similar treatment for companies in their donations to his party.
    In recent years it has been customary for the final day of debate on the Budget to cover matters relating to trade and industry. It is usual for the Secretary of State for Trade and Industry to open the debate. The Chancellor of the Duchy of Lancaster criticised the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) for not being here, and would no doubt be ready to criticise any other hon. Member for not being here. But he should perhaps note that the Secretary of State for Trade and Industry is not here, and that as far as I can see not a single member of that Department has seen fit to come to the Chamber for the debate.
    It was appropriate for the Chancellor of the Duchy to speak in the debate last year, because he was then the Secretary of State for Trade and Industry. This year, however, he appears in a different guise. I wonder why he decided to speak in this debate. Is he worried that he might somehow be forgotten if he does not manage to speak in debates in the Chamber? Why did he elbow aside either the Paymaster General or the Secretary of State for Trade and Industry in order to speak in this debate? Once again the Secretary of State for Trade and Industry was unfortunate. Where is he? Is he or his Ministers away negotiating some other deal to sell off another part of British industry?
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    There is one happy feature about the right hon. Gentleman being here and it is that he is closely involved in the affairs that may be keeping the Secretary of State for Trade and Industry away from the Chamber. When he was Secretary of State for Trade and Industry, did not the right hon. Gentleman invite General Motors to make an application to take over Leyland Vehicles and Land Rover? Was he not the Minister responsible for starting the secret talks that went on for 18 months until they were flushed out by the Opposition when we found out the information and challenged Ministers?
    The right hon. Gentleman appears to have been involved in bringing the talks to an end. Has he reflected since what they were all about? Last Sunday The Observer told us about the right hon. Gentleman's activities. We were given a blow-by-blow account of these frenetic negotiations. The Observer said:
    "All week they had been in discussions with Mr. Channon and his officials—with Mr. Norman Tebbit coming in and out. The effort was to find a compromise formula that would be palatable to the backbenchers.
    On Wednesday they thought they had agreement on the 49–51 principle with GM eventually taking the majority after it had proved its 'good citizenship'.
    Then Mr. Channon came back, saying this would not work, and suggested … an overseeing board".
    In view of his close involvement in these matters the right hon. Gentleman might have told us something about that. After all, we are discussing trade and industry and the motor vehicle industry is an, important matter for us in the Budget. The right hon. Gentleman has a direct and personal responsibility for the fiasco that the whole British Leyland affair has become. If a charge of anti-Americanism is to be flung at anyone, what about a company like General Motors that spent £1 million on a wild goose chase? Will that company not feel that there is a tinge of anti-Americanism in this Conservative Government—and a rather expensive one at that?
    Mr. Tebbit: I hope that the press release of the right hon. and learned Gentleman's speech is now over. He has been on his feet for nearly 10 minutes. Perhaps now we could get on with the debate on the Budget—not least as the whole Treasury team is here eager to discuss the Budget and to hear what level of PSBR the right hon. and learned Gentleman thinks there ought to be in a Socialist Budget. The team is also eager, as am I, to take him to one side later on and show him several different versions in several different newspapers of the recent talks.
    Mr. Smith: The easiest way of solving that problem is for the Government to tell us what is going on. They have had many opportunities to do that and if there is a problem of misrepresentation it can be cleared up.
    Mr. Hickmet rose—
    Mr. Smith: The hon. Gentleman is stopping me from getting on with the Budget, but I shall give way.
    Mr. Hickmet: The right hon. and learned Gentleman's party made its position clear on the link between General Motors and British Leyland. It does not want that link at any price. How will he react if, for example, the operations of General Motors in Britain are wound down as a result of the policy that his party has adopted?
    Mr. Smith: I hope the Chancellor of the Duchy of Lancaster will forgive me if I answer that intervention, even though it means I shall have to talk a little bit longer. It is an odd conclusion to draw, is it not, that when the

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    Government initiate a project that invites General Motors to acquire parts of British Leyland and that project does not come off, if General Motors then decides to do something with its plant, that is the responsibility of the Opposition. That is a new one on me.
    Whether in his role as chairman of the Conservative party or as an ex-Secretary of State, the right hon. Gentleman had a shot at defending the Budget. However, he made very little attempt to deal with trade and industry. He said little about manufacturing industry and gave us a rather lame and tendentious explanation about the debilitating balance of trade deficit on manufactured goods. There was a substantial surplus when the Government took office and now we are heading for a £4 million deficit. No explanation has been offered about why that has happened under this wise and beneficent Government, and the right hon. Gentleman did not even give us a clue about an explanation.
    We know that for a long time there has been what one might call massive scepticism by the Government about manufacturing industry. I know they are trying hard to change their tune, but in 1981 the Chancellor of the Exchequer said in a memorable phrase:
    "I do not understand the importance which the Opposition and some Tories give to manufacturing industry."
    That is on the record. It is as notable as his other famous prediction that young people in Britain would get not so much low-tech as no-tech jobs. The Chancellor can deny it if he likes but he made both of those statements.
    The Chancellor of the Exchequer (Mr. Nigel Lawson): That sort of dishonest quotation does not serve any purpose. The right hon. and learned Gentleman did not give the full text. What I said was that, although high technology had an important part to play in future, many future jobs would not be so much low-tech as no-tech. I did not say all jobs: I said many of them. That is a fact in the United States and here.
    Mr. Smith: The right hon. Gentleman appears to concede that I quoted him correctly. I am not being accused, nor could I reasonably be so accused, of misquoting him. I said, "not so much low-tech as no-tech" and in his intervention the right hon. Gentleman quoted the very words I used. His excuse is that he did not say all the jobs would be low-tech, just many of them. [Interruption.] If we go on the way we are going, that will be the result of the Government's policies. The right hon. Gentleman might learn something by listening, so let me repeat what I said. If the Government continue with their present policies, that will be the result.
    What an ambition for our young people! Let us give them high-tech jobs. Would not that be a better ambition for the Chancellor of the Exchequer and the Government? As many as possible of our young people should be obtaining high-tech jobs, and we would be going in that direction if the Government were not turning them away from technical colleges and polytechnics and universities and were encouraging them to stay on at school.[Interruption.] When someone talks about opportunity, all the Government can think about is money. They can never draw the balance between the enjoyment of human opportunity and the reasonable investment required to achieve it.
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    The Chancellor is trying to change his stance. We saw a rather pathetic attempt at that in his intervention. That is because he is beginning to realise that the plan that was there before will not work. That plan was that Britain could live off service industries and oil revenues and the remittances from foreign investments. It was felt that we could get by quite nicely on that and the Government did not need to worry too much about manufacturing industry. We heard all the speeches at that time about the undue importance attached to manufacturing industry, but even the Chancellor now realises that a number of things are changing. The nation is becoming more and more convinced that the catastrophic consequences of a decline in our manufacturing industry are quite unbearable.
    The Aldington report was published last year. All that gets from the Chancellor of the Exchequer is a snigger. The distinguished authors of that report were rubbished before the ink was dry on the document. Not only was it turned down without being read, but attacks were made on its individual authors. That report makes good reading for anyone who wants to understand Britain's industrial predicament. It said what would happen when the volume of North sea oil declined. The report was not able to predict any more than the Government were able to predict that the value of North sea oil would decline in an even shorter period. That has accentuated the problem and the Chancellor knows that more than anyone else in the House, or at least he ought to.
    We have now been brought close to the reality of our economic position. North sea oil is not so obviously helping us. Of course it is still of enormous benefit to the Government, although not as much benefit as it was, but still useful in terms of balance of payments and our overall balance of trade and Government revenue. To this Government it has meant tens of billions of pounds and yet they have wasted most of that money. They have had those funds in a way that no other Government have ever had them. They have had that money without having to go through the complicated business of raising it by taxation or by cutting expenditure. [Interruption.] It was taxation which the Government inherited. North sea oil was on stream in 1980 and the Government inherited the revenues. What point are the Government seeking to make? If they are saying that they did not have a marvellous windfall of North sea oil revenues, no one will believe them. [Interruption.] I should like to say what the Chancellor of the Duchy of Lancaster kept saying to my colleagues—if the right hon. Gentleman would listen occasionally, he might learn something to his benefit.
    That is why there is apprehension about the crumbling technological base of our manufacturing industry. The failure to invest in British manufacturing industry, to develop our research and development and to provide proper training within industry are at the root of our economic problems.
    I should like to consider quickly some of the facts. Manufacturing output stagnated in 1985 and is still 6 per cent. below the 1979 level. Manufacturing investment is still more than 10 per cent. less than the 1979 level. The United Kingdom's manufacturing trade deficit is forecast to increase to £4·5 billion in 1986, although we had a substantial surplus in 1980. One would not guess that that was the position from the Chancellor's complacent survey in his Budget speech. There was one glimmer of light in

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    his speech—one faint dawning of comprehension. Referring to the effect on the economy of the fall in the oil price, the Chancellor stated:
    "This provides British industry with an outstanding opportunity both to increase its exports and to reduce import penetration in the home market, but it will only be able to seize that opportunity if it meets two conditions. First, it must keep firmer control of its labour costs. Secondly, it must spend more of its much healthier level of profits on investing for the future in research and development and in training. Both the opportunity, and the responsibility to see that it is not thrown away, rest fairly and squarely on the shoulders of British management."—[Official Report, 18 March 1986; Vol. 94, c. 169.]
    First, there was an admonition to industry to keep control of its labour costs. But there was no admonition to the City. There was no feeling that perhaps labour costs in the City were rather high because of the huge salaries that are paid. The "golden helloes" managed to avoid any action by the Government in the Budget. I wonder whether the Chancellor of the Duchy of Lancaster ever says to the stockbrokers, "If you would cut your wages a bit you would create more jobs." On the basis of some of the very large salaries of stockbrokers there must be enormous scope for job creation in the stock exchange.
    If the proposition of the Chancellor of the Duchy of Lancaster is fundamentally true and if one divides a stockbroker's salary by five, there would be five more stockbrokers—or at least that is what the right hon. Gentleman says to the workers.
    Mr. Tebbit rose—
    Mr. Smith: I am to be given an explanation?
    Mr. Tebbit: I say the same to people in the City' as I say anywhere else—that if they allow their costs to become higher than those of their competitors they will lose their market share and jobs, their salaries will fall and the "golden helloes" will turn into brass goodbyes. They understand that lesson more clearly than those in other industries.
    Mr. Smith: If that is the lesson which they understand, it is amazing that salaries keep going up instead of coming down. If the right hon. Gentleman has been having chats with them, he has been singularly unconvincing and unpersuasive. Everyone knows that salaries in the City and in the stock exchange are hopelessly out of control. It does not help if the Government say to people who are struggling to make ends meet, "You should be careful about asking for wage increases or for improvements in conditions", because they can see the conditions and wages offered to people on high salaries.
    Mr. Donald Stewart: Does the right hon. and learned Gentleman agree that there is no need to test the theory of the Chancellor of the Duchy of Lancaster about low wages equalling more jobs, because long ago the Low Pay Unit worked out that the areas where wages are lowest are exactly the areas where unemployment is highest?
    Mr. Smith: I am grateful to the right hon. Gentleman. He is well aware, as are many other hon. Members, of the fundamental principle which seems to motivate the Government—that we need high wages to give incentives to people at the top end of the wage bracket and low wages to give incentives to people at the bottom end of the wage bracket. We have noticed throughout the Budget the attempt to drive more people into low-paid
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    temporary occupations. The drive is not so much to find jobs as to accentuate the prevalence of low pay in the economy. I am sorry to say that a number of the Budget measures are leading in that direction.
    The Chancellor has recognised that there should be more investment in research and development and in training, but the trouble As that he thinks it is simply a matter for industrial management. He thinks that the investment rests on their shoulders and implies that it does not rest on anyone else's shoulders. I believe that it is a matter for the whole community because the whole community will be affected by a failure to invest in industry and in research and development and a failure to develop adequate training. If we had employers like those in West Germany, we could perhaps hand over training to them. The West German employers take their responsibilities serously. No one can say that British employers, left to their own devices, have a good record on training. The Chancellor of the Duchy of Lancaster has an inglorious record, having dismantled 16 of the 23 industrial training boards.
    On 12 March 1986, the hon. Member for Bedfordshire, North (Sir T. Skeet) asked the Secretary of State for Education and Science
    "how many of the leading industrial states have progressively increased expenditure on civil research over the past five years; and what is the comparative position of the United Kingdom expressed in real terms."—[Official Report, 12 March 1986; Vol. 93, c. 474.]
    In an informative answer, the Minister for Information Technology gave some alarming statistics. The increase in gross research and development expenditure from 1979 to 1983—the latest date for which figures were available—was 3 per cent. in the United Kingdom. The increase in the United States was 18 per cent., in Japan 44 per cent., in Germany 10 per cent., in France 10 per cent., in Italy 45 per cent. and in Canada 32 per cent. The United Kingdom is not just bottom of the league but is lamentably bottom of the league, with only a 3 per cent. increase in civil research and development in the past four years from a total budget of $12·6 billion. That is appalling. If Britain continues to invest such a minuscule part of its assets in research and development, it will lose the technological base of its industry and will not be able to develop the new products and processes for tomorrow.
    The Government's contribution, through their direct funding of research and development, is pitiful. There is not a research institution or university that is not pleading for more resources for primary research and development. The Government's niggardly attitude is disgraceful. If the Government gave research institutions and universities what they gave in a handout to abolish inter vivos gifts and capital transfer tax, that would be a useful start. Why not give that £55 million to research and development instead of to the rich?
    Sir Julian Ridsdale: Does the right hon. and learned Gentleman agree that the increase in profitability to 8 per cent., compared with 0·5 per cent. in 1979, is a means of getting increased research and development in companies?
    Mr. Smith: That would be understandable if companies were doing that now. It was only a matter of days ago that Sir Brian Nicholson, the Government Chief Scientist, in evidence to the House of Lords Select Committee on Science and Technology—
    The Minister of State, Treasury (Mr. Peter Brooke): Sir Brian?
    Mr. Smith: Yes, as I understand it—the Government's Chief Scientist. He said that the Government were deeply upset at the failure to invest, given the substantial increase in the profits of British companies. I do not think that the Government's excuse will wash. I am given to understand that the Department of Trade and Industry, which is not represented here today, is pressing hard for companies to do that, and so they should.
    Why do the Government turn their back on supporting schemes for research and development? Why is there no reference in the Budget to training in industry? Why are there no fiscal incentives, schemes or plans? Why are no ambitions revealed in the Budget? The Government simply have no industrial strategy. They are just moving about the market place, hoping that it will come right. They are not taking any steps, such as those taken by most of our major competitors, to ensure that fundamental aspects such as research and development, training and investment are securely put into place. There is a failure to comprehend that there is more to industry than just giving freedom to the entrepreneur and his wealth. One cannot leave it at that. If the entrepreneur does not invest his wealth wisely, the consequences for the whole of the community are devastating. There may be increased unemployment. There may be diminished opportunity for our young people. There may be a failure to conquer the markets on which the standard of living of us all—not just of the entrepreneur—depends. That is why this is a legitimate matter for community concern.
    Today, investment is not being made in new products because we are in the grip of merger mania. When a company that has extra money decides what to do with it, it is far too easy for it to gobble up another company rather than to improve its products and its market share. It may improve its market share but it will do so by eliminating its competitor, because the natural tendency of unregulated markets is towards monopoly. One would have expected even a Conservative Government, recognising that, to adopt a tougher policy on mergers and monopoly, but we do not find that.
    Even more lamentably, the present situation in which the creditor can too easily acquire his competition forces industrial managements continually into short-term profits. They must have short-term profits and those profits must be reported to the stock exchange to keep the predator away. When there is a choice between short-term projects—which represent essential defensive security—and long-term investment, long-term investment goes by the board, and the Government look on complacently. The Government have been reviewing competition policy endlessly and continuously for a number of years without doing anything about it. Even the Governor of the Bank of England said the other day that the matter had got out of hand. It is a pity that we do not have a Chancellor of the Exchequer who would say a sensible thing like that.
    We need a better investment plan. That is why the Labour party proposes that we should have a national investment bank, which would make sure that long-term investment was secured for British industry. However, when sensible and practical suggestions are put forward, all we hear from right hon. and hon. Gentlemen on the Government Benches are silly party political sniggers. The
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    national investment bank would make sure that there was long-term investment at suitable rates of interest. In West Germany, a billion pounds was invested in small and medium-sized businesses by KFB, an admirable bank to which the House of Lords report paid particular attention. Why should not this country have mechanisms to ensure that there is investment in the wealth-creating sectors of the economy? Why cannot the Conservative party have the intelligence to appreciate a good idea when it is presented with one? [Interruption.] One of my hon. Friends suggests that there is not enough of that commodity to go around. There is distressing evidence that that may be so.
    Viscount Cranborne: The right hon. and learned Gentleman rightly refers to the manufacturing sector of the economy as the wealth-producing sector. No doubt, like many of us, he reads The Economist. He will have seen there that the wealth-producing sector also embraces the City, about which he has been so disparaging. No doubt he has noticed that the invisible earnings not only contribute to the wealth of this country but contribute a very large number of jobs. In the unlikely event of the right hon. and learned Gentleman returning to power, would he kill the City's earning capacity in his quest for manufacturing industry?
    Mr. Smith: I thought that the hon. Gentleman had followed my argument that to depend on the City was not enough. We need to manufacture. The City is rather better at creating jobs in other countries than in our own. The Chancellor boasted about the amount of money that we have invested abroad. He said that we could live like remittance men. He said that there would be a flow of remittances returning from the investments.
    The hon. Member for Dorset, South (Viscount Cranborne) is slightly behind the times. He is playing the tune to which I referred earlier—that we can take some chances with manufacturing industry. However, the Government have become a little worried and have changed their stance. It is a pity that the hon. Gentleman has not noticed that. We need to set three engines of recovery in motion. We need a proper investment policy in manufacturing industry, a proper research and development policy and a proper training policy. We are slipping in all three areas.
    I must mention one other factor — the near disappearance of regional industrial assistance. I calculate that the Government have more than halved the amount of support for industry that they provide. Hon. Members may recently have seen a very revealing "World in Action" programme on television about some young people from Middlesbrough who went down to High Wycombe to seek work. Although they went by bus, they were following the advice of the Chancellor of the Duchy of Lancaster to get on their bikes. They went to High Wycombe because they could find no jobs in Middlesbrough. One of them found a reasonably well-paid job fairly quickly, because he had a skill — a skill for which there was no use in Middlesbrough. He was clearly a man who wanted to find work. He was prepared to separate himself from his family to find it. I think that he was paid £120 net in the factory. It cost him £57 to pay for his digs during the week and a visit home every week or fortnight—I forget which—to see his wife and children. He explained that he could not go on like that, with so little left after the £57 had been subtracted, and that he was contemplating returning to Middlesbrough.
    Mr. John Townend rose—
    Mr. Smith: The hon. Gentleman should listen with a little sympathy and understanding—
    Mr. Townend rose—
    Mr. Smith: I will not give way to the hon. Gentleman. He does not deserve to be given way to. If the public could have seen the look on the hon. Gentleman's face as I was describing the predicament of those people, it would have been a telling political indictment.
    Another person from Middlesbrough was told that he could go to High Wycombe too. He came down with his girlfriend; they were contemplating getting married. He too found a job—not so well paid—and his girlfriend found a job in a cafe. They put their wages together and decided to try to set up home in High Wycombe. They went to the estate agents to see whether they could buy a house. They tried every estate agent in High Wycombe, but even the cheapest house cost £10,000 or £15,000 more than they could afford. At the end of the programme, the question was asked: what should they do next? The man who had left his family in Middlesbrough could not take them to High Wycombe because he could not afford to buy a house and there were no council houses available. Should he remain separated from his family and continue to pay so much for lodgings and travel?
    Mr. Nicholas Budgen rose—
    Mr. Smith: Should the other couple live perpetually in digs or furnished lettings in High Wycombe because they could not buy a house? Those people followed the right hon. Gentleman's advice, and that is what happened. Any sensible Government would say, "Why not get the jobs in Middlesbrough, and get to the heart of the problem? Why not spend some of our communal resources helping to create jobs in Middlesbrough?" That is what regional industrial assistance is all about.
    That story is revealing about life in modern Britain. There are opportunities, wages and jobs in the south, but very little is available in the north, and the term "north" covers an increasingly wide area of the country. There is a deep divide, which is worrying people in the south as well as the north. Our citizens do not wish to live in a country in which the divisions are becoming so sharp and ugly. A sharp and ugly division is growing between the very well-heeled and the growing under-class, and it is an affront to our conscience.
    The Conservatives could give long-term supplementary benefit to the long-term unemployed. They could give about £10 a week to poor unemployed families if they did one simple thing—restored the investment income surcharge which was removed a few Budgets ago. The amount thus saved would more or less meet the cost of long-term supplementary benefit. The investment income surcharge was imposed on investment incomes of over £7,000 a year. People had, by definition, to have £70,000 capital before they benefited from the change. What proper society would give the money available to such people and deny it to the suffering long-term unemployed, the poor families and the needy? In my book, that is not a political choice but a moral one. It is one which the people of this country, when these matters have been made even more clear to them than they have been already, will have no hesitation in answering.
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    The Budget is both unfair and irrelevant. It is unfair to the divisions between north and south and it is unfair to the divisions between rich and poor. It is supremely irrelevant to putting our manufacturing industry and our economy back on their feet. It is a matter of regret for the whole country that this is happening. It is a matter of shame for this Government.
    5.40 pm
    Mr. Leon Brittan: In his speech the right hon. and learned Member for Monklands, East (Mr. Smith) dealt with a number of wide and important issues which have been with us for a considerable period. I do not agree with his conclusions. However, he has been wise, from his own narrow point of view, not to focus very much upon what the Budget actually says. On the other hand, I welcome the opportunity to join those who have congratulated my right hon. Friend the Chancellor of the Exchequer on combining in his Budget a continuing policy of sound finance with the imagination and ingenuity of his proposals.
    When I was Home Secretary, naturally I was particularly anxious, as the Minister with responsibility for policy towards the voluntary sector, that the Government should give what help they could to charities. I am delighted that the Chancellor has now been able to give fiscal reality to what were then just a number of embryonic ideas. Equally, I welcome the measures to encourage investment in equities and the proposals to stimulate profit sharing. However, all those measures must be seen in the context of the central Budget decisions on the Government's fiscal and monetary stance.
    It is no accident that from the moment when the Government took firm and unpopular action in 1981 to bring the public sector borrowing requirement under control we have seen steady and continuous growth. Therefore, I applaud the Chancellor's decision to continue the downward path of public borrowing as a percentage of gross domestic product and, indeed, to set the public sector borrowing requirement at £7 billion, which is slightly below the level indicated in last year's medium term financial strategy. That is, of course, the key decision in the whole Budget. It is of profound significance that it was that decision, and the Budget constructed around it, that immediately led to a fall in interest rates and the mortgage rate. If one were to ask anyone in industry or business today what single step could be taken which would assist them most in expanding and protecting the jobs of today and providing the jobs of tomorrow, I have no doubt at all that it would be one which would result in a fall in interest rates.
    Having taken the central fiscal decisions, the Chancellor had to decide how to distribute the limited amount of largesse that was left to him of about £1 billion. In any Budget there is a certain amount of giving with one hand and taking away with the other—perhaps rather more of that in this Budget than in most—but at the end of the day, on that analysis, there was still only about £1 billion left to play with. That money could, of course, be used to increase spending or to reduce taxes. There are several ways of doing both. All of them are likely to stimulate employment in the short run.
    The difference in the extent to which the different measures—increasing expenditure or reducing taxes—would do so is, frankly, not very great. Within the total of only £1 bllion, the differences between the impact on

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    jobs of the various possiblities are very small indeed. So there is simply no question of one route being remotely open to the Chancellor as the right one for jobs, while the others are not.
    As my right hon. and learned Friend the Paymaster General pointed out, public works programmes today are far from being the best way of getting the most jobs for any given expenditure. The question of the level of public works or capital expenditure more generally in the public sector should be decided on merit, not as a means of short term job creation. In crude terms, if one were thinking that way—and it would be the wrong way to think—the way to create most jobs in the short term is to employ people directly in the public sector or indirectly through the use of public money by such means as special employment measures.
    If expenditure of that kind could make a huge difference to the level of employment, it might be tempting to decide to spend the limited sum of £1 billion on that basis. But with that sort of money, it cannot possibly make any substantial difference. Therefore, it would be wrong to decide what to do on such a short term basis. The decision should be made on longer term structural grounds—on the basis of not of what would give the the most immediate boost, which would be dissipated after a short while, but of what would most help to change the structure of the economy in a way that would make it more productive, more innovative, and more likely to grow in a sustained and sustainable way.
    It is because reductions in the burden of taxation are likely to have that longer term structural effect that I think the Chancellor was right to spend about £100 million on specific employment measures and the rest on reductions in taxation. The case for tax cuts on those grounds was immensely persuasively made by my right hon. Friend the Member for Guildford (Mr. Howell) earlier in this debate.
    The question then arises: what sort of tax cuts should they be? Should they be personal or corporate, direct or indirect? For some time I have believed that the first priority should be to cut personal taxation but to increase allowances over and above indexation to the greatest possible extent. That gives most help to those who need it most and takes many of them out of tax altogether. It helps most in the poverty and unemployment traps. But in my view the argument in favour of proceeding in that direction became substantially less strong in the face of the reforms of my right hon. Friend the Secretary of State for Social Services. They make a significant difference to the choice between increasing allowances and reducing the basic rate of income tax. Therefore, I became less resolute in my preference for increasing allowances.
    That preference was further diminished when I heard the Chancellor announce that at the higher rate he was not indexing thresholds in line with inflation. Indeed, the top rate threshold has been increased by less than half the amount that full indexation would prescribe. In the past, all the thresholds have normally gone up proportionately. The failure to follow that principle this year has not been sufficiently noted. It makes an important difference to the argument and to the impact of the cut in the basic rate of income tax.
    I must confess that I was only finally converted to full acceptance that it was right to reduce the rate rather than to increase allowances further when I heard my right hon.
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    Friend the Chief Secretary to the Treasury explain last Wednesday that it was the turn this year—I stress "this year"—of those within the income ranges of £5,000 to £20,000 to benefit and, above all, when I heard him say that in choosing to make a reduction in the basic rate this year the Government are not saying that basic reductions are in some sense better than threshold increases. The proper choice between the two will, I assume, have to be reconsidered afresh next year.
    However, I am afraid that if the Government's task of persuasion has been effective as far as I am concerned on this point, I have more difficulty with what has been said in the Budget and with what appears in the Red Book about monetary policy. In the very short term, any weakness in monetary policy may be masked by the overall support that is currently rightly being given to the Government's general economic stance, but that should not be a pretext for ignoring what seems to me to be a real problem that is potentially storing up trouble for the future.
    The Red Book says that there is some scope for varying the balance between fiscal and monetary policy. I cannot help feeling that fiscal policy is having to do most of the work this year. I find what is said about monetary policy lapidary, tentative and not wholly convincing. That is not entirely the Chancellor's fault. We have simply not found a monetary aggregate that is credible as a target to seek to follow.
    To select instead a couple of aggregates and then to say that the exchange rate will also be taken into account, without saying how in any very cogent way, is hardly likely to produce a convincing monetary policy, especially if one of the targets has proved as broken a reed as sterling M3. As recently as in last year's medium-term financial strategy the target range for sterling M3 was set at 4 to 8 per cent., but it has been rightly felt that the failure to meet that target did not mean that monetary policy has been too lax. Other indications show that it was not.
    What does one do about sterling M3? The answer given is that sterling M3 does not behave as it used to behave because of the rapid fall in velocity in recent years. Because of that, a new target for 1986–87 has been set at 11 to 15 per cent.—a near trebling of the lower end of the range and a near doubling of the upper end of the range —compared with what was set for this year only 12 months ago.
    Dr. Jeremy Bray: Is the right hon. and learned Gentleman seriously maintaining that monetary policy is lax when we have the highest real interest rates in the world by 6 per cent.?
    Mr. Brittan: No, I am not. That is exactly what I have said. I am dealing with a problem, which still exists, of how one handles, sets and determines what monetary policy should be. I was going on to say that if one looks at chart 2.3 in the Red Book, which shows the velocity of the monetary aggregates, it is clear that the velocity has been falling fairly steadily since 1980, and there has certainly not been an acceleration of that fall in the last year to justify so huge an increase in the target range. It is difficult to avoid the conclusion that the target range has been chosen on the basis of what is attainable rather than what has any real significance in terms of the assessment of the appropriate degree of tightness of the monetary policy. That is the answer to the hon. Gentleman.

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    The lack of real belief in sterling M3 is borne out by two further points. First, the Red Book rather plaintively tells us that
    "the high proportion of interest bearing deposits within broad money has meant that the immediate response of broad liquidity aggregates to changes in short term interest rates is highly uncertain."
    In ordinary language, if sterling M3 looks as if it is going wrong, we have no idea whether our only known instrument of affecting it, now that we have given up overfunding, will put it right.
    Secondly, it is significant that no target or illustrative range for sterling M3 is given beyond 1986–87, although figures for GDP and MO are given for a further three years up to and including 1989–90. The reality is that, with monetary aggregates in disrepute, monetary policy has increasingly been dependent on exchange rates, but the policy has not been clearly spelt out. The difficulty—and I hope to show why it has practical importance—is that, if monetary policy cannot be spelt out convincingly, the markets are uncertain, the authorities may have to react, and the effect is that interest rates are likely to be higher than they would otherwise be and probably change more often.
    Excessive interest rates and frequent changes in them are damaging to industry. Therefore, this is not some theoretical or esoteric argument. If credible and comprehensive monetary policy is likely to lead to lower interest rates, that is a valuable prize for which we ought to strive.
    I do not believe that there is any monetary target currently in sight that will provide a more worthy lodestar. The way to achieve a convincing monetary policy is through the exchange rate route. Theoretically, it would be possible to choose our own free standing exchange rate target. In my view, it would be artificial to do so, because for so long it has been Government policy to join the exchange rate mechanism of the European monetary system when the time is right. In the past I have not thought that the time was right for that.
    Rightly or wrongly, the pound has been regarded as a petro-currency and it was thought that movements in the price of oil would be likely to push the pound in the opposite direction from the currency of the other European countries which are not oil producers. It was said that our entry would be destabilising for the European monetary system and difficult for us to sustain. It is said, and I agree, that there would be nothing worse than frequent realignment and rushing over to Brussels at times of crisis.
    Recent events have completely changed that position. At last the world believes what the Treasury has been shouting from the tree tops for years—that the role of oil in our economy is not nearly as great as has been universally assumed. In recent years, there have been at least eight studies of the impact of oil prices on the exchange rate. Taken together they seem to show that a 10 per cent. change in oil prices leads to a 3 to 5 per cent. change in the effective rate. Therefore, a 50 per cent. change in oil prices ought to have been expected to lead to a 15 to 25 per cent. change in the exchange rate. In fact, in recent months the price of oil has fallen by nearly 50 per cent., but the effective exchange rate has fallen by only about 5 per cent. On top of that, the current rate against the deutschmark is competitive for our exporters while the dollar rate is high enough not to be inflationary.
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    Therefore, I conclude that the moment is approaching very rapidly—if it has not already arrived—when we should fully join the European monetary system. I understand the risks of pressure on the pound on political grounds — for example, impending elections which momentarily seem likely to be won by parties other than the Conservative party. However, the risk of that is no greater inside rather than outside the European monetary system. We would have to take corrective action in any event. In the European monetary system there would still be the retention of freedom of action in genuinely exceptional circumstances.
    Mr. Robert Sheldon: Has the right hon. and learned Gentleman taken account of the fact that at present the one dominant currency in the European monetary system is the deutschmark? With the introduction of Britain, there would be two powerful currencies operating on slightly different bases, and that could lead to a certain amount of instability.
    Mr. Brittan: That was one of my anxieties. However, for the reason that I have just given, I think that recent developments have removed that anxiety and the advantage of once again having a credible monetary policy would be very great. Such a monetary policy would be a tight one. It would reinforce other pressures on industry not to be lax on the pay front. It is clear that such laxness would not lead to the lowering of the exchange rate to bail out industry in order to restore competitiveness in the short term. Industry would have to play its part in the tight for jobs by resisting excessive pay claims. In that way monetary policy would help the battle against unemployment, as would the lower interest rates which would be likely to come about as a result.
    Mr. Budgen rose—
    Mr. Brittan: I hope that my hon. Friend will excuse me, but I am coming to the end of my remarks.
    I hope that the hesitancy that I detect in the current statement of monetary policy is caused by the fact that what we are seeing is only a provisional statement and that it will soon be superseded by an approach of the kind that I suggest. I hasten to make it clear that I have no specific reasons for believing that is so. I am expressing a hope. When that happens, the fiscal system and the constructive ingenuity of the Budget which has been so warmly applauded will be complemented by a monetary policy that reinforces the Government's efforts to promote the only kind of economic advance that will endure—an advance that is soundly based and firmly buttressed.
    5.58 pm
    Mr. J. Enoch Powell: I do not share what appears to be the belief of the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) that if we can find a satisfactory form of monetary measurement we can therefore find the means of manipulating it. As to the advantages of having a fixed exchange rate, I shall arrive at an opposite conclusion from him.
    Under the pressure of time, however, I want to restrict myself almost exclusively to one economic phenomenon—the balance of payments. The balance of payments is a very amusing toy to play with. All sorts of arithmetical games can be played with it with great satisfaction and occasionally with some entertainment and instruction. The balance of payments has one delightful quality—that is

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    that it balances, is bound to balance, and always must balance, because it is merely a statement of the different motivations with which the same transactions take place within a given period of time. Hence the astonishing conclusion, which people find difficult to absorb, that if one has a surplus on current account, one must therefore inevitably have an equal and opposite deficit on capital account. That is to say—to put it crudely—one must be exporting capital to the value of whatever is the surplus on the balance of payments in which one happens to be rejoicing.
    On the subject of the balance of payments, there are two questions that I want to address specifically, one to the Treasury Front Bench and the other to the Opposition Front Bench. It is, of course, a consequence of having a current surplus on the balance of payments that one is exporting capital; and no doubt a considerable factor in the growth of our overseas assets is due to the surplus which we have enjoyed in our trading accounts of the past six years.
    The Chancellor of the Exchequer said in his Budget speech:
    "Our net overseas assets have, in fact, risen more than sevenfold from £12 billion at the end of 1979 to almost £90 billion at the end of last year."—[Official Report, 18 March 1986; Vol. 94, c. 168.]
    There is an interesting feature about that statistic. If one totals up our current account surpluses of the past six or seven years, one will not find that they come to anything near the difference between £12 billion and £90 billion. The deduction from this must be that a massive factor in the increase is reinvestment abroad of the profits earned upon overseas investments owned by residents of this country.
    The question I want to put to the Opposition Front Bench is this. I understand that it is part of their policy that they will restore control over capital movements. I want to know three things, though essentially they are all part of the same question. First, would they seek to prevent the export of capital from this country? Secondly, would they finish off the job by attempting to secure the repatriation of profits from investments abroad, and thus remove the other factor which was present in the increase to which the Chancellor drew attention? The third but perhaps most important question is this: do the Opposition realise what the effect of that would be upon the balance of payments?
    There seems to be the notion that a surplus on our balance of payments is an expendable item, which we are free to invest either in this country or abroad. There is, in fact, no such possibility, for if we do not send that capital abroad we cannot, by definition, have a current surplus on our balance of payments.
    Now, although, as I said earlier, the balance of payments is an amusing contraption in an arithmetical sense, in a real sense it is highly complex. We do not really understand the interaction of the various component parts of that balance. Let me take a crude example. We do not know what would be the result of a given increase in exports; do not know whether that would result in an equal increase in our current payments surplus or whether there would be some adjustment in other parts of the account. In particular, we do not know—here I come very much
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    into the real world—how far our experience with the balance of payments has been related to our experience in unemployment.
    In Britain today we are meeting with our exports the cost of acquiring all that we find it advantageous to acquire from the outside world, and still are earning a very substantial surplus of payments year in and year out, a surplus that the Chancellor expects to continue. There is a plausible case to be made that that factor—that changeover of the United Kingdom economy from persistent deficit to persistent surplus—may be not unconnected with our difficulty in dealing with the apparently intractable phenomenon of a high statistical level of unemployment, though there are obviously many other factors that also feed into it.
    Therefore, it would be right for the Opposition to think—I hope that they can bring the House into their counsels in this matter—about what they intend to do about capital transactions between this country and the outside world. Do they intend to control them, or aim at reducing them to zero? Do they intend to secure the repatriation of the capital that is reinvested abroad? What effect do they think that will have upon the balance of payments, and, through the balance of payments, upon the economy of the country?
    Having given the Opposition Front Bench something to think about, I hope, for it is a serious issue, I now refer to the Chancellor of the Exchequer.
    Sir Peter Tapsell: I have heard the right hon. Gentleman's interesting analysis of the balance of payments many times over the years, but I have never been wholly convinced by it. How, for instance, does he square his analysis with the Japanese experience? For many years the Japanese have combined a large surplus on their balance of payments with full employment at home, but have not always found it necessary to export large quantities of capital. How does the right hon. Gentleman relate that to his analysis?
    Mr. Powell: I am sure that the Japanese have found it possible to combine a surplus on their current account with high employment at home. Different economies, at different stages of development and in different circumstances, will differ in that respect. What I cannot believe is that the Japanese have succeeded in achieving in one and the same year a surplus on current account and also a surplus on capital account, which means importing capital at the same time. In fact, they have been buying assets abroad—[HON. MEMBERS: "Hear, hear."] Hon. Members are with me on that—and that is what has been enabling the Japanese to maintain their continuing large surplus on current account, which appears, although unaccountably to me, to cause so much anxiety.
    Mr. Robert Sheldon: Has the right hon. Gentleman taken into account the possibility of industrialisation leading to an increase in the £74 billion of imports that we bring into the country? That could be raw materials, capital goods and such things. Only a 5 per cent. increase would wipe out our balance of payments surplus.
    Mr. Powell: I follow the right hon. Gentleman entirely in that I do not think that it is easy to quantify or predict the result of changing a given factor in the balance of payments analysis. Some of the factors which, in

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    themselves, are inherently negative may turn out, in their repercussions and indirect effects, to be positive overall. To that extent, I agree with the right hon. Gentleman.
    I now come to the point that I wish to put to the Chancellor of the Exchequer. He said that British industry has the
    "opportunity both to increase its exports and to reduce import penetration in the home market."—[Official Report, 18 March 1986; Vol. 94, c. 169.]
    I want to ask him what he thinks the consequences will be if that exhortation, hope or prayer on his part is followed by British industry.
    In so far as exports are increased and import penetration in the home market is reduced, no doubt the current account surplus on our overall balance of payments will, other things being equal, be that much greater — we shall have an intensification of the phenomenon which we have experienced in the past six years. Is that what the Chancellor aims at? Is that what he hopes for? What is his analysis of the economic consequences—the consequences in terms, first, of the impact on the balance of payments, and, secondly, the impact upon the economy of that impact on the balance of payments?
    I come in haste to the matter with which the right hon. and learned Member for Richmond, Yorks was dealing—control of the exchange rate. The balance of payments will operate inexorably, whether or not one messes around with the exchange rate. With an exchange rate entirely free to move, with which the Bank of England is not playing any games, still the inexorable logic of the balance of payments will apply. But if one decides upon a fixed exchange rate policy —or an aligned exchange rate, which is effectively another version of the same thing —then, in addition to everything else, one is deciding to add a further factor, namely, the level of the exchange rate, and bring that into the play of forces which determine the composition of the balance of payments.
    If one decides to fix the exchange rate, one does so at one's own expense, in two ways: to keep the rate down one manufactures one's own currency and sells it; to push the rate up one borrows other people's currencies and sells that. It is a simple and rather hair-raising game, is rigging the exchange rate. In the end the cost always recoils on the country which does it—either by the consequences of providing currency of its own in order to depress the rate, or by the consequences of the international debt incurred in operations to force the exchange rate up.
    The Prime Minister made a sage observation—indeed, it might have been a deep observation—when, responding to a supplementary of mine, she said, referring to the suggestion that we should tie our exchange rate to a norm not within our own control, that had the Government listened to the suggestions earlier
    "we would have found ourselves in some difficulty in view of the fluctuation in exchange rates which inevitably comes through having a currency rather different from those in the rest of Europe."—[Official Report, 6 March 1986; Vol. 93, c. 444.]
    The right hon. and learned Member for Richmond, Yorks evidently believes that we have walked out of history. He believes that we have left behind us the period when factors which none of us foresaw, not years before, but only a few weeks before, could alter the balance of supply and demand for sterling. For myself, I cannot believe that the change in economic variables throughout the world which comes home to roost in terms of a movement of the sterling exchange rate lies behind us once and for all and that therefore it would now be painless to
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    attach ourselves to an external norm. I believe that we would still find ourselves paying dearly to maintain that norm, and ultimately at our own cost.
    The right hon. and learned Gentleman is under an illusion when he imagines that the stop-go that would result would be an effective measure against inflation. It is true that it has been used in terrorem by Chancellors of the Exchequer. They threatened the economy, which they were themselves inflating, chat if it did not behave itself, there would be a balance of payments crisis; but still inflation continued and still the balance of payments crisis had to be met by sudden and sharp adjustments of the rate of exchange.
    I agree rather with the right hon. and learned Gentleman's fundamental proposition that the Chancellor of the Exchequer and this Administration in general have, by control of public sector borrowing, been utilising the only instrument by which money supply can be increased or controlled or by which inflation can be—to use the rather absurd metaphor—conquered. We would not get any nearer to that by applying the self-punishing mechanism of an externally fixed exchange rate, which would have to be fed in along with all the other factors in the balance of payments.
    So I hope that the Government will reflect long and hard upon the philosophy of the Prime Minister's reply, and that we shall continue to enjoy what have proved to be the lasting advantages of an exchange rate which tells us the truth about the worldwide supply and demand for our currency. At least we can do without that additional factor in the already difficult and puzzling make-up of the balance of payments about which both from the Chancellor of the Exchequer and eventually, no doubt after an appropriate period of reflection, from Her Majesty's Opposition I look forward to further enlightenment.
    6.14 pm
    Sir William Clark: The right hon. Member for South Down (Mr. Powell) asked the Opposition Front Bench about the repatriation of capital. British pension funds have already been threatened that unless they repatriate some of their capital invested abroad the fiscal advantage will be withdrawn from them. The Opposition policy is clear.
    The right hon. Gentleman mentioned Japan. He did not mention an additional advantage enjoyed by Japan over many years—its small defence budget. It competes with other economies with defence expenditures amounting to an appreciable amount of GDP.
    I think that the Budget is clever and far-sighted. It is not a Budget just for tomorrow. The Chancellor has little room for manoeuvre. He has said that the oil factor in our economy is merely 5 per cent. and that the buoyancy of the other 95 per cent. is real. That is borne out in the figures and the Treasury receipts in January which were about £4·5 billion against a forecast of about £2 billion.
    The buoyancy in the economy was too conservatively projected in the Budget last year. As a consequence, the Chancellor had some flexibility, albeit only about £1 billion. He has relieved taxation by that amount. That confounds the doom and gloom prophets. I know that Opposition Members think that this is old hat, but productivity, even in manufacturing, is increasing. Growth in the past five or six years has been sustained. Output, productivity and investment in manufacturing are increasing.

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    We should stop talking down the economy. Our economy is extremely buoyant. Ours is not a petrocurrency. Opposition Members do the country a disservice in always talking down our economy.
    We are accused of wasting oil revenues. Over the years we have received about £50 billion in oil revenues, but, as the right hon. Member for South Down reminded us, our overseas assets have increased by about £78 billion, from £12 billion to £90 billion. That must be good for the future, whether we invest in dividends or whatever. Opposition Members do not realise that if one invests abroad one can look forward to the dividend, but that in many cases the only way to penetrate the overseas market is to acquire subsidiaries. That has certainly happened in America and in Europe. When people question capital going out of the country they must realise that many other countries such as America and Japan invest here. If we become isolationist and decide not to invest abroad, we shall suffer reciprocity.
    We should not forget the background to the Budget. Inflation is coming down. People can plan with far more certainty. Inflation was 26 per cent, today it is just over 5 per cent., and it is bound to come down to about 3 or 3·5 per cent. Any increase in employment will be retarded by high wage demands. I hope that industry realises that.
    At one time the CBI appeared to be concerned only with the need to reduce interest rates. The one point drop that we have recently enjoyed is excellent and it will give industry a boost of about £250 million, but a one point drop in wage rates would give industry a boost of £1,000 million. That is how we shall secure more research and development and more jobs, and that is why it is essential to keep down wage demands.
    I am sure that everyone welcomes the measures in the Budget to improve training. In addition, we have the loan guarantee scheme, the business expansion scheme and the community programme.
    I welcome the suggestion that wages should be tied to profitability. My right hon. Friend the Chancellor of the Duchy of Lancaster drew attention to the fact that the long-term unemployed are being interviewed over three, four or five days with a view to their joining or forming job clubs. A few pilot schemes throughout the country have been successful and I understand from my right hon. and noble Friend the Secretary of State for Employment that they are to be extended generally. It is interesting to note that there has been some deregistering by the unemployed in some areas where clubs have been formed or introduced.
    There are 3·2 million who are unemployed and that is disastrous. I hope that the House will not think that I am trying to denigrate the importance that is attached to reducing unemployment. However, we should ascertain how many of the 3·2 million are looking actively for work. We all know that some have taken early retirement and are not looking for work but are registered as unemployed. Some married women who were in employment are registered as unemployed but are not looking actively for work. If we have 3·2 million drawing benefit, I accept that unemployment is far too high—we must ascertain how many are looking actively for work.
    Mr. Martin Flannery: The hon. Gentleman talks about inflation being reduced, but
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    he has not said that unemployment is increasing massively. It is useless to talk to the unemployed, who expect unemployment to increase, as though everything in the garden is glorious and that nothing is wrong. Is it not a fact that the unemployed have been taken out of a sector where they were able to buy products and that if they returned to it they would be able to buy more products? The spiral of unemployment makes things worse all the time. I ask the hon. Gentleman to accept that reality.
    Sir William Clark: I cannot understand the hon. Gentleman's logic.
    Mr. Flannery: Of course the hon. Gentleman cannot.
    Sir William Clark: I should have said that I cannot understand the logicality of the hon. Gentleman's statement. Surely the reduction of inflation is the greatest boon to everyone, whether he or she is on a small income or a large one. It must be better for inflation to decrease rather than increase. Surely that is obvious to anyone.
    My right hon. Friend the Chancellor of the Exchequer told us in his Budget statement that the surplus assets in pension funds will be taxed at 40 per cent. I do not object to that, but I am slightly concerned that the Government Actuary will intervene if the assets of a pension fund are only 5 per cent. more than the fund's liabilities. I am not certain that a surplus of 5 per cent. is a sufficiently high one for the introduction of taxation. I do not agree that the pension funds should hold massive surpluses, but we must not undermine the integrity or the financial stability of occupational pension funds. If the stock market turns down and securities decline, some of the pension funds with a 5 per cent. surplus may be in trouble.
    The 11 million occupational pensioners should be aware of what the Opposition have in store for them. As I understand it, a Labour Government would force the institutions—the pension funds—to invest in a national investment bank. The House will recall that the right hon. and learned Member for Monklands, East (Mr. Smith) talked about a national investment bank and investment, but he did not say from where its funds would come. I believe that a good part of the funds will be forced from occupational pension schemes. I have no objection to forced investment if I am satisfied that the person who is to invest my money will do so wisely, but unfortunately the record of most public investment is not all that good. If the funds of the 11 million are to be diverted into a national investment bank and reinvested—no doubt into lame ducks to create jobs, for example—pensioners and their pensions will be put at risk.
    The Opposition have threatened that if a Labour Government are returned they will repurchase all the shares that have been bought under our privatisation measures. Of course, a Labour Government would not repurchase the shares that have been bought by small investors. We know that 2 million small investors bought British Telecom shares and we know also that a Labour Government would not wish to upset them. Presumably a Labour Government would repurchase the shares that have been bought by the institutions. Apparently, they will buy them at the same price that the institutions paid for them initially. No allowance will be made for inflation between purchase and repurchase. Similarly, there will be no allowance for any capital growth that has taken place

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    between purchase and repurchase. Again, this will put at risk the pensions of the 11 million occupational pensioners.
    I say to occupational pensioners that they should beware of any Labour Government. I have explained what the Opposition intend to do with their money and their future.
    My right hon. Friend the Chancellor of the Exchequer knows that I am in slight disagreement with him on how we should relieve the burden of taxation. The reduction of the standard rate of tax by 1p, from 30p to 29p, was excellent, and the same can be said of the indexation of the tax thresholds. However, under the new indexation, a married man will start paying tax as soon as he has earned £70 a week. Surely that figure is far too low when the national average wage is slightly more than £180 a week. A priority for any Chancellor of the Exchequer should be to increase thresholds so that half the national average wage becomes the tax threshold for a married man. When that has been achieved, let us deal with the standard rate tax.
    The Budget is a continuation of previous measures in that it encourages wider share ownership and the Government's housing policy, which has led to more than 60 per cent. of houses being owner-occupied. There are over 4 million small shareholders, and that number will increase with the introduction of PEP, which I warmly welcome. More help will be given to charities and some of the strain will be taken from the public purse in looking after people through the various charities.
    My right hon. Friend the Chancellor of the Exchequer should be congratulated on the Budget. The exchange rate has been abolished and so has the investment surcharge, along with the tax on jobs which was imposed by the Labour Government in the form of the national insurance surcharge. Development land tax has been abolished and it is time that my right hon. Friend abolished the lifetime gifts tax. As others have said, it is an ingenious Budget. It is also a prudent Budget and it will be welcomed by most of the British people. Furthermore, it is a cautious Budget. I am sure that all my right hon. and hon. Friends look forward to next year's Budget.
    6.29 pm
    Mr. David Penhaligon: I am sure that many hon. Members would agree with the hon. Member for Croydon, South (Sir W. Clark) that one of the better aspects of the Budget concerned the changes for charities. I welcome those changes, and I am not afraid to say that. However, I take issue with the hon. Member for Croydon, South when he implies that charities could substantially help to alleviate some of the enormous social problems in our country. Charities can set standards, have new ideas and manoeuvre a fresh approach to many issues, but, relative to the global problem regarding the relief that they bring for the many people who need help, their contribution can never be that massive. However, I am willing to agree, enthusiastically, that we should encourage individuals to give money to the charity of their choice and to do that through fiscal measures.
    The first major point that I should like to make has already been mentioned—the problem that the economy is currently experiencing regarding unit labour costs. The Chancellor identified that problem during his Budget statement, the right hon. Member for Chingford (Mr. Tebbit) at least managed to make passing reference to it,
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    and the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) made substantial reference to that problem and concluded that we should join the EMS.
    I have long taken the view—a view held by the alliance—that we should join the EMS, but those who believe that that will solve unit labour cost problems in splendid and wonderful isolation are misled. It is time that the House applied itself more to the problem of unit labour costs than it has done hitherto. In 1979 we were told that the solution was simple—we should control the money supply. There are few in the House now, even among its original, enthusiastic advocates, who would argue for that idea.
    At Budget time it is fair to ask the Government, if they see unit labour costs as one of the great problems affecting the economy—and I would concur with that belief—and if they believed originally that control of the money supply was the solution, to tell us what went wrong with the original policy or what they wish to put in its place. The alliance firmly believes that, unless we can get unit labour costs under reasonable control relative to our competitors, there is no prospect of long-term economic recovery. I am not certain that many in the Treasury would disagree with that diagnosis.
    It is interesting to analyse the experience of the average British industrial worker compared with that of the average German industrial worker over the past 20 years. I have been trying to find the precise answer to the following question but have not been successful, although I can give an approximate answer: which group of workers, German industrial or British industrial has, in each year received the largest pay increase? The answer would appear to be something like 16:4 or maybe 15:5 in favour of the British worker. It is certain that in most of the past 20 years the German industrial worker has received a substantially smaller increase in the monetary value of his pay than his British counterpart. Yet, when one analyses the changes in living standards that have taken place over that time, it shows how lunatic and nonsensical is the obsession with an individual's yearly pay increase.
    We must undertake a major propaganda effort to explain that point and make it more widely known. Indeed, as I sit on the alliance Benches and listen to some of the comments from the Labour Benches, it is apparent that we must do a great deal of work on that matter in the House. If we cannot get industrial pay settlements down to a little over the level of inflation, there is no alternative economic scenario which will get people back to work and rebuild our manufacturing base, for which so many people in this House desperately wish.
    The Government have occasionally applied their mind to wages. However, they have taken on the easy targets—the ones that least needed attention. There has been much legislation to reduce the pay of the very lowest paid in Britain. The people creating difficulty in that area are not the ones who immediately flash to mind. The Government have put a lot of effort into taking on an easy target because they wish to duck a far more difficult one. It is not the low paid who are causing the problems; rather it is us—and I use the word "us" in a collective sense to describe those of us in the medium to well paid category. We must somehow persuade people in that category to accept pay rises of rather less than they have been getting over the years if we wish to re-establish our employment record and manufacturing base.

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    Even more than that—although this is not absolutely fundamental to the Budget statement, there is an implication for it—we have seen the Government's determined and successful attempt to keep down many of the pay settlements in what I describe in the broadest sense as the Government sector. That is causing a potential explosion of resentment which is gradually building up beneath the Government. It is an explosion of demand and a feeling of outrage which I suspect someone at some time will have to pay for.
    Much of the Government's progress on inflation is undoubtedly true and real, and the alliance welcomes that, but much is illusory and not necessarily long-term. It is worth pointing out, when the figures comparing this decade with the last decade are so freely given across the Floor of the House, that at this moment, after all the agony that this country has been through, as far as I am aware, there is only one industrially-based nation which can reasonably be compared to Britain. Only Italy has a higher level of inflation than Great Britain. Italy has an inflation rate two or three points higher than ours. All the other nations have lower inflation levels—not much lower, it is true, but it is worth stressing that. Despite the effort, sacrifices and enormous level of unemployment, so far as I am aware, only one country has a higher level of inflation than ours.
    Mr. Ian Gow: Would the hon. Gentleman care to consider Greece, Portugal and Spain, just to mention three other countries, when he makes those statements?
    Mr. Penhaligon: I did say that I was comparing nations roughly equivalent to ourselves. I did not realise that the Government believe that the British economy is now in such a state that we should compare ourselves with Portugal, Spain and Greece. If that is the standard adopted by the hon. Member for Eastbourne (Mr. Gow), so be it. However, when comparing ourselves with France, Germany, Holland, Canada, the United States and nearly all the OECD countries with a large manufacturing base, my previous statement is true. If I need to be corrected, there will be opportunities for that to be done.
    The alliance's conclusion—which is not popular and may not attract votes but which is important and fundamental and one which we will argue for with vigour—is that there must be some kind of incomes policy within the economy. That policy should preferably be built on the back of consent; if not, on the back of a mandate. In the final analysis, it should be encouraged to work through statutory fiscal pressures.
    My next point concerns the penny off income tax. It has been interesting listening to hon. Members speaking about that. In reality, the Chancellor, having adjusted this and that, discovered that he had about £1 billion to spend. That is his judgment. The alliance took another view in the alternative submission that we put to the House, which was published before the Budget and which we were willing to put through the various economic models. That was a brave and unusual thing for an Opposition party to do. It is certainly something that the Labour Front Bench would not dare to do as the computer is likely to say "submit" or "surrender" before it gets through the first six months of the Labour party's proposals. However, we are willing to put our alternative submission to the test. We believe that
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    we could run a slightly bigger PSBR. I do not wish to discuss that point at present. I should just like to accept the Chancellor's analysis of his £1 billion to spend. One can run a PSBR bigger than that, but let us simply accept the Chancellor's statement about that £1 billion.
    In current circumstances, on what would the House collectively wish to spend that £1 billion? That is the decision that the Chancellor had to make. The alliance, in its submission, said that it thought that one of the most effective ways of using that money would be to relieve poverty, create jobs and give the manufacturing base some kind of boost. To do that the money could be used to reduce the employers' national insurance contributions. We accept that there are alternatives. One could have argued that some of the money should go to alleviate the poverty that has undoubtedly increased in our society over the past few years, particularly among the unemployed and the retired. One could have argued that some of the money should be used to build up and repair the infrastructure—houses, roads, sewers or whatever. The alliance argued for a combination of the three in its submission.
    The Government decided not to do any of those things. They decided that poverty, jobs and the infrastructure were not important. They chose to spend that miserable £1 billion in the least effective way. They decided to reduce income tax by 1p in the pound rather than to rebuild our industry and infrastructure and relieve poverty.
    We know from knocking on doors during election campaigns that few constituents would offer to pay more tax. I am constantly amazed when politicians argue to the contrary. But we believe that the 1p in the pound off income tax is a mistake, and to show that we take that seriously we shall seek to divide the House on that matter tonight. We shall vote against that reduction in income tax tonight because we believe that there are other less selfish ways in which that money could be used.
    The Financial Secretary to the Treasury (Mr. John Moore): This is obviously an important issue for the hon. Gentleman's party. Why was not income tax mentioned in the budgetary statement, "Jobs and competitiveness," which his party issued in advance of the Budget?
    Mr. Penhaligon: Income tax is mentioned. We said—the Minister will be unfair not to recognise this—that we would valorise tax thresholds and tax levels. If the Minister does not know what that means, he has not read far enough. We made it clear that we would increase thresholds in line with inflation, but—and we were not trying to duck it, deny it or wriggle our way out of it—that we must face the economic reality. We would not have reduced income tax by 1p in the pound in the current situation.
    We would not have exempted lifetime gifts from tax altogether. It is an obscenity beyond belief that, as a result of the budget, a parent during his lifetime can give a child £10 million and that massive transfer of wealth would not incur one farthing of tax. Previously, the Chancellor would have taken £3 million.
    Politically, the Government will get away with that change because most people do not believe that there are people who have £10 million to give to their children. But those who have been Members of the House for a year or two know jolly well that there are many hon. Members who could afford that. With all the poverty and housing problems that we see, it is staggering that, of all the people

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    the Treasury could relieve, it has chosen to relieve people with that sort of wealth. We on this Bench do not argue, and never have, that levels of tax should be such that they represent confiscation. The previous level was one third. Plus or minus a bit, that is about right. Frankly, in all decency, someone who has £10 million to give to a child can afford £3 million in tax.
    Mr. John Townend: Does not the hon. Gentleman have the problem in his constituency that many other hon. Members have of family businesses being forced to sell out because of capital transfer tax, with the consequent loss of jobs? Does he accept that some of the family businesses that went out of business or sold up in the 1960s and 1970s would have been the seedcorn that would have provided jobs today? Will he at least exempt family businesses?
    Mr. Penhaligon: We have not attacked some of the changes in capital transfer tax.
    If one takes £10 million—
    Sir William Clark: I did not mention £10 million.
    Mr. Penhaligon: I know. I am talking about the consequence of the Government's legislation. Farms are the most difficult area in relation to capital transfer tax in areas such as mine. They already have a 50 per cent. exemption on top of the basic rate. A farmer must own a grand-daddy of a farm for it to be worth £10 million, even with the inflated property values that we have today.
    Mr. John Townend: £500,000.
    Mr. Penhaligon: Oddly enough, one could argue that capital transfer tax started at too low a level at £71,000. That is where it started previously. I have not mentioned the £71,000 level, but I become extremely angry at the net effect of the removal of capital transfer tax from a sum of £10 million.
    The lunacy of the Government's position is that the only wealth we now tax is that which is released from its possessor as a result of his unexpected death. No other wealth is taxed. Everybody knows that they will die in the end, and there is plenty of advice that people can take on that. The only people who will pay large-scale capital transfer tax in future are those who die unexpectedly, or, as my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) said, those who trust the Inland Revenue more than they trust their own relatives.
    Mr. Moore: I apologise for intervening again, but it is interesting to learn the policies of the hon. Gentleman's party. How does the hon. Gentleman combine what he has been saying at great length about capital transfer tax—I trust that he will seek the opportunity to vote against this Budget resolution in order to put his party's position on the record—with the fact that in the past seven years, since 1978–79, the proportion of taxation taken in capital taxation has increased from 1·4 per cent. to 1·8 per cent. and in real terms the revenue yield has gone up by 30 per cent?
    Mr. Penhaligon: The right hon. Gentleman will certainly reduce that this time. I rather suspect that a fair amount of capital has been transferred in the past few years in the belief that the regime could not conceivably become more favourable. It just shows what mistakes people can make. If only they had hung on a bit longer, they would have paid no tax at all.
    The Chancellor is clearly in a difficult financial position. He lost £5 billion from oil and he takes no blame
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    for that. But the Government must be able to stand up and defend why, within the narrow limits for manouevre that they have in this Budget, they have decided to use £1 billion in the way that they have.
    Many Conservative Back Benchers, at least on television, attack that change with as much vigour as I do. If there were a secret vote on this among Government Back Benchers, the 1p in the pound reduction in income tax would not receive a majority.
    6.47 pm
    Mr. Michael Heseltine: I share the broad approval that has been extended, not only in the House but widely outside, for my right hon. Friend the Chancellor's Budget statement which has achieved so many of his central economic aims. Obviously, the Government's prime responsibility to secure control over the economy is self-evident. There is no question whatever that on some of the more important aspects of my right hon. Friend's policy he had a good story to tell. The star of the record was the fact that we now look to the prospect of a 3·5 per cent. rate of inflation. Not even the most enthusiastic Government supporters believed that we would reach such levels as quickly as we have. Without the slightest doubt, falling interest rates and rising output and productivity in an economy that is now growing faster than any comparable economy, with the possible exception of that of Japan, are a remarkable achievement.
    We should not lose sight of the fact that part of the growth in output, particularly in manufacturing, is a recovery from a low base but that is now rising and it is part of a growing economy on a consistent year-on-year basis. That is a solid and real achievement. My right hon. Friend the Chancellor of the Duchy of Lancaster was right to draw the attention of the House to the fact that much of the credit for our falling inflation goes to the falling levels of raw materials and changing oil prices, but there is a countervailing force which is much to be deplored. The private sector has been given the most incentive-oriented economy that it ever dreamt it would see, but we are speeding up the potential level of inflation with wage settlements running at nearly double the level of inflation. We shall pay the price for that in lost jobs and lost opportunities as it feeds through into the economy.
    Recently, we have benefited considerably from the change in the price of imports and of oil but the private sector is undermining benefits which should accrue to the whole national economy. That is to be deplored.
    I agree with the hon. Member for Truro (Mr. Penhaligon) that the Government have taken an immensely courageous stand in holding down public sector wage claims for a long time. There is an unhappy contrast between how the public sector has accepted that, with great difficulty and with great stress to the Government, and what is happening in parts of the private sector. Everybody knows that significant real increases in earnings are being achieved by many of those who are in work because pay settlements are so far above the level of inflation. Everybody expected that the steps that the Chancellor would take would lead to a fall in interest rates, but it did not seem self-evident to me that we should further encourage an increase in real living standards for those people by giving them a 1p reduction in the standard rate of income tax.
    I was slightly at odds with my right hon. Friend the Chancellor of the Duchy of Lancaster—although I agree

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    with much of what he said—because he did not give quite the right emphasis to the sale of capital assets to finance current consumption increases which a standard rate reduction in tax would tend to stimulate. There is too little awareness that the capacity to go on selling assets is temporary. If one stimulates consumption on the basis of capital asset realisation, one is losing sight of the long-term need to use those capital asset realisations for capital growth and capital stimulation as opposed to enhanced consumption, which we might find difficult to sustain when the ability to realise more capital assets is diminished.
    I strongly commend the Chancellor and his predecessor, my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs, for their consistent efforts to incentivise and stimulate the small business economy. It is impossible to underestimate the scale of present incentives to encourage people to become self-employed, to start their own businesses and to develop those businesses into successful, thriving concerns.
    If there is a criticism of previous Governments—there are many, especially of the Labour Government—it is that there was a relatively inflexible economy for far too long. We were not sufficiently innovative and, when the recession came, there was not the wide dispersal of industry and activity which might have protected us from some of the worst excesses of that recession. Recently, however—and this Budget continues the policy—we have created a wide range of incentives which are equal to anything that can be offered anywhere in the world.
    I strongly support the Chancellor's determination to build on the philosophical and political strength on which the Government have laid such importance—the spreading of ownership. The property-owning democracy of the 1950s and 1960s, to which the Government have added the enfranchisement of council tenants, has played as decisive a role in changing fundamental attitudes to individual responsibilities as any other single feature of modern society. To extend that into wider share ownership must be the priority. Without the slightest doubt, the Chancellor has taken an important step. I hope that he will accept that it is not the last one. There are other incentives, which could easily be copied from overseas, to give greater thrust to our economy. However, all credit is due to my right hon. Friend for taking that important step in the Budget.
    I take issue with the hon. Member for Truro on his attempt to win both ways on the taxation of small family businesses. We quite understand that the principal Opposition party, in its guts, has no sympathy or empathy for the flourishing private sector economy and the private businesses that it creates. It has for generations encouraged the incentivisation that encourages publicly quoted companies to buy up family businesses and thus diminish the provincial power base of the industrial heartlands of Britain.
    The tax changes announced by the Chancellor mean that those who create businesses will be able to pass them on to their families or to sell them within the community to which they are important. That is an important part of maintaining the capitalist strength of Britain. Nothing is more harmful, other than nationalisation in which so many
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    Opposition Members believe, than forcing, by considerable fiscal incentives and high capital taxes, family business, to sell out to publicly quoted companies. That is another step towards the centralisation of wealth. The branch officer takes the place of the entrepreneur in provincial Britain. The Chancellor has taken a courageous step in trying to reverse that trend. The Labour party has no interest in encouraging such a thriving capitalist base.
    The Liberal party says that it favours a capitalist base for small people, but the moment a company becomes successful it will obliterate the company's ability to remain in business. That is a classic example of the Liberal party not being prepared to stand up for either side of the political argument. If one genuinely wants capitalism and for it to be a rival to the centralising process of Socialism, one must recognise that small businesses will, in many cases, become large. It is far better to leave the ownership of those businesses where they were created and where they are relied on than to centralise them by taxation or other techniques.
    From the privacy of Government discussions, the Chancellor is as familiar with my views as I am. If I have one criticism of his Budget it is that it has a discretion which I would rather see used differently. I am aware of the limited opportunities available to the Chancellor, but I would have preferred him to have encouraged more direct investment in and stimulation of the underlying strengths of the manufacturing base. I do not intend to expand on that today. I accept that he was faced with limited opportunities, but he should have taken a more purposeful stride forward towards the stress areas associated with inner city deprivation.
    I do not intend to take the time of the House describing the conditions which are now characteristic of inner city Britain and comparing them with the more prosperous suburbs, rural areas and, especially, the south. I am the first to say that in every constituency—even in mine, which is relatively prosperous — there are pockets of poverty and individual cases of tragedy. Those of us who represent the more prosperous parts of Britain cannot honestly say that there is not an unacceptable gap between what we see in the stress areas of the inner cities and the prosperous parts of Britain. That is recognised in the harsh conditions of the inner city stress areas and throughout the British political community.
    We do not need an endless parade of more statistics because the conditions in those areas have an eloquence of their own. The Government, as everyone is aware, inherited rapidly rising unemployment from the last Labour Government. It is extraordinary to listen to the Opposition Front Bench. If it is so easy to deal with the problems of unemployment, why did the Labour Government of the late 1970s find it impossible to reverse the then upward trend? The Government inherited about 1 million unemployed, which was a post-war record. The Labour Government had no idea how to reverse or grapple with the unemployment which was permeating through the entire Western world. If Labour does not recognise that basic part of its inheritance, it will never command the respect of the country.
    Mr. D. N. Campbell-Savours: This is not Blackpool.
    Mr. Heseltine: People remember that there were no easy solutions when Labour Members sat on the Treasury

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    Bench. There are no easy solutions today, and there certainly would be none if, by misjudgment, Labour party Members found themselves back on the Treasury Bench.
    We should be frank. Although unemployment is unacceptably high, its level has never been seen to be capable of being cured easily or simply by changing the political party in power. The social, fiscal and economic forces of the 20th century have encouraged generations with wealth and discretion to leave the inner cities. They left behind conditions which are increasingly reminiscent of state-dependent pensioner societies. These are the people who have too few personal resources. They tend to be less well educated, elderly and to have no family support. They are the last group in society to whom we can apply the language of self-reliance and a competitive race in which, by their own abilities, they should somehow succeed. They do not have the personal characteristics with which they can fairly be expected to survive in that rather over-simplistic description of life's forces.
    The language of self-help when applied to those communities is something of a delusion. There is growing anxiety about the social imbalances and the consequences that flow from them. Those anxieties grew under the previous Government, as under the present one. When the Government came to power, they rightly refused to increase, or even in some cases to sustain, all of the programmes which affected some of those areas. There was absolutely no case for excluding current programmes of local government from the rigours to which the private sector was being subjected by the recession. Nor was there any reason to exclude local government from the appraisals and the insistence upon greater efficiency to which the Government subjected the national Civil Service. There was no case for setting the bureaucracies of local government apart from that long overdue scrutiny of our national performance. If anybody has the slightest doubt about that, he has only to pick up the latest report of the local government Audit Commission to discover that the figures prove that service after service can be provided at a perfectly acceptable level but at significantly lower cost.
    There was absolutely no case for suggesting that restrictive practices and over-manning in inner cities should be set apart from the pressures to which British society was subjected. If there is a point to be made on that score, it is that restrictive practices so close to conditions of harshness were even more culpable because they denied resources to those who needed them most.
    The Government experimented across a wide range of policy areas. In their experiments with specific urban programmes, the Government, despite the constraints on public expenditure, substantially increased expenditure in real terms on programmes dealing with the worst hardship.
    There were two simple objectives. The first was to try to do something to alleviate the conditions of those who had been left behind in stress areas. That does not add up to a whole policy, however; it merely accepts the inevitability of the historic forces that brought such decline about.
    The second and essential objective, which the Government developed as policy, was to try to attract back into the stress areas people who would otherwise remain outside. To widen the basis of society in stress areas, we had to try to attract private investment which would have gone—some still is going—to the suburbs, the green-field sites, and the congested south. We recognised that,
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    to bring a new sense of hope and purpose to stress areas, we had to make them attractive. In a free society, we had to encourage people or to produce incentives to enable people to find a way back—people and investment which would not have chosen to go to those areas otherwise, under any Government.
    I shall not list the vast range of grants, programmes and experiments that we conducted, but far and away the most significant and successful is to be found in the east end of London. Through the Urban Development Corporation, we have set about rebuilding the east end of London. It is without doubt one of the most exciting pieces of inner city reclamation in western Europe. Some people talk of the clear divide between the public and the private sector, but I am told that for every £1 of public money going to the east end of London through the UDC, £7 of private money is taking advantage of the opportunity which the public purse created. I saw in The Times on Friday a supplement about the north-west of Britain which refers to a land being born again. Virtually every scheme that is referred to in the supplement was born because the Government took public money into the inner cities to create the environment in which larger sums of private money could be attracted. The Government have shown that the public sector can lead and that, where it leads, the private sector will follow, even into the most deprived and needful areas of the country.
    My conclusion is therefore clear. We now know what to do and how to do it. It is clear that, to attract back the strengths that have gone during several decades, we must recognise that there is no substitute for the public leadership which clears the dereliction of the Victorian, the Edwardian and, in some cases, the post-war world. No private sector initiative will do it on its own, because this is a loss-making business. There is no profit to be found. Any of us who is asked to advise the private sector whether it should lose money in such endeavours is bound to advise it not to. We must therefore ask whether we leave these vicious circles of despair to continue on their downward journey or whether we will find the resources to clear the dereliction of the past and to make the areas attractive so that, combining public and private endeavour, we can give people there, and the new ones we can attract, a sense of hope and purpose.
    It is said that we cannot throw money at these problems. Just what will we throw at them if it is not money? What else will be used to clear up the dereliction? What else will get rid of the appalling squalor in inner cities? I do not mean that we should spend money indiscriminately, but we have now been experimenting for the whole of the decade. If we have learnt nothing, we should be ashamed of ourselves. I believe, however, that we have learnt the answers that we sought. Once we have the answers, it is our responsibility, if the matter is accorded priority, to extend the experiments commensurate to the scale of the problem. It is only the careful balance between the public and the private sectors which can lead us forward as the appalling conditions demand.
    In his Budget statement, my right hon. Friend answered the final question which he would be entitled to put to me—where is the money to come from? He reduced the public sector borrowing requirement by £500 million. I do not believe that there was any case for doing that. We have already pursued with great courage a harsh regime to bring the economy back to a condition of which we can be proud and in which it is growing and there is wealth for dispersal.

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    Even in the discussions and forecasts of the present Government, it has never been considered necessary to reduce the PSBR by another £500 million. Indeed, I believe that we could have increased the PSBR by £500 million and there would have been no difference in the acclaim with which my right hon. Friend's Budget was greeted.
    Even if my right hon. Friend insisted on reducing the PSBR by £500 million, and did not accept that it could have been increased, he still had £1 billion. It therefore becomes a matter of balance. We know what to do. The judgment is about priorities. We can stimulate jobs and wealth and recognise the social imbalance that the tensions that I have described have created by leading the private sector—the builders, the investors, the strong, and the able—back into areas of deprivation.
    We have to create an urban environment which attracts people to live and invest in it. The chance to stride forward with conviction this year has sadly been missed, but there will be another. It is the privilege of Chancellors that, after one week's recuperation, they begin on the public expenditure round as a prelude to next year's Budget. The process is circular and remorseless and it has familiar characteristics about it.
    I hope that my right hon. Friends not represented in the debate today, who would not be the Chancellor's natural allies but who represent the policies that are of central importance in giving new life to the inner city areas, will recognise that my right hon. Friend the Chancellor is perceived as having a wider discretion in his hands next year. I hope that, as the public expenditure round that is the prelude to next year's Budget gets under way, all those harrowing stories of how we are not going to make it this time and how the City will not take it and how the pressures on borrowing limits or public expenditure targets are such that there is no room for manoeuvre will, in July and August, somehow miraculously turn out to be an ability to produce tax cuts and PSBR reductions when the Chancellor produces his Budget. I hope that, when all that dialogue goes on, given that there is now more flexibility, there will be a recognition that the Government's task is one not only of economic purpose but of securing a wider social and political purpose which is not compatible with the squalor and hopelessness of inner city Britain.
    Several Hon. Members rose—
    Mr. Deputy Speaker (Sir Paul Dean): Order. I remind the House that the 10-minute limit on speeches is now in operation, and I appeal for the co-operation of those who are called.
    7.12 pm
    Mr. Robert Sheldon: Any Member who represents a constituency in the north-west or any other region cannot fail to agree with the right hon. Member for Henley (Mr. Heseltine) about the need for some assistance for the disadvantaged areas.
    The right hon. and learned Member for Richmond, Yorks (Mr. Brittan) said that the Government's monetary policy was not wholly convincing. That is one way to put it. I found the Chancellor almost insultingly dismissive. His infatuation with money supply seems to have come to
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    an end and the theory behind the seven lean years has been dissipated. We should rejoice at the conversion of one whose opinions have hitherto been held very strongly.
    The Financial Times leader on 21 March said:
    "The plain fact concealed by this technical bashfulness is that the monetary policy is by now in an almost total mess."
    I do not deplore that. The Chancellor is at last being realistic, and I welcome that note of realism.
    This is the first Budget in this Parliament that makes no serious attempt to reduce unemployment. The Chancellor now believes that we have passed the point of no return and that high unemployment will never be materially improved before the next election. He therefore thinks that it is better to spend money not on what he considers to be meaningless measures but on conferring benefits on the better-off, in the hope that they who have gained from the Government might express their gratitude at the next election.
    So it is that there remain, and will continue to remain, more favoured parts of the country and more favoured sectors of our national life. It must be emphasised, because this is the cause of the discontent and anger in the north and the other regions, that preference is shown to the south and the City of London, and that this preference is an artificial and Government-made preference due wholly to their policies of a high pound, high interest rates and a contempt for any industrial policy.
    My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) put it well, when he said that the high FT index leads to short-term profits to prevent takeover bids coming in, as unwelcome as they are. So we sacrifice the long-term investment and expansion for the short-term profits that are a direct consequence of the actions of the City of London. Such thinking lies behind the paucity even of sops to the unemployed. We have had statistical tricks and deceptions designed to delude us into believing what is unbelievable—that unemployment is not worsening.
    It is easy to remove people from the unemployment register on the grounds that they are not really looking for work, as the hon. Member for Croydon, South (Sir W. Clark) pointed out. We know that the higher the levels of unemployment, the more pointless it is for many of the 500,000 unemployed for more than three years to continue the charade of searching for employment. The higher the levels of unemployment, the higher the number of those who genuinely cannot find work and so give up looking for it.
    The Chancellor's action on capital transfer tax is one of the most disgraceful parts of the Budget. It is a shameful proposal. The Chancellor has replaced what was a useful tax with a voluntary donation payable only by the miser or the negligent. The principles of the tax were sensible and equitable. The enjoyment of the capital that an individual creates for himself is the right of that individual. It is for him to enjoy the wealth that he has created. The enjoyment of capital by virtue of birth has long been regarded as eminently suitable for high and enforceable taxation. That was the basis of the death duties when they were first introduced, of estate duties and, more recently, of the capital transfer tax.
    The approach had been to make enforceable that which had been avoided. Under the Government, the tax has been emasculated, first by the reduction in the rates of tax, particularly on lifetime gifts, and then by the 10-year rule whereby one starts all over again every 10 years. Now, we

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    are back to a tax made even more optional because of the greater sophistication of the insurance market. The Chancellor will be taxing only those who were improvident or over-cautious in not divesting themselves of their wealth. Those who repent of their lack of foresight and endeavour to make hurried gifts towards the end of their lives will be penalised.
    The Chancellor has decided that the period of repentance should be fixed at seven years, but insurance companies are even now gearing themselves to cover the seven-year rule. So sophisticated are the new instruments that will be devised that there will be virtual freedom from capital transfer tax, as it is now, or inheritance tax as it will be called, for those who are even remotely well advised.
    The Chancellor of the Exchequer prides himself on abolishing certain taxes and reducing others. He prides himself on abolishing investment income surcharge, development land tax and national insurance surcharge, which was created when circumstances were different. Then there were high levels of employment and demand was overheating, but we now have quite different problems of unemployment and the need to increase subsidies.
    The Chancellor prides himself on abolishing the capital transfer tax. He has reduced the higher levels of income tax and he is equivocating about the capital gains tax, which may be the next one for abolition—after all, it now brings in less than stamp duty, which the Chancellor has cut in half. The investment income surcharge abandoned the distinction between earned and unearned income—the right and proper distinction that all previous Governments had accepted. There is a difference. There are costs associated with the earning of income such as travel to work, meals out, clothing and so on. There is also the underlying security of capital compared with the insecurity of employment, particularly now.
    The Chancellor also abolished the development land tax, which attempted to tax development values created by the community. Its disappearance is yet another bonus to the wealthy. Truly, the rich have never had it so good.
    Like many in the debate, I take issue with the Chancellor on belittling the value of oil to our economy. Rarely has the beneficiary of great good fortune been so contemptuous of that good fortune. Having won the pools, he claims that his success is due to his merit, and because he has squandered the oil revenues on the high exchange rates that damaged our industry, brought in imports and allowed the avoidance of any balance of payment difficulties, there has been postponement of any attempt to rectify our underlying weakness. How does the Chancellor think that France, Germany or Japan would have dealt with large oil revenues? Are they a good thing or a bad thing? They would have transformed their economies, which were good enough even before that.
    But, most importantly, the balance of payments has been the constricting aspect of our economy in all the post-war years. It has been a dominant factor in all of those 35 years. Stop-go was due not to overheating but to balance of payments difficulties and the holding of a reserve currency. What would Rab Butler and Reg Maudling have done if, at a stroke, they had found themselves relieved of these balance of payments problems?
    Oil is of enormous importance and its price is also important to us. We should have a view about the price that we are able to obtain for our products. We sell oil cheaply because of an ideology. But a trading nation
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    should not be able to afford an ideology when it comes to something so important to us. Consequently, we should speak to OPEC and should try to get what we can for our assets. Having obtained it, we should put that money to good use in industry, in the deprived areas of our country and in the expansion of our manufacturing base. That is how we should use it, and that is how we should proceed.
    7.20 pm
    Mr. Michael Morris: I should like to use 30 seconds of the 10 minutes allotted to me to comment on the speeches of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) and of my right hon. Friend the Member for Henley (Mr. Heseltine). I take much of what my right hon. Friend the Member for Henley said, especially as I have been a leader in one of the deprived inner city areas, but the most successful experiments have been controlled by central Government with central Government money. I believe that he should bear that point in mind. I treat the right hon. Member for Ashton-under-Lyne as a right hon. Friend, but he is a far better Chairman of the Public Accounts Committee than he is a Budget analyst.
    The Budget was highly creative. My right hon. Friend the Chancellor has managed to squeeze virtually a quart out of a pint pot. I thank him for his provisions on charities. I need say no more than thank you. It was good work; well done. We have made a good start on the share owning democracy with the personal equity plan proposals, but it is only a start. I also say well done for the 1p cut in the standard rate. Whatever colleagues may feel, all the evidence shows that cutting taxes is the best way of boosting long-term jobs and of reducing unemployment.
    I repudiate the idea that tax cuts are in conflict with job creation. Although Government expenditure on subsidised jobs may, and I hope will, lead to short-term results, new jobs that are financially self-supporting in the long term have to satisfy market demand. Tax cuts remain the most effective way of increasing that demand.
    I am not sure whether the Budget is stimulative or restrictive. At the end of the debate, perhaps I may be told how my right hon. Friend the Chancellor sees it. For example, there is a PSBR of £7 billion with, in addition, £4·25 billion of public asset sales compared with £2·5 billion last year. An analysis of that would suggest that it is a stimulative Budget. But we have lost £5·5 billion of oil revenues, which have to be allowed for in any calculation. Consequently, in a sense, one could say that it is a restrictive Budget. I am not sure whether it is stimulative or restrictive, and commentators in the City are none too sure either.
    I query why my right hon. Friend the Chancellor is so coy about fixed capital expenditure. After all, major items of capital expenditure such as the Channel tunnel, Stansted and all the activities, for example, in the east of London were previously substantially just public sector investment. But now there is a mixture. So my right hon. Friend the Chancellor did his cause a slight disservice in not trumpeting the success of that mixed investment. However, I am slightly worried that if interest rates do not fall they may restrict the growth of future capital investment.
    I am also worried about North sea oil. It is fortuitous that most of the rig contracts are on a one to two-year basis, so my right hon. Friend the Chancellor has a little

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    time in which to make suitable adjustments. Although it was right to have windfall taxes when oil prices were in the high $30, it must be recognised that we are not likely to return to such figures. The marginal cost in the North sea is perhaps $20 a barrel, and even that seems hardly attainable in the near future. In the United States there is an automatic adjustment below $20 a barrel in terms of the removal of windfall taxes. The North sea is important not only to Aberdeen but to a whole plethora of companies in the midlands, and I hope that my right hon. Friend will ensure that the tax element is not too restrictive.
    British Leyland has already been mentioned. It is not for me to dwell on who initiated the discussions with General Motors. However, it might be a subject for the PAC to consider. Nevertheless, I am sure that Land Rover should be sold to the management. It is not surprising that that company should have suffered; it has been deprived of investment resources for 12 to 15 years. Leyland Trucks reputedly has the best product line in Europe, while Bedford trucks reputedly has the worst. One might reflect that Leyland could take over Bedford trucks rather than the reverse.
    Last year's Budget was a "Budget for jobs." Any job stimulation takes time to work through. I can speak only for the east midlands, which is my part of England, but unemployment in Northampton is now falling to less than 10 per cent. Last Tuesday, I was somewhat dumbfounded to hear the Leader of the Opposition say:
    "The expansion of the jobs clubs for advice is more a taunt than a support for the unemployed. The Chancellor of the Exchequer, who must be acquainted with the facts, must know that people will regard that as nothing more than an additional opportunity to have a chat and a cup of tea. In some ways that is an advantage in itself, because unemployment can be an extremely lonely condition, but that is about as far as it goes".—[Official Report, 18 March 1986; Vol. 94, c. 186.]
    On the following day, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) mixed up the job start allowance scheme and job clubs. It was quite obvious that he did not understand the difference between the two, and had never visited any of the trial areas. It is not good enough for Opposition spokesmen to criticise such new dimensions when they do not even know what they are all about.
    There have been 30 experiments on job clubs. One of those experiments is in Northampton. In about six months we have handled well over 100 applicants from among the long-term unemployed, and of those 65 per cent. have found long-term jobs. It is not just a cup of tea and a chat. People have to come on four mornings a week for two weeks. They are given help in how to apply for jobs and are given free telephone calls, mock interviews, help with their curricula vitae, postage facilities, a room with a typewriter and a room with photocopying equipment. Indeed, they are given general help with how to get a job.
    The public has a great deal more confidence in a Government who carry out pilot schemes which, when found successful, as the job club has been in Northampton, are then introduced nationally than it has in the Leader of the Opposition or in the Opposition's economic spokesman. Those right hon. Gentlemen do not understand the difference between job clubs and job starts and cannot be bothered to visit them.
    This is a creative Budget. We have two more to come in this Parliament in 1987 and 1988 and I look forward to
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    a 25 pence standard rate of income tax in that time. The economy is growing and inflation is falling, and because of that we will see a considerable reduction in unemployment.
    7.31 pm
    Mr. Doug Hoyle: I must declare an interest as president of ASTMS. That gives me an opportunity to say that we recently won the political fund ballot by a massive majority. That will not bring any joy to the faces of Members on the Government Benches, but it is certainly good news for the Opposition.
    The Budget is totally irrelevant and has nothing whatever to do with the problems that are facing us. As has been said several times, despite the drop in oil prices, the Chancellor has suddently found that he has £1 billion to give away. To whom did he give that money? Did he give it to the people who are facing problems, to the poor or to the unemployed? Did he use it for the benefit of manufacturing industry? He did not. He used it to reward those who already have quite a lot of money anyway, to reward the wealthy.
    The penny reduction in income tax will benefit those who earn the most. What is the business expansion scheme? It means that the rich can use their dividend windfalls, the rebates from the taxman, to invest or gamble in schemes which are supposedly for small businesses. Even the Chancellor had to admit that a lot of money will go into farmland and development. The hon. Member for Truro (Mr. Penhaligan) talked about the abolition of the tax on lifetime gifts. That scheme is a scandal. What relevance does it have to industrial constituencies like mine in the north? What relevance does it have to the problems of Merseyside, to the north-east, to Scotland or to Wales? What relevance does it have to the impoverished north as against the prosperous south? It has none whatever. It will not begin to solve any problems.
    I am sorry that the Chancellor of the Duchy of Lancaster is not here. He introduced the debate in his usual manner of the Chingford charm school. His method is to denigrate his opponents, to be short on facts, to say nothing about Government policy and to present it overall with the manners of a house-trained aardvark. He has not changed at all. His chief topic was inflation. As has been reasonably said, our inflation rate is still higher than the inflation rates of our competitors. It is higher than the rates in Japan, the United States, Canada, France and West Germany. What a price we have had to pay for getting inflation down. We in the north and the unemployed have had to pay that price. Nothing in the Budget will do anything for the unemployed.
    The Chancellor missed a great opportunity because he could have used that £1 billion to stimulate employment. He could have used it for public works and to develop our infrastructure. The right hon. Member for Henley (Mr. Heseltine) talked about the inner cities, but regenerating the inner cities means far more than giving Liverpool a garden centre. It is about building houses which the council in Liverpool has been trying hard to do in face of all the restrictions. It is about building the roads and the docks that we need and about building schools and hospitals. Schemes like that would provide real jobs.
    The Government have no strategy for industry. They are quite happy to rely on privatisation and to try to bring about mergers that have collapsed. That happened in the case of General Motors and Leyland Vehicles. We look

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    forward to hearing the facts when they come out and learn what part the Chancellor of the Duchy of Lancaster played in that. Apparently, he initiated it and then advised against it. The Government have allowed the American company Sikorsky to take a stake in our only independent helicopter manufacturer. As we have seen, the trade unions there which supported the employers are now paying for that support because we now see Westland withdrawing recognition from the foremen and chargehands at Weston-super-Mare. Because of the American influence, will we see a non-union company develop at Westland?
    The amount of money sloshing about in the City has given rise to a spate of mergers. There is a proposed merger between Allied-Lyons and Elders IXL. We have seen the bid for the Distillers Company, first by Gulliver and then by Guinness, and there has been an attempt by GEC to take over Plessey. What relevance has that for employment? The spate of takeovers will lead to asset stripping, and unemployment will grow. The Government are not prepared to do anything about any of those things. The Budget should have been used to develop an industrial strategy, but all that it does is react too late to the needs of industry and crisis piles upon crisis.
    The Government have no policy, and it is not just the Opposition who are saying that they ought to have a policy for industrial regeneration, because voices are also being raised on the Government side. I wish that some of the people saying that the Government ought to have a fiscal policy to begin to regenerate industry had been giving the same message when they were in Cabinet. We seem to hear them only when they resign. As the number of resignations from the Government grow, so the number of voices grow that say we ought to do something about the regeneration of industry. Nothing is done.
    The only thing talked about by most Conservative Members who have spoken is the benefit that will accrue to the City, the benefits that will accrue to those who have and who are not interested in British manufacturing industry, but are more likely to invest in manufacturing industry in rival companies in Japan or the United States or in the developing world. Those pople are not interested in regenerating British industry or in creating prosperity.
    The Government ought to use their fiscal policy to ensure that the banks, the insurance companies and the City institutions invest in British industry. Failure to do that will mean that not only will more and more people join the ranks of the unemployed, but we will also become a low tech country. The hon. Member for Eastbourne (Mr. Gow) said the rate of inflation in Greece is higher than ours. That is the level to which Conservative Members are prepared to stoop. They believe that in industrial terms we can be compared to Greece and Portugal. I am happy to say that there are others with more vision, but we cannot expect vision from a Government who are leaderless, rudderless and powerless to stop the ship of state drifting on to the rocks of destruction.
    The sooner this Government make way for a Government who are prepared to put the interests of the British people first, especially those of the ordinary people, the better. The sooner the Government end the great divide between north and south, the better. Instead of confrontation, there should be compassion. We should use all our resources to bring people together. We should begin to rebuild the base of manufacturing industry on which the Government were created. We should be
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    assisting the new industries of the future. Although this Government will not do that, I hope that we shall not have to wait three years before it is done by a new Government.
    7.40 pm
    Mr. Ian Gow: Nearly seven years ago, my right hon. Friend the Member for Blaby (Mr. Lawson) arrived for the first time at Treasury Chambers. He found as Chancellor of the Exchequer my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) who is now Foreign and Commonwealth Secretary. In the early months of 1980, the then Chancellor and the then Financial Secretary established for the then Government and their successor what is described as the medium-term financial strategy. I pay tribute to my right hon. Friend the Chancellor for the consistency and persistency of purpose which he and his predecessor have shown in managing our economy during the past seven years. Consistency and persistency in economic policy have been tragically lacking in the fashioning of British economic policy since the war.
    When my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) formed his Administration on 18 June 1970, it was not his intention that we should pursue a statutory prices and incomes policy. It was not his intention that there should be a dramatic increase in the money supply in the closing years of his Administration. It was not the Labour party's policy, when it came into power in the early days of March 1974, that, before barely two years were out, it should go cap in hand to the International Monetary Fund and reverse some, although not all, of the disastrous policies which it had been pursuing in the two preceding years.
    What has marked out this Government, not only from the two whom I have mentioned but from all previous Governments since the war, is that we have had consistency of purpose. Consistency of purpose offers for the British people not only the best prospect of economic growth but the best long-term prospect of creating more jobs.
    The shadow Chancellor for the Liberal party —the hon. Member for Truro (Mr. Penhaligon)—is not in his place, but the solitary representative of the Liberal party, the hon. Member for Ceredigion and Pembroke, North (Mr. Howells), is welcome. We listened with considerable interest to the hon. Member for Truro tell us that, if we had a Liberal Chancellor, there would be a prices and incomes policy with statutory back-up.
    Mr. Richard Ryder: He did not explain.
    Mr. Gow: My hon. Friend is right. Who ever heard a Liberal explain anything with cogency or conviction?
    On the second day of the Budget debate the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was challenged, wisely, by my hon. Friend the Member for Lewisham, West (Mr. Maples) on what would be the public sector borrowing requirement if the right hon. Gentleman happened to be in Great George street. The right hon. Gentleman replied:
    "I shall give the figure in a moment."
    He said that the amount would be considerably more. He continued:
    "Before dealing precisely and directly with the question of the hon. Member for Lewisham, West (Mr. Maples), I must deal with the Government's plans for tackling the unemployment crisis."—[Official Report, 19 March 1986; Vol. 94, c. 309.]

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    Did the right hon. Member for Sparkbrook do what he had promised and deal precisely and directly with the question? He did not. I hope that the hon. Member for Birmingham, Hodge Hill (Mr. Davis) will answer the question that his right hon. Friend did not answer.
    My right hon. Friend the Member for Henley (Mr. Heseltine) said that he thought that this year's PSBR could be £500 million more than the £7 billion figure which has been wisely chosen by my right hon. Friend the Chancellor. My right hon. Friend the Member for Henley is entitled to put forward that view—the target of the PSBR is a matter of judgment. I do not believe that, if we had taken a more relaxed view about the PSBR, we would have shown consistency of purpose during the successive dramas of the Falklands war, the miners' strike and the dramatic reduction not only in the price of oil but in the revenue from oil.
    I believe that the level of the PSBR has a crucial influence on interest rates. No one is a keener advocate of lower interest rates than my right hon. Friend the Member for Henley. He is the first person to say that we must encourage our industrial manufacturing base. I believe that the surest way in which we can encourage our manufacturing industry is by following that policy of sound money and honest finance which is the best prospect of reducing interest rates.
    If I praise my right hon. Friend the Chancellor for his cautious and prudent Budget, I praise him also for his new imaginative scheme to encourage the wider ownership of shares. Nothing has caused greater happiness among Conservative Members than the way in which, since my right hon. Friend the Prime Minister arrived at Downing street, between 925,000 and 950,000 people—it will be more than 1 million people by the time of the next Budget—whom the Labour party wanted to keep as tenants in perpetuity in the public sector have become home owners. I see a former Minister for Housing and Construction—the right hon. Member for Brent, East (Mr. Freeson)—in his place.
    Mr. Winnick: What about private tenants?
    Mr. Gow: The hon. Gentleman should contain himself. He may get a chance to catch your eye later, Mr. Deputy Speaker. I ask the hon. Gentleman to remain silent.
    This increase in home ownership has become accepted by some Labour Members. At the next election, there will not be the same commitment by the Labour party as there was at the last election to repeal our Acts of 1980 and 1984. They may seek to amend them but they will not repeal them. In the past seven years, we have moved the centre of British politics to the right. I predict that the Labour party is fearful lest our new plans for encouraging share ownership should prove to be as popular with the people as was our policy of offering them choice. My right hon. Friend the Chancellor, in extending the opportunities for share ownership, wishes to extend opportunities and choice ever more widely. This is really the people's Budget—[Laughter.] Do you remember, Mr. Deputy Speaker, that the Labour party laughed when we promised that we would give tenants the opportunity to become owners? Today the Labour party laughs when we are
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    giving to others the opportunity to become owners of capital—an opportunity that they would never have had before.
    We have heard from Labour Members and even from the spokesman—now vanished—for the Liberal party that if only the Government would spend more money we would be able to abate what, by common consent, is the tragedy of unemployment. The Labour party should remember its own record of public expenditure and the consequences of that irresponsible expenditure: high interest rates and high inflation. It was those interest rates, that high inflation and that excessive borrowing—often undertaken in the name of compassion—that laid the fearful grounds of avoidable unemployment. In the longer term it is essential that the Government should persevere in their policy of lower borrowing, lower interest rates and insisting that this country, like others, should get rid of overmanning. Only in that way will we have a better prospect of more jobs in the future.
    I repeat my congratulations to my right hon. Friend the Chancellor and look forward to another two Budgets in this Parliament.
    7.51 pm
    Mr. Donald Stewart: If the hon. Member for Eastbourne (Mr. Gow) describes last week's Budget as a people's Budget, he will find that it will not be only Opposition Members who laugh.
    The hon. Gentleman referred to wider share ownership. I shall not argue about whether or not that would be a good aim. However, we have heard about the 2 million people who bought shares in British Telecom. I am fairly confident that in two or three years that number will have been drastically reduced and the shares will be in the hands of the big institutions.
    In opening the debate, the Chancellor of the Duchy of Lancaster referred to difficulties inherited from the Labour Government. I am not here to defend the Labour Government or to argue about whether those charges were correct, but the present Government have now been in power for seven years and they cannot continue, year after year, to say that they are not responsible. A time must come when they must take responsibility for the state of the country.
    Most people looked to the Budget for a two-pronged attack on unemployment and poverty. Last Tuesday, the Chancellor made no claim to attack either problem. Had he done so, the claim would have been impossible to sustain. When we remember what happened to the unemployment figures after the right hon. Gentleman announced a Budget for jobs, perhaps it is just as well that he made no similar claim on this occasion.
    The Budget resembled a gift of little value well presented in a nice package. The Chancellor's casual and frivolous comment on the prospect of the other half of the oil revenue disappearing over the next 25 years seemed to me to be complacent and irresponsible. Had it not been for the oil revenues in recent years, the United Kingdom might well have been obliged to file its petition in bankruptcy.
    The tax on petrol will have serious repercussions, particularly in Scotland where petrol is generally dearer than in the rest of the country and where rural areas and islands are dependent on road transport. If the right hon. Gentleman really believes that the oil companies should

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    absorb the new tax, he should take the necessary action to oblige them to do so. Those hungry hyenas will not cooperate with him otherwise.
    The hon. Member for Eastbourne was pleased with the personal equity plan, which allows for relief of taxes on investments of £50 per week. With the appalling unemployment figures and widespread poverty, most of our fellow citizens will regard that measure as a joke in poor taste. Many of them do not have that amount to live on. Even from the capitalist viewpoint, I gather that if one lifts the shares when the stock market is dropping, the tax relief will not be forthcoming.
    I welcome the action taken on charities. At last the iniquitous VAT on distress alarms, welfare vehicles for the disabled and so on is to be removed. It should never have been imposed. I also welcome the relief on employee donations to charities and the relief to companies on one-off gifts, which should be of substantial help to many worthy and needy causes. I am sure that that aspect of the Budget will receive universal approval.
    I also support the increased duty on cigarette tobacco. As a pipe smoker I should declare an interest, but I agree that tobacco in general is a legitimate object for raising revenue, with improved health as a bonus—although I suspect the Chancellor would be taken aback if everyone gave up tobacco at the same time.
    The wealthy section of society has been handed substantial increments by the abolition of tax on lifetime gifts. I agree with the hon. Member for Truro (Mr. Penhaligon) that it is a disgrace that that tax should be abolished at such a time. When one thinks of the lack of funds for the universities, the cutting of student grants and so on, the abolition of that tax is iniquitous.
    The reduction of a penny in income tax is gimmickry. Everyone wants more money, but the Prime Minister and the Chancellor evidently believe that people are all hungry materialists with no higher aim in life than a reduction in income tax. The Government boast about the reduction in income tax, but the same Government imposed 15 per cent. VAT on almost all goods and services. In my view, many people would forgo tax reductions if that helped the unemployed and the old-age pensioners who have suffered severely this winter. The money could be better used in providing schools, hospitals and houses. Our housing stock is a serious problem that some Government will have to face in four or five years.
    It is nonsense to reduce income tax when the Health Service is in dire straits. The DHSS quotes statistics about more doctors and nurses but the public knows that the Health Service and the hospitals are at crisis point. That penny could have been used for education, for the universities, or for improving student grants. I and my hon. Friend the Member for Dundee, East (Mr. Wilson) will join the alliance in voting against the reduction in income tax. Even British business puts tax cuts far behind help for the unemployed in its list of priorities. The Government might have taken their friends' view into account.
    The Budget was a political, not an economic, one. I hope and believe that the Government will pay the political price.
    7.58 pm
    Sir Julian Ridsdale: I congratulate my right hon. Friend the Chancellor of the Exchequer on a prudent and cautious Budget. Looking after the country's finances
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    is no different from looking after the finances of a family. At times one has to be cruel to be kind. It is not easy to restrain Government expenditure, especially when unemployment is rising so severely, and when we are already spending about £2·5 billion on employment and training measures in 1986, increasing to nearly £3 billion in 1988. However, let us remember that every £100 million spent on employment measures comes from other businesses and other people in employment. Squeeze them too hard by higher taxes or higher interest rates and one destroys hundreds of thousands of jobs that would otherwise be lasting jobs.
    That is why I have supported all along the restraints on Government spending, which I am glad to underline have now got us to the position where my right hon. Friend the Chancellor of the Exchequer is able to reduce interest rates and point to a growth rate this year of 3 per cent.—1 per cent. more than is estimated this year for Japan—with inflation moving, I hope, somewhere near that figure, too.
    We hear a lot about industrial planning and helping industry, but from my visits to industry—especially recently to the exciting KTM factory in Brighton, part of the Vickers Group which is making machine centers—I find general agreement that the best way for the Government to help manufacturing industry is by lowering interest rates and working for stable exchange rates. As my hon. Friend the Member for Eastbourne (Mr. Gow) said, we are unable to reduce interest rates unless we have a stable public sector borrowing requirement. That is why I join him in being nervous about some of the luxuries that at this moment my right hon. Friend the Member for Henley (Mr. Heseltine) wishes to have.
    In my view, at the moment we must take care of our international competitiveness which is being threatened by the United Kingdom paying higher increases in wages than West Germany, Japan or the United States, which are helped by far lower tax bases than we have.
    The Social Democratic party and the Liberal party oppose the reduction of 1p in the basic rate of income tax, yet, to quote from the speech of the hon. Member for Stockton, South (Mr. Wrigglesworth) in the debate on 20 March:
    "In recent years, unit labour costs in Britain have continued to increase consistently compared with the costs of our major competitors. That must stop."—[Official Report, 20 March 1986; Vol. 94, c. 462.]
    I agree with what he says, but surely the Budget helps in this respect. Everybody agrees that the single person earning £140 a week—that is the average wage in my constituency—is paying too much tax. I admit that I thought that that person would benefit from higher thresholds rather than from the basic rate reduction in income tax. On the contrary, as my right hon. Friend the Chief Secretary to the Treasury told us on 19 March, that person will gain a 95p a week reduction in the basic rate, compared with 69p a week for an equal cost increase in allowances.
    I am glad that those people will have £1·70 more in their pay packets as a direct result of the Budget. For a married couple on average earnings, the figure is £2·59 a week. For the employee on average earnings, the reduction in the basic rate, plus the increase in thresholds, is the equivalent of an increase of £4 a week in gross pay. I am surprised that although the Liberal party and the Social Democratic party are complaining about Britain's international

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    competitiveness they complain when the Government take 1p off the basic rate of income tax, which will help to alleviate this problem, and yet intend to oppose it in the Lobby.
    This pay increase does not damage the competitiveness of British industry and does not put other people's job, or that employee's job, at risk. As the Chancellor said, this is a springboard Budget for making our industry more competitive, but with limited resources available this year because of the £5 billion spent on the miners' strike last year and the £6 billion fall in oil revenues—lost because of the change in the oil price. I hope that we can have more meaningful tax reductions from the springboard that the Chancellor has put in place, because that is the best way to stop our international uncompetitiveness. That is why I am so surprised that the Social Democratic party and the Liberal party do not see this.
    Finally, I turn to the wild promises of the Labour party which have been costed at £24 billion, with promises of £3·5 billion extra for pensioners. It all sounds so like a repeat of the disastrous policies between 1974 and 1979 that led to runaway inflation and the erosion of the lifetime savings of so many pensioners. Nevertheless, I should be wrong if I did not point to the 18·9 per cent. increase in rates which we are having to face in Essex this year and to the heavy heating bills that pensioners are having to face because of the severe winter. Proper indexation of income thresholds for pensioners in the Budget will help, but I would urge the Government to do more ahead of the promised reform of local government finance to help pensioners because they have been so badly hit by these large rate increases.
    Surely there is no better way of doing that than by giving next year a very generous Christmas bonus as a dividend to pensioners to share in our growing prosperity, to assess the present Labour promises and to remind pensioners that twice the Labour Government cut the Christmas bonus in those disastrous days between 1974 and 1979. Compared with those days, Britain is back on the rails and heading towards an age of prosperity. But let us make no mistake. We shall have that age of prosperity only if we keep a Conservative Government in power.
    8.7 pm
    Mr. Eric S. Heffer: On a number of occasions this evening hon. Members have referred to previous Labour Governments. I want to make one clear statement and then say no more about it. Whenever Labour Governments have made mistakes, they made them because they were following the type of policies that had been set down by members of the Conservative party. In other words, they accepted Conservative ideas rather than Socialist ideas. That is why Labour Governments have made some fairly serious mistakes from time to time. When I have been in the House I have said so. I trust that a future Labour Government will not make the kind of mistakes that Labour Governments made in the past.
    It has also been said many times during the course of this debate that the problem is that workers earn too high wages. In an exchange with the Chancellor of the Duchy of Lancaster I said that this is the old, old story. I first heard it when I was six or seven years of age. I did not understand then what it was all about. However, I have always been told that our economic problems are due to
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    the fact that the awful working people earn too much and that if only their wages were cut everything would be all right. The problem is that when their wages are cut, as happens in areas of high unemployment—for example, on Merseyside and elsewhere—it does not lead to an increase in employment. All it does is to depress the condition of the people and make the situation worse.
    The best thing that I read about the Budget appeared in yesterday's edition of The Observer. I am not reading The Sunday Times at the moment, so I read The Observer with even greater interest. What did The Observer say yesterday? It said:
    "There is a very British feeling in the land at the moment that enough has been done for the rich. Now should have been the time to ease the pain a little at the lower end … There is, too, a feeling that the money being made in the City is unseemly, that it is industry and jobs that matter and should be assisted. There was no need for the Chancellor to play silly games over a penny off income tax, less-than-expected increases on petrol, and nothing on beer or whisky."
    The article ends with this statement:
    "As Lord King commented, it is she who is in charge. And that means—goodnight, nurse. You are a fool to believe that public service or fair play matter. This is the day of the speculator and the inheritor, the greed of the oil companies and the slickness of the City operators. This is Mrs. Thatcher's Britain, 1986."
    That is what the Budget is about. It is a rich man's Budget. It helps the rich but does not help the poor.
    Also in The Observer—I am sorry to keep quoting The Observer but I think that it is of interest—there is the following:
    "The Chancellor signally failed to provide any specific help for the country's poorest families. They did not even earn a mention in his speech, and welfare groups are bitter."
    I should think that they are bitter because the people who gain—and it gives all the figures in the newspaper—are once again the higher income groups in this country. The ordinary working people and those who are not working have once again suffered under this Budget because it is in line with the ideological position of the Government. The Government are a very ideological Government. They believe that the capitalist system is the best of all systems. They ignore the fact that it is crumbling around their ears and that there is increased unemployment, poverty and misery amongst people. All they see is increased profits for some people and they believe that that proves what a successful society we have. We are in this position precisely because we have a capitalist economy with a capitalist Government carrying out capitalist policies.
    I have no hesitation in saying that the only real answer is Socialist policies. I get a little upset when I hear some people from my party apologising for our past policies and for our Socialist concepts. I do not apologise for them and I never will. I well remember what the 1945 general election manifesto said. It was a grand manifesto. We should think of what happened at that time and the crisis that the people of this country had to face. The soldiers, airmen and sailors were coming back from the war. There was a danger that we would have a problem similar to that which occurred after the first world war with an immediate increase in mass unemployment. That was not the case. We did not have mass unemployment. The Government dealt with the problem and they did not drop their policies such as public ownership. They took into public ownership a whole series of industries, introduced a National Health Service and created the welfare state. They laid the basis for the society we have had since 1945.

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    I say to my comrades on the Front Bench—[HON. MEMBERS: "Comrades?"] Yes, comrades. I say to them, do not be mesmerised like rabbits in front of the Thatcher stoat. The way to handle the Thatcher stoat is to deal with it positively and get rid of it. The answer is to carry out the sort of policies that were carried out in 1945, which are still basically the policies of my party. That is the way to deal with the crisis. The Budget is a disgrace and a disaster. It is a Budget for the rich and at the next election we shall have a change in Government. That Government will reverse the whole policy, trend and system we have been suffering under for the past few years.
    8.13 pm
    Mr. Tony Baldry: There is no doubt that falling oil prices have presented British industry with an outstanding opportunity to increase its exports, win a larger share of world markets and orders for jobs. As the Chancellor made clear in his Budget speech, industry
    "will only be able to seize that opportunity if it meets two conditions. First, it must keep firmer control of its labour costs. Secondly, it must spend more of its much healthier level of profits on investing for the future in research and development and in training."—[Official Report, 18 March 1986; Vol. 94, c. 169.]
    I want to consider those points because I believe that they are critical to whether we succeed as a competitive trading nation.
    For a long time Conservative Members have spoken about the responsibilities of trade unions. I believe that it is imperative that we now alert the nation to the responsibilities of employers, particularly the importance of industry and employers controlling wage costs, and investing in research and development and training. I believe that those three items are conditions precedent to our sustaining success into the 21st century.
    In January the Organisation for Economic Co-operation and Development published a survey which focused on our labour market since 1979. It found that in Britain the failure of wages to adjust to lower inflation and increasing unemployment was at the core of our unemployment difficulties. Further, the OECD considered that the failure of Britain to moderate wages ruled out the option of any general reflation of the economy to reduce unemployment because it concluded that, without greater wage moderation, any stimulus to demand would simply be dissipated in higher inflation.
    The OECD further found that in other developed countries higher unemployment had led to a downward pressure on wages, in stark contrast to Britain, where earnings have continued to rise steeply irrespective of unemployment levels. In those circumstances, the OECD concluded, pessimistically, that there is little that macroeconomic policy can do to reduce unemployment.
    None of that should come as any surprise. Only last summer the House of Lords Select Committee on Overseas Trade published its findings. It asked its statistical staff to produce figures for unit labour costs for manufacturing in Britain and elsewhere. It found that since 1962 labour costs per unit of output in America had hardly doubled, in West Germany they had slightly less than doubled, in France they rose four times, but in Britain they had risen six times.
    The simple fact is that in those countries we consider to be the most well off—for example, West Germany and the United States—the rise in wage costs has been the smallest. Indeed, in 1984 real average earnings in the
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    United States were lower than in 1962, in contrast to Britain where we simply continue to pay ourselves as a nation more than we earn. Average earnings were up by 8·3 per cent. last year compared to inflation of only 5·5 per cent. There has to be a new sense of responsibility in pay claims if Britain is to improve her competitive position and if we are to have any chance of significantly increasing the flow of new jobs.
    Let us all be clear about at least two things. First, extra spending of the type and degree consistently advocated by the Opposition—borrowed money pumped into the economy—would not go towards output and jobs. It would simply disappear in higher pay and prices. Secondly, pay is one of the main reasons, if not the main reason, why we have such a disastrous unemployment total. Even unemployment based on the lack of industrial capacity reflects excessive pay awards of the past. Of course, people like getting wage increases well above inflation but that has a cost for the whole community. It has a cost in lost jobs.
    In successive years the Government have reduced the burden on business, for example, by abolishing the national insurance surcharge, only to see industry placing a greater burden on its own back by allowing unit labour costs to soar because of excessive pay awards. Excessive pay awards mean that our goods cost more to make. Therefore, the goods cost more to buy, fewer are bought and fewer are then made. That results in higher unemployment.
    Pay awards constantly that are ahead of inflation in the private sector also lead to pressures for greater public spending and greater taxation. Teachers, for example, are not complaining that their salaries have not kept pace with inflation; they know that they have. The teachers' complaint is that their pay has fallen behind the private sector and, understandably, they want to catch up. That inevitably means pressure for more public spending and thus more revenue from taxation, fuelled by the private sector failing to face up to the reality of the wage settlements in this country. I have a nightmare that some managers prefer having an overpaid workforce, as long as its numbers are kept to the minimum. They do not want to create new jobs if they can manage it. But we need more new jobs, and that means wage moderation now, and leadership from management and employers.
    To that end, I am sure that the whole House will welcome the new proposals for profit sharing, the idea that part of the pay packet should be related to profit and performance. The suggestion that a significant slice could be taken off the tax burden of those who enter profit-sharing schemes is good news, and, further, can lead only to greater employee involvement, which is also good news. However, the stark reality is that employers and managers have to get a grip on spiralling wage costs if we are to get more people into jobs.
    If we are to compete in the 21st century, industry has to invest more in research and development. Let us consider a few stark facts concerning just one key area — information technology. IBM's European data processing revenue of almost $10 billion equals the combined turnover of its 10 closest competitors, which illustrates the dominant position of the United States an advanced technologies. It is not surprising that Europe is estimated to import 80 per cent. of the personal computers that it requires, mainly from the United States. As for silicon chips, Europe's market share for the supply of

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    advanced metal oxide semiconductors, which will dominate chip-making for the next few years, is just 6 per cent.
    If we are to keep in the forefront of the new technologies that will dominate the 21st century, British companies must invest more of their profits in research and development, because if we do not invest in the future, we shall simply find ourselves struggling ever harder to preserve the industries of the past. Certainly, the British Government and the European Community are acting to stimulate industry to increase research and development. There is the Esprit programme, which concentrates on improving information technology, the BRITE programme, the RACE programme for broad band communication, and the Eureka programme to promote awareness of the practical opportunities that research might bring. If one wants to see the success of investing in research and development and of greater industrial collaboration in Europe, one has simply to look at Airbus and our aviation industry. Airbus, now successfully competing with Boeing, is winning orders and creating jobs. But British companies have to invest more in research and development, and they have to spend more on training.
    A recent report called "Challenge to Complacency", commissioned by the Manpower Services Commission as a follow-up to the National Economic Development Office report entitled "Competence and Competition", condemned employers for their indifference to training. The report found that the vast majority of companies studied were not very interested in training and
    "had an attitude which bordered on complacency."
    Indeed, few chief executives interviewed appeared to have much knowledge of the training activities undertaken by their firms. Compared with the United States, Germany and Japan, Britain's record of the training of adults is lousy, with training being seen not as an investment but, all too often, as an overhead to be reduced when times are difficult.
    If we are to succeed, we have to become a nation of lifetime learners. The tools and the technology that are used can be same the world over. What makes the difference is what one does with that technology, and that means the skills and knowledge of those who are using the technology. That means industry having to invest more in training and in people. During the next five years the impact of new technology will involve something between half and three quarters of the nation's entire work force needing to update their skills just to keep pace with new technology.
    My right hon. Friend the Chancellor's Budget is imaginative and creative. It promotes wider share ownership; it stimulates greater growth; and it builds on the continuing improvements in our economy. But if Britain is to maximise opportunities presented by the Budget and falling oil prices, employers will have to realise that they have responsibilities to ensure common sense on wages, to invest in research and development, and to invest more in training.
    8.24 pm
    Mr. Reg Freeson: I should like to make an observation on the remarks of the hon. Member for Banbury (Mr. Baldry). If one wants the economic and
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    social ethos to which he referred, national standards will have to be set. If one wants national standards to be set, it is the Government who should be in the lead on that. One will not get a willingness to undertake increased research and training, which the hon. Gentleman rightly emphasised, if at the same time the Government are cutting in those very areas in our educational establishments. That is perfectly true, and the hon. Gentleman should look at his figures.
    Those who take pride in the financial strategy of the Budget, such as the Chancellor, and those who have applauded it, with a few exceptions, on Conservative Benches, are, in effect, applauding and taking pride in continued decay and mass homelessness in our inner cities, the physical decay and decline of our schools, as well as the services that are provided in many of them, and the continued decline of the less often mentioned areas of rural deprivation, which are often cheek by jowl with affluent "exurbs", as the Americans call them. Any pride in such a financial strategy means pride and applause for the things that I have mentioned and many others, too. One cannot have continued restrictions on public expenditure and investment and at the same time put one's hand on one's heart and complain about the crumbling of the inner cities, homelessness, decay in the state of our homes, particularly houses that elderly people live in, and decay in the schools, in our public services, our environment, and so on. The Government are reaching the stage where they are presiding over environmental slums in vast areas of our cities.
    I shall concentrate on one or two of the things that I believe could have been dealt with in the Budget rather than comment too much, except indirectly, on what is in the Budget. Potentially, the main generator of economic revival would be what we loosely call the construction industry. In fact, it is a group of industries and services. Many reports have been emanating from that industry and others — the Confederation of British Industry, the Building Employers Confederation, the Federation of Civil Engineering Contractors, National Council of Building Material Producers, the Royal Institute of British Architects, the Duke of Edinburgh's study into housing conditions, the House-Builders Federation and the Housing Corporation. All the reports and studies have been pigeon-holed by the Chancellor and the Treasury. Not a thing has been done in the Budget to tackle any of the problems that have been identified in detail—not in general rhetoric—in those reports. Not a single thing is to be found in the Budget that tackles any of the over-urgent problems depicted and detailed in those reports. This is not the first time. We have had several years of that.
    Therefore, our housing, schools, colleges, hospitals, roads, sewers, inner cities and deprived rural areas will continue to decline, decay and crumble. When that grows into rioting and other foul conditions in our cities, all the fine speeches and expressions of concern will mean nothing if nothing effective is done about that. Millions of people who are unemployed could be tackling some of those problems. They remain unemployed while huge fortunes are being made in the wasteful buying and selling of existing assets, when we could and should be conserving and creating assets. The strategy should be to create assets. We should invest in that, not in buying and selling.

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    Those are the issues which could have been dealt with, in part, by the Budget, and which I want to develop. Investment in infrastructure and capital works in public services could be increased without the risk of higher inflation. I agree with the right hon. Member for Henley (Mr. Heseltine) that it could be done. Indeed, there could have been increased public sector borrowing without affecting inflation. That is shown analytically and conclusively in the full submissions by the sections of the industry to which I have referred, and by other bodies.
    The Chancellor's response last week was that the appropriate policy was to keep borrowing low. I understood him to mean that he was talking about the private as well as the public sector. He did not refer specifically to the public sector borrowing requirement. Although it has not been stated, I have suspected for a long time that Government policy was directed to confining and restraining borrowing across the economy, irrespective of the public or private characteristics of the borrowing, but that they always concentrated on public sector borrowing. There is nothing new about that. It has been going on for years.
    Ways could be found to increase investment in rented housing, the inner cities and infrastructure. It means more public sector borrowing. After all, we are borrowing for massively high unemployment. That is where the biggest burden lies. The burden is roughly equivalent to the revenues in the last five or six years from the North sea, which amount to thousands of millions of pounds annually. It would be far better to have a strategy directed to using that resource for the creation of assets rather than unemployment. I echo what the right hon. Member for Henley said on that score.
    I shall put briefly to the Chancellor some proposals which could and should be adopted by the Government now without conflicting with what I believe to be their wrongful prejudice against increased public expenditure in such areas. Time forbids me from developing the proposals in detail. With his colleagues in other Departments, in particular the Department of the Environment, will the Chancellor take action to put a stop to the underspending on derelict land and development grants? Underspending occurs mainly because of the bureaucratic procedures employed by the Department of the Environment in processing the grants. Hundreds of millions of pounds are involved in the underspend. Each thousand pounds spent on one of those grants produces £6,000 or £7,000 of private investment.
    Housing associations have experienced massive cuts in expenditure in recent years, as have local authorities. The housing associations have made detailed, not general, proposals to the Government to marry the grant expenditure, however limited, with private investment. They have worked out schemes in negotiation with building societies to couple the two organisations. There is one obstacle to that partnership approach—the Treasury. The Chancellor and the Treasury are forbidding housing associations to line up private capital with housing association grants which could double the effects of grant expenditure on rented housing. Instead of 15,000 homes a year, 30,000 could be started. I urge the Chancellor to take action.
    8.34 pm
    Mr. Richard Ryder: The right hon. Member for Brent, East (Mr. Freeson) bemoans the
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    Government's low public expenditure. It comes as some surprise since he was happy enough to remain in a Labour Government between 1976, when the Government were forced to go to the International Monetary Fund, and 1979, when they were defeated at the polls. Public expenditure in real terms on the Health Service fell by 30 per cent. in that time, as it did on major road construction.
    During the Budget debate Opposition Members such as the right hon. Member for Brent, South urge the Government to spend a great deal more money and to expand the public sector borrowing requirement. They have tried to depict the Government's prudent fiscal policy as a dogmatic experiment which no other sensible nation dares to follow.
    In such circumstances it is reasonable to look abroad to discover whether Britain is, as the Opposition contend, the odd man out, or whether the truth is that other countries are pursuing identical fiscal policies to those of the Conservative Government in Britain. Needless to say, Governments of the centre Right in Japan and Germany are pursuing precisely the same policies as Her Majesty's Government.
    What about democratic Governments led by the Left, particularly in Europe? What policies are they pursuing? Under President Mitterrand in France the Socialist Government introduced their budget in September last year. It was the toughest budget introduced by any French Government since the war. It involved huge public expenditure cuts across the board, but included—I must tell the right hon. and learned Member for Monklands, East (Mr. Smith)—an increase in law and order expenditure. Defence expenditure was also increased by 2 per cent. President Mitterrand cut public expenditure on trade and industry. Public expenditure on the car industry was sliced through Renault. Expenditure on the steel-making industry through Usinov was sliced by a Socialist Government. Expenditure on social security was cut too. A person under the age of 25 in France, who has been unemployed for longer than six months, can be deprived of unemployment benefit. Psychiatric treatment in the French health service has been farmed out to the private sector. All that has happened under a Socialist Government.
    What about Socialist Spain? The Socialist Government in Spain last year introduced the toughest ever budget since General Franco's time. That Government have sliced 20 per cent. from capital spending on infrastructure and nationalised industries. The Socialist Government in Spain have cut pensions. A new pensions reform law came into operation last August, and lower pensions will now be paid.
    The same applies to Italy where the Socialist Prime Minister, Mr. Craxi, presented an austerity budget to the Italian Parliament last September. Health spending was to be curbed by raising prescription and other charges by at least 19 per cent., and by as much as 25 per cent. Italy imposed hefty cuts in welfare benefits and families with only one child are no longer to receive benefit. Concessionary rates for travel on railways and for electricity are to be cut. University fees, about which we hear so much, are to be raised significantly by that Socialist Government.
    I have been talking about budgetary policies by Socialist Governments who have to grapple daily with the

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    realities of office, rather than dallying in the sort of rhetoric of opposition that we have heard from the Labour party and the alliance in the last few days.
    I have a little piece of good news for the right hon. and learned Member for Monklands, East. I have a small consolation for him. There is a Socialist Government in the democratic world which has pursued almost the same policies as he recommends we follow here. That Socialist Government is the Government of Australia.
    The Australian Government have increased public expenditure and there have been six major consequences. During the past year the Australians have had to devalue their currency by 20 per cent. Interest rates in Australia under a Labour Government have hit 20 per cent. and small businessmen have been driven into bankruptcy. The inflation rate in Australia is double the OECD average and there is rising international debt in Australia. The Australian balance of payment problems are a cause for enormous concern. Lastly, industrial disputes are increasing rapidly in Australia.
    All these problems are being encountered by a Labour Government in Australia who are putting forward, and have implemented, precisely the same policies that the British Labour party is suggesting should be followed in Britain, and which a Labour Government would introduce.
    If Britain wants to embrace extravagant policies of the Left, it has only to look at what has happened in Australia. That which has happened in Australia would happen here if a Labour Government were elected. We should have double-digit inflation, and interest and mortgage rates of 20 per cent. We would have industrial strife on the scale of the 1960s and 1970s. We would have rising international debt, balance of payments problems and currency devaluation. It is because I do not wish these kind of Labour policies to be pursued in Britain or to witness their consequences if the Labour party is given the chance to form a Government that I shall be supporting my right hon. Friend the Chancellor of the Exchequer when the House divides. I congratulate him wholeheartedly on introducing an excellent Budget.
    8.42 pm
    Dr. Jeremy Bray: There was a joker missing from the Budget statement of the Chancellor of the Exchequer, and that was exchange rate policy. The Government started out in 1979 with the view that markets could be trusted to manage exchange rates better than Governments could. They considered that Governments had no real power in the face of market forces and today's capital flows. The Chancellor of the Exchequer seems now to have abandoned these extreme views. He has recognised that the exchange rate is an important indicator and he took part in the Group of Five meeting in September 1985 when the main industrial countries agreed to take concerted action to move interest rates and exchange rates. Indeed they have moved in the directions needed to correct imbalances in cost competitiveness and trade that have done more damage to Britain than any other country.
    The movement that has taken place seems to have exhausted the extent of the agreement. The United States might like the dollar to be lower, but Japan seems to think that the yen has risen enough. So where do we go from
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    here? What is our national interest with the pound? What understanding should we seek from other industrial countries?
    The Chancellor of the Exchequer is slowly learning the lessons that are set out in the second special report in 1983 of the Select Committee on the Treasury and Civil Service that was produced at the end of the previous Parliament. The right hon. Gentleman is following very much the course that we recommended to him. Mechanistically he repeats the formula that is now a regular feature of financial statements. It is as follows:
    "There is no mechanical formula for taking the exchange rate into account in assessing monetary conditions".
    Last year the phrase was:
    "There is no mechanistic formula".
    But this year he goes on to give the exchange rate an independent role. He states:
    "a balance must be struck between the exchange rate and domestic monetary growth consistent with the Government's aims for money GDP and inflation."
    The "balance" of objectives which the Chancellor of the Exchequer talks about he may not like to describe as a mechanism, but there is a computer programme operating in the Treasury which comes remarkably close to doing what the right hon. Gentleman describes. The Government have a number of policy instruments, including fiscal policy, which they adjust annually in the Budget. Interest rates and intervention in the money and foreign exchange markets are instruments which they can adjust more frequently and even continuously. The effects on unemployment, growth, the balance of payments and inflation are not measurable continuously, and even shorter-term monthly measures are often not a reliable indicator of trends. The effects on the exchange rate and capital flows are, however, observable continuously, and are very important.
    There is, therefore, a slowly moving background of final objectives and fiscal policy, and a rapidly moving foreground of market expectations, intervention, interest rate adjustments, and their effects on the exchange rate and capital flows. The shorter-term foreground and the longer-term background are part of the same scene. They interact and they have to be mutually consistent.
    To set the background, it is necessary to attach priorities to the final objectives of growth, employment and stable prices. It is not a question whether unemployment matters. Of course it matters, even to the Chancellor. But the Chancellor is prepared, perhaps, to give less priority to the speed of reducing unemployment than the Opposition would. Any Chancellor will set the instruments at his disposal to achieve the best achievable balance of objectives given his priorities. That is broadly the content of the Budget speech and the Financial Statement and Budget Report, which includes forecasts of the expected outturn. It enables the House to judge the Government's priorities, and it also sets the expectations of the markets.
    But one thing is for sure: events will not fulfil those expectations, especially for the most variable short-term indicators, such as the exchange rate and financial markets, which in the absence of any definite expectations can go all over the place.
    The Chancellor of the Exchequer does not even spell our precisely his expectations for the exchange rate, which is said to be assumed to remain at broadly its present level. That may or may not be right. But what is done internally within the Treasury? The computer programme that I

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    mentioned is operated by the Treasury. It indicates fiscal policy instrument levels that are appropriate to the balance of priorities or final objectives. But it also picks short-term rules which indicate the adjustment of, for example, interest rate changes which will be needed in response to movements of the exchange rate from its expected path. None of this leads automatically to policy adjustments. It is not in that sense a mechanism. But it does give guidance which, on the best evidence available, achieves a balance between objectives, and a coherence of shorter-term actions on interest rates and longer-term actions on fiscal policies.
    This apparatus does use our old friend the Treasury model. It can handle various types of expectation formation and uncertainty, and select a policy which produces a reasonable result on models based on conflicting economic theories. Very much the same sort of action now emerges from the Treasury, London Business School and National Institute models, now that they are being more rigorously tested and compared. We have, therefore, a basis for a more pragmatic fiscal and monetary policy which properly reflects the Government's priorities at the national level.
    But what about the international level? Can we trace the international repercussions and reactions? A fortnight ago, at a conference of the Brookings Institution in Washington, the first comparisons took place between the internationally linked model systems maintained by the Federal Reserve Board, the OECD, the Japan Economic Planning Agency, and nine other systems. The Treasury, the Bank of England and the IMF were all well represented so the Chancellor has his own reports of what took place. There were, of course, substantial differences, particularly among the outliers. But what impressed me was that in the models that mattered there was broad agreement on the sign and on the timing of effects of fiscal and monetary changes in the United States on the rest of the OECD, and conversely. It looked as if the apparatus was there to provide the analytical framework needed for international negotiation and co-operation in our mutual interests.
    In the Treasury programme that I described, the level and weight of the exchange rate target has to be set externally. So, notionally, these are adjustable in international negotiation. If the exercise that the Treasury does is done on one of these international model systems, each country can be left to specify its own priorities, and the system will produce a set of exchange rate rules which would maximise the sum of benefits to all countries, or, perhaps more appropriately, maximise the minimum benefit to any one country. That does not, of course, dictate the outcome of negotiations but it gives it a sound analytical basis and, therefore, a better chance of success.
    If the evidence of the conference is anything to go by, Britain now enjoys a comparative advantage in such work. It would be in the British interest if the Chancellor were to say rather more about his exchange rate policy and spell out the evidence on which it is based. Most importantly, it can encompass the hazards that remain on the oil price. I would not expect that to lead to our joining the EMS, but I would expect it to stimulate work by other Governments and the international organisations leading to developments in the EMS, in the context of wider international cooperation, in which we could join with the hope and expectation that we could avoid exchange rate wars and the gross misalignments of currencies which have done so much damage in recent years.
    8.49 pm
    Mr. William Powell: The hon. Member for Liverpool, Walton (Mr. Heffer), who unfortunately is not in the Chamber, is much admired in the House for his consistency and sincerity. However, when he chose to argue that Labour Governments have only gone wrong in the past because they abandoned Socialism and that if only they had pursued red-blooded Socialism they would not have gone wrong, I could not help but reflect that the Labour Government were not pursuing Conservative policy when they were driven to the IMF. Frankly, over the course of the past four days of this debate the Opposition have presented us with a picture revealing a remarkable reluctance to come to terms with those aspects of previous Labour rule which led them invariably to shipwreck and which are being pursued and continued today, as my hon. Friend the Member for Mid-Norfolk (Mr. Ryder) said, by a Labour Government on the other side of the world.
    It is very easy to mouth platitudes, to be in favour of everything progressive and to say that if only one was given the opportunity of putting such things into action then everything would be right. People who say that fail to come to terms with the fact that such a policy, when tried in the past, invariably led to failure.
    The simple truth is that previous Labour Governments went wrong not because they failed to pursue red-blooded Socialism, but because Socialism is the locomotive of inflation—the locomotive which destroys jobs and leads to the social breakdown which has caused so much comment during this debate.
    It is impossible, after more than 80 speeches during the course of the debate, for one of the last Conservative Back Bench speakers to contribute anything novel to the debate. It would not be worth while my trying to do that. Instead, I should like to congratulate my right hon. Friend the Chancellor of the Exchequer on a number of points. I congratulate him and the Governor of the Bank of England on the way that they have handled the currency instability which occurred in January and February of this year. At the same time last year, when we had a period of currency instability, not everyone was universally happy with the way in which it was handled. However, there cannot be the slightest doubt that the way it was handled this year has been dramatically successful. Heads have been kept, and, at the very time when everyone was forecasting that things would go off course, that did not happen. Considerable praise is due to my right hon. Friend the Chancellor and to the Governor of the Bank of England for handling things extremely well this year.
    I also congratulate my right hon. Friend the Chancellor on continuing the policy adopted in previous years and on maintaining course. Many people think that each Budget should be a new beginning each year. Many wish to blot out previous years and think that it is possible to have a new beginning each year. Of course, this year's Budget is merely a development of a policy that has been carried on—thank goodness—for some years. I have no doubt that the measures taken last year will continue to have a beneficial effect upon economic activity during the course of next year and that the recent and new measures will take some time before they have their full impact on the economy. A Budget is not and cannot be a new beginning.

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    It is part of the progression of policy. My right hon. Friend deserves all praise for seeing it in that context and not in the way in which so many would have him view it.
    I should also like to take this opportunity, perhaps belatedly, to congratulate my right hon. Friend on the elimination—I have forgotten just how long ago it was done—of the halfpenny from our currency. That had one very good effect during the course of the debate. The hon. Member for Truro (Mr. Penhaligon), representing the Liberal party, was not able to come to the House as he would have done in previous years and advocate not a penny reduction in the standard rate of income tax, but only half—a halfpenny reduction. The elimiation of the halfpenny from our currency has at least had the effect of forcing Liberals to stop trying to halve what everybody else is trying to do and saying that that was the correct judgment to make.
    Many of the aspects of the Budget are to be welcomed. I welcome the schemes which will encourage saving. I have no doubt that other schemes will come forward in subsequent years.
    I very much welcome the abolition of the lifetime gifts tax, and I commend to the House the remarks of my right hon. Friend the Member for Henley (Mr. Heseltine) who analysed that point clearly in his speech. It has been made very clear that the Liberal party is against the handing on of small businesses through families. They are in favour of small businesses, provided that they are not successful or grow to the point at which they come within tax limits. That humbug, which the hon. Member for Truro articulated, is clearly on the record. I know that in every constituency, including his own, people will realise the nonsense that he was speaking. We can understand the Labour party being completely against family businesses and all that that involves—its opposition to that is honest and straightforward—but the humbug and nonsense from the Liberal party has been clearly revealed for what it is.
    A Budget offers the opportunity for developing existing policies. It should never be seen as a new beginning, as so many commentators inside and outside the House choose to see it. I hope that the Budget policy will continue to develop. However, I recognise that we are not as successful as we ought to be in certain matters.
    As a country we are deficient in two major areas. First, as a general rule, English people—I choose that phrase carefully—hate selling. There are plenty of exceptions to that general rule. Many successful companies have prospered on that basis, but it is the general rule. We love people to buy from us but we hate the idea of going out and getting a sale. We shall not be successful as an economy until all companies, not just the best companies, recognise that they must go out into the market place and sell their products. That is not something that my right hon. Friend the Chancellor will be able to make clear in his Budgets, but it shows that budgetary policy is only one aspect of the development of the economy. Much has to be done outside.
    My second point is that Britain's training provision is desperately inadequate. I hope that companies will recognise much of what has been said during the debate and will use their new-found profits to invest much more
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    heavily in research, development and training. Thank heaven, they are much more profitable than they were when the Labour party was in power.
    Alas, it is not possible for me to develop my arguments. Without going into the judgments of my right hon. Friend the Member for Henley on the fiscal adjustment, the PSBR, and so on, I strongly commend his basic line of approach. I commend the Budget to the House.
    8.59 pm
    Mr. Nicholas Budgen: I want to make three short points. First, I hope that when my right hon. Friend the Member for Henley (Mr. Heseltine) commends, as I am sure he will in his many speeches in the country, the lower cost of borrowing, he will explain to the country how that is consistent with his rather heroic attitude towards public expenditure generally. Those of us who admire and watch what he says will look forward to a further explanation on that point.
    Secondly, I regret that in this Budget my right hon. Friend the Chancellor of the Exchequer has effectively abandoned the principle of fiscal neutrality. He has suffered some important defeats in pursuit of that policy. He was defeated over cars and pensions and he has been defeated over mortgage interest relief. He won an important battle upon investment allowances and he has now, at least for the time being, given up the battle. Many Conservative Members applaud that retreat and speak with great approval of the various incentives that he has given to politically favoured interest groups. He has been skilful in his selection of those which he intends should benefit. But my right hon. Friend has persuaded me of the advantages of fiscal neutrality, and I hope that the time will come when the Tory party returns to that principle, although I accept that by returning to it we shall offend many of the interest groups that so often support us.
    Thirdly, and finally, I wish to agree with my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) in his criticisms of the observations in the Red Book about monetary policy. But I come to an entirely different conclusion from my right hon. and learned Friend. My right hon. and learned Friend wishes us to go into the EMS. I agree that there is a need for a discipline, but I would assert that disciplines in Britain are better if they are recognised to be internal disciplines—that we recognise that we are doing something not because we are ordered to do it by the IMF, or even the EMS, but because we recognise the social advantages of sound money.
    I am somewhat amazed that many of those who wish us to go into the EMS are fierce supporters of our continued membership of the EEC. I am somewhat sceptical of that, but I conclude by saying that those who want us to go into the EMS may be doing the cause of Europe severe harm, because when the time comes to take deflationary action upon the economy if we go into the EMS, we can be certain that it will not be the Government of the day who are blamed, but the EMS and the other nations of Europe. I hope that my right hon. Friend the Prime Minister will continue her opposition to our going into the EMS.
    9.3 pm
    Mr. Terry Davis: After the speech of the hon. Member for Wolverhampton, South-West (Mr. Budgen), the Chancellor may be surprised to know that I intend to begin my speech with a compliment

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    to him. I always believe that credit should be given where it is due and for once I agree with the hon. Member for Croydon, South (Sir W. Clark), who described the Chancellor's Budget as clever and ingenious. I think that the words were originally used by other hon. Members—the right hon. Members for Glasgow, Hillhead (Mr. Jenkins) and for Worthing (Mr. Higgins)—but I agree that the Budget is clever, skilful and ingenious. As the Chancellor admitted at the beginning of his Budget statement, the fall in the price of oil and the resulting fall in the Government's income from the special taxes on oil revenues mean that the Chancellor is left with little room for manoeuvre within the framework of his principles and prejudices.
    I admire the way in which the Chancellor presented the Budget under these circumstances, but I must make it clear that it is admiration of a sort that I give to the cleverness, skill and ingenuity of the professional cardsharp. The only difference was that the Budget deceived the ear rather than the eye, and already the commentators are beginning to realise the truth.
    Let us consider, for example, what the Chancellor said about the fall in oil prices and the effect of that fall on the Government and on the economy. As I have already said, the Chancellor made, for him, a remarkable admission. He admitted that his room for manoeuvre was restricted by the fall in oil prices. However, later in his speech, as part of his constant attempt to disguise the dependence of the Government and the economy on North sea oil, he pointed out, quite fairly—I do not argue with the figures—that North sea oil accounts for only 5 per cent. of gross domestic product. The other sectors of the economy—manufacturing industry, agriculture, distribution, construction, public and private services—account for 95 per cent. of economic activity.
    The mere statement of these figures constitutes a condemnation of the Government's strategy because the Chancellor is saying that his Budget, his ability to cut taxes or to increase public expenditure, his success and the Government's survival, depend not on the 95 per cent. of economic activity in Britain but the 5 per cent. of economic activity in and around the North sea. The truth is that the vital decisions at the heart of the Government's economic policy are taken not by the Chancellor and the Chief Secretary to the Treasury, but by Sheikh Yamani and his colleages in OPEC. They are taken without any reference to this country or the balance of our economic interests. It is surely ironic that, more than any other part of Western Europe, this country is at the mercy of the middle east. The correct description of any country whose Government's economic policies are determined by other Governments is to call it a colony. That is the role of Britain today. Our colonial past has become our colonial present with the roles reversed.
    The price of oil is determined elsewhere and the Chancellor's Budget is entirely dependent on it. Dependent on it? The Government's policies are dominated by it. During the next few months, if the price of oil falls to $10 a barrel, the Chancellor tells us that the result for the Government will be disaster. If the price of oil rises to $20 we shall have a tax-cutting Budget on a massive scale next year—in the run-up to the general election. Of course, the tax cuts will be, and can only be, temporary, because the oil will eventually run out. What will happen then? The Chancellor gave his answer on Tuesday with characteristic sleight of hand:
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    "If we can survive unscathed the loss of half of our North sea oil revenues in less than 25 weeks, the prospective loss of the other half over the remainder of the next 25 years should not cause us undue concern."—[Official Report, 18 March 1986; Vol. 94, c. 168.]
    The Chancellor forgets that there is a tremendous difference between loss of revenue due to the fall in the price of oil and the inevitable loss of revenue when the oil runs out. The Chancellor himself pointed out that, although lower prices for oil result in lower revenue for the Government, it also means lower costs to British industry. British industry benefits not only in terms of lower inflation but in terms of jobs. It also benefits, we hope, from the boost in world trade arising from universally lower prices for oil.
    What will happen when the oil runs out and we lose the rest of the revenue? That will not have beneficial side effects for British industry. There will not be any reduction in costs because industry will still be paying the international price for oil. There will be no benefits in terms of lower costs, lower inflation and extra jobs.
    Every economist knows—I am sure that the Chancellor must know—that his comparison of the effect of lower oil prices and the exhaustion of North sea oil was ingenious but invalid. I envisage a standard question in examinations on economics asking "Comment on the following statement—" after which will follow that classic quotation from the Chancellor of the Exchequer, who will then be a former Chancellor of the Exchequer. Anybody how goes along with him will fail the exam as surely as the Chancellor is failing the country.
    We also have the Chancellor's equally skilful, but equally misleading, approach to indirect taxes. Anybody who listened to the Chancellor's statement would have thought that he was putting all of the increases on cigarettes and petrol and leaving all other indirect taxes at the same level. He referred to the vehicle excise duty for cars, vans, and lorries but he forgot to tell us—he refrained from telling us—that only those rates, not all rates of vehicle excise duty, were unchanged.
    We had to wait for a press release from the Department of Transport to learn that the Chancellor was increasing the vehicle excise duty on all forms of public transport. Even the Department of Transport took care to tell the editors of newspapers that it was the Chancellor's decision, not its decision, although he had left it to the Department of Transport to make the announcement.
    There is no logic about the decision. Those of us who served on the Standing Committee which examined last year's Finance Bill remember that there was no logic or economic justification for the existing pattern of vehicle excise duties. The Government even brought the Parliamentary Under-Secretary of State for Transport to the Committee in an attempt to explain the Government's thinking to us. From what I heard afterwards, Labour members of the Committee were not alone in concluding that the Parliamentary Under-Secretary of State made a bad job of explaining the Government's thinking because the Government had not done any thinking about vehicle excise duty. It is clear from this year's Budget statement that the Chancellor has not given any thought to the level or pattern of vehicle excise duties during the past 12 months either. So much for his claim of wanting to be known as a reforming Chancellor.
    The Chancellor's attitude to petrol tax is even more revealing. As he said, petrol prices have drifted down

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    recently as a result of falling oil prices, but the price of petrol has not dropped as much as it should. By the Chancellor's own admission, the price of petrol should have been 12p a gallon lower than it was on Budget day. What was the Chancellor's response? Did he see his role as the protector of consumers? Did he put any pressure on oil companies to pass on the reduction to the motorist? Did he announce that, although the price of petrol was due to drop by another 12p, he would regretfully have to increase the price by 5·5p to protect the Government's revenue against inflation? The answer is no on all counts. Instead, the Chancellor proposed what was effectively a deal with the oil companies. He said that the oil companies could keep 4·5p of that 12p if only they would let him have the rest—the 7·5p—without putting up the price at the pump, as he put it. He hoped that nobody would notice and that at least the motorist would not mind. It was a typical piece of ingenuity. The price of petrol should have come down, and it should still come down after allowing for the Chancellor's 7·5p, but the Chancellor was offering to keep quiet about it if only the oil companies would deal him in. The Chancellor's attitude to the oil companies is like the attitude of a policemen running a protection racket—offering to keep quiet if he gets his cut.
    We also have the ingenuity of the Chancellor's policies to encourage share ownership, especially the personal equity plan. As my hon. friend the Member for Sedgefield (Mr. Blair) explained to the House, if the Chancellor was really trying to encourage new investors, he would restrict the tax benefits of the new scheme to that group. The truth is that the personal equity plan is a device to enable existing investors to avoid the tax on existing investment by switching their funds from their existing portfolios to the personal equity plan. The Chancellor shakes his head. If I am wrong, I am sure that he will explain later, and we shall look carefully at the Finance Bill for that provision. If people are able to switch their funds in that way, they will benefit disproportionately more than the new investor, by obtaining relief on dividends at the highest rates of tax as well as relief from capital gains tax.
    This is the Chancellor who claims to want to help the small saver and the small investor. He even referred to his scheme as being designed specifically to encourage the smaller savers. Yet this is the same Chancellor who introduced a new tax on the savings of the smallest savers, the Chancellor whose 1984 Budget imposed tax on the interest received by people whose income was, and is, so low that they would not otherwise pay any income tax. These are the people who typically put their savings in the trustee savings bank or similar institutions and find that when they receive interest on their savings the Chancellor has been there before them and taken his cut of 25 per cent. with all the skill of a pickpocket.
    That is not all. There is the same inconsistency in the Chancellor's treatment of other savers—people with incomes above average, who are liable to income tax on their investment incomes. This is the Chancellor who, only two years ago, as the hon. Member for Wolverhampton, South-West has just reminded us, turned the phrase "fiscal neutrality" into a cliché. This is the Chancellor who said that there should not be any difference in treatment of the income that investors and savers receive from different sources. He said that the institutions should compete on equal tax terms. That was
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    the intellectual justification for the composite rate of tax on the interest paid by the trustee savings bank and similar institutions.
    What price fiscal neutrality now? Where is the fiscal neutrality in charging tax on all interest received by savers and relieving income tax on dividends received by the same people if they put money into a personal equity plan rather than a trustee savings bank? No doubt the Chancellor will tell us later.
    The one genuine tax concession for the individual taxpayer is the 1p off income tax. The arguments for and against this concession have all been rehearsed during our debates, and we all agree that it illustrates the differences between us. The Conservative party gives, and has always given, the greatest priority to tax cuts, by which it means cuts in the taxes on wealth and income, whereas the Labour party gives greater priority to an increase in public expenditure in order to extend and improve social services in the widest sense, to alleviate poverty in all its forms and above all to create jobs and reduce unemployment.
    A Labour Government with £1 billion to spare would have used it differently. For example, to reduce the amount of income tax paid by people on low income, we would have preferred to raise the threshold for the basic rate of tax. To reduce the amount taken from people with the lowest wages, we would have preferred to raise the threshold for national insurance contributions. To have given the greatest help to people in greatest poverty, we would have preferred to increase pensions and child benefit.
    As my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) explained last week, such measures would cost much more than £1 billion. We calculate that it would cost £3 billion to increase pensions and child benefit and extend the long-term rate for supplementary benefit to the long-term unemployed. We would get that money, not at the expense of the man and woman paying the standard rate of income tax, but by increasing the taxes paid by the richest 5 per cent. of society.
    Mr. Nicholas Soames: Will the hon. Gentleman be voting against the cut in income tax?
    Mr. Davis: I saw the hon. Gentleman receive that message from the Chancellor of the Exchequer a few moments ago via the Chancellor's PPS. We all know where the question came from, but I shall answer the Chancellor's question. We shall not be voting against the reduction in the standard rate of income tax. It would be strange if the Labour party voted against a reduction of 1p on the way towards a standard rate of income tax that existed when we left office. It was 25p, and is now 30p, so why should we vote against a slip back towards 25p? Anyway, we have made it clear that a cut in the standard rate of income tax will be of some benefit to those on the lowest wages who pay income tax. We do not deny that. It will provide a small amount. We are not going to set off the basic rate taxpayer against pensioners, parents and the long-term unemployed. We will get that money from the Chancellor's friends, the richest 5 per cent. of our society, those who have gained £3 billion a year. This Government have given that money to the rich not just in this Budget, but in all of their Budgets. That money has been given away in cuts not in the standard rate of income tax, but in the higher rates of income tax. It has been given away in

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    the abolition of the investment income surcharge and in cuts in capital gains tax. It has also been given away in cuts in capital transfer tax and now in the abolition of that tax. I have mentioned only the four biggest giveaways. That money has been given not to those on the lowest incomes who are in greatest need, but to those on the highest incomes with the least need.
    Mr. Richard Page: Is the top rate of our income tax in line with the income tax rates paid in the EEC?
    Mr. Davis: The hon. Gentleman has not been listening. I specifically referred not just to the higher rates of income tax but to the capital taxes. Those taxes have been cut and now abolished by this Government. That is the answer to Tory spokesmen such as the Chancellor of the Duchy of Lancaster, who has just drawn himself to my attention. The right hon. Gentleman claimed that the Labour party's programme would be financed only by increasing the standard rate of income tax or by increasing VAT. But I shall not take any lessons from the chairman of a party that nearly doubled VAT within six weeks of coming to office.
    I think that the right hon. Member for Chingford (Mr. Tebbit) today made his first speech since returning to the House. On a personal level, we are all glad that he has returned. There is no Conservative Member who feels more strongly than my hon. Friends and I feel about the reasons for his temporary absence.
    Mr. Tebbit: May I assume that Opposition Members will be voting in favour of the prevention of terrorism legislation next time?
    Mr. Davis: I must also tell the right hon. Member for Chingford that on a political level his absence has not led us to regard him more fondly.
    But our real quarrel with Conservative spokesmen is that they constantly refuse to acknowledge that the most valuable, expensive and far-reaching tax concessions introduced by the Conservative Government have been reductions in the tax paid by people with large amounts of capital and people with substantial incomes derived from that capital. Those are the people who have benefited most from the Government's tax cuts, and it is they who will pay more to finance the Labour Government's anti-poverty programme. That programme will involve at present an increase of £3 a week in child benefit for every child; an increase of £5 a week in real terms in the pension for a single person; an increase of £8 a week in the pension for a married couple; and the extension of the long-term rate of supplementary benefit to the long-term unemployed.
    The biggest failure of this Government is their failure to reduce unemployment and all the Chancellor's cleverness and skill and ingenuity cannot hide that failure from the British people. Of course we welcome an extra £100 million for job creation schemes, but such a sum is totally inadequate when compared to what is needed. That is why my right hon. Friend the Member for Sparkbrook announced a package of measures with the aim of providing a million new jobs within two years.
    I come to the question put to me by the hon. Member for Eastbourne (Mr. Gow) who quoted directly from Hansard of 19 March 1986. He quoted the question put by the hon. Member for Lewisham, West (Mr. Maples) at column 309. It is a pity that the hon. Member for
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    Eastbourne did not listen carefully to the answer given by my right hon. Friend the Member for Sparkbrook, or at least did not read on in Hansard. If he had read on to the next column he would have seen the answer to the question. I do not know whether the hon. Member for Eastbourne was absent from our proceedings when the question was answered, but he could have read it before he made his intervention.
    That package announced by my right hon. Friend will add up to £6·8 billion, not the £24 billion proclaimed by the Chief Secretary.
    This debate has been overshadowed by the Chief Secretary's claim to have costed the Labour programme at £24 billion, a claim echoed by the right hon. Member for Chingford. That total has been shown to be a fiction. It was calculated by civil servants acting as animated calculating machines and dutifully totting up the cost for a mixture of plans for immediate implementation, longterm commitments and Green Paper type proposals on which the Labour party is consulting.
    It is quite clear from the records that the Chief Secretary had the nerve to send to us that it was a mixture collected, confused and even invented by the Chief Secretary. Worse still, even where the Chief Secretary is right in his claims and his costings, he fails to understand—and many would say that he does not want to understand—that any increase in public expenditure on housing, roads, education, the Health Service or on a community programme or on training for the unemployed, would also have the effect of reducing all those items of public expenditure that result from unemployment.
    We have made the point before and I will make it again. The top priority of the next Labour Government will be a reduction in unemployment. That is why we will increase public expenditure. It will be done to reduce unemployment, but the creation of new jobs will not only do that: it will also reduce the cost of unemployment. It costs £6,000 a year for every person who is unemployed, and for every person helped to get back to work the Government will save £6,000. That money is now spent on unemployment, and it will become available for education and the arts and a better standard of living for all those people, from pensioners to students, who depend on the Government for their standard of living. That is not an increase in public expenditure: it is a redistribution of public expenditure and resources.
    I do not expect the Chief Secretary to understand that because he does not understand the economy any more than the Chancellor understands industry. Look at them: a financial journalist and a merchant banker supported by an investment banker and another hon. Gentleman who simply calls himself "banker." None of them has ever been unemployed or has ever worked in industry. The only thing that has ever dirtied their hands is their own economic policy. They do not care about industry or unemployment or poverty. That is why they have produced a Budget that is irrelevant to the needs of the country, and that is why the Labour party opposes it.
    9.28 pm
    The Chancellor of the Exchequer (Mr. Nigel Lawson): The one thing of which we are always sure when the hon. Member for Birmingham, Hodge Hill (Mr. Davis) winds up a debate is entertainment. What he says bears little relationship to the facts, but at least we get the entertainment. I am grateful to the hon. Gentleman for not

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    failing us this evening. He began his speech by saying that Britain was at the mercy of the middle east. The one thing that this Budget and the events that surrounded its conception has shown is, first, that events in the oil market have occurred not as a result of political actions by Governments in the middle east, but as a result of market forces asserting themselves against the political wishes of those in the middle east. Secondly, the events surrounding the Budget's conception have shown that our economic performance is in no way dependent on North sea oil. North sea oil is an important but marginal issue.
    I should like to turn the point on which the hon. Member for Hodge Hill ended—the £24 billion programme which, as my right hon. Friend the Chief Secretary has rightly pointed out, is the sum to which the Labour party's commitments add up. [Interruption.] There is no point in the hon. Member for Hodge Hill muttering from a sedentary position that that is not true. During these debates, Labour Members announced not only the £3·6 billion programme for the relief of poverty but, on top of that, a £6·8 billion programme for jobs. We have been told that everything else is merely Green Paper conjecture for consultation. Is that really the case? Is the £1·3 billion, which the Labour party has said it will spend on education in various forms, merely a Green Paper type figure for consultation, or is it serious?
    Mr. Terry Davis rose—
    Mr. Lawson: I shall give way in a moment. Is the £0·8 billion—
    Mr. Davis: Will the right hon. Gentleman let me answer?
    Mr. Lawson: In a moment. Is the £0·8 billion, which the Labour party has said is the extra amount it will spend on the Health Service, merely a Green Paper type speculation? Is the Labour party now resiling from the £1·1 billion extra which the Leader of the Opposition said would be spent on overseas aid? Is the Labour party now resiling from the extra £1 billion which the right hon. and learned Member for Monklands, East (Mr. Smith) said was for additional spending on industry? Which of those programmes is a commitment and from which does the Labour party resile?
    Mr. Davis: If the Chancellor had sat through more of our debates he would have heard the truth about our promises on the education programme. He knows that the figures were invented by the Chief Secretary. There is a four letter word to describe that, which is not parliamentary language.
    Mr. Lawson: On the contrary, the figure that I have cited has been amended as a result of the letter from the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). Will the hon. Member for Hodge Hill say whether the Labour party resiles from the figures on health, education, overseas aid and aid to industry?
    Mr. Davis: The Chief Secretary invented pledges, costed them wrongly and refused to retract. Any other hon. Member would have apologised to the House. We now know that the figures really came from the Chancellor of the Exchequer. The Chief Secretary was merely his parrot.
    Mr. Lawson: It is clear that the hon. Gentleman, speaking on behalf of the Opposition, has not resiled from those figures and that, therefore, the £24 billion still stands.
    How will the Labour party pay for all those programmes? For a Chancellor of the Exchequer, when faced with questions of this kind—
    Mr. Hoyle: On a point of order, Mr. Speaker. When will the Chancellor reply to the debate?
    Mr. Speaker: The Chancellor has been speaking for about five minutes.
    Mr. Lawson: I had no intention of going into these waters until these matters were raised by the hon. Member for Hodge Hill. I have to reply to his remarks.
    How will the Labour party pay for all these programmes? When a Chancellor of the Exchequer has to be interrogated, he goes to the Select Committee on Treasury and Civil Service, and he is investigated by my right hon. Friend the Member for Worthing (Mr. Higgins) and other hon. Members. For a shadow spokesman on economic affairs, the equivalent of the Treasury and Civil Service Committee is Jimmy Young. Therefore, it is right that I should look to the transcript of the very important interview that the right hon. Member for Sparkbrook gave on the Jimmy Young programme on 20 March. This is very important, and the House ought to pay attention.
    Mr. Young said:
    "Can I just ask you, I mean would what you get from the rich cover all the things that you want to do?"
    The right hon. Gentleman said:
    "It would more than cover it. Not the job programme, not the job programme. It would cover the pensions, the child benefit and the help to the long term unemployed. The very rich have got back about £3·64 billion and our anti-poverty programme, increasing the pension and so on, would cost about £3·5 billion."
    Mr. Young said:
    "Can I just ask you; when you say rich, Roy, you mean who's rich? I mean what income are you talking about?"
    The right hon. Gentleman said:
    "It's people earning more than £25,000 a year … I don't think we should begrudge people their very high earnings, we just ought to face the fact that if you don't tax them properly, there are penalties."
    Mr. Young asked:
    "Can I just get that one out of the way: when you say tax them properly, what sort of level would they be paying tax then, people on £25,000 a year?"
    The right hon. Gentleman replied:
    "The general income tax level wouldn't change very much, because our complaint is not about income tax, which ought not to return to what it was 10 years ago—98 per cent. on the marginal pound. I don't want income tax ever to get back to that level for £30,000, £40,000, £50,000."
    Mr. Young then asked:
    "You wouldn't want it to get past what sort of level?"
    The right hon. Gentleman replied:
    "I wouldn't want to change income tax very much. What I would want to do is remove some of the other tax perks that they've been given; capital gains tax, capital transfer tax and particularly the tax on unearned income."
    Let us look at that. There would be no change in income tax at all, or at least not very much, but changes in capital gains tax and capital transfer tax. Let us see what that adds up to. [Interruption.] The right hon. Member for Sparkbrook was able to make his speech in relative quiet. I hope that the same courtesy will be extended to me.
    The reductions in CGT and CTT under the present Government have added up to £620 million. On top of that, the abolition of the investment income surcharge—

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    much of which went to people on the standard rate, not just to the wealthy—amounted to £740 million. So the total is £1·36 billion, or, even generously, only £1½ billion. I doubt very much, too, whether the right hon. Gentleman would be able to get that £1½ billion, because, as a result of the changes that we have made and the more benign climate for investment in this country, the yield on capital taxes since we have been in office has risen in real terms by more than 20 per cent. despite those reductions. Nevertheless, with that £1½ billion, the right hon. Gentleman would still be £2 billion short of his £3½ billion. Where would he find it? If he confined himself to those earning over £25,000, he would have to tax every single penny above £25,000 at 75 per cent. compared with the present starting point of 45 per cent. For the right hon. Gentleman to say that he would not change income tax very much is sheer humbug and hypocrisy, and he should know that that is not the case.
    Furthermore, during the period that this Government have been in office, as a result of the benign climate that has been created, the share of total income tax paid by the top 5 per cent. has not fallen. It has risen from 24 per cent. of the total in 1978–79 to 27 per cent. of the total in the coming year. So much for the arithmetic of the right hon. Member for Sparkbrook.
    The speech of the right hon. and learned Member for Monklands, East was one of the poorest speeches that he has made in this House for some considerable time. He claimed that manufacturing output stagnated in 1985. Manufacturing output rose in 1985 by 3 per cent., which was more than in any single year of the last Labour Government.
    My right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) made a more substantial speech. I thank him for his support for the Budget. He and the right hon. Member for South Down (Mr. Powell) expressed opposing views about the desirability of joining the European monetary system. That is clearly an important issue, but I am afraid that I do not have time to go into the details of it tonight. However, I assure the House that we shall continue to keep it under close review.
    The right hon. Member for South Down asked about the consequences that I expect to flow from the improvement in industry's success in the markets, both at home and overseas. One answer is more jobs, and I am sure that he will welcome that. However, I suspect that he was referring to the balance of payments. Another answer would be to offset the declining surplus in oil which is likely to occur on the overseas account.
    My hon. Friend the Member for Croydon, South (Sir W. Clark) also supported the Budget. He queried to some extent the preference for the basic rate over thresholds. In this Parliament alone we have moved very substantially on tax thresholds. We have increased tax thresholds in real terms by more than 20 per cent. Most of that increase has been during the lifetime of this Parliament. Our thresholds are higher, as a proportion of average earnings, than those in Germany and the United States, whereas the starting point of our basic rate is higher than in almost any other country in the world. It is right that we should seek to bring it down, and I make no apology for saying that the long term aim of this Government is to get it down to 25 per cent.
    My right hon. Friend the Member for Henley (Mr. Heseltine) spoke, in particular, about inner city deprivation. If there is one culprit responsible for the acute
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    problem of inner city deprivation, it is the public sector and the way in which local authorities have continually harassed businesses. It was necessary to create the urban development corporations, to which my right hon. Friend referred, in order to take power out of the hands of the local authorities in those areas.
    On the whole, this Budget has been well received by the financial markets, as a result of which we have seen already a reduction of 1 per cent. in interest rates and a reduction in the mortgage rate. It has also been well received by industry, and not least by charities. I should like to say a word about charities. Some of the most important elements in the Budget were the measures that were introduced to encourage giving to charities and the charities themselves. I refer to the basic concession for corporate giving, the brand new concession for payroll giving by employees, the removal of the ceiling of £10,000 on covenants and the selection of value added tax reliefs. Certain abuses were also stopped. The Institute of Charity Fund-Raising Managers had this to say—[Interruption.] I am sorry that Opposition Members have no interest whatever in charitable giving. It is characteristic of them.
    Mr. Bell: The reason why the Opposition have taken no interest in the subject until now is that the Chancellor has not alluded to the Budget. He has only now come to the Budget. We shall listen to him with interest.
    Mr. Lawson: It is clear that the hon. Gentleman has not been listening. I am talking about an important section of the Budget at this moment—the concessions to charities. The Institute of Charity Fund-Raising Managers has said:
    "This is the most exciting and imaginative Budget for charities there has ever been."
    The Charities Aid Foundation said it was
    "more radical and far-reaching than we could have hoped for."
    The noble Lord Goodman, on behalf of charities concerned with the arts, said there was the
    "prospect of many good things to come, and come soon."
    The Charities VAT Reform Group said the Budget had the "most substantial concessions ever." Mr. Brian Rix of MENCAP said he was "amazed and delighted" by the concessions.
    The Budget reflects and seeks to promote the sort of society we wish to see. This is an exemplification of capitalism in the true sense—the voluntary aid secured from higher profits and higher incomes. It is popular capitalism, too. That has been the theme of the Government and of the Budget.
    The Government believe in a society in which people own a stake in their own country and in its means of wealth creation. We are engaged in closing the divide between them and us. That is the true route to one nation. It began many years ago with the property owning democracy in terms of home ownership. That has been greatly extended under this Government as a result of the enfranchisement of council tenants. It has been further extended through employee share ownership.
    When we came into office in 1979 there were merely 30 all-employee share schemes in operation under the Finance Act 1978. Through improvements of that Act and through the Finance Act 1980, enacted by my predecessor, we have today not 30 schemes, but well over 1,000 schemes, involving 1¼ million employees in all-employee share schemes. There are now 1,375 share option schemes in operation, and that scheme only started in 1984.

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    There are also workers' co-operatives—[Interruption.] I think that Labour Members are interested in worker co-operatives. When we took office the number of worker co-operatives in this country was 300. Today there are more than 1,200. [Interruption.] The Opposition may cheer, but when they were in office they merely talked about worker co-operatives. They never did anything about them.
    The way in which we have pursued privatisation by giving preferential applications to small shareholders has more than doubled the number of individual shareholders in this country. Notably, of course, there is the British Telecom privatisation, which still has 1·6 million individual shareholders, many of them men and women who have never held a share before in their lives. That has opened up new horizons for more and more of our people.
    Those horizons will be extended further by the personal equity plans announced in the Budget, which will come into force on 1 January after a period of consultation. Over time I believe that the new personal equity plans, which provide the possibility of investing small sums in equities year in, year out, totally free of all tax—tax on the dividends and on capital gains—will profoundly change the nature of our society. The people's capitalism is on the march, and there will be no stopping it. It will further foster the spirit of enterprise upon which economic success depends. [Interruption.] Opposition Members find it difficult to accept the fact that the British economy is doing very well.
    We have a very important anniversary this year. It is the 10th anniversary of the flight from Manila in 1976. Unlike President Marcos, the right hon. Member for Leeds, East (Mr. Healey) had to flee from Manila before he had even reached it. He got only as far as London airport when he had to turn back. That was at a time when inflation was running at 26 per cent. The exchange rate had fallen by one quarter over the previous three years. This country's net overseas assets are now some £90 billion. At that time, they had fallen to £3 billion. The public sector borrowing requirement, which the right hon. Gentleman regarded in such a cavalier manner, was almost 10 per cent. of gross domestic product. In today's money, that is £33 billion. That is precisely what he would like to see again. The result was collapse, ignominy and going cap in hand to the International Monetary Fund, and the then Labour Government had to have an about turn of their policies.
    Let us contrast the situation today. Inflation is at 5 per cent., which is the average since the last election, and we are heading for 3·5 per cent. by the end of this year. We have a growth rate of 3 per cent. We have had 3 per cent. a year steadily since the last general election — [Interruption.] Yes, since the general election in 1983 it has been steadily 3 per cent. The right hon. and learned Member for Monklands, East does not even know when the last general election was. I am not surprised. He had to obliterate it from his mind because his party was practically obliterated, too. Our growth rate is 3 per cent., and the prospect is the best for a generation. Indeed, in international competitiveness since 1979—
    Mr. Andrew Faulds: Will the right hon. Gentleman give way?
    Mr. Lawson: I do not have the time.
    Mr. Faulds rose—
    Mr. Lawson: All right. I shall give way in a moment.
    The right hon. and learned Member for Monklands, East invited me to make a comparison with 1979. I shall do so. Since 1979, we have grown to the same extent as France and Germany, whereas under the Labour Government we grew very much less. Indeed, in no other six-year period since the war has our relative performance compared with our European competitors been as good as it has been since 1979.
    Mr. Faulds: Will the right hon. Gentleman be charitable enough to his private office to admit that he wrote this rubbish?
    Mr. Lawson: I am sorry that I gave way to the hon. Gentleman.
    Our cumulative surplus on the balance of payments has been more than £20 billion over that period.
    The right hon. and learned Member for Monklands, East spent a great deal of time talking about manufacturing industry. It is right that I should reply. To do him credit, I think that he has been talking about it for a little while. The Leader of the Opposition speaks with the excessive enthusiasm of someone who has only just discovered its very existence.
    The plain fact is that the environment for manufacturing today is better than it has been for a very long time. We have lower oil prices. The reduction in the fuel bill so far is worth over £1 billion to manufacturing industry. Mind you, Mr. Speaker, Labour Members want to take that away. Despite their professed concern for manufacturing industry, they are recommending that we should enter into talks with the Organisation of Petroleum Exporting Countries to ensure that the oil price is higher than it is now. That is what was said by the hon. Member for Thurrock (Dr. McDonald) on behalf of the Opposition. I hope that Labour Members will tell manufacturing industry how much higher they would like oil prices to be—[Interruption.] We have a lower exchange rate against both Germany and Japan, our principal competitors, and, of course, lower inflation. That does not normally happen when the exchange rate is coming down. Inflation is also coming down sharply. This is an unparalleled opportunity for British industry in general and for manufacturing industry in particular, at a time when we are holding our share of world markets. Between 1981 and 1985 inclusive we have seen the best five-year period in recent history for maintaining our share of world markets.
    Dr. M. S. Miller: Will the right hon. Gentleman give way?
    Mr. Lawson: I shall not give way. I have given way a great deal.
    Although there has been some decline since 1979 in the share of world trade in manufacturing, our share of world trade has declined very much less than that of France and Germany since 1979. Manufacturing profitability is the highest since 1973. It is from that manufacturing profitability that the resources come for more spending on training and research and development. Of course, I welcome the emphasis that was laid on that, echoing what I said in my Budget speech. Under the Labour Government, the profits were not there and industry was

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    unable to make that expenditure. Now that the opportunity is there, I hope that industry will take it. As to unemployment—
    Dr. M. S. Miller: Will the Chancellor answer a question which is puzzling the nation? If things are so good, why are things so bad?
    Mr. Lawson: I assume that the hon. Member is referring to unemployment, which, of course, is bad. We have never sought to disguise the fact that unemployment is bad. It is odd that the Opposition seek to deny what is good in terms of productivity, output, inflation, profitability, overall investment and exports. All these are good. Over a number of years we have introduced special measures to help the unemployed. We announced more this year. In addition—
    Mr. John Smith: Will the right hon. Gentleman give way?
    Mr. Lawson: No.
    In addition to that, a number of measures are specially designed to encourage small and new businesses which are particularly important for the future of employment. I refer to the improved loan guarantee scheme, the improvement in the business expansion scheme and the improvement on capital transfer tax. The most crippling burden on small and family businesses was capital transfer tax.
    None of those measures will reduce unemployment in the way that hon. Members on both sides of the House would like, unless there is a slower growth in unit labour costs. Many of my hon. Friends rightly referred to that. There is no getting away from the fact that we shall not achieve the lower unemployment that we all seek unless unit labour costs rise at a slower rate than among our competitors. That is why, to encourage flexibility in the labour market, I made the profit sharing proposal in the Budget so that a proportion of remuneration related to company profits might receive a tax concession. I am encouraged by the early signs of a positive response. But that is in the long term. In the short term business must take control of its own labour costs. The only solution to unemployment is a more effective, efficient and dynamic economy.
    The most favourable climate for industry is the most favourable climate for jobs. There is no way round achieving a better climate for jobs other than by achieving a better climate for industry.
    Since the last general election we have seen inflation averaging 5 per cent. and growth averaging 3 per cent.—the best combination for a generation. We have seen manufacturing output average 4 per cent. growth a year, manufacturing productivity average 4¾ per cent. a year, employment rise at a rate of over 750,000 a year, non-oil exports grow at 4½ per cent. a year and real take-home pay at 2½ per cent. a year.
    Not only has our position been better than under many previous Governments for a very long time, but, even if one takes the period from 1979, our relative position has improved considerably. We have not yet made as much progress with inflation as we should like, but we are making progress and I forecast that it will be 3½ per cent. by the end of this year. Since we have been in office, inflation has been 1 per cent. higher than the OECD average. But when the Labour party was in power inflation
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    was 6 per cent. higher than the OECD average. That is another measure of the improvement in comparative terms as well as in absolute terms.
    The Budget which I introduced on Tuesday is a Budget for the whole of the people. It is a Budget that will continue to build on the success of our previous Budgets. It is a Budget that will encourage the spread of wider share ownership and popular capitalism and I commend it to the House.
    Question put:—
    The House divided: Ayes 353, Noes 212.

    Division No. 111]

    [10 pm

    AYES

    Adley, Robert

    Clark, Sir W. (Croydon S)

    Aitken, Jonathan

    Clarke, Rt Hon K. (Rushcliffe)

    Alexander, Richard

    Cockeram, Eric

    Alison, Rt Hon Michael

    Colvin, Michael

    Amess, David

    Conway, Derek

    Ancram, Michael

    Coombs, Simon

    Arnold, Tom

    Cope, John

    Ashby, David

    Cormack, Patrick

    Aspinwall, Jack

    Corrie, John

    Atkins, Rt Hon Sir H.

    Couchman, James

    Atkins, Robert (South Ribble)

    Cranborne, Viscount

    Atkinson, David (B'm'th E)

    Critchley, Julian

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

    Crouch, David

    Baker, Nicholas (Dorset N)

    Currie, Mrs Edwina

    Baldry, Tony

    Dickens, Geoffrey

    Banks, Robert (Harrogate)

    Dorrell, Stephen

    Batiste, Spencer

    Dover, Den

    Beaumont-Dark, Anthony

    du Cann, Rt Hon Sir Edward

    Bellingham, Henry

    Dunn, Robert

    Bendall, Vivian

    Durant, Tony

    Bennett, Rt Hon Sir Frederic

    Dykes, Hugh

    Benyon, William

    Edwards, Rt Hon N. (P'broke)

    Best, Keith

    Eggar, Tim

    Bevan, David Gilroy

    Emery, Sir Peter

    Biffen, Rt Hon John

    Evennett, David

    Biggs-Davison, Sir John

    Fallon, Michael

    Blackburn, John

    Farr, Sir John

    Blaker, Rt Hon Sir Peter

    Favell, Anthony

    Body, Sir Richard

    Fenner, Mrs Peggy

    Bonsor, Sir Nicholas

    Finsberg, Sir Geoffrey

    Bottomley, Peter

    Fletcher, Alexander

    Bottomley, Mrs Virginia

    Fookes, Miss Janet

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

    Forman, Nigel

    Bowden, Gerald (Dulwich)

    Forsyth, Michael (Stirling)

    Boyson, Dr Rhodes

    Forth, Eric

    Braine, Rt Hon Sir Bernard

    Fowler, Rt Hon Norman

    Brandon-Bravo, Martin

    Fox, Marcus

    Bright, Graham

    Franks, Cecil

    Brinton, Tim

    Fraser, Peter (Angus East)

    Brittan, Rt Hon Leon

    Freeman, Roger

    Brooke, Hon Peter

    Fry, Peter

    Brown, M. (Brigg & Cl'thpes)

    Gale, Roger

    Browne, John

    Galley, Roy

    Bruinvels, Peter

    Gardiner, George (Reigate)

    Bryan, Sir Paul

    Gardner, Sir Edward (Fylde)

    Buchanan-Smith, Rt Hon A.

    Gilmour, Rt Hon Sir Ian

    Buck, Sir Antony

    Glyn, Dr Alan

    Budgen, Nick

    Goodhart, Sir Philip

    Burt, Alistair

    Goodlad, Alastair

    Butcher, John

    Gorst, John

    Butler, Rt Hon Sir Adam

    Gow, Ian

    Butterfill, John

    Gower, Sir Raymond

    Carlisle, John (Luton N)

    Grant, Sir Anthony

    Carlisle, Kenneth (Lincoln)

    Greenway, Harry

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

    Gregory, Conal

    Carttiss, Michael

    Griffiths, Sir Eldon

    Cash, William

    Griffiths, Peter (Portsm'th N)

    Chalker, Mrs Lynda

    Grist, Ian

    Channon, Rt Hon Paul

    Ground, Patrick

    Chapman, Sydney

    Grylls, Michael

    Chope, Christopher

    Hamilton, Hon A. (Epsom)

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

    Hampson, Dr Keith

    Clark, Dr Michael (Rochford)

    Hanley, Jeremy

    709

    Hannam, John

    Marshall, Michael (Arundel)

    Hargreaves, Kenneth

    Mates, Michael

    Harris, David

    Maude, Hon Francis

    Harvey, Robert

    Mawhinney, Dr Brian

    Hawkins, C. (High Peak)

    Maxwell-Hyslop, Robin

    Hawksley, Warren

    Mayhew, Sir Patrick

    Hayhoe, Rt Hon Barney

    Meyer, Sir Anthony

    Hayward, Robert

    Miller, Hal (B'grove)

    Heath, Rt Hon Edward

    Mills, Iain (Meriden)

    Heathcoat-Amory, David

    Miscampbell, Norman

    Heddle, John

    Mitchell, David (Hants NW)

    Henderson, Barry

    Moate, Roger

    Heseltine, Rt Hon Michael

    Monro, Sir Hector

    Hickmet, Richard

    Montgomery, Sir Fergus

    Higgins, Rt Hon Terence L.

    Moore, Rt Hon John

    Hill, James

    Morris, M. (N'hampton S)

    Hind, Kenneth

    Morrison, Hon C. (Devizes)

    Hirst, Michael

    Morrison, Hon P. (Chester)

    Hogg, Hon Douglas (Gr'th'm)

    Moynihan, Hon C.

    Holland, Sir Philip (Gedling)

    Mudd, David

    Holt, Richard

    Neale, Gerrard

    Hordern, Sir Peter

    Nelson, Anthony

    Howard, Michael

    Neubert, Michael

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

    Newton, Tony

    Howarth, Gerald (Cannock)

    Nicholls, Patrick

    Howell, Rt Hon D. (G'ldford)

    Normanton, Tom

    Howell, Ralph (Norfolk, N)

    Norris, Steven

    Hubbard-Miles, Peter

    Onslow, Cranley

    Hunt, David (Wirral W)

    Oppenheim, Phillip

    Hunt, John (Ravensbourne)

    Oppenheim, Rt Hon Mrs S.

    Hunter, Andrew

    Osborn, Sir John

    Hurd, Rt Hon Douglas

    Ottaway, Richard

    Jackson, Robert

    Page, Richard (Herts SW)

    Jenkin, Rt Hon Patrick

    Parkinson, Rt Hon Cecil

    Jessel, Toby

    Parris, Matthew

    Johnson Smith, Sir Geoffrey

    Patten, Christopher (Bath)

    Jones, Gwilym (Cardiff N)

    Patten, J. (Oxf W & Abgdn)

    Jones, Robert (Herts W)

    Pattie, Geoffrey

    Joseph, Rt Hon Sir Keith

    Pawsey, James

    Kellett-Bowman, Mrs Elaine

    Peacock, Mrs Elizabeth

    Kershaw, Sir Anthony

    Percival, Rt Hon Sir Ian

    Key, Robert

    Porter, Barry

    King, Roger (B'ham N'field)

    Portillo, Michael

    Knight, Greg (Derby N)

    Powell, William (Corby)

    Knowles, Michael

    Powley, John

    Knox, David

    Prentice, Rt Hon Reg

    Lamont, Norman

    Price, Sir David

    Lang, Ian

    Prior, Rt Hon James

    Latham, Michael

    Pym, Rt Hon Francis

    Lawler, Geoffrey

    Raffan, Keith

    Lawrence, Ivan

    Raison, Rt Hon Timothy

    Lawson, Rt Hon Nigel

    Rathbone, Tim

    Lee, John (Pendle)

    Rees, Rt Hon Peter (Dover)

    Lennox-Boyd, Hon Mark

    Renton, Tim

    Lester, Jim

    Rhodes James, Robert

    Lewis, Sir Kenneth (Stamf'd)

    Rhys Williams, Sir Brandon

    Lightbown, David

    Ridley, Rt Hon Nicholas

    Lilley, Peter

    Ridsdale, Sir Julian

    Lloyd, Ian (Havant)

    Rifkind, Rt Hon Malcolm

    Lloyd, Peter (Fareham)

    Rippon, Rt Hon Geoffrey

    Lord, Michael

    Roberts, Wyn (Conwy)

    Luce, Rt Hon Richard

    Robinson, Mark (N'port W)

    Lyell, Nicholas

    Roe, Mrs Marion

    McCrindle, Robert

    Rossi, Sir Hugh

    McCurley, Mrs Anna

    Rost, Peter

    Macfarlane, Neil

    Rowe, Andrew

    MacGregor, Rt Hon John

    Rumbold, Mrs Angela

    MacKay, Andrew (Berkshire)

    Ryder, Richard

    MacKay, John (Argyll & Bute)

    Sackville, Hon Thomas

    Maclean, David John

    Sainsbury, Hon Timothy

    McNair-Wilson, M. (N'bury)

    St. John-Stevas, Rt Hon N.

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

    Sayeed, Jonathan

    McQuarrie, Albert

    Shaw, Giles (Pudsey)

    Madel, David

    Shaw, Sir Michael (Scarb')

    Major, John

    Shelton, William (Streatham)

    Malins, Humfrey

    Shepherd, Colin (Hereford)

    Malone, Gerald

    Shepherd, Richard (Aldridge)

    Maples, John

    Shersby, Michael

    Marland, Paul

    Silvester, Fred

    Marlow, Antony

    Sims, Roger

    710

    Skeet, Sir Trevor

    van Straubenzee, Sir W.

    Smith, Sir Dudley (Warwick)

    Vaughan, Sir Gerard

    Smith, Tim (Beaconsfield)

    Viggers, Peter

    Soames, Hon Nicholas

    Waddington, David

    Speller, Tony

    Wakeham, Rt Hon John

    Spencer, Derek

    Waldegrave, Hon William

    Spicer, Jim (Dorset W)

    Walden, George

    Spicer, Michael (S Worcs)

    Walker, Bill (T'side N)

    Squire, Robin

    Walker, Rt Hon P. (W'cester)

    Stanbrook, Ivor

    Wall, Sir Patrick

    Stanley, Rt Hon John

    Waller, Gary

    Steen, Anthony

    Walters, Dennis

    Stern, Michael

    Wardle, C. (Bexhill)

    Stevens, Lewis (Nuneaton)

    Warren, Kenneth

    Stewart, Allan (Eastwood)

    Watson, John

    Stewart, Andrew (Sherwood)

    Watts, John

    Stewart, Ian (Hertf'dshire N)

    Wells, Bowen (Hertford)

    Stokes, John

    Wells, Sir John (Maidstone)

    Stradling Thomas, Sir John

    Wheeler, John

    Sumberg, David

    Whitfield, John

    Tapsell, Sir Peter

    Whitney, Raymond

    Taylor, John (Solihull)

    Wiggin, Jerry

    Tebbit, Rt Hon Norman

    Wilkinson, John

    Temple-Morris, Peter

    Winterton, Mrs Ann

    Thatcher, Rt Hon Mrs M.

    Winterton, Nicholas

    Thomas, Rt Hon Peter

    Wolfson, Mark

    Thompson, Donald (Calder V)

    Wood, Timothy

    Thompson, Patrick (N'ich N)

    Woodcock, Michael

    Thornton, Malcolm

    Yeo, Tim

    Thurnham, Peter

    Young, Sir George (Acton)

    Townend, John (Bridlington)

    Younger, Rt Hon George

    Townsend, Cyril D. (B'heath)

    Tracey, Richard

    Tellers for the Ayes:

    Trippier, David

    Mr. Carol Mather and

    Trotter, Neville

    Mr. Robert Boscawen.

    Twinn, Dr Ian

    NOES

    Abse, Leo

    Cohen, Harry

    Adams, Allen (Paisley N)

    Conlan, Bernard

    Alton, David

    Cook, Frank (Stockton North)

    Anderson, Donald

    Cook, Robin F. (Livingston)

    Archer, Rt Hon Peter

    Corbett, Robin

    Ashdown, Paddy

    Corbyn, Jeremy

    Ashley, Rt Hon Jack

    Craigen, J. M.

    Ashton, Joe

    Crowther, Stan

    Atkinson, N. (Tottenham)

    Cunliffe, Lawrence

    Bagier, Gordon A. T.

    Cunningham, Dr John

    Banks, Tony (Newham NW)

    Davies, Rt Hon Denzil (L'lli)

    Barnett, Guy

    Davies, Ronald (Caerphilly)

    Barron, Kevin

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

    Beckett, Mrs Margaret

    Deakins, Eric

    Beith, A. J.

    Dewar, Donald

    Bell, Stuart

    Dixon, Donald

    Benn, Rt Hon Tony

    Dormand, Jack

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

    Douglas, Dick

    Bermingham, Gerald

    Dubs, Alfred

    Bidwell, Sydney

    Duffy, A. E. P.

    Blair, Anthony

    Dunwoody, Hon Mrs G.

    Boothroyd, Miss Betty

    Eadie, Alex

    Boyes, Roland

    Eastham, Ken

    Bray, Dr Jeremy

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

    Brown, Gordon (D'f'mline E)

    Evans, John (St. Helens N)

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

    Ewing, Harry

    Brown, Ron (E'burgh, Leith)

    Fatchett, Derek

    Bruce, Malcolm

    Faulds, Andrew

    Buchan, Norman

    Field, Frank (Birkenhead)

    Caborn, Richard

    Fields, T. (L'pool Broad Gn)

    Callaghan, Rt Hon J.

    Fisher, Mark

    Callaghan, Jim (Heyw'd & M)

    Flannery, Martin

    Campbell-Savours, Dale

    Foot, Rt Hon Michael

    Canavan, Dennis

    Foster, Derek

    Carlile, Alexander (Montg'y)

    Foulkes, George

    Carter-Jones, Lewis

    Fraser, J. (Norwood)

    Clark, Dr David (S Shields)

    Freeson, Rt Hon Reginald

    Clarke, Thomas

    Freud, Clement

    Clay, Robert

    Garrett, W. E.

    Clelland, David Gordon

    Godman, Dr Norman

    Clwyd, Mrs Ann

    Golding, John

    Cocks, Rt Hon M. (Bristol S)

    Gould, Bryan

    711

    Gourlay, Harry

    O'Brien, William

    Hamilton, James (M'well N)

    O'Neill, Martin

    Hamilton, W. W. (Fife Central)

    Orme, Rt Hon Stanley

    Hancock, Michael

    Owen, Rt Hon Dr David

    Hardy, Peter

    Park, George

    Harman, Ms Harriet

    Parry, Robert

    Harrison, Rt Hon Walter

    Patchett, Terry

    Hart, Rt Hon Dame Judith

    Pavitt, Laurie

    Hattersley, Rt Hon Roy

    Pendry, Tom

    Haynes, Frank

    Penhaligon, David

    Healey, Rt Hon Denis

    Pike, Peter

    Heffer, Eric S.

    Powell, Raymond (Ogmore)

    Hogg, N. (C'nauld & Kilsyth)

    Prescott, John

    Holland, Stuart (Vauxhall)

    Radice, Giles

    Home Robertson, John

    Redmond, Martin

    Howells, Geraint

    Rees, Rt Hon M. (Leeds S)

    Hoyle, Douglas

    Richardson, Ms Jo

    Hughes, Dr Mark (Durham)

    Roberts, Allan (Bootle)

    Hughes, Robert (Aberdeen N)

    Robertson, George

    Hughes, Roy (Newport East)

    Robinson, G. (Coventry NW)

    Hughes, Sean (Knowsley S)

    Rogers, Allan

    Hughes, Simon (Southwark)

    Rooker, J. W.

    Janner, Hon Greville

    Ross, Ernest (Dundee W)

    Jenkins, Rt Hon Roy (Hillh'd)

    Rowlands, Ted

    John, Brynmor

    Ryman, John

    Johnston, Sir Russell

    Sedgemore, Brian

    Jones, Barry (Alyn & Deeside)

    Sheerman, Barry

    Kaufman, Rt Hon Gerald

    Sheldon, Rt Hon R.

    Kennedy, Charles

    Shore, Rt Hon Peter

    Kilroy-Silk, Robert

    Short, Ms Clare (Ladywood)

    Kinnock, Rt Hon Neil

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

    Kirkwood, Archy

    Silkin, Rt Hon J.

    Lambie, David

    Skinner, Dennis

    Lamond, James

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

    Leadbitter, Ted

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

    Leighton, Ronald

    Snape, Peter

    Litherland, Robert

    Soley, Clive

    Livsey, Richard

    Spearing, Nigel

    Lloyd, Tony (Stretford)

    Steel, Rt Hon David

    Lofthouse, Geoffrey

    Stewart, Rt Hon D. (W Isles)

    McCartney, Hugh

    Stott, Roger

    McDonald, Dr Oonagh

    Strang, Gavin

    McGuire, Michael

    Straw, Jack

    McKelvey, William

    Thomas, Dafydd (Merioneth)

    MacKenzie, Rt Hon Gregor

    Thomas, Dr R. (Carmarthen)

    Maclennan, Robert

    Thompson, J. (Wansbeck)

    McNamara, Kevin

    Thorne, Stan (Preston)

    McTaggart, Robert

    Tinn, James

    Madden, Max

    Torney, Tom

    Marek, Dr John

    Wainwright, R.

    Marshall, David (Shettleston)

    Wallace, James

    Martin, Michael

    Wardell, Gareth (Gower)

    Mason, Rt Hon Roy

    Wareing, Robert

    Maxton, John

    Weetch, Ken

    Maynard, Miss Joan

    Welsh, Michael

    Meacher, Michael

    White, James

    Meadowcroft, Michael

    Wigley, Dafydd

    Michie, William

    Williams, Rt Hon A.

    Mikardo, Ian

    Wilson, Gordon

    Millan, Rt Hon Bruce

    Winnick, David

    Miller, Dr M. S. (E Kilbride)

    Wrigglesworth, Ian

    Mitchell, Austin (G't Grimsby)

    Young, David (Bolton SE)

    Morris,Rt Hon A. (W'shawe)

    Morris, Rt Hon J. (Aberavon)

    Tellers for the Noes:

    Nellist, David

    Mr. Allen MacKay and

    Oakes, Rt Hon Gordon

    Mr. John McWilliam.

    Question accordingly agreed to.
    Resolved,
    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

    712

    (d) for any relief other than relief applying to goods of whatever description or services of whatever description.

    Mr. Speaker: I am now required under Standing Order No. 114 to put successively, without further debate, the Questions on each of the Ways and Means motions Nos. 2 to 41 and the motion of procedure, on all of which the Finance Bill is to be brought in. Instead of reading out all of the motions in full, I propose to follow the procedure used in recent years; that is to say, I shall first state the title of the motion and then put the Question that the motion be agreed to.

    2. TOBACCO PRODUCTS
    Resolved,
    That, as from 21st March 1986, the rates of duty on cigarettes and hand-rolling tobacco specified in Schedule 1 to the Tobacco Products Duty Act 1979 shall be increased—

    (a) in the case of cigarettes, to an amount equal to 21 per cent. of the retail price plus £30·61 per thousand cigarettes; and

    (b) in the case of hand-rolling tobacco, to £49·64 per kilogram:

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    3. HYDROCARBON OIL
    Question put,
    That, as from 6 o'clock in the evening of 18th March 1986—
    (1) the rates of duty specified in section 6(1) of the Hydrocarbon Oil Duties Act 1979 shall be increased—

    (a) in the case of light oil, from £0·1794 a litre to £0·1938 a litre; and

    (b) in the case of heavy oil, from £0·1515 a litre to £0·1639 a litre; and

    (2) in subsection (1) of section 11 of that Act (rebate on heavy oil) for paragraphs (a) and (b) there shall be substituted—

    "(a) in the case of fuel oil, of £0·0077 a litre less than the rate at which the duty is for the time being chargeable;

    (b) in the case of gas oil, of £0·0110 a litre less than the rate at which the duty is for the time being chargeable; and

    (c) in the case of heavy oil other than fuel oil and gas oil, equal to the rate at which the duty is for the time being chargeable"; and

    (3) for subsection (2) of section 11 of that Act (definition of types of heavy oil) there shall be substituted—
    "(2) In this section—
    'fuel oil' means heavy oil which contains in solution an amount of asphaltenes of not less than 0·5 per cent. or which contains less than 0·5 per cent. but not less than 0·1 per cent. of asphaltenes and has a closed flash point not exceeding 150°C; and
    'gas oil' means heavy oil of which not more than 50 per cent. by volume distils at a temperature not exceeding 240°C arid of which more than 50 per cent. by volume distils at a temperature not exceeding 340°C":
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
    The House divided: Ayes 351, Noes 207.

    Division No. 112]

    [10.15 pm

    AYES

    Adley, Robert

    Aspinwall, Jack

    Aitken, Jonathan

    Atkins, Rt Hon Sir H.

    Alexander, Richard

    Atkins, Robert (South Ribble)

    Alison, Rt Hon Michael

    Atkinson, David (B'm'th E)

    Amess, David

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

    Ancram, Michael

    Baker, Nicholas (Dorset N)

    Arnold, Tom

    Baldry, Tony

    Ashby, David

    Banks, Robert (Harrogate)

    713

    Batiste, Spencer

    Forth, Eric

    Beaumont-Dark, Anthony

    Fowler, Rt Hon Norman

    Bellingham, Henry

    Fox, Marcus

    Bendall, Vivian

    Franks, Cecil

    Bennett, Rt Hon Sir Frederic

    Fraser, Peter (Angus East)

    Benyon, William

    Freeman, Roger

    Best, Keith

    Fry, Peter

    Bevan, David Gilroy

    Gale, Roger

    Biffen, Rt Hon John

    Galley, Roy

    Biggs-Davison, Sir John

    Gardiner, George (Reigate)

    Blackburn, John

    Gardner, Sir Edward (Fylde)

    Blaker, Rt Hon Sir Peter

    Gilmour, Rt Hon Sir Ian

    Body, Sir Richard

    Glyn, Dr Alan

    Bonsor, Sir Nicholas

    Goodhart, Sir Philip

    Bottomley, Peter

    Goodlad, Alastair

    Bottomley, Mrs Virginia

    Gorst, John

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

    Gow, Ian

    Bowden, Gerald (Dulwich)

    Gower, Sir Raymond

    Boyson, Dr Rhodes

    Grant, Sir Anthony

    Braine, Rt Hon Sir Bernard

    Greenway, Harry

    Brandon-Bravo, Martin

    Gregory, Conal

    Bright, Graham

    Griffiths, Sir Eldon

    Brinton, Tim

    Griffiths, Peter (Portsm'th N)

    Brittan, Rt Hon Leon

    Grist, Ian

    Brooke, Hon Peter

    Ground, Patrick

    Brown, M. (Brigg & Cl'thpes)

    Grylls, Michael

    Browne, John

    Hamilton, Hon A. (Epsom)

    Bruinvels, Peter

    Hampson, Dr Keith

    Buchanan-Smith, Rt Hon A.

    Hanley, Jeremy

    Buck, Sir Antony

    Hannam, John

    Budgen, Nick

    Hargreaves, Kenneth

    Burt, Alistair

    Harris, David

    Butcher, John

    Harvey, Robert

    Butler, Rt Hon Sir Adam

    Hawkins, C. (High Peak)

    Butterfill, John

    Hawksley, Warren

    Carlisle, John (Luton N)

    Hayhoe, Rt Hon Barney

    Carlisle, Kenneth (Lincoln)

    Hayward, Robert

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

    Heath, Rt Hon Edward

    Carttiss, Michael

    Heathcoat-Amory, David

    Cash, William

    Heddle, John

    Chalker, Mrs Lynda

    Henderson, Barry

    Channon, Rt Hon Paul

    Heseltine, Rt Hon Michael

    Chapman, Sydney

    Hickmet, Richard

    Chope, Christopher

    Higgins, Rt Hon Terence L.

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

    Hill, James

    Clark, Dr Michael (Rochford)

    Hind, Kenneth

    Clark, Sir W. (Croydon S)

    Hirst, Michael

    Clarke, Rt Hon K. (Rushcliffe)

    Hogg, Hon Douglas (Gr'th'm)

    Cockeram, Eric

    Holland, Sir Philip (Gedling)

    Colvin, Michael

    Holt, Richard

    Conway, Derek

    Hordern, Sir Peter

    Coombs, Simon

    Howard, Michael

    Cope, John

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

    Cormack, Patrick

    Howarth, Gerald (Cannock)

    Corrie, John

    Howell, Rt Hon D. (G'ldford)

    Couchman, James

    Howell, Ralph (Norfolk, N)

    Cranborne, Viscount

    Hubbard-Miles, Peter

    Critchley, Julian

    Hunt, David (Wirral W)

    Crouch, David

    Hunt, John (Ravensbourne)

    Currie, Mrs Edwina

    Hunter, Andrew

    Dickens, Geoffrey

    Hurd, Rt Hon Douglas

    Dorrell, Stephen

    Jackson, Robert

    Dover, Den

    Jenkin, Rt Hon Patrick

    du Cann, Rt Hon Sir Edward

    Jessel, Toby

    Dunn, Robert

    Johnson Smith, Sir Geoffrey

    Durant, Tony

    Jones, Gwilym (Cardiff N)

    Dykes, Hugh

    Jones, Robert (Herts W)

    Edwards, Rt Hon N. (P'broke)

    Joseph, Rt Hon Sir Keith

    Eggar, Tim

    Kellett-Bowman, Mrs Elaine

    Emery, Sir Peter

    Kershaw, Sir Anthony

    Evennett, David

    Key, Robert

    Fallon, Michael

    King, Roger (B'ham N'field)

    Farr, Sir John

    Knight, Greg (Derby N)

    Favell, Anthony

    Knowles, Michael

    Fenner, Mrs Peggy

    Knox, David

    Finsberg, Sir Geoffrey

    Lamont, Norman

    Fletcher, Alexander

    Lang, Ian

    Fookes, Miss Janet

    Latham, Michael

    Forman, Nigel

    Lawler, Geoffrey

    Forsyth, Michael (Stirling)

    Lawrence, Ivan

    714

    Lawson, Rt Hon Nigel

    Rathbone, Tim

    Lee, John (Pendle)

    Rees, Rt Hon Peter (Dover)

    Lennox-Boyd, Hon Mark

    Renton, Tim

    Lester, Jim

    Rhodes James, Robert

    Lewis, Sir Kenneth (Stamf'd)

    Rhys Williams, Sir Brandon

    Lightbown, David

    Ridley, Rt Hon Nicholas

    Lilley, Peter

    Ridsdale, Sir Julian

    Lloyd, Ian (Havant)

    Rifkind, Rt Hon Malcolm

    Lloyd, Peter (Fareham)

    Rippon, Rt Hon Geoffrey

    Lord, Michael

    Roberts, Wyn (Conwy)

    Luce, Rt Hon Richard

    Robinson, Mark (N'port W)

    Lyell, Nicholas

    Roe, Mrs Marion

    McCrindle, Robert

    Rossi, Sir Hugh

    McCurley, Mrs Anna

    Rost, Peter

    Macfarlane, Neil

    Rowe, Andrew

    MacGregor, Rt Hon John

    Rumbold, Mrs Angela

    MacKay, Andrew (Berkshire)

    Ryder, Richard

    MacKay, John (Argyll & Bute)

    Sackville, Hon Thomas

    Maclean, David John

    Sainsbury, Hon Timothy

    McNair-Wilson, M. (N'bury)

    St. John-Stevas, Rt Hon N.

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

    Sayeed, Jonathan

    McQuarrie, Albert

    Shaw, Giles (Pudsey)

    Madel, David

    Shaw, Sir Michael (Scarb')

    Major, John

    Shepherd, Colin (Hereford)

    Malins, Humfrey

    Shepherd, Richard (Aldridge)

    Malone, Gerald

    Shersby, Michael

    Maples, John

    Silvester, Fred

    Marland, Paul

    Sims, Roger

    Marlow, Antony

    Skeet, Sir Trevor

    Marshall, Michael (Arundel)

    Smith, Sir Dudley (Warwick)

    Mates, Michael

    Smith, Tim (Beaconsfield)

    Maude, Hon Francis

    Soames, Hon Nicholas

    Mawhinney, Dr Brian

    Speller, Tony

    Maxwell-Hyslop, Robin

    Spencer, Derek

    Mayhew, Sir Patrick

    Spicer, Jim (Dorset W)

    Meyer, Sir Anthony

    Spicer, Michael (S Worcs)

    Miller, Hal (B'grove)

    Squire, Robin

    Mills, Iain (Meriden)

    Stanbrook, Ivor

    Miscampbell, Norman

    Stanley, Rt Hon John

    Mitchell, David (Hants NW)

    Steen, Anthony

    Moate, Roger

    Stern, Michael

    Monro, Sir Hector

    Stevens, Lewis (Nuneaton)

    Montgomery, Sir Fergus

    Stewart, Allan (Eastwood)

    Moore, Rt Hon John

    Stewart, Andrew (Sherwood)

    Morris, M. (N'hampton S)

    Stewart, Ian (Hertf'dshire N)

    Morrison, Hon C. (Devizes)

    Stokes, John

    Morrison, Hon P. (Chester)

    Stradling Thomas, Sir John

    Moynihan, Hon C.

    Sumberg, David

    Mudd, David

    Tapsell, Sir Peter

    Neale, Gerrard

    Taylor, John (Solihull)

    Nelson, Anthony

    Tebbit, Rt Hon Norman

    Neubert, Michael

    Temple-Morris, Peter

    Newton, Tony

    Thatcher, Rt Hon Mrs M.

    Nicholls, Patrick

    Thomas, Rt Hon Peter

    Normanton, Tom

    Thompson, Donald (Calder V)

    Norris, Steven

    Thompson, Patrick (N'ich N)

    Onslow, Cranley

    Thornton, Malcolm

    Oppenheim, Phillip

    Thurnham, Peter

    Oppenheim, Rt Hon Mrs S.

    Townend, John (Bridlington)

    Osborn, Sir John

    Townsend, Cyril D. (B'heath)

    Ottaway, Richard

    Tracey, Richard

    Page, Richard (Herts SW)

    Trippier, David

    Parkinson, Rt Hon Cecil

    Trotter, Neville

    Parris, Matthew

    Twinn, Dr Ian

    Patten, Christopher (Bath)

    van Straubenzee, Sir W.

    Patten, J. (Oxf W & Abgdn)

    Vaughan, Sir Gerard

    Pattie, Geoffrey

    Viggers, Peter

    Pawsey, James

    Waddington, David

    Peacock, Mrs Elizabeth

    Wakeham, Rt Hon John

    Percival, Rt Hon Sir Ian

    Waldegrave, Hon William

    Porter, Barry

    Walden, George

    Portillo, Michael

    Walker, Bill (T'side N)

    Powell, William (Corby)

    Walker, Rt Hon P. (W'cester)

    Powley, John

    Wall, Sir Patrick

    Prentice, Rt Hon Reg

    Waller, Gary

    Price, Sir David

    Walters, Dennis

    Prior, Rt Hon James

    Wardle, C. (Bexhill)

    Pym, Rt Hon Francis

    Warren, Kenneth

    Raffan, Keith

    Watson, John

    Raison, Rt Hon Timothy

    Watts, John

    715

    Wells, Bowen (Hertford)

    Wood, Timothy

    Wells, Sir John (Maidstone)

    Woodcock, Michael

    Wheeler, John

    Yeo, Tim

    Whitfield, John

    Young, Sir George (Acton)

    Whitney, Raymond

    Younger, Rt Hon George

    Wiggin, Jerry

    Wilkinson, John

    Tellers for the Ayes:

    Winterton, Mrs Ann

    Mr. Carol Mather and

    Winterton, Nicholas

    Mr. Robert Boscawen.

    Wolfson, Mark

    NOES

    Abse, Leo

    Dubs, Alfred

    Adams, Allen (Paisley N)

    Duffy, A. E. P.

    Alton, David

    Dunwoody, Hon Mrs G.

    Anderson, Donald

    Eadie, Alex

    Archer, Rt Hon Peter

    Eastham, Ken

    Ashley, Rt Hon Jack

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

    Ashton, Joe

    Evans, John (St. Helens N)

    Atkinson, N. (Tottenham)

    Ewing, Harry

    Bagier, Gordon A. T.

    Fatchett, Derek

    Banks, Tony (Newham NW)

    Faulds, Andrew

    Barnett, Guy

    Field, Frank (Birkenhead)

    Barron, Kevin

    Fields, T. (L'pool Broad Gn)

    Beckett, Mrs Margaret

    Fisher, Mark

    Beith, A. J.

    Flannery, Martin

    Bell, Stuart

    Foot, Rt Hon Michael

    Benn, Rt Hon Tony

    Foster, Derek

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

    Foulkes, George

    Bermingham, Gerald

    Fraser, J. (Norwood)

    Bidwell, Sydney

    Freeson, Rt Hon Reginald

    Blair, Anthony

    Freud, Clement

    Boothroyd, Miss Betty

    Garrett, W. E.

    Boyes, Roland

    Godman, Dr Norman

    Bray, Dr Jeremy

    Golding, John

    Brown, Gordon (D'f'mline E)

    Gould, Bryan

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

    Gourlay, Harry

    Brown, Ron (E'burgh, Leith)

    Hamilton, James (M'well N)

    Bruce, Malcolm

    Hamilton, W. W. (Fife Central)

    Buchan, Norman

    Hancock, Michael

    Caborn, Richard

    Hardy, Peter

    Callaghan, Rt Hon J.

    Harman, Ms Harriet

    Callaghan, Jim (Heyw'd & M)

    Harrison, Rt Hon Walter

    Campbell-Savours, Dale

    Hart, Rt Hon Dame Judith

    Canavan, Dennis

    Hattersley, Rt Hon Roy

    Carlile, Alexander (Montg'y)

    Haynes, Frank

    Carter-Jones, Lewis

    Healey, Rt Hon Denis

    Clark, Dr David (S Shields)

    Heffer, Eric S.

    Clarke, Thomas

    Hogg, N. (C'nauld & Kilsyth)

    Clay, Robert

    Holland, Stuart (Vauxhall)

    Clelland, David Gordon

    Home Robertson, John

    Clwyd, Mrs Ann

    Howells, Geraint

    Cocks, Rt Hon M. (Bristol S)

    Hoyle, Douglas

    Cohen, Harry

    Hughes, Dr Mark (Durham)

    Conlan, Bernard

    Hughes, Robert (Aberdeen N)

    Cook, Robin F. (Livingston)

    Hughes, Roy (Newport East)

    Corbett, Robin

    Hughes, Sean (Knowsley S)

    Corbyn, Jeremy

    Hughes, Simon (Southwark)

    Craigen, J. M.

    Janner, Hon Greville

    Crowther, Stan

    Jenkins, Rt Hon Roy (Hillh'd)

    Cunliffe, Lawrence

    John, Brynmor

    Cunningham, Dr John

    Johnston, Sir Russell

    Davies, Rt Hon Denzil (L'lli)

    Jones, Barry (Alyn & Deeside)

    Davies, Ronald (Caerphilly)

    Kaufman, Rt Hon Gerald

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

    Kennedy, Charles

    Deakins, Eric

    Kilroy-Silk, Robert

    Dewar, Donald

    Kinnock, Rt Hon Neil

    Dixon, Donald

    Kirkwood, Archy

    Dormand, Jack

    Lambie, David

    Douglas, Dick

    Lamond, James

    716

    Leadbitter, Ted

    Roberts, Allan (Bootle)

    Leighton, Ronald

    Robertson, George

    Litherland, Robert

    Robinson, G. (Coventry NW)

    Livsey, Richard

    Rogers, Allan

    Lloyd, Tony (Stretford)

    Rooker, J. W.

    Lofthouse, Geoffrey

    Ross, Ernest (Dundee W)

    McDonald, Dr Oonagh

    Rowlands, Ted

    McGuire, Michael

    Ryman, John

    McKelvey, William

    Sedgemore, Brian

    MacKenzie, Rt Hon Gregor

    Sheerman, Barry

    Maclennan, Robert

    Sheldon, Rt Hon R.

    McNamara, Kevin

    Shore, Rt Hon Peter

    McTaggart, Robert

    Short, Ms Clare (Ladywood)

    Madden, Max

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

    Marek, Dr John

    Silkin, Rt Hon J.

    Marshall, David (Shettleston)

    Skinner, Dennis

    Martin, Michael

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

    Mason, Rt Hon Roy

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

    Maxton, John

    Snape, Peter

    Maynard, Miss Joan

    Soley, Clive

    Meacher, Michael

    Spearing, Nigel

    Meadowcroft, Michael

    Steel, Rt Hon David

    Michie, William

    Stewart, Rt Hon D. (W Isles)

    Mikardo, Ian

    Stott, Roger

    Millan, Rt Hon Bruce

    Strang, Gavin

    Miller, Dr M. S. (E Kilbride)

    Straw, Jack

    Mitchell, Austin (G't Grimsby)

    Thomas, Dafydd (Merioneth)

    Morris, Rt Hon A. (W'shawe)

    Thomas, Dr R. (Carmarthen)

    Morris, Rt Hon J. (Aberavon)

    Thompson, J. (Wansbeck)

    Nellist, David

    Thorne, Stan (Preston)

    Oakes, Rt Hon Gordon

    Tinn, James

    O'Brien, William

    Torney, Tom

    O'Neill, Martin

    Wallace, James

    Orme, Rt Hon Stanley

    Wardell, Gareth (Gower)

    Owen, Rt Hon Dr David

    Weetch, Ken

    Park, George

    Welsh, Michael

    Parry, Robert

    White, James

    Patchett, Terry

    Wigley, Dafydd

    Pavitt, Laurie

    Williams, Rt Hon A.

    Pendry, Tom

    Wilson, Gordon

    Penhaligon, David

    Winnick, David

    Pike, Peter

    Wrigglesworth, Ian

    Powell, Raymond (Ogmore)

    Young, David (Bolton SE)

    Prescott, John

    Radice, Giles

    Tellers for the Noes:

    Redmond, Martin

    Mr. Allen McKay and

    Rees, Rt Hon M. (Leeds S)

    Mr. John McWilliam.

    Richardson, Ms Jo

    Question accordingly agreed to.

    4. VEHICLES EXCISE DUTY (HACKNEY CARRIAGES AND FARMERS' GOODS VEHICLES)
    Resolved,
    That the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972 shall have effect, in relation to licences taken out after 18th March 1986, with the amendments set out below:
    But this Resolution shall not authorise the making of amendments which would result in different provisions being in force in different parts of Great Britain;
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
    (1) For Part II of Schedule 2 to each of the Acts of 1971 and 1972 (annual rates of duty for hackney carriages) there shall be substituted the following—

    PART II

    Description of vehicle

    Rate of duty

    £

    Hackney carriages … … … … … … … … …

    52·50

    with an additional £1·05 for each person above 20 (excluding the driver) for which the vehicle has seating capacity.

    (2) In Schedule 4 to each of the Acts of 1971 and 1972 (annual rates of duty on goods vehicles)—

    (a) in Part I, in sub-paragraph (2) of paragraph 6 (farmer's goods vehicle or showman's goods vehicle having a plated gross weight or a plated train weight) in paragraph (b) (weight exceeding 7·5 tonnes but not

    TABLE A(1)

    RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT RATES FOR FARMERS' GOODS VEHICLES

    Plated gross weight of vehicle

    Rate of duty

    1.

    2.

    3.

    4.

    5.

    Exceeding

    Not exceeding

    Two axle vehicle

    Three axle vehicle

    Four or more axle vehicle

    tonnes

    tonnes

    £

    £

    £

    12

    13

    210

    170

    170

    13

    14

    280

    175

    175

    14

    15

    350

    175

    175

    15

    17

    475

    180

    175

    17

    19

    —

    240

    175

    19

    21

    —

    320

    180

    21

    23

    —

    420

    245

    23

    25

    —

    720

    330

    25

    27

    —

    —

    465

    27

    29

    —

    —

    665

    29

    30.49

    —

    —

    1,090

    exceeding 12 tonnes) for "£135" (which applies to farmers' goods vehicles only) there shall be substituted "£155"; and

    (b) in Part II, for Tables A(1), C(1) and D(1) (rates for farmers' goods vehicles having plated weight exceeding 12 tonnes) there shall be substituted the Tables set out below:

    TABLE C(1)

    RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES

    RATES FOR FARMERS' GOODS VEHICLES

    Plated train weight of tractor unit

    Rate of duty

    1.

    2.

    3.

    4.

    5.

    Exceeding

    Not exceeding

    For a tractor unit to be used with semi-trailers with any number of axles

    For a tractor unit to be used only with semi- trailers with not less than two axles

    For a tractor unit to be used only with semi- trailers with not less than three axles

    tonnes

    tonnes

    £

    £

    £

    12

    14

    235

    215

    215

    14

    16

    290

    220

    220

    16

    18

    330

    220

    220

    18

    20

    385

    220

    220

    20

    22

    435

    270

    220

    22

    23

    465

    300

    220

    23

    25

    530

    365

    225

    25

    26

    530

    405

    265

    26

    28

    530

    500

    345

    28

    29

    555

    555

    390

    29

    31

    765

    765

    495

    31

    33

    1,115

    1,115

    780

    33

    34

    1,230

    1,230

    1,150

    34

    36

    1,405

    1,405

    1,405

    36

    38

    1,580

    1,580

    1,580

    TABLE D(1)

    RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING THREE OR MORE AXLES

    RATES FOR FARMERS' GOODS VEHICLES

    Plated train weight of tractor unit

    Rate of duty

    1.

    2.

    3.

    4.

    5.

    Exceeding

    Not exceeding

    For a tractor unit to be used with semi-trailers with any number of axles

    For a tractor unit to be used only with semi- trailers with not less than two axles

    For a tractor unit to be used only with semi- trailers with not less than three axles

    tonnes

    tonnes

    £

    £

    £

    12

    14

    215

    215

    215

    14

    20

    220

    220

    220

    20

    22

    270

    220

    220

    22

    23

    300

    220

    220

    23

    25

    365

    220

    220

    25

    26

    405

    225

    220

    26

    28

    500

    230

    225

    28

    29

    555

    270

    230

    29

    31

    765

    325

    240

    31

    33

    1,115

    495

    250

    33

    34

    1,140

    725

    315

    34

    36

    1,205

    1,035

    475

    36

    38

    1,390

    1,390

    710

    5. VEHICLES EXCISE DUTY (TRADE LICENCES)
    Resolved,
    That provision be made with respect to the rates of duty applicable to trade licences under section 16 of each of the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972.

    6. ABOLITION OF CERTAIN EXCISE LICENCE DUTIES
    Resolved,
    That no excise licence duty shall be chargeable on the grant after 18th March 1986 of an excise licence under any provision of the Alcoholic Liquor Duties Act 1979 or under section 2 of the Matches and Mechanical Lighters Duties Act 1979:
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    7. GENERAL BETTING DUTY, POOL BETTING DUTY AND BINGO DUTY
    Resolved,
    That provision may be made extending to Northern Ireland the provisions of the Betting and Gaming Duties Act 1981 relating to general betting duty, pool betting duty and bingo duty.

    8. CUSTOMS AND EXCISE DUTIES (WAREHOUSING)
    Resolved,
    That provision may be made with respect to the matters which may be dealt with in regulations under section 93 of the Customs and Excise Management Act 1979 (warehousing regulations).

    9. VALUE ADDED TAX (REGISTRATION)
    Resolved,
    That for the purposes of the Value Added Tax Act 1983 provision may be made with respect to the registration of two or more persons as one taxable person.

    10. VALUE ADDED TAX (ZERO-RATING)
    Resolved,
    That provision may be made for the imposition of conditions with respect to the zero-rating of supplies of goods by virtue of section 16(6) of the Value Added Tax Act 1983.

    11. VALUE ADDED TAX (RELIEF ON IMPORTATION)
    Resolved,
    That provision may be made with respect to conditional relief from value added tax under section 19 of the Value Added Tax Act 1983.

    12. VALUE ADDED TAX (PROVISION OF ACCOMMODATION)
    Resolved,
    That provision may be made with respect to the valuation for the purposes of value added tax of certain supplies of services consisting in the provision of accommodation.

    13. INCOME TAX (CHARGE AND RATES FOR 1986–87)
    Question put,
    That—
    (1) Income tax for the year 1986–87 shall be charged at the basic rate of 29 per cent. and, in respect of so much of an individual's total income as exceeds £17,200 (the basic rate limit as determined under subsection (4) of section 24 of the Finance Act 1980—indexation), at such higher rates as are specified in the Table below:

    TABLE

    Higher rate bands

    Higher rate

    The first £3,000 … … … … …

    40 per cent.

    The next £5,200 … … … … …

    45 per cent.

    The next 7,900 … … … … …

    50 per cent.

    The next £7,900 … … … … …

    55 per cent.

    The remainder … … … … …

    60 per cent.

    (2) Section 24(4) of the Finance Act 1980 (indexation of thresholds) shall not, so far as it relates to the higher rate bands, apply for the year 1986–87:
    (3) This Resolution shall not require any change to be made in the amounts deductable or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 18th May 1986:
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
    The House divided: Ayes 343, Noes 43.

    Division No.113]

    [10.30 pm

    AYES

    Adley, Robert

    Chapman, Sydney

    Aitken, Jonathan

    Chope, Christopher

    Alexander, Richard

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

    Alison, Rt Hon Michael

    Clark, Dr Michael (Rochford)

    Amess, David

    Clark, Sir W. (Croydon S)

    Ancram, Michael

    Clarke, Rt Hon K. (Rushcliffe)

    Arnold, Tom

    Cockeram, Eric

    Ashby, David

    Colvin, Michael

    Aspinwall, Jack

    Conway, Derek

    Atkins, Rt Hon Sir H.

    Coombs, Simon

    Atkins, Robert (South Ribble)

    Cope, John

    Atkinson, David (B'm'th E)

    Cormack, Patrick

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

    Corrie, John

    Baker, Nicholas (Dorset N)

    Couchman, James

    Baldry, Tony

    Cranborne, Viscount

    Banks, Robert (Harrogate)

    Crouch, David

    Batiste, Spencer

    Currie, Mrs Edwina

    Beaumont-Dark, Anthony

    Dickens, Geoffrey

    Bellingham, Henry

    Dorrell, Stephen

    Bendall, Vivian

    Dover, Den

    Bennett, Rt Hon Sir Frederic

    du Cann, Rt Hon Sir Edward

    Benyon, William

    Dunn, Robert

    Best, Keith

    Durant, Tony

    Bevan, David Gilroy

    Dykes, Hugh

    Biffen, Rt Hon John

    Edwards, Rt Hon N. (P'broke)

    Biggs-Davison, Sir John

    Eggar, Tim

    Blackburn, John

    Emery, Sir Peter

    Blaker, Rt Hon Sir Peter

    Evennett, David

    Body, Sir Richard

    Fallon, Michael

    Bonsor, Sir Nicholas

    Farr, Sir John

    Bottomley, Peter

    Favell, Anthony

    Bottomley, Mrs Virginia

    Fenner, Mrs Peggy

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

    Finsberg, Sir Geoffrey

    Bowden, Gerald (Dulwich)

    Fletcher, Alexander

    Boyson, Dr Rhodes

    Fookes, Miss Janet

    Braine, Rt Hon Sir Bernard

    Forman, Nigel

    Brandon-Bravo, Martin

    Forsyth, Michael (Stirling)

    Bright, Graham

    Forth, Eric

    Brinton, Tim

    Fowler, Rt Hon Norman

    Brittan, Rt Hon Leon

    Fox, Marcus

    Brooke, Hon Peter

    Franks, Cecil

    Brown, M. (Brigg & Cl'thpes)

    Fraser, Peter (Angus East)

    Browne, John

    Freeman, Roger

    Bruinvels, Peter

    Fry, Peter

    Buchanan-Smith, Rt Hon A.

    Gale, Roger

    Buck, Sir Antony

    Galley, Roy

    Budgen, Nick

    Gardiner, George (Reigate)

    Burt, Alistair

    Gardner, Sir Edward (Fylde)

    Butcher, John

    Glyn, Dr Alan

    Butler, Rt Hon Sir Adam

    Goodhart, Sir Philip

    Butterfill, John

    Goodlad, Alastair

    Carlisle, John (Luton N)

    Gorst, John

    Carlisle, Kenneth (Lincoln)

    Gow, Ian

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

    Gower, Sir Raymond

    Carttiss, Michael

    Grant, Sir Anthony

    Cash, William

    Greenway, Harry

    Chalker, Mrs Lynda

    Gregory, Conal

    Channon, Rt Hon Paul

    Griffiths, Sir Eldon

    723

    Griffiths, Peter (Portsm'th N)

    Malins, Humfrey

    Grist, Ian

    Malone, Gerald

    Ground, Patrick

    Maples, John

    Grylls, Michael

    Marland, Paul

    Hamilton, Hon A. (Epsom)

    Marlow, Antony

    Hampson, Dr Keith

    Marshall, Michael (Arundel)

    Hanley, Jeremy

    Mates, Michael

    Hannam, John

    Maude, Hon Francis

    Hargreaves, Kenneth

    Mawhinney, Dr Brian

    Harris, David

    Maxwell-Hyslop, Robin

    Hawkins, C. (High Peak)

    Mayhew, Sir Patrick

    Hawksley, Warren

    Miller, Hal (B'grove)

    Hayhoe, Rt Hon Barney

    Mills, Iain (Meriden)

    Hayward, Robert

    Miscampbell, Norman

    Heath, Rt Hon Edward

    Mitchell, David (Hants NW)

    Heathcoat-Amory, David

    Moate, Roger

    Heddle, John

    Monro, Sir Hector

    Henderson, Barry

    Montgomery, Sir Fergus

    Heseltine, Rt Hon Michael

    Moore, Rt Hon John

    Hickmet, Richard

    Morris, M. (N'hampton S)

    Higgins, Rt Hon Terence L.

    Morrison, Hon P. (Chester)

    Hill, James

    Moynihan, Hon C.

    Hind, Kenneth

    Mudd, David

    Hirst, Michael

    Neale, Gerrard

    Hogg, Hon Douglas (Gr'th'm)

    Nelson, Anthony

    Holland, Sir Philip (Gedling)

    Neubert, Michael

    Holt, Richard

    Newton, Tony

    Hordern, Sir Peter

    Nicholls, Patrick

    Howard, Michael

    Normanton, Tom

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

    Norris, Steven

    Howarth, Gerald (Cannock)

    Onslow, Cranley

    Howell, Rt Hon D. (G'ldford)

    Oppenheim, Phillip

    Howell, Ralph (Norfolk, N)

    Oppenheim, Rt Hon Mrs S.

    Hubbard-Miles, Peter

    Osborn, Sir John

    Hume, John

    Ottaway, Richard

    Hunt, David (Wirral W)

    Page, Richard (Herts SW)

    Hunter, Andrew

    Parkinson, Rt Hon Cecil

    Hurd, Rt Hon Douglas

    Parris, Matthew

    Jackson, Robert

    Patten, Christopher (Bath)

    Jenkin, Rt Hon Patrick

    Patten, J. (Oxf W & Abgdn)

    Jessel, Toby

    Pattie, Geoffrey

    Johnson Smith, Sir Geoffrey

    Pawsey, James

    Jones, Gwilym (Cardiff N)

    Peacock, Mrs Elizabeth

    Jones, Robert (Herts W)

    Percival, Rt Hon Sir Ian

    Joseph, Rt Hon Sir Keith

    Porter, Barry

    Kellett-Bowman, Mrs Elaine

    Portillo, Michael

    Kershaw, Sir Anthony

    Powell, William (Corby)

    Key, Robert

    Powley, John

    King, Roger (B'ham N'field)

    Prentice, Rt Hon Reg

    Knight, Greg (Derby N)

    Price, Sir David

    Knowles, Michael

    Prior, Rt Hon James

    Knox, David

    Raffan, Keith

    Lamont, Norman

    Raison, Rt Hon Timothy

    Lang, Ian

    Rathbone, Tim

    Latham, Michael

    Rees, Rt Hon Peter (Dover)

    Lawler, Geoffrey

    Renton, Tim

    Lawrence, Ivan

    Rhodes James, Robert

    Lawson, Rt Hon Nigel

    Rhys Williams, Sir Brandon

    Lee, John (Pendle)

    Ridley, Rt Hon Nicholas

    Lennox-Boyd, Hon Mark

    Ridsdale, Sir Julian

    Lewis, Sir Kenneth (Stamf'd)

    Rifkind, Rt Hon Malcolm

    Lightbown, David

    Rippon, Rt Hon Geoffrey

    Lilley, Peter

    Roberts, Wyn (Conwy)

    Lloyd, Ian (Havant)

    Robinson, Mark (N'port W)

    Lloyd, Peter (Fareham)

    Roe, Mrs Marion

    Lord, Michael

    Rossi, Sir Hugh

    Luce, Rt Hon Richard

    Rost, Peter

    Lyell, Nicholas

    Rowe, Andrew

    McCrindle, Robert

    Rumbold, Mrs Angela

    McCurley, Mrs Anna

    Ryder, Richard

    Macfarlane, Neil

    Sackville, Hon Thomas

    MacGregor, Rt Hon John

    Sainsbury, Hon Timothy

    MacKay, Andrew (Berkshire)

    St. John-Stevas, Rt Hon N.

    MacKay, John (Argyll & Bute)

    Sayeed, Jonathan

    Maclean, David John

    Shaw, Giles (Pudsey)

    McNair-Wilson, M. (N'bury)

    Shaw, Sir Michael (Scarb')

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

    Shepherd, Colin (Hereford)

    McQuarrie, Albert

    Shepherd, Richard (Aldridge)

    Madel, David

    Shersby, Michael

    Major, John

    Silvester, Fred

    724

    Sims, Roger

    van Straubenzee, Sir W.

    Skeet, Sir Trevor

    Vaughan, Sir Gerard

    Smith, Sir Dudley (Warwick)

    Viggers, Peter

    Soames, Hon Nicholas

    Waddington, David

    Speller, Tony

    Wakeham, Rt Hon John

    Spencer, Derek

    Waldegrave, Hon William

    Spicer, Jim (Dorset W)

    Walden, George

    Spicer, Michael (S Worcs)

    Walker, Bill (T'side N)

    Squire, Robin

    Walker, Rt Hon P. (W'cester)

    Stanbrook, Ivor

    Wall, Sir Patrick

    Stanley, Rt Hon John

    Waller, Gary

    Steen, Anthony

    Walters, Dennis

    Stern, Michael

    Wardle, C. (Bexhill)

    Stevens, Lewis (Nuneaton)

    Warren, Kenneth

    Stewart, Allan (Eastwood)

    Watson, John

    Stewart, Andrew (Sherwood)

    Watts, John

    Stewart, Ian (Hertf'dshire N)

    Wells, Bowen (Hertford)

    Stokes, John

    Wells, Sir John (Maidstone)

    Stradling Thomas, Sir John

    Wheeler, John

    Sumberg, David

    Whitfield, John

    Tapsell, Sir Peter

    Whitney, Raymond

    Taylor, John (Solihull)

    Wiggin, Jerry

    Tebbit, Rt Hon Norman

    Wilkinson, John

    Temple-Morris, Peter

    Winterton, Mrs Ann

    Thatcher, Rt Hon Mrs M.

    Winterton, Nicholas

    Thomas, Rt Hon Peter

    Wolfson, Mark

    Thompson, Donald (Calder V)

    Wood, Timothy

    Thompson, Patrick (N'ich N)

    Woodcock, Michael

    Thornton, Malcolm

    Yeo, Tim

    Thurnham, Peter

    Young, Sir George (Acton)

    Townend, John (Bridlington)

    Younger, Rt Hon George

    Townsend, Cyril D. (B'heath)

    Tracey, Richard

    Tellers for the Ayes:

    Trippier, David

    Mr. Carol Mather and

    Trotter, Neville

    Mr. Robert Boscawen.

    Twinn, Dr Ian

    NOES

    Alton, David

    Madden, Max

    Ashdown, Paddy

    Meadowcroft, Michael

    Ashton, Joe

    Mikardo, Ian

    Beith, A. J.

    Nellist, David

    Bruce, Malcolm

    Owen, Rt Hon Dr David

    Canavan, Dennis

    Parry, Robert

    Carlile, Alexander (Montg'y)

    Penhaligon, David

    Clay, Robert

    Pike, Peter

    Cohen, Harry

    Skinner, Dennis

    Field, Frank (Birkenhead)

    Steel, Rt Hon David

    Fields, T. (L'pool Broad Gn)

    Stewart, Rt Hon D. (W Isles)

    Freud, Clement

    Thomas, Dafydd (Merioneth)

    Godman, Dr Norman

    Thomas, Dr R. (Carmarthen)

    Hancock, Michael

    Thorne, Stan (Preston)

    Harrison, Rt Hon Walter

    Wainwright, R.

    Heffer, Eric S.

    Wardell, Gareth (Gower)

    Howells, Geraint

    Wigley, Dafydd

    Hughes, Simon (Southwark)

    Wilson, Gordon

    Jenkins, Rt Hon Roy (Hillh'd)

    Wrigglesworth, Ian

    Johnston, Sir Russell

    Kennedy, Charles

    Tellers for the Noes:

    Kirkwood, Archy

    Mr. James Wallace and

    Lambie, David

    Mr. Robert Maclean.

    Livsey, Richard

    Question accordingly agreed to.

    14. INCOME TAX (INDEXED PERSONAL RELIEFS ETC.): OPERATIVE DATE FOR PAYE
    Resolved,
    That, for the year 1986–87, in subsection (7) of section 24 of the Finance Act 1980 (which specifies the date from which indexed changes in income tax thresholds and allowances are to be brought into account for the purposes of PAYE) for "5th May" there shall be substituted "18th May":
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    15. RELIEF FOR INTEREST (LIMIT FOR 1986–87)
    Resolved,
    That, for the year 1986–87, the qualifying maximum referred to in paragraphs 5(1) and 24(3) of Schedule 1 to the Finance Act 1974 (limit on relief for interest on certain loans for the purchase or improvement of land) shall be £30,000:
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    16. ADVANCE CORPORATION TAX (RATE FOR FINANCIAL YEAR 1986)
    Resolved,
    That the rate of advance corporation tax for the financial year 1986 shall be twenty-nine seventy-firsts.

    17. BUILDING SOCIETIES
    Resolved,
    That provision may be made with respect to the treatment for the purposes of income tax and corporation tax of dividends and interest payable in respect of shares in or deposits with or loans to a building society.

    18. SHARES AND RIGHTS TO ACQUIRE SHARES OBTAINED BY DIRECTORS AND EMPLOYEES
    Resolved,
    That charges to income tax may be imposed by provisions amending section 186 of the Income and Corporation Taxes Act 1970 (directors and employees granted rights to acquire shares) and section 79 of the Finance Act 1972 (share incentive schemes).

    19. OCCUPATIONAL PENSION SCHEMES
    Resolved,
    That provision may be made with respect to—

    (a) payments to employers out of funds held for the purposes of occupational pension schemes; and

    (b) exemptions and reliefs from tax under section 21 of the Finance Act 1970.

    20. ENTERPRISE ALLOWANCE
    Resolved,
    That provision (including retrospective provision) may be made about enterprise allowance.

    21. BUSINESS EXPANSION SCHEME
    Resolved,
    That provision may be made amending Schedule 5 to the Finance Act 1983.

    22. COMPANY RECONSTRUCTIONS
    Resolved,
    That provision may be made with respect to relief from tax where a company ceases to carry on a trade or part of a trade.

    23. LOANS TO PARTICIPATORS
    Resolved,
    That provision may be made with respect to tax chargeable under section 286 of the Income and Corporation Taxes Act 1970.

    24. CHARITIES
    Resolved,
    That provision may be made with respect to—

    (a) exemption under section 360 of the Income and Corporation Taxes Act 1970 (exemptions for charities from tax under Schedule A to F);

    (b) charges to tax where assets are disposed of by charities; and

    (c) covenanted payments to charities and payments by one charity to another.

    25. VALUE ADDED TAX PENALTIES ETC. (INCOME TAX AND CORPORATION TAX)
    Resolved,
    That charges to income tax and corporation tax may be imposed by provisions with respect to penalties, interest and surcharge under Chapter II of Part I of the Finance Act 1985 (value added tax).

    26. ASSOCIATED COMPANIES (OIL AND GAS INDUSTRY)
    Resolved,
    That provision may be made extending the cases in which two companies are associated with one another for the purposes of Part II of the Oil Taxation Act 1975.

    27. CAPITAL ALLOWANCES (MACHINERY AND PLANT ETC.)
    Resolved,
    That provision may be made with respect to allowances in respect of expenditure on the provision of machinery or plant for leasing and on the provision of certain vehicles.

    28. CAPITAL ALLOWANCES (MINERAL EXPLORATION AND EXTRACTION)
    Resolved,
    That provision may be made with respect to allowances under Chapter III of Part I of the Capital Allowances Act 1968 (mines, oil wells etc.)

    29. DUAL RESIDENT TRUSTS: CAPITAL GAINS TAX
    Resolved,
    That provision may be made for denying or recovering relief under section 79 of the Finance Act 1980 (general relief for gifts) where the transferee is a body of trustees which is or becomes treated as resident both in the United Kingdom and elsewhere.

    30. SECURITIES (INCOME TAX, CAPITAL GAINS TAX AND CORPORATION TAX)
    Resolved,
    That charges to income tax, capital gains tax and corporation tax may be imposed by provisions about events occurring after 18th March 1986 in relation to securities.

    31. STAMP DUTY (RECONSTRUCTIONS ETC.)
    Resolved,
    That the following provisions shall have effect for the period beginning 25th March 1986 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973–
    (1) In section 55 of the Finance Act 1927 and in section 4 of the Finance Act (Northern Ireland) 1928 (reconstructions and amalgamations) in paragraph (B) of subsection (1) for the words "not be chargeable" there shall be substituted the words "be chargeable at the rate mentioned in subsection (9) of this section" and for the words "nor shall any such duty be chargeable" there shall be substituted the word "or".
    (2) In consequence, each of those sections shall be further amended as follows—

    (a) at the beginning of paragraph (B) of subsection (1) there shall be inserted the words "If a claim is made under this section";

    (b) in paragraph (a) of the proviso to subsection (1) the words from "either it" to "liable or" and from "either that" to "duty or" shall be omitted, and in paragraph (c) of that proviso the words "for exemption" shall be omitted;

    (c) in subsection (2) for the words "for exemption under paragraph (B) of subsection (1) of" there shall be substituted the word "under";

    (d) in subsection (5) the words "for exemption" shall be omitted;

    727

    (e) in subsection (6), in paragraph (a) the words "for expemption from duty" shall be omitted, in paragraph (c) for the word "exemption" there shall be substituted the word "claim", and in the words following paragraph (c) for the word "exemption" there shall be substituted the word "claim", for the word "remitted" (in the first place where it occurs) there shall be substituted the word "unpaid" and the words from "in the case of duty remitted under paragraph (A)" to "the said subsection" shall he omitted;

    (f) in subsection (7) for the words "for exemption from duty under subsection (1) of" there shall be substituted the word "under", for the words "such exemption" there shall be substituted the words "such a claim to be allowed" and for the words "have been remitted" there shall be substituted the words "not have been chargeable".

    (3) At the end of each of those sections there shall be inserted—
    "(9) The rate is the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the instrument gives effect."
    (4) In paragraph 12 of Schedule 18 to the Finance Act 1980 (demergers) for sub-paragraph (1) there shall be substituted—
    "(1) If a document executed solely for the purpose of effecting an exempt distribution is chargeable with stamp duty under the heading 'Conveyance or Transfer on Sale' in Schedule 1 to the Stamp Act 1891, the rate at which the duty is charged under that heading shall be the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the document gives effect.
    (1A) If a document executed solely for the purpose of effecting an exempt distribution is chargeable with stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891, it shall not be treated as duly stamped unless it is stamped in accordance with section 12 of the Stamp Act 1891 with a particular stamp denoting that it is duly stamped."
    (5) In paragraph 12(3) of Schedule 18 to the Finance Act 1980 for the words "this paragraph" there shall be substituted the words "sub-paragraph (2) above".
    (6) In section 78 of the Finance Act 1985 (takeovers) the following shall be substituted for subsection (2)—
    "(2) If the instrument transferring the shares in company B by way of the exchange is chargeable with stamp duty under the heading 'Conveyance or Transfer on Sale' in Schedule 1 to the Stamp Act 1891, the rate at which the duty is charged under that heading shall be the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the instrument gives effect."
    (7) In section 79 of the Finance Act 1985 (voluntary winding-up: transfer of shares) the following shall be substituted for subsection (2)—
    "(2) If the instrument transferring the shares in company B to company A is chargeable with stamp duty under the heading 'Conveyance or Transfer on Sale' in Schedule 1 to the Stamp Act 1891, the rate at which the duty is charged under that heading shall be the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the instrument gives effect."
    (8) In section 78 and in section 79 of the Finance Act 1985—

    (a) in subsection (3) for the word "ignored" there shall be substituted the words "treated as reduced by 50 per cent.";

    (b) subsection (9) shall be omitted;

    (c) in subsection (10) for "(3)" there shall be substituted "(2) or (3)".

    (9) This Resolution applies to any instrument which is executed after 24th March 1986 unless—

    (a) it is executed in pursuance of an unconditional contract made on or before 18th March 1986, or

    (b) it transfers stock or marketable securities and is executed in pursuance of a general offer (for the stock or securities) which became unconditional as to acceptances on or before 18th March 1986.

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

    32. STAMP DUTY (ACQUISITIONS)
    Resolved,
    That the following provisions shall have effect for the period beginning 25th March 1986 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

    (1) This Resolution applies where a company (the acquiring company) acquires the whole or part of an undertaking of another company (the target company) in pursuance of a scheme for the reconstruction of the target company.

    (2) If the first and second conditions (as defined below) are fulfilled, stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891 shall not be chargeable on an instrument executed for the purposes of or in connection with the transfer of the undertaking or part.

    (3) An instrument on which stamp duty is not chargeable by virtue only of paragraph (2) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that paragraph or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.

    (4) The first condition is that the registered office of the acquiring company is in the United Kingdom and that the consideration for the acquisition—

    (a) consists of or includes the issue of shares in the acquiring company to all the shareholders of the target company;

    (b) includes nothing else (if anything) but the assumption or discharge by the acquiring company of liabilities of the target company.

    (5) The second condition is that—

    (a) the acquisition is effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to stamp duty, income tax, corporation tax or capital gains tax,

    (b) after the acquisition has been made, each shareholder of each of the companies is a shareholder of the other, and

    (c) after the acquisition has been made, the proportion of shares of one of the companies held by any shareholder is the same as the proportion of shares of the other company held by that shareholder.

    (6) This Resolution applies to any instrument which is executed after 24th March 1986 unless it is executed in pursuance of an unconditional contract made on or before 18th March 1986.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

    33. STAMP DUTY (LOAN CAPITAL)
    Resolved,
    That the following provisions shall have effect for the period beginning 25th March 1986 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
    (1) The following provisions shall cease to have effect—

    (a) in section 62 of the Finance Act 1963, subsections (2) and (6) (commonwealth stock);

    (b) in section 11 of the Finance Act (Northern Ireland) 1963, subsections (2) and (5) (commonwealth stock);

    (c) section 29 of the Finance Act 1967 (local authority capital);

    (d) section 6 of the Finance Act (Northern Ireland) 1967 (local authority capital);

    (e) section 126 of the Finance Act 1967 (loan capital).

    (2) Stamp duty under the heading "Bearer Instrument" in Schedule 1 to the Stamp Act 1891 shall not be chargeable on the issue of an instrument which relates to loan capital or on the transfer of the loan capital constituted by or transferable by means of, such an instrument.
    (3) Stamp duty shall not be chargeable on an instrument which transfers loan capital issued or raised by—

    (a) the financial support fund of the Organisation for Economic Co-operation and Development,

    729

    (b) the Inter-American Development Bank, or

    (c) an organisation which was a designated international organisation at the time of the transfer (whether or not it was such an organisation at the time the loan capital was issued or raised).

    (4) Stamp duty shall not be chargeable on an instrument which transfers short-term loan capital.
    (5) Where stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891 is chargeable on an instrument which transfers loan capital, the rate at which the duty is charged under that heading shall be the rate of 50p for every £100 or part of £100 of the amount or value of the consideration for the sale to which the instrument gives effect.
    (6) In this Resolution "loan capital" means—

    (a) any debenture stock, corporation stock or funded debt, by whatever name known, issued by a body corporate or other body of persons (which here includes a local authority and any body whether formed or established in the United Kingdom or elsewhere);

    (b) any capital raised by such a body if the capital is borrowed or has the character of borrowed money, and whether it is in the form of stock or any other form;

    (c) stock or marketable securities issued by the government of any country or territory outside the United Kingdom.

    (7) In this Resolution "short-term loan capital" means loan capital the date (or latest date) for the repayment of which is not more than five years after the date on which it is issued or raised.
    (8) In this Resolution "designated international organisation" means an international organisation designated for the purposes of section 126 of the Finance Act 1984 by an order made under subsection (1) of that section.
    (9) In construing sections 80(3) and 81(3) of the Finance Act 1985 (definitions by reference to section 126 of the Finance Act 1976) the effect of this Resolution shall be ignored.
    (10) This Resolution applies to any instrument which falls within section 60(1) of the Finance Act 1963 and is issued after 24th March 1986.
    (11) This Resolution applies to any instrument which falls within section 60(2) of that Act if the loan capital constituted by or transferable by means of it is transferred after 24th March 1986.
    (12) This Resolution applies, in the case of instruments not falling within section 60(1) or (2) of that Act, to any instrument which is executed after 24th March 1986, unless it is executed in pursuance of a contract made on or before 18th March 1986.
    (13) In this Resolution references to section 60(1) of the Finance Act 1963 include references to section 9(1)(a) of the Finance Act (Northern Ireland) 1963 and references to section 60(2) of the former Act include references to section 9(1)(b) of the latter.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

    34. STAMP DUTY (BEARER LETTERS OF ALLOTMENT ETC.)
    Resolved,
    That the following provisions shall have effect for the period beginning 25th March 1986 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

    (1) In Schedule 1 to the Stamp Act 1891, in the heading "Bearer Instrument", paragraph 2 of the exemptions (bearer letter of allotment etc. required to be surrendered not later than six months after issue) shall be omitted.

    (2) This Resolution applies to any instrument which falls within section 60(1) of the Finance Act 1963 and is issued after 24th March 1986, unless it is issued by a company in pursuance of a general offer for its shares and the offer became unconditional as to acceptances on or before 18th March 1986.

    (3) This Resolution applies to any instrument which falls within section 60(2) of that Act if the stock constituted by or transferable by means of it is transferred after 24th March 1986.

    (4) In this Resolution the reference to section 60(1) of the Finance Act 1963 includes a reference to section 9(1)(a) of the Finance Act (Northern Ireland) 1963 and the reference to section 60(2) of the former Act includes a reference to section 9(1)(b) of the latter.

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

    35. STAMP DUTY (LETTERS OF ALLOTMENT)
    Resolved,
    That provision may be made for restricting the exemption from stamp duty provided by section 65(1) of the Finance Act 1963 and section 14(1) of the Finance Act (Northern Ireland) 1963.

    36. STAMP DUTY (COMPANY'S PURCHASE OF OWN SHARES)
    Resolved,
    That provision may be made for charging stamp duty on returns delivered under section 169 of the Companies Act 1985 or Article 53 of the Companies (Northern Ireland) Order 1982.

    37. STAMP DUTY RESERVE TAX
    Resolved,
    That a tax shall be charged in respect of events occurring after 18th march 1986 in relation to securities.

    38. TAX UNDER CAPITAL TRANSFER TAX ACT 1984
    Question put,
    That charges to tax under the Capital Transfer Tax Act 1984 may be imposed—

    (a) by provisions relating to deaths occurring on or after 18th March 1986;

    (b) by provisions removing relief referable to mutual transfers where at least one of the transfers occurs on or after that date; and

    (c) by provisions relating to relief under Chapter I (business property) or Chapter II (agricultural property) of Part V of that Act in the case of transfers of value on or after that date.

    The House divided: Ayes 340, Noes 203.

    Division No. 114]

    [10.43 pm

    AYES

    Adley, Robert

    Brandon-Bravo, Martin

    Aitken, Jonathan

    Bright, Graham

    Alexander, Richard

    Brinton, Tim

    Alison, Rt Hon Michael

    Brittan, Rt Hon Leon

    Amess, David

    Brooke, Hon Peter

    Ancram, Michael

    Brown, M. (Brigg & Cl'thpes)

    Arnold, Tom

    Browne, John

    Ashby, David

    Bruinvels, Peter

    Aspinwall, Jack

    Buchanan-Smith, Rt Hon A.

    Atkins, Rt Hon Sir H.

    Buck, Sir Antony

    Atkins, Robert (South Ribble)

    Budgen, Nick

    Atkinson, David (B'm'th E)

    Burt, Alistair

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

    Butler, Rt Hon Sir Adam

    Baker, Nicholas (Dorset N)

    Butterfill, John

    Baldry, Tony

    Carlisle, John (Luton N)

    Banks, Robert (Harrogate)

    Carlisle, Kenneth (Lincoln)

    Batiste, Spencer

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

    Beaumont-Dark, Anthony

    Carttiss, Michael

    Bellingham, Henry

    Cash, William

    Bendall, Vivian

    Chalker, Mrs Lynda

    Bennett, Rt Hon Sir Frederic

    Channon, Rt Hon Paul

    Benyon, William

    Chapman, Sydney

    Best, Keith

    Chope, Christopher

    Bevan, David Gilroy

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

    Biffen, Rt Hon John

    Clark, Dr Michael (Rochford)

    Biggs-Davison, Sir John

    Clark, Sir W. (Croydon S)

    Blackburn, John

    Clarke, Rt Hon K. (Rushcliffe)

    Blaker, Rt Hon Sir Peter

    Cockeram, Eric

    Body, Sir Richard

    Colvin, Michael

    Bonsor, Sir Nicholas

    Conway, Derek

    Bottomley, Peter

    Coombs, Simon

    Bottomley, Mrs Virginia

    Cope, John

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

    Cormack, Patrick

    Bowden, Gerald (Dulwich)

    Corrie, John

    Boyson, Dr Rhodes

    Couchman, James

    Braine, Rt Hon Sir Bernard

    Cranborne, Viscount

    731

    Critchley, Julian

    Hunter, Andrew

    Crouch, David

    Jackson, Robert

    Currie, Mrs Edwina

    Jenkin, Rt Hon Patrick

    Dickens, Geoffrey

    Jessel, Toby

    Dorrell, Stephen

    Johnson Smith, Sir Geoffrey

    Dover, Den

    Jones, Gwilym (Cardiff N)

    du Cann, Rt Hon Sir Edward

    Jones, Robert (Herts W)

    Dunn, Robert

    Joseph, Rt Hon Sir Keith

    Durant, Tony

    Kellett-Bowman, Mrs Elaine

    Dykes, Hugh

    Kershaw, Sir Anthony

    Edwards, Rt Hon N. (P'broke)

    Key, Robert

    Eggar, Tim

    King, Roger (B'ham N'field)

    Emery, Sir Peter

    Knight, Greg (Derby N)

    Evennett, David

    Knowles, Michael

    Fallon, Michael

    Knox, David

    Farr, Sir John

    Lamont, Norman

    Favell, Anthony

    Lang, Ian

    Fenner, Mrs Peggy

    Latham, Michael

    Finsberg, Sir Geoffrey

    Lawler, Geoffrey

    Fletcher, Alexander

    Lawrence, Ivan

    Fookes, Miss Janet

    Lawson, Rt Hon Nigel

    Forman, Nigel

    Lee, John (Pendle)

    Forsyth, Michael (Stirling)

    Lennox-Boyd, Hon Mark

    Forth, Eric

    Lester, Jim

    Fowler, Rt Hon Norman

    Lewis, Sir Kenneth (Stamf'd)

    Fox, Marcus

    Lightbown, David

    Franks, Cecil

    Lilley, Peter

    Fraser, Peter (Angus East)

    Lloyd, Ian (Havant)

    Freeman, Roger

    Lloyd, Peter (Fareham)

    Fry, Peter

    Lord, Michael

    Gale, Roger

    Luce, Rt Hon Richard

    Galley, Roy

    Lyell, Nicholas

    Gardiner, George (Reigate)

    McCrindle, Robert

    Gardner, Sir Edward (Fylde)

    McCurley, Mrs Anna

    Gilmour, Rt Hon Sir Ian

    Macfarlane, Neil

    Glyn, Dr Alan

    MacGregor, Rt Hon John

    Goodhart, Sir Philip

    MacKay, Andrew (Berkshire)

    Gorst, John

    MacKay, John (Argyll & Bute)

    Gow, Ian

    Maclean, David John

    Gower, Sir Raymond

    McNair-Wilson, M. (N'bury)

    Grant, Sir Anthony

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

    Greenway, Harry

    McQuarrie, Albert

    Gregory, Conal

    Madel, David

    Griffiths, Sir Eldon

    Major, John

    Griffiths, Peter (Portsm'th N)

    Malins, Humfrey

    Grist, Ian

    Malone, Gerald

    Ground, Patrick

    Maples, John

    Grylls, Michael

    Marland, Paul

    Hamilton, Hon A. (Epsom)

    Marlow, Antony

    Hampson, Dr Keith

    Maude, Hon Francis

    Hanley, Jeremy

    Mawhinney, Dr Brian

    Hannam, John

    Maxwell-Hyslop, Robin

    Hargreaves, Kenneth

    Mayhew, Sir Patrick

    Harris, David

    Meyer, Sir Anthony

    Harvey, Robert

    Miller, Hal (B'grove)

    Hawkins, C. (High Peak)

    Mills, Iain (Meriden)

    Hawksley, Warren

    Miscampbell, Norman

    Hayhoe, Rt Hon Barney

    Mitchell, David (Hants NW)

    Hayward, Robert

    Moate, Roger

    Heath, Rt Hon Edward

    Monro, Sir Hector

    Heathcoat-Amory, David

    Montgomery, Sir Fergus

    Heddle, John

    Moore, Rt Hon John

    Henderson, Barry

    Morris, M. (N'hampton S)

    Heseltine, Rt Hon Michael

    Morrison, Hon C. (Devizes)

    Hickmet, Richard

    Morrison, Hon P. (Chester)

    Higgins, Rt Hon Terence L.

    Moynihan, Hon C.

    Hill, James

    Mudd, David

    Hirst, Michael

    Neale, Gerrard

    Hogg, Hon Douglas (Gr'th'm)

    Nelson, Anthony

    Holland, Sir Philip (Gedling)

    Neubert, Michael

    Holt, Richard

    Newton, Tony

    Hordern, Sir Peter

    Nicholls, Patrick

    Howard, Michael

    Normanton, Tom

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

    Norris, Steven

    Howarth, Gerald (Cannock)

    Onslow, Cranley

    Howell, Rt Hon D. (G'ldford)

    Oppenheim, Phillip

    Howell, Ralph (Norfolk, N)

    Oppenheim, Rt Hon Mrs S.

    Hubbard-Miles, Peter

    Osborn, Sir John

    Hunt, David (Wirral W)

    Ottaway, Richard

    Hunt, John (Ravensbourne)

    Page, Richard (Herts SW)

    732

    Parkinson, Rt Hon Cecil

    Stern, Michael

    Parris, Matthew

    Stevens, Lewis (Nuneaton)

    Patten, Christopher (Bath)

    Stewart, Allan (Eastwood)

    Patten, J. (Oxf W & Abgdn)

    Stewart, Andrew (Sherwood)

    Pattie, Geoffrey

    Stewart, Ian (Hertf'dshire N)

    Pawsey, James

    Stokes, John

    Peacock, Mrs Elizabeth

    Stradling Thomas, Sir John

    Percival, Rt Hon Sir Ian

    Sumberg, David

    Porter, Barry

    Tapsell, Sir Peter

    Portillo, Michael

    Taylor, John (Solihull)

    Powell, William (Corby)

    Tebbit, Rt Hon Norman

    Powley, John

    Temple-Morris, Peter

    Prentice, Rt Hon Reg

    Thatcher, Rt Hon Mrs M.

    Price, Sir David

    Thomas, Rt Hon Peter

    Prior, Rt Hon James

    Thompson, Donald (Calder V)

    Pym, Rt Hon Francis

    Thompson, Patrick (N'ich N)

    Raffan, Keith

    Thornton, Malcolm

    Raison, Rt Hon Timothy

    Thurnham, Peter

    Rathbone, Tim

    Townend, John (Bridlington)

    Rees, Rt Hon Peter (Dover)

    Townsend, Cyril D. (B'heath)

    Renton, Tim

    Trippier, David

    Rhodes James, Robert

    Twinn, Dr Ian

    Ridley, Rt Hon Nicholas

    van Straubenzee, Sir W.

    Ridsdale, Sir Julian

    Vaughan, Sir Gerard

    Rifkind, Rt Hon Malcolm

    Viggers, Peter

    Rippon, Rt Hon Geoffrey

    Waddington, David

    Roberts, Wyn (Conwy)

    Wakeham, Rt Hon John

    Robinson, Mark (N'port W)

    Waldegrave, Hon William

    Roe, Mrs Marion

    Walden, George

    Rossi, Sir Hugh

    Walker, Bill (T'side N)

    Rost, Peter

    Walker, Rt Hon P. (W'cester)

    Rowe, Andrew

    Wall, Sir Patrick

    Rumbold, Mrs Angela

    Waller, Gary

    Ryder, Richard

    Walters, Dennis

    Sackville, Hon Thomas

    Wardle, C. (Bexhill)

    Sainsbury, Hon Timothy

    Warren, Kenneth

    St. John-Stevas, Rt Hon N.

    Watts, John

    Sayeed, Jonathan

    Wells, Bowen (Hertford)

    Shaw, Giles (Pudsey)

    Wells, Sir John (Maidstone)

    Shaw, Sir Michael (Scarb')

    Wheeler, John

    Shepherd, Colin (Hereford)

    Whitfield, John

    Shepherd, Richard (Aldridge)

    Whitney, Raymond

    Shersby, Michael

    Wiggin, Jerry

    Silvester, Fred

    Wilkinson, John

    Sims, Roger

    Winterton, Mrs Ann

    Skeet, Sir Trevor

    Winterton, Nicholas

    Smith, Sir Dudley (Warwick)

    Wolfson, Mark

    Smith, Tim (Beaconsfield)

    Wood, Timothy

    Soames, Hon Nicholas

    Woodcock, Michael

    Spencer, Derek

    Yeo, Tim

    Spicer, Jim (Dorset W)

    Young, Sir George (Acton)

    Spicer, Michael (S Worcs)

    Younger, Rt Hon George

    Squire, Robin

    Stanbrook, Ivor

    Tellers for the Ayes:

    Stanley, Rt Hon John

    Mr. Carol Mather and

    Steen, Anthony

    Mr. Robert Boscawen.

    NOES

    Abse, Leo

    Bray, Dr Jeremy

    Adams, Allen (Paisley N)

    Brown, Gordon (D'f'mline E)

    Alton, David

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

    Anderson, Donald

    Brown, Ron (E'burgh, Leith)

    Archer, Rt Hon Peter

    Bruce, Malcolm

    Ashdown, Paddy

    Buchan, Norman

    Ashley, Rt Hon Jack

    Caborn, Richard

    Ashton, Joe

    Callaghan, Rt Hon J.

    Atkinson, N. (Tottenham)

    Callaghan, Jim (Heyw'd & M)

    Bagier, Gordon A. T.

    Campbell-Savours, Dale

    Banks, Tony (Newham NW)

    Canavan, Dennis

    Barnett, Guy

    Carter-Jones, Lewis

    Barron, Kevin

    Clark, Dr David (S Shields)

    Beckett, Mrs Margaret

    Clarke, Thomas

    Beith, A. J.

    Clay, Robert

    Bell, Stuart

    Clelland, David Gordon

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

    Clwyd, Mrs Ann

    Bermingham, Gerald

    Cocks, Rt Hon M. (Bristol S)

    Bidwell, Sydney

    Cohen, Harry

    Blair, Anthony

    Conlan, Bernard

    Boothroyd, Miss Betty

    Cook, Robin F. (Livingston)

    Boyes, Roland

    Corbett, Robin

    733

    Corbyn, Jeremy

    McKelvey, William

    Craigen, J. M.

    MacKenzie, Rt Ron Gregor

    Crowther, Stan

    Maclennan, Robert

    Cunliffe, Lawrence

    McNamara, Kevin

    Cunningham, Dr John

    McTaggart, Robert

    Davies, Rt Hon Denzil (L'lli)

    McWilliam, John

    Davies, Ronald (Caerphilly)

    Madden, Max

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

    Marek, Dr John

    Deakins, Eric

    Marshall, David (Shettleston)

    Dewar, Donald

    Martin, Michael

    Dixon, Donald

    Mason, Rt Hon Roy

    Dormand, Jack

    Maxton, John

    Douglas, Dick

    Maynard, Miss Joan

    Dubs, Alfred

    Meacher, Michael

    Duffy, A. E. P.

    Meadowcroft, Michael

    Dunwoody, Hon Mrs G.

    Michie, William

    Eadie, Alex

    Mikardo, Ian

    Eastham, Ken

    Millan, Rt Hon Bruce

    Evans, John (St. Helens N)

    Miller, Dr M. S. (E Kilbride)

    Ewing, Harry

    Mitchell, Austin (G't Grimsby)

    Fatchett, Derek

    Morris, Rt Hon A. (W'shawe)

    Faulds, Andrew

    Morris, Rt Hon J. (Aberavon)

    Field, Frank (Birkenhead)

    Nellist, David

    Fields, T. (L'pool Broad Gn)

    Oakes, Rt Hon Gordon

    Fisher, Mark

    O'Brien, William

    Flannery, Martin

    O'Neill, Martin

    Foot, Rt Hon Michael

    Orme, Rt Hon Stanley

    Foster, Derek

    Park, George

    Foulkes, George

    Parry, Robert

    Fraser, J. (Norwood)

    Patchett, Terry

    Freeson, Rt Hon Reginald

    Pavitt, Laurie

    Freud, Clement

    Pendry, Tom

    Garrett, W. E.

    Penhaligon, David

    Godman, Dr Norman

    Pike, Peter

    Golding, John

    Powell, Raymond (Ogmore)

    Gould, Bryan

    Prescott, John

    Hamilton, James (M'well N)

    Radice, Giles

    Hamilton, W. W. (Fife Central)

    Redmond, Martin

    Hancock, Michael

    Rees, Rt Hon M. (Leeds S)

    Hardy, Peter

    Richardson, Ms Jo

    Harman, Ms Harriet

    Roberts, Allan (Bootle)

    Harrison, Rt Hon Walter

    Robertson, George

    Hart, Rt Hon Dame Judith

    Robinson, G. (Coventry NW)

    Hattersley, Rt Hon Roy

    Rogers, Allan

    Heffer, Eric S.

    Rooker, J. W.

    Hogg, N. (C'nauld & Kilsyth)

    Ross, Ernest (Dundee W)

    Holland, Stuart (Vauxhall)

    Rowlands, Ted

    Home Robertson, John

    Ryman, John

    Hoyle, Douglas

    Sedgemore, Brian

    Hughes, Dr Mark (Durham)

    Sheerman, Barry

    Hughes, Robert (Aberdeen N)

    Sheldon, Rt Hon R.

    Hughes, Roy (Newport East)

    Shore, Rt Hon Peter

    Hughes, Sean (Knowsley S)

    Short, Ms Clare (Ladywood)

    Hughes, Simon (Southwark)

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

    Janner, Hon Greville

    Silkin, Rt Hon J.

    Jenkins, Rt Hon Roy (Hillh'd)

    Skinner, Dennis

    John, Brynmor

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

    Johnston, Sir Russell

    Snape, Peter

    Jones, Barry (Alyn & Deeside)

    Soley, Clive

    Kaufman, Rt Hon Gerald

    Spearing, Nigel

    Kennedy, Charles

    Steel, Rt Hon David

    Kilroy-Silk, Robert

    Stewart, Rt Hon D. (W Isles)

    Kinnock, Rt Hon Neil

    Stott, Roger

    Kirkwood, Archy

    Strang, Gavin

    Lambie, David

    Straw, Jack

    Lamond, James

    Thomas, Dafydd (Merioneth)

    Leadbitter, Ted

    Thomas, Dr R. (Carmarthen)

    Leighton, Ronald

    Thompson, J. (Wansbeck)

    Litherland, Robert

    Thorne, Stan (Preston)

    Lloyd, Tony (Stretford)

    Tinn, James

    Lofthouse, Geoffrey

    Torney, Tom

    Loyden, Edward

    Wainwright, R.

    McDonald, Dr Oonagh

    Wallace, James

    McGuire, Michael

    Wardell, Gareth (Gower)

    McKay, Allen (Penistone)

    Wareing, Robert

    734

    Weetch, Ken

    Wrigglesworth, Ian

    Welsh, Michael

    Young, David (Bolton SE)

    White, James

    Wigley, Dafydd

    Tellers for the Noes:

    Williams, Rt Hon A.

    Mr. Frank Haynes and

    Wilson, Gordon

    Mr. Chris Smith.

    Winnick, David

    Question accordingly agreed to.

    39. OIL TAXATION: LIGHT GASES
    Resolved,
    That, for the purpose of petroleum revenue tax, provision may be made with respect to the valuation of light gases.

    40. OIL TAXATION: ATTRIBUTION OF CHARGEABLE RECEIPTS AND ALLOWABLE EXPENDITURE
    Resolved,
    That, in any case where—

    (a) tariff receipts or disposal receipts arising in a chargeable period ending after 30th June 1982, or

    (b) allowable expenditure, within the meaning of Part II of Schedule I to the Oil Taxation Act 1983,

    fall to be (or have at any time since the passing of the said Act of 1983 fallen to be) attributed to one of two or more oil fields and development decisions relating to those fields were first made on the same day, provision may be made for determining which of those decisions is to be presumed to have been made first.

    41. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)
    Resolved
    That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from tax.

    PROCEDURE (FUTURE TAXATION)
    Resolved,
    That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision taking effect in a future year with respect to—

    (a) the treatment for the purposes of value added tax of fuel which is or is to be provided or appropriated by a taxable person for private use in a motor vehicle;

    (b) relief from investment in corporate trades; and

    (c) relief in respect of payments to charities.

    Bill ordered to be brought in upon the foregoing resolutions by the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Secretary Walker, Mr. Secretary Fowler, Mr. Secretary Ridley, Mr. Secretary Baker, Mr. Kenneth Clarke, Mr. John MacGregor, Mr. Secretary Channon Mr. John Moore, Mr. Ian Stewart and Mr. Peter Brooke.

    FINANCE
    Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance, presented accordingly by Mr. John Moore and read the First time; to be read a Second time tomorrow and to be printed. [Bill 117.]

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the consideration of the Lords Amendment to the Museum of London Bill may be proceeded with, though opposed, until any hour.—[Mr. Lennox-Boyd.]

Museum of London Bill
Lords amendment considered.
Museum of London Bill
  New Clause

    REPORTS
    Lords amendment: After clause 4, insert:
    " . Not later than 31st March 1989 and subsequently at intervals not exceeding three years the Secretary of State shall lay before each House of Parliament a report on the exercise of the functions of the Board of Governors of the Museum of London since the commencement of this Act or, in the case of the second and subsequent reports, since the end of the period to which the previous report related."
    10.57 pm
    The Minister for the Arts (Mr. Richard Luce): I beg to move, That this House doth agree with the Lords in the said amendment.
    The moving of the new clause by the Government in another place fulfilled a commitment that I gave to the House on Report on 3 February. The object of the amendment is to ensure, by a statutory obligation, that regular reports on the Museum of London's activities are produced and laid before Parliament. The hon. Member for Paisley, South (Mr. Buchan) will recall that I made it clear on 3 February that, were we to impose that statutory obligation on the museum itself, there would be an element of hybridity in the proceedings. For that reason, we moved a new clause in another place.
    The Museum of London already produces regular reports and I have no doubt that it would continue to do so without a statutory obligation being placed upon it. However, persuasive arguments were put forward in the earlier stages that, because of the important accountability principle, there was a good case for enshrining the reporting commitment into a statutory obligation. The Government agree and so proposed the amendment.
    I stress another matter about the wording. The new clause provides for reports to be produced not less frequently than every three years. I emphasise that there is no intention to change the practice of producing annual reports. The museum will continue to do that. As I explained in Committee, it would be an overtight imposition to require the museum by law to produce reports every year. The words follow the precedent for statutory reporting obligations on other major museums under the National Heritage Act 1983.
    Mr. Norman Buchan: On behalf of the Opposition I welcome one of the few changes that we have managed to secure. The new clause is helpful and I am grateful to the Minister for his clarification on the three years or one year reporting obligation.
    I welcome the clause, but the Opposition do not welcome the Bill. We shall reverse its provisions when we return to power. In the meantime it will be convenient to have a report on the workings of the museum. I support the new clause.
    Mr. Jeremy Hanley: I am grateful to my right hon. Friend for the new clause. The Opposition moved an amendment that there should be an annual report. I suggested that a three-year period would be wiser because of the charitable nature of the organisation and because of the practice among museums in general. Not only should one remember that the Museum of London already produces a report annually,

    737
    but I am certain that if something is to be received from organisations outside local government, such as industry and, under the new Budget, from individuals who might find it more attractive to give money to such causes, reports are important because they can help to raise even more money through imformative presentation.
    Mr. Clement Freud: My right hon. and hon. Friends welcome the proposal. In view of the Budget and the change in the personae of those who might contribute to the museum, I urge the Minister
    738
    not to stray too far from an annual report. In a changing scene it is immensely helpful to accountability for a report not only to be there, but to be seen to be there.
    Sir Antony Buck: I dashed into the House in the hope of hearing the Minister, but I was just too late. The position as I understand it now seems satisfactory. There is to be an obligation to produce a report every three years, but that does not preclude an annual report, which has been of considerable value to those interested in the museum, and in museums generally. I join in the general accord for the proposal.
    Question put and agreed to.

Coal Industry
11.4 pm
The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): I beg to move,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order 1986, which was laid before this House on 10 March, be approved.
I understand that it might be in order to take both orders together.
Mr. Deputy Speaker (Sir Paul Dean): With the agreement of the House, we shall take both orders together.
Mr. Roy Mason: On a point of order, Mr. Deputy Speaker. If we are taking both orders together, are we restricted to only 90 minutes' debate?
Mr. Deputy Speaker: That is so. The House has decided to take the two orders together which means a debate of 1½ hours on both orders, not three hours.
Mr. Hunt: When on 28 March 1985 I commended to the House the Redundant Mineworkers and Concessionary Coal (Payments Schemes) Amendment Order 1985 I warned that, although the long and damaging strike which the industry had suffered was over, its consequences would be with us for some considerable time. One important consequence was that many miners failed to pay sufficient national insurance contributions during the tax year 1984–85 to qualify for full contributions-based social security benefits on claims falling within the 1986 benefit year. The purpose of the present Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order is both to provide for the continued operation of the schemes and to amend the existing terms to take account of this consequence.
The provisions of the scheme now being introduced were announced in outline by my right hon. Friend the Secretary of State for Energy on 19 December 1985. They follow closely for full-time employees those of the present schemes which expire on 29 March, providing for essentially the same range of lump sum and weekly benefits; but they provide important additional protection for those older men whose redundancy date falls within the 1986 social security benefit year and who, for the reasons I have already mentioned, fail to qualify for full state unemployment benefit or sickness benefit.
As right hon. and hon. Members who take an interest in the operation of the redundancy scheme will know, to be entitled to weekly benefits under the present rules a man must, with certain limited exceptions, either satisfy the conditions for receipt of unemployment benefit, sickness benefit or invalidity pension or, with regard to unemployment benefit, satisfy those conditions but for entitlement to that benefit being exhausted. This rule, which has been part of the scheme since it was first introduced, was designed to ensure a proper integration of continuing weekly payments under the scheme with social security benefits.
In the present circumstances, however, it has an unfortunate consequence since it means that an older man whose redundancy falls within the 1986 social security benefit year and who lacks sufficient national insurance contributions to qualify for unemployment benefit or sickness benefit stands to lose the benefits for which he
740
failed to make adequate contributions and his weekly benefits under the redundant mineworkers payments scheme.
The present order seeks to overcome this difficulty in articles 9 and 10. Article 10 provides that where such a man is unemployed or unavailable for work through sickness, provided he has an entitlement to credits on national insurance contributions he is not precluded from weekly benefits under the scheme even if he fails to satisfy the contribution conditions for entitlement to unemployment benefit or sickness benefit. That is, provided he meets essentially the same general requirement as before, other than the contribution requirement, he may receive weekly payments under the redundant mineworkers payments scheme. Article 9 then allows the Secretary of State to pay such a man additional scheme benefits as well, together with any unemployment benefit, sickness benefit, invalidity pension or severe disablement allowance to which he is entitled, equal the total amount of those benefits to which he would have been entitled but for the failure to satisfy the contribution conditions. In short, he may receive make-up payments under the redundant mineworkers payment scheme to make good his loss of social security benefits.
Clearly it would be inequitable if men who had failed to pay full national insurance contributions in 1984–85 and received these make-up payments were in consequence better off overall than those who did pay and would therefore satisfy the existing rules. For this reason, the order also provides, in article 18, for a reduction in the lump sum payable to men who receive topped-up weekly payments. It is not practicable for the amount of that reduction to equal for each man the precise figure which he might have paid in national insurance contributions had he continued working. That figure is anyway ultimately a matter of conjecture. The article provides, therefore, for a uniform deduction from lump sum entitlement of £600 where the man has no entitlement to unemployment benefit, or £550 if he has some entitlement but at less than the full rate. These figures represent a reasonable reduction taking account of the average national insurance contributions paid by those falling into the two categories and those typically paid by men who worked throughout the period of the strike.
There is one further provision in the draft order which I should mention. This concerns the treatment of former part-time workers who were employed for fewer than 30 hours per week. The benefits available under the redundant mineworkers payments scheme have been improved substantially under the present Government, notably in 1983, 1984 and under the present order. It is a generous scheme primarily designed fully to recompense those full-time employees who help the industry through its present period of necessary restructuring by taking voluntary redundancy. However, I suggest there can be no justification for providing those who take redundancy with higher weekly earnings than when they worked, nor for paying lump sums on the scale now provided under the scheme to former part-time employees who may have been employed for as little as 16 hours per week. The new order provides, therefore, that to be entitled to full scheme benefits a former employee must have been employed for 30 or more hours per week in the relevant tax year.
Before discussing the second of the two draft orders before us tonight, I think it would be right for me to say something about the future of the coal industry and the

741
RMPS. In the past 12 months, the industry has made giant strides towards economic viability. Productivity has increased by one quarter and much uneconomic capacity has gone. This has been achieved without a single compulsory redundancy. All those who wished to remain in the industry have been able to do so. In the nature of things, an extractive industry can offer no guarantee that there will never be redundancies; and the future size and prosperity of the coal industry must depend on the success of men and management in making it competitive. There is no doubt that the recent fall in the price of oil increases the severity of the competition which the coal industry faces, and will make it necessary for the industry to strengthen still further the efforts it is making to eliminate losses.
Nevertheless, the Government's view is that the time is approaching when the NCB can, like the great majority of employers, take more responsibility for deciding and financing the redundancy terms which it offers. The new order will operate to the end of the National Coal Board's 1986–87 financial year, when the power to make schemes under the Coal Industry Act 1977 expires. It is right for me now to make it clear that it is not the Government's intention to introduce new legislation extending the power to make schemes beyond that date.
To enable payments to be made under the new schemes, it is necessary also to provide financial headroom. Section 4(3) of the Coal Industry Act 1983 increased the limit on aggregate cumulative expenditure on Redundant Mineworkers and Concessionary Coal Payments Schemes under the 1977 Act to £1,200 million. Section 3(3) of the Coal Industry Act 1985 gave the Secretary of State power to increase that limit by order made with the approval of the Treasury up to £1,800 million. The Coal Industry (Limit on Payments in Respect of Redundant Mineworkers) Order 1986 increases the limit to that figure.
When the 1985 Coal Industry Bill was presented to Parliament, it was impossible to know how many men would leave the industry under the redundant mineworkers and concessionary coal payments schemes then operating, nor what, if any, scheme would follow expiry of that scheme in March 1986. We were therefore faced with the choice of increasing the existing limit on expenditure to a figure so large that it could accommodate any conceivable circumstance, or providing for the power to increase the existing figure by order as and when circumstances required. As hon. and right hon. Members know, we adopted the latter course. The present order exercises the power then provided and provides the financial headroom to enable payments to be made under the new redundancy order. I should emphasise that the increase of £600 million in the limit of expenditure is not based upon an estimate of numbers who might leave in the coming year; it is simply the maximum envisaged in the 1985 Act and therefore compatible with the widest possible range of outcomes.
To conclude, Mr. Deputy Speaker, the Government have demonstrated by their financial support to the NCB over the past few years that they are committed to the creation of an efficient, competitive and viable coal industry; an industry capable of contributing to the national economy rather than one which must continually come cap in hand for further support; an industry with a proud future to match its proud past, capable of providing
742
long-term, secure jobs with good earnings for those who work in it. The Government have further demonstrated by the redundancy terms they have made available and by their support for the National Coal Board's enterprise subsidiary, their equal commitment to ensuring that those who leave the industry as part of the present restructuring and their communities are as far as possible compensated and protected.
There are signs that the industry is now coming right. Productivity, which for so many years grew at a rate which was the despair of all those who cared and could only spell long-term disaster, improves month by month. Costs of production are falling.
The industry is not yet at a point at which we can say that all the difficulties are over, but the portents are good. The industry is leaner and fitter than it has been for many years. We can all see that with further efforts, and just a little good fortune, the industry may enter a new and prosperous era. The Government are committed to that goal and to providing the support necessary to make it possible. As part of that process I hope that right hon. and hon. Members on both sides of the House will welcome the orders.
11.14 pm
Mr. Alexander Eadie: We are asked to approve an increase from £1,200 million to £1,800 million because the Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order 1984 expires at the end of the month. The revised orders extend the scheme until 28 March 1987 with some principal changes, which allow us to consider what has prompted them and to look at the coal industry today.
A new definition has been added to cover "coal industry employment". There have also been some technical alterations to the definitions of "days of employment", "industrial accident" and "industrial disease". I hope that the Minister will comment further on those when he replies. A definition has also been included to cover "severe disablement allowance". The definition of "subsidiary" has been amended to bring it up to date from the Companies Act 1948 to the Companies Act 1985.
The Minister tried to explain that under the present scheme part-time workers are not discriminated against. However, the new order introduces a pro rata reduction in benefits, and that is contained in article 5(1)(a) by reference to 30 hours and the pro rata extension of the weekly benefit table down from £35 to £10. There is also a consequential amendment to article 7 relating to the adjustment of basic benefit whereby a reference to employment on average for not less than 30 hours a week is introduced. Those amendments are clearly designed to reduce benefits in future to part-time employees in the industry.
As a result of the 1984–85 strike, a number of members, as the Minister indicated, have insufficient national insurance contributions to qualify for unemployment benefit in the benefit year commencing January 1986. That, in turn, means that men aged 50 and over who would normally have qualified for weekly benefit would be barred by virtue of failing to establish a right to unemployment benefit. To overcome that problem, the new order makes provision for an additional weekly benefit by switching the second order of unemployment benefit equivalent to be applied to the first year of scheme entitlement for unemployment benefit which will be

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payable in the second year. For example, under the new arrangements a person who is made redundant from the beginning of the tax year 1986–87, by registering as unemployed, will be given a credit towards the national insurance which will bring him hack into entitlement to unemployment benefit in 1987 for 52 weeks. The Minister referred to the statement made by the Secretary of State on 19 December.
The Minister may want to correct me, but my information is that there will be a reduction in redundancy pay as a consequence of that arrangement. I hope that the Minister will confirm that when he replies.
The only other principal change is the revision of the weekly benefits tables in appendix 4 to select the increases in the level of unemployment benefit introduced with effect from November 1985. Apart from that, we are dealing only with the tables changing in relation to lump sum payments.
Tonight we are asked to approve the due process of law and legal enactment by discussing these orders affecting the coal industry. It is a strange irony that although such processes apply to Parliament, which we would defend, they do not apply to the working and administration of the National Coal Board. I will discuss three aspects of the board's conduct which could be related to the legality of the orders which we are being asked to approve this evening.
First, I shall deal with the new modified colliery review procedure. The old procedure gave the NCB the power to act as judge, jury and executioner. The new procedure, upon which many high hopes were pinned, has been dashed by the NCB's attitude, for example, to the Bates colliery closure and its decision to ignore the recommendations of the independent arbiter that the colliery should remain open.
The NCB has clearly interpreted the new procedure as allowing it to be the judge, jury and executioner on colliery closures. The NCB has done enormous damage by its action and destroyed any faith that people working in the industry may have had in the new procedure. There will be a further test tomorrow when the Kingsley Drift colliery in Yorkshire is considered under this new procedure.
The NCB continues to flout any form of judicial process and natural justice, and this is highlighted by its attitude to miners who were victims of the strike which ended over a year ago.
Industrial tribunals have given verdicts of unfair dismissals and recommended that miners should be reinstated. Union leaders have attempted to regain normality in those areas in the spirit of consultation and conciliation. However, in all but a few instances these attempts and recommendations have met a stony-faced reaction by the NCB.
The NCB has been given a legal opinion by no less an authority than the Attorney-General that it is in breach of the law if it tampers with the miners' pension fund and uses striking miners, in a dispute over a year old, as an excuse to delay the wage increases of members of the National Union of Mineworkers, unless that increase is tied to amending the miners' pension fund. Despite the legal advice that the NCB would be in breach of the law, it intends to spend money, which is not its own, on what could be an expensive legal action.
We need changes in the NCB, and a start should be made by the Government. They should ask the present chairman of the NCB, Mr. Ian MacGregor, to go now
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rather than in September. The industry and the country have had to put up with this expensive liability for too long.
The backcloth to the orders signals a further contraction of manpower in the mining industry. There will be more pit closures and more redundancies. The figures released for the past year show that 30,000 jobs have been lost. That is depressing. If the Minister is not concerned, the House certainly is concerned about the continued contraction of manpower in the industry.
The House is aware of the problems of energy provision as a consequence of the massive drop in oil price, referred to by the Minister. We were reminded of that when we debated the EEC document on state aids to the coal industry. It has not gone unobserved by some of us that, like baying wolves, the leaders of the Central Electricity Generating Board are going for the British coal industry in this energy price war which is confronting many nations in the world. The CEGB wants to import more foreign coal. It does not care whether it is Polish or South African coal, as long as the price is right. I hope that the Minister will tell us that the Central Electricity Generating Board has been told that it is not in the business of creating unemployment in the British coal industry by its quest for more imports of foreign coal.
I endorse what the Minister said about the performance of the industry and the way that the miners are responding to the needs and to the call of the nation to produce more coal. We do not oppose these orders, but the Minister must reply to some of the issues that I have raised, because they are of great importance not only to people working in the industry but to my right hon. and hon. Friends.
11.27 pm
Mr. Phillip Oppenheim: I recently had the honour to be invited to a meeting in my constituency organised by the local National Farmers Union. I was slightly surprised when one old farmer told me that farmers did far better under Labour Governments and coal miners did better under Conservative Governments. That is probably just as well, because I have only about 100 farmers but more than 2,000 coal miners and a large number of retired miners in my constituency. On pondering this, I have to admit that there is some truth in the words of the old farmer. I do not want to go into the problems of agriculture, but history seems to bear out his view that coal miners have done substantially better under Conservative Governments.
It was under the Macmillan Government that coal pools were first arranged to provide fuel for miners over the age of 60. The Heath Government centralised those pools and backdated the concessionary coal allowances to miners aged over 55 on retirement and also backdated it to 1969. In 1983, this Government further reduced to 50 the age for concessionary coal and took over funding for the scheme from the coal pools. In doing that, the Government left out large numbers of miners who were under 60 when they were made redundant because of the massive pit closures of the Wilson Government in the 1960s. During that period, nearly half as many miners were made redundant in my constituency alone as were proposed by the National Coal Board in 1983 and 1984 for the whole country. Some 10,000 miners in my area were made redundant during the 1960s compared with only 20,000 proposed redundancies for the whole country in 1983 and 1984. Those proposed redundancies led to the Scargill strike.

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Many of the miners who were made compulsorily redundant under the Wilson Government in the 1960s have had a raw deal. Some worked in the pits from the age of 14 for as many as 30 years in conditions that were far worse than conditions pertaining in the pits today. In the mid-1960s many of them received letters from the chairman of the NCB telling them that the coal industry was set to expand and that their jobs were totally secure. Nonetheless, they were made redundant or at best offered jobs many miles away. When they were made compulsorily redundant under the Wilson Government they were given a pittance in redundancy money, far less in real terms than miners receive today. Furthermore, if they were under the age of 60 when they were made redundant, as many of them were, they received no concessionary coal, even though many of them had contributed to coal pools for miners aged over 60 in the reasonable expectation that they themselves would benefit from those pools. These are the forgotten miners. Their votes were taken for granted by their representatives for too long, and as a result, they got a raw deal.
It is true that most of the advances in the coal industry have come about during the periods of Conservative Governments—better redundancy terms, higher wages and far better concessionary coal allowances. Therefore, there is a precedent for the Government to make further improvements, and to allow retired miners the retrospective benefit, as happened in 1973. I accept that cost has to be a key factor, and I understand that recent estimates by the NCB put the cost of retrospectively extending concessionary coal to miners made redundant in the 1960s at some £3 million. This sounds a very large sum, but it represents only 10 per cent. of the total cost of the concessionary coal scheme that the Government already fund. Furthermore, it represents only 0·15 per cent. of the total cost of the coal industry to the taxpayer.
Concern and support for this is shown by the large number of Members who recently signed an early-day motion on this subject. Therefore, I strongly urge my hon. Friend the Minister to consider extending retrospectively the concessionary coal allowances to those miners made redundant at the age of 60 in the 1960s. If he will not consider that, will he at least consider some one-off payment, or some benefit to these miners, who have had a raw deal?
11.31 pm
Dr. Dennis Skinner: The hon. Member for Amber Valley (Mr. Oppenheim) has referred to a matter that some of my hon. Friends will recall has been mentioned almost every time that these redundancies and concessionary coal orders have been debated. I find it rather strange that this Johnny-come-lately can join with those of us like my hon. Friend the Member for Makerfield (Mr. McGuire) in calling for concessionary coal for those who did not get a square deal under the Tory Government.
Mr. Phillip Oppenheim: Will the hon. Gentleman give way?
Mr. Skinner: No, we have not got time. If the hon. Gentleman had been present at some of the coal debates over the past two or three years since he became a Member of Parliament, he would know all about the concern that has consistently been shown by my hon. Friends on this
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matter, because they represent almost every coalfield in Britain. That is why they signed my early-day motion on the matter.
I have news for the hon. Gentleman, which the Minister will confirm. When I wrote to the Secretary of State for Energy at the back end of last year about this matter for the umpteenth time—the Minister knows that I have raised it with him several times—the Secretary of State replied to the effect that, notwithstanding the new-found concern on the Tory Benches, he would not consider giving the concessionary coal to the pre-1968 people who did not get a square deal under any Government.
Mr. Oppenheim rose—
Mr. Skinner: No, I shall not give way. We do not have time, as many of my Friends want to speak on this and many other subjects.
If the hon. Gentleman only knew, he would appreciate that this matter has been raised consistently because some of the miners have done more than 40 years in the pits, and not many of them are left now, because many died. There are widows who should get the coal. It is true that it will cost only about £3 million, and that is why we argue that it should be implemented without any further delay. If the Government can find £2 billion for the farmers in 1984–85, which works out at a massive sum for every farmer in Britain, they could find the money for retired miners' and miner's widows, so that they can have the coal.
I remind the hon. Member for Amber Valley that some of the pits that shut in and around his constituency were not closed under a Labour Government—I happened to be a north Derbyshire miner. Almost without exception, the pits there were closed by the Macmillan Government, about which he spoke.
I want concessionary coal for the people in Blackwell. South Normanton, Pinxton, Tibshelf and all of the other villages in which the pits shut under the pre- 1968 agreement. We are dealing with, perhaps, the first Secretary of State who has no influence with the chairman of the National Coal Board. We do not expect the Secretary of State to run the day-to-day administration of the NCB, but the present one is just a lame duck. He cannot get anywhere with the chairman. When the miners group met him recently, he was unable to challenge MacGregor on any of these issues. The Minister has to reply to these questions. Why does he and the Secretary of State not use their muscle? Why do they not use what influence they have with the chairman in his last few months? Why do they not send him packing?
It is remarkable that in Kent we have 47 miners, I believe, who have not been given their jobs back. A considerable proportion of them are branch officials. It is almost as if the NCB wanted to pick new officials for the Kent industry. If Ministers have any influence, they should use it to get some reinstatements in Kent, Yorkshire and Scotland. The BBC's "Open Space" programme tonight told of a branch secretary who went to a tribunal, which found that he should get his job back but, because MacGregor is in the driving seat and says that someone must pay for insubordination, he has still not been given his job back, like many others in Scotland.
In Derbyshire recently a man was supposedly given his job back. He and his mate were then sent along for a medical and he did not pass the hearing test. That is another form of victimisation.

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The Secretary of State and the Minister have hardly any influence. That was shown graphically in the case of Bates colliery. The colliery review procedure was sabotaged by the NCB, and the Minister sits there, unable to use any influence despite the fact that, over and over again, the Prime Minister, when she was not dealing in shares in a mining company in Australia, said from the Dispatch Box that that procedure was sacrosanct. My hon. Friend the Member for Wentworth (Mr. Hardy) who represents NACODS, knows all about sacrosanct procedures and the promises that were made from the Dispatch Box.
The Minister has a chance. My hon. Friend the Member for Midlothian (Mr. Eadie) mentioned Kinsley drift. It has not been open long.
Mr. Peter Hardy: Six years.
Mr. Skinner: My hon. Friend says six years. Millions of pounds have been invested in the pit. There is a colliery review tomorrow. There is a picket at Hobart house, starting at 9.30 am. I had better get the advert in. If what happened to Bates happens to Kinsley drift, will the Minister use his influence to ensure that the pit gets a fair crack of the whip? I doubt it. During the strike and since, the Secretary of State and the Minister have not been able to do anything with respect to the chairman of the NCB. The Minister now has a chance to put things right, to show that he has some muscle and to give some hope to those who have been victimised. Some 500 miners are still without a job. It has been agreed in courts and tribunals that many of them have not done anything wrong. Perhaps 200 of them could be given their jobs back in the next few weeks. We would, perhaps, understand that, for the first time, the Minister and his right hon. Friend are beginning to use what power they have. Previous Secretaries of State have used that power and influence. We have seen nothing of it during the course of this Government's reign.
The price of oil has fallen again today. If market forces are left to operate, it could result in a massive further rundown in the mining industry. There could be closures on the same scale as in the 1950s and 1960s when Governments—whatever their political hue—decided that oil was cheap, that it could be obtained from the middle east and elsewhere for ever and that they would supplant the miners by using it. The massive drop in the oil price could mean that a Government who were hellbent on allowing market forces to operate would allow cheap oil once again to supplant the 300 years' supply of coal which lies beneath the ground of Britain. That would be foolish, because no one can predict that there will not be a quadrupling of oil prices, as happened in 1972 and 1973.
I hope that the Under-Secretary will not listen to the siren voices of the Central Electricity Generating Board, which suggests in code language that it would not be a bad idea to move over to oil because it is cheap. Such a move would mean that more people will be thrown out of work. More miners would have to receive redundancy payments. More miners would be thrown on to the scrap heap and would have to go on the dole, resulting in a loss of tax revenue to the Government, and so on. I want the Under-Secretary of State to declare that the Government will not let market forces operate freely, that they will use coal and will ensure that the mining industry remains intact.
11.41 pm
Mr. David Ashby: The hon. Member for Bolsover (Mr. Skinner) was warbling a somewhat false note—a note that he and all hon. Members know to be false. One should note what the hon. Member for Bolsover said during those years when the Wilson Government were closing so many pits, giving no coal concessions and making no allowances. One would have thought that the hon. Gentleman would sing a song crying out for help for the miners, but there was silence from him. He began to sing that song only when the Conservative party came to office, and, even then, he was not singing it too loudly. Last year, there was an hour and a half debate on this subject; this year, it is a three hour debate. Apart from when the hon. Gentleman tried to interrupt other hon. Members, we heard nothing from him on this subject.
Mr. Andy Stewart: Was he here?
Mr. Ashby: Yes, he was here, but we heard little on this subject until my hon. Friend the Member for Amber Valley (Mr. Oppenheim) and I tabled an early-day motion on concessionary coal for miners. Three or four days later, the hon. Member for Bolsover came rushing in saying, "I had forgotten about that. Let us get on with it." He then tabled his early-day motion. He is always second best. He does not really care about the miners for whom he says he cares so much.
Productivity has increased and the costs of production have fallen in the coal industry. As my hon. Friend the Under-Secretary of State said, we now have a leaner, fitter and more prosperous industry. The coal orders are almost the swan song of the Government's involvement in the industry. It is nice to realise that the coal industry is about to be able to stand on its own two feet? It will be able to produce its own redundancy schemes. It is becoming a good profitable business. No group can be prouder than the miners of being party to this development. They do not want an industry that is supported up to the neck by the taxpayers. They want a sleek, prosperous industry of which they can be proud.
We have a new mine coming on line in south Leicestershire. Asfordby, a new superpit, will be part of the leaner and more profitable industry. I asked for, and indeed have had, undertakings from the chairman that the people of south Leicestershire will be considered first for jobs in the new pit. They have worked throughout and suffered redundancies, and they will look to the Asfordby pit for the future of their industry. I am grateful that they can look to it for future jobs.
My hon. Friend the Member for Amber Valley (Mr. Oppenheim) referred to the early-day motion which I have had the pleasure of signing. When did most of the major redundancies take place, and when were most of the pits closed? We have to look to the years of the Wilson Government, when many pits were closed and redundancy terms were bad. Under the Conservative Government there have been substantial redundancy payments, and coal. allowances have increasingly been given to younger people, and men have been able to leave the pits with dignity, having worked there for many years. It is a far cry from the early years.
There is just one anomaly, and it will not cost much to remedy. I hope that a caring Government and the National Coal Board will take action. I refer to the granting of a

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concessionary coal allowance to all those who would have been entitled to it if they were retiring now. It is not much to ask. The amounts and the numbers are not very large. Advertisements have appeared in my constituency asking those who would be entitled to a coal allowance to contact me so that the numbers can be ascertained. I have received many letters from retired miners, all speaking of the hardship that they have suffered and all asking that the concessionary coal allowance be extended to them. I shall quote from just one of them:
"I am writing on behalf of my husband … who is now 74 years old. He is one of the miners you refer to in the local papers. He was made redundant in the late 60s under the Wilson government having been made redundant with a miserly £600 and no coal at the age of 59 years. When he came home and told me what was going to happen I felt very sad as he had several working years left and couldn't get another job and was thrown on the scrapheap. The business of not having the coal allowance hit us very hard … for 16 years and had to buy every cobble which does not seem right when a man has worked in the pits for 43 years on the face producing the coal … My husband is a Burton man. He trained the Bevin boys and dedicated his life to the miners. We think what was done with the Wilson Government was indeed a very shabby trick, and we vowed we would never vote Labour again, which we haven't."
That is the view of so many of the miners who were made redundant in the 1960s. They feel that they were let down by the Wilson Government—and indeed they were. We, on the other hand, have not let them down. We have supported and looked after them. We should try to make some restitution for the shabby trick that was played upon the coal miners under the Wilson Government. I am asking the Government to adopt a magnanimous approach and to put right the wrong for which the Opposition know they were responsible.
11.50 pm
Mr. A. J. Beith: The hon. Member for Leicestershire, North-West (Mr. Ashby) doth protest too much, not in raising the issue—a cause to which he is welcome among the many hon. Members who have sought to deal with the long-standing problem that affects those people who do not benefit from the concessionary coal scheme—but in his zeal in directing his attack specifically at the activities of the Wilson Government, for which there is a reasonable justification. However, his zeal suggested a diversionary tactic away from some of the problems that have arisen during the period of this Government. He slightly lost his sense of perspective about some of the problems that have arisen during the last two years under the current chairman of the National Coal Board. But let us not complain. Instead let us all join in pressing the Minister to take this step, as the alliance has done over a considerable period.
These orders concern the number of people who retire early or who become redundant by accepting voluntary redundancy as a result of the great changes that are taking place in the coal industry. Those changes are very apparent in the Northumberland coalfield. Many people come into these categories, and many of them come into my constituency to work. They accept employment by transfer to two of the only three remaining collieries in the Northumberland coalfield. Two of those collieries are in my constituency. A considerable question mark hangs over the only remaining colliery that lies outside my constituency. Questions have recently been raised about one of the two collieries in my constituency.
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One problem, above all others, has caused anger and great anxiety in the Northumberland coalfield and elsewhere in the coal industry in recent weeks—the attitude of the NCB to the colliery review procedure relating to Bates colliery. For the NCB so markedly to have failed the test of this new procedure by its complete refusal to take any notice of it has removed from the Government any credit that was attached to them for placing emphasis on that procedure during the long months of the dispute. If there is to be any respect at all for the procedure, it has to be respected by the NCB. There may come a time when it will be reasonable for the NCB to take issue in detail with a recommendation of the independent review procedure.
I do not think anybody ever claimed that the colliery review procedure had an absolute right always to override the judgment of the NCB, but for the NCB to take no notice of it whatsoever and to dismiss out of hand the recommendations of the review procedure on Bates colliery has completely destroyed any confidence that could be placed in that procedure and has done considerable damage at a time when attempts were being made on all sides to bring about reconciliation and introduce a new atmosphere into the coalfields. The Government must recognise the seriousness of the NCB's actions in this instance.
Another issue that has caused anxiety in the Northumberland coalfield is the future of Whittle colliery. On several occasions the NCB has stated that that colliery is part of its strategy for the area and that it attaches considerable importance to it. Its coal finds a ready sale. It produces the highest quality household coal. When supply difficulties arise at Whittle I am bombarded with complaints from constituents and coal merchants about their inability to get coal from that colliery and about their dissatisfaction with the substitute that they are offered instead. It produces a great deal of constituency correspondence.
There have been geological difficulties at Whittle, as is well known, which have prevented it recently from achieving the very significant improvements in production targets of recent years. The question has been raised by NACODS in recent weeks as to whether a wholly unrealistic target was being set by the NCB for the preparation of a new face at Whittle to enable it to continue profitably in production. I raised this issue with the area director and I have received further assurances about the future of that pit, but I must emphasise to the Minister that anxieties remain. In a letter which I received yesterday the area director said:
"It is precisely because Whittle was part of my Area strategy that I have initiated a special development programme to prepare a replacement coal face. The programme is certainly very demanding, but the organisation and resources are being provided to meet it."
I hope that that means that the work will continue even if whatever initial timetable has been set for it cannot be met.
I do not think that anyone denies the urgency of the work. Certainly nobody who works at the pit wants, in any way, to delay bringing the new face into production. Their future as well as their current earnings depend on it. If Whittle colliery's future were not to be safeguarded the effects on the area of Northumberland around Alnwick and Amble and on many people now coming in from much

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further afield in the Ashington and Blyth areas would be disastrous. Whittle is already absorbing men from Bates colliery, as is Ellington.
It is Ellington which remains the prize of the coal industry in the north-east of England and we all depend on its future. The pit has notable achievements to its credit and is now absorbing labour from all parts of the Northumberland coalfield.
Mr. Jack Thompson: The hon. Member for Berwick-upon-Tweed (Mr. Beith) is a neighbour of mine. I think he will recognise that the problems of Whittle colliery and the problem of non-profitability that will arise—I accept the point he has raised—will be covered by the profitability at Ellington and Ashington collieries. That is the way that the National Coal Board ought to organise things. If it is not organising things, each colliery will stand on its own merits. Therefore we may face the problem that Whittle colliery, which employs some people from my constituency, may go under because it has to stand on its own, and not be supported by a neighbouring colliery which is very profitable.
Mr. Beith: It is my belief that in due course Whittle colliery will be able to stand on its own feet and be a profitable colliery. The question is whether it will be carried sufficiently over the period in which the essential work needs to be done. The danger of taking what the hon. Gentleman said to its logical conclusion is that we have had a history in the coal industry of pits being pulled down by the number of other pits they were having to carry. I think that the hon. Gentleman is right to stress that there may be a period, we are going through it now, in which Whittle has to be sustained by the industry to be brought back to profitability, which I am sure can be achieved.
Hanging over all the arguments about profitability is a point mentioned earlier about oil prices. Clearly, that is leading the NCB to pose fresh questions about the profitability of a number of pits. Those of us who are concerned, not just about the coal industry but about the future energy provision of our nation, are bound to record the extraordinary variations wich have occurred in the oil price over the years and the political factors which tend to determine that price. There can be no mistaking the political forces which are at work in the current reductions in the price of oil. We cannot place total reliance on a future of low oil prices.
One of the great advantages this country enjoys is the freedom that its coal supplies give it to have a wide range of energy sources, without firm dependence on any one of them, and not to be impelled to rush into the development of nuclear power at a time when there are so many unanswered questions in that area. Our coalfields give us a considerable advantage and we should not throw that advantage away, least of all on the assumption that the present oil prices will continue to drop and to stay down indefinitely.
11.58 pm
Mr. Andy Stewart: I was not intending to say anything at all. However, looking across at the Opposition Benches I do not see any Labour members from Nottinghamshire here to listen and take part in this important debate on the coal industry. This is not the first time that the Benches have been empty of those hon. Members. However, I shall be charitable and say that the
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right hon. Member for Mansfield (Mr.Concannon) has been suffering from a car injury which he sustained on his way back from the labour party conference last year.
I was listening closely to my hon. Friend the Minister when he was talking about the future prospects and prosperity of the coal industry. I know that he speaks from fact. He visited Nottinghamshire last week and heard for himself about the record production which is taking place daily. Records are being broken in every pit in that county, not for the first time, but weekly. Thorsby colliery is turning out almost 10 tonnes per man shift. The area director has informed me that next year we shall be producing 18·5 million tonnes of coal from the Nottinghamshire coalfield, at a cost which competes with oil at $15 per barrel. That is the future for coal.
My hon. Friend the Parliamentary Under-Secretary talked about the redundancy terms that will come to an end on 31 March next year. I know that he hopes that all those who want to participate in the scheme will be able to do so. When my hon. Friend sees the chairman of the NCB, I hope that he will insist that a proper early retirement scheme is in place when the terms come to an end. In my maiden speech in the House I said that 55 would be the right age for miners to retire. That is also the aim of, and has been endorsed by, the Union of Democratic Mineworkers. Therefore, when my hon. Friend sees the chairman, I hope that he will say that when the scheme finishes, a suitable retirement age for miners in the industry should be put in its place.
I remind my hon. Friend that during that unnecessary strike, caused by we all know who, miners in working areas were not able to participate in the scheme because of the need to produce coal. Will those who have not been able to take part be allowed an extension if the NCB finds that time is not on their side?
With those few remarks, I leave it to my hon. Friend to answer my questions when he replies to the debate.
12.1 am
Mr. Michael McGuire: The hon. Member for Leicestershire, North-West (Mr. Ashby) must not go round deluding himself that it was the Wilson Government, as he kept reminding us, who gave the miners a raw deal. I was a pit secretary as long ago as 1957, when Jimmy Bowman was chairman of the National Coal Board, putting down massive stocks of coal. We started the market forces argument then. Nearly every pit in the constituency that I represent was closed before I came to the House. The miners got sweet nothing. I think £200 was the agreement, and that was under the great Government that the hon. Gentleman was praising.
We can say that we did not do as well for the retired miners as we should, but we shall not listen and take lessons from Conservative Members, telling us what great Conservative Governments did. Real closures took place when I was a pit secretary. The Wigan coalfield closed almost entirely, and we had the job of receiving the miners at our pit.
Hon. Members have referred to the contrast between what men get now and what they got then. There are Members of Parliament here who were working in the mines when I was a pit secretary. My hon. Friend the Member for Bolsover (Mr. Skinner) will remember that there was no pension for men who retired before 1952. and who had worked a lifetime in the pit. That was during the great Conservative Government of Macmillan, to which

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the hon. Member for Leicestershire, North-West referred. Those who retired before 1952 did not get a brass farthing in pension, after a lifetime in the industry.
We decided that all working miners should contribute 4d a week for a pension for those who had done a lifetime in the industry. I remember one of the sad, yet joyful, occasions when old men came into the office—the union cabin, as we called it—the tears were blinding them, because they had got a 10 bob pension. But it had to be taken off what was known as the national assistance. Those men took pride in getting that 10 bob, which we paid for. So we have moved on a long way.
I hope that the hon. Member for Leicestershire, North-West will take a friendly rebuke. He should not tell us the nonsense that the miners got glory when the Tories were in and a rough deal when we were in. They have had a better deal over the years. We could have done more for them.
Tory Members are wrong to rebuke my hon. Friend the Member for Bolsover, not that he cannot deal with rebukes from Tories. He can deal with them equally well when he gets them from our side. I have been on these Benches with him many times when together, in debates such as this, we have raised the matter of concessionary coal, and the gap in that concession. I am glad that the Tories are joining in, although it is cold comfort. I hope that they can persuade the Minister, because he is the lad, with the Secretary of State, who can put things right. A Tory has threatened to resign if the Government put a nuclear disposal unit in his constituency. That passion must not go unrewarded. Tories can also say that if concessionary coal is not given, they will resign. That would convince me.
I want to convince the Secretary of State that this scandal has lasted long enough. We are talking about a 10-year qualification when men have worked a lifetime in the industry. That is a scandal. The money involved is little, but the reward to the widows and the few men who are still alive would be great.
All hon. Members, Tory, Labour and Liberal—I must not forget the Liberals—know that to give a widow or an old miner concessionary coal is one of the most rewarding of experiences. Some of these people have been forgotten and left by the wayside.
Mr. Phillip Oppenheim: Will the hon. Gentleman give way?
Mr. McGuire: No. I have to sit down soon because colleagues wish to speak.
Some miners are still being sacked. The NCB has been vindictive beyond measure. There is a patchwork across the country. In some areas men who have been convicted of minor offences have had their jobs back, but other men have experienced the heavy hand of vindictiveness and malicious spite and have not got their jobs back.
Anybody understanding my views on the strike will know that I sometimes disputed with my colleagues the efficacy of the strike. But that has gone. I believe that men are being discriminated against, sometimes because they are local union leaders. That is a shame. It is a bigger shame that the Secretary of State and his colleagues have not used their influence. We are not saying that every sacked miner should be given back his job. None of us is foolish enough to say that. But there should be an examination of men who were unfairly, vindictively,
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sacked and who remain sacked. Until their cases are examined and a sense of fair play prevails, the sore in the mining industry will fester.
The pendulum has swung. The miners' union is almost impotent. It is divided. I shall not go into the reasons. The pendulum will swing back. The miners will not forget the treatment that they received—and they will be right not to forget.
Let us see some movement. This is our strong view. I hope that the Minister will lean on the chap on whom he can lean. Those of us who read the football reports know what happens when the manager is not quite doing his stuff and there is a threat to bring someone else in. In this case that chap is already in on a free transfer from the steel industry. When that happens, it is a question of "On your bike, mate." He should not have got the job, but now he is second in command and another will take over in a couple of months. The Secretary of State and his colleagues should get together with him and say "We want this put right." We are not saying that every sacked miner should regain his job, but we want to see fair play.
During the debate on the colliery review procedure on 5 February 1985, we were told that the miners had no need to fear any question—
Mr. Deputy Speaker: Order. The hon. Gentleman is going rather wide of the debate. I am sure that he can relate his remarks to the order.
Mr. McGuire: I am not sure whether you were judicially deaf during an earlier part of the debate, Mr. Deputy Speaker, when the issue of the review was touched upon. I wish to speak only briefly about it in taking up the remarks of the hon. Member for Berwick-upon-Tweed (Mr. Beith). I believe that the House was misled on 5 February 1985 because of the inference that was to be drawn from what the NCB was publicising at that stage. It was said that no colliery would close merely because the board wanted to close it and that any proposed closure would be the subject of an impartial and independent review. If the board is saying, "If the review leads to a contrary decision to that which we have taken, we shall still go ahead and close the pit," the debate on 5 February 1985 was a farce and the House was misled. We must ensure that there is a proper review procedure and an independent adjudication, and we should abide by the decision of the adjudicating body. I hope that the Minister will get that across to the coal board.
12.12 am
Mr. Roy Mason: Raising the ceiling for redundancy payments in the pits enables us to air our views on job losses, and I shall confine my remarks to that issue. Pits are closing at a faster rate than anyone imagined and redundancies are taking place on a scale which might eventually endanger the industry. This has nothing to do with a pre-arranged hit list.
One major area of concern is the National Coal Board's new accounting procedures, allied with the recommendations of the Waddilove committee's report. Instead of national, or even area, accounting procedures whereby some profitable pits might help keep some marginally unprofitable pits open, two stringent tests apply to each pit. The first test comes from the interest charges on the capital investment at each pit being attributable to that pit. The second test is that the costs of subsidence damage

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caused by mining from a pit shall also be added to the pit's costs. That means that a pit that is near a built-up area is penalised to a greater extent on the second test than one in the country.
Redundancies that affect my constituents are being declared at Redbrook colliery near Barnsley. There were 1,189 men working at that pit in April 1985 and only 865 in February 1986, and the work force is to be further reduced to 500. With massive capital investment, both underground and on the surface, high interest charges have to be paid by the pit. As the pit is on the edge of Barnsley, as it were, high subsidence compensation payments have to be paid as well. The alternative is not to work the coal. To avoid subsidence compensation payments, faces have been cut back and redundancies have been declared. In the end, the pit will be lucky to survive.
I have no doubt that it could be proved that what I have described is the result of bad planning on the board's part, that it was a bad investment that led to the loss of millions of pounds and that the accounting procedures are making it difficult for the pit to survive.
Some of my constituents work at Kinsley drift, which is not far from Barnsley. The pit is only six years old. Again, there has been vast investment. I understand that it amounted to £30 million. Kinsley drift became a wonder pit and now it is on the eve of closure. The final appeal goes before the Coal Board tomorrow. Can anyone doubt that another mistake on the part of the Coal Board was made at this pit?
Members of the women's campaign against pit closures came to see me this past weekend. The campaign is based in Barnsley and its members have been demonstrating and campaigning against the closure of Kinsley drift and the effects that that will have on coalfield communities, and rightly so. As I have said, £30 million has been spent and yet the pit is to close after only six years. Who is to blame? What a waste! I have no doubt that there are many similar examples.
The Department of Energy should set up an an independent inquiry team and give it status and power to investigate the past plans and investment schemes at Redbrook, Kinsley drift and other pits in the British coalfields. All that must necessitate a vigorous and detailed examination. The NCB has made major investment mistakes, there have been many unneccessary redundancies and the British taxpayers, the House and the National Union of Mineworkers have a right to know who are the guilty men.
There are now only 135 pits in the country and a labour force of 139,000. In only 11 months—from 30 March 1985 to 1 March 1986–31,637 men have left the industry nearly all of them through redundancies. What is most disturbing is that during that time the NCB imported 12,600,000 tonnes of coal. That tonnage meant 12,000 job losses in the industry. Contracts were no doubt stepped up during the miners' strike, but we do not know for how long they must carry on.
The vast coal imports plus the present fall in oil prices have caused a serious turn of events in the aftermath of the coal strike. Many more redundancies could result and no doubt the CEGB is exploiting the cheap oil and oil-fired power stations are being prepared to come on stream. With cheap coal imports and cheap oil the CEGB has the National Coal Board over a barrel when it comes to negotiations over the annual coal contracts.
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The coal industry could be seriously undermined if that situation continues for long. More pits are bound to close under present management policies and through Government indifference. The Secretary of State should step in and, if necessary, use his directive powers to cut coal imports and check the CEGB from switching to oil burning. The rundown of the coal industry has already gone far enough. If it is run down much further, if there is a high rise in oil prices and if shipping freight prices also rise, and then there is a fresh upsurge in the demand for coal, we shall rue the fact that the Minister did not act before it was too late.
The Minister should elaborate on the points that I have raised when he replies to the debate. Will the Minister tell us how many miners have taken voluntary redundancy since the end of the strike? How much has been paid out in lump sums? What is the current annual payment for redundant miners' pensions? Why is there no appeal procedure over redundancy payments? Hon. Members who represent mining constituencies are often approached when there is a difference between a miner and the NCB regarding his payments. Why has no appeal board been established? In view of the numbers involved now, and doubtless that number will rise, why has that board not been established? Finally, the NCB and the Minister have been able to say that all the redundancies have been voluntary and that there have been no compulsory retirements. Will the Minister assure the House and the mineworker's union that that will continue to be the case?
12.17 am
Mr. Spencer Batiste: I will intervene only briefly in the debate, as other hon. Members wish to speak, but several points have arisen on which I would like to comment.
My first point relates to the question of concessionary coal, but I do not want to go over all the points that have been argued so eloquently on the Floor of the House on that issue already this evening. However, I believe that if the Government could find the relatively small sums of money involved it would do a great deal to put right an injustice that has existed for a long time and would earn much good will for the Government.
I should like to link my first point with a request to my hon. Friend the Minister to consider what further progress has yet to be made in relation to the miners who took redundancy after the strike began and who have lost out on the full benefits to which they reasonably thought they were entitled.
During the debate reference has been made to various industrial tribunal cases and to the NCB's attitude in not taking back miners as a result of the decisions of those tribunals. If the NCB took back miners whom it has dismissed and who it reasonably believed had been guilty of violence and intimidation during the strike, that would make a mockery of the courage of the working miners who stood by the NCB during the strike and would go against the principles for which the Government have fought and for which the country has paid so dearly. The NCB must be satisfied that it has the full support of the House or at least of Conservative Members in making sure that there is no place in the mining industry for the wreckers, the violent and the intimidators.
Finally, let me make a general comment on the future of the coal industry, on which there has already been much comment. Clearly the industry's future and survival must

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depend on its being profitable and my hon. Friend's announcement showed that the industry is now close to being able to stand on its own feet, which must be good news and reassuring to all who work in the industry.
Obviously, however, a cloud has been cast by the drop in oil prices and that must reflect upon the targets and profitability of the mining industry. But will my hon. Friend recall that oil prices can go shooting up just as fast as they have come down and all it needs is for the oil sheikhs to meet together and agree on production cuts for oil prices to start rising again. If we have learnt one lesson from the 1970s, it must be that we need an energy policy that ensures not just the profitability of the industries that produce energy, but also certainty of supply, and there can be no better certainty of supply than from coal that is mined in Britain.
For our strategy and our future we need a diverse energy market. We need diverse energy resources, but within that diversity coal must have an important part to play.
12.20 am
Mr. Dick Douglas: I notice that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) is in the Chamber, and he is a singular reminder of the vagaries of oil prices and markets. Those of us who have a bit of a memory will acknowledge that his stricture during the energy crisis in 1973 was that we should brush our teeth in the dark. We should remember that oil prices have a way not only of going down but of going up fairly rapidly. However, I do not want to discuss energy policy this evening because time does not permit.
The hon. Member for Elmet (Mr. Batiste) said that the NCB had to face the results of industrial tribunals. I want to put on record the course taken by my constituent, Mr. Robert Young. The Under-Secretary will know that we met him on that matter on 5 March. I am informed that my constituent has had an offer of reinstatement by the NCB. The vagaries of the procedures involved show the degree of vindictiveness and the extent to which the NCB was willing to go—even to offering perjured evidence at a tribunal—in order to deny Mr. Young his democratic rights.
I have reported the matter to the Minister. We know that Mr. Young was charged and fined £75 for a breach of the peace. He was interviewed on 19 August by the colliery manager. He went to an industrial tribunal on 13 January and there the NCB said that it was not contesting unfair dismissal, but was not willing to re-engage Mr. Young because of his behaviour during the interview at Comrie colliery.
As I have told the House previously, my constituent had the presence of mind to tape proceedings. Had he not done so he would have been damned to perpetual unemployment in so far as any chance of being re-engaged or reinstated by the NCB is concerned. I use this example to demonstrate that we in Scotland had 206 victimised, not dismissed, miners. At present, we still have 127 victimised miners. Ten of my constituents are similarly placed as are many more who are not my constituents but who are employed in pits in my area.
The NCB was willing to spend public money defending a case that was indefensible. I want that put on records an illustration of the NCB's mind in Scotland. If the Minister wants to enhance his reputation and that of the coal
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industry in Scotland, he should take urgent steps to wipe the slate clean. My constituent fears that there is the danger that, having got the offer of reinstatement, he will return to the colliery, Comrie, and find that it is under threat of closure. Those who have knowledge of the mining industry know that if there is no redevelopment, the colliery is almost certain to be scheduled for closure.
The Minister ought to take urgent steps to put the record straight with regard to victimised miners. He ought to give an assurance to the Scottish mining industry that there will be adequate capital development and security of employment for miners in my area and throughout Scotland.
12.25 am
Mr. Ron Davies: I wish to raise a constituency problem which is related to the orders that we are discussing tonight. It concerns a group of employees who were formerly employed by the National Coal Board but who are now employed by an engineering company which is a subsidiary of the NCB — the Tredomen Engineering Works at Ystrad Mynach.
I have been chasing the Minister, his predecessor the Secretary of State, the NCB, the area director and the chairman of the NCB to get some satisfaction for hundreds of miners who have been made redundant due to the decline of the coal industry, and many of whom have been denied payment from the redundant mineworkers payments scheme even though they are entitled to payment from the mineworkers pension scheme. In 1983 I asked the Minister's predecessor whether he would consider making provision for the payment of the RMPS to employees of Tredomen. In reply, he said that Tredomen, though a wholly-owned subsidiary of the National Coal Board, was a limited company engaged in the manufacture of specialised mining equipment not only for the board but for other organisations, and that it was not the kind of establishment providing services ancillary to collieries for which the RMPS was designed. The Minister said that the answer was no for three reasons: first, that the company was a wholly-owned subsidiary of the NCB and it was a limited company; secondly, that the company did not manufacture exclusively for the board and, thirdly, that it was not the type of establishment for which the RMPS was designed. Yet on page 14 of these orders it is made clear that the orders apply to people employed not only directly by the board but by its subsidiaries.
I have confirmation from Mr. Ian MacGregor, the chairman of the NCB, that for the past eight years the Tredomen Engineering Company did between 95 and 98 per cent. of its work directly for the NCB. If that is not working exclusively for the NCB, I do not know what is.
Payments can be made from the RMPS to people who are employed in estate and house maintenance depots, in headquarters and regional offices and establishments, civil engineering depots and workshops. They are covered by appendix 1 on page 45 of the order. In 1973 the Tredomen employees, employed directly by the NCB, were told in a letter that their conditions of employment would be protected on the transfer of their employment from the NCB. If all the other categories of people can receive payment from the RMPS, the workers facing redundancy from Tredomen should be entitled to receive it. I ask the Minister to consider this matter. I am awaiting a detailed reply on these specific points.
Mr. Allen McKay: I support what my right hon. Friend the Member for Barnsley, Central (Mr. Mason) said about Redbrook. Investment in collieries ought to be examined. There is such a long lead-in time that it is totally unfair to load the cost on one colliery. The investment period in Redbrook started about 15 years ago when plants in the Barnsley area were designated for alteration and rejuvenation. It is entirely wrong to load on to the 450 men in one colliery the capital costs of what would be sustained by at least
1,500 men.
I should like to ask about people who do not receive unemployment benefit. People who go in for the business scheme are normally allowed up to £40 per week from the Department of Employment to help them with ideas for creating a small business. The £40 depends upon the receipt of unemployment pay. My workers are not in receipt of unemployment benefit and when they apply to be considered under the small business scheme they are turned down. I have written to the Under-Secretary in the Department of Employment, and perhaps the Minister will take up the matter on an interdepartmental basis to see whether he can get rid of what is clearly an anomaly.
12.37 am
Mr. David Hunt: I say to my hon. Friends the Members for Amber Valley (Mr. Oppenheim), Leicestershire, North-West (Mr. Ashby), Sherwood (Mr.Stewart) and Elmet (Mr. Batiste), and to the hon. Members for Midlothian (Mr. Eadie), Bolsover (Mr. Skinner), Berwick-upon-Tweed (Mr. Beith), and Makerfield (Mr. McGuire), the right hon. Member for Barnsley, Central (Mr. Mason), and the hon. Members for Dunfermline, West (Mr. Douglas), Caerphilly (Mr. Davies), Barnsley, West and Penistone (Mr. McKay) that I do not have sufficient time tonight to deal adequately with the points they raised, but I shall write to them, just as I shall respond to those hon. Members who have not caught your eye, Mr. Deputy Speaker, about any points they raise with me in correspondence.
My hon. Friends the Members for Elmet, Sherwood and Leicestershire, North-West spoke about the announcement I made of the ending of the scheme. When the scheme was introduced the then Minister for Power, Mr. Richard Marsh, made it clear that it was a temporary scheme to provide a breathing space. On 5 December 1967, Mr. Marsh said:
"Therefore, the purpose of the Bill is to give the industry a breathing space to help it to get the level of productivity to enable it to compete with other industries."—[Official Report, 5 December 1967; Vol. 755, c. 1269.]
We have seen a marvellous breakthrough in productivity. There is a new pride in the industry. I found that last week when I went underground at Bilsthorpe with my hon. Friend the Member for Sherwood. As he constantly reminds the House, as do my other hon. Friends, the industry must never forget the debt it owes to the courage and determination of working miners. I am sure I shall find the same pride when I go underground with my hon. Friend the Member for Leicestershire, North-West at Donisthorpe this week as I found at Point of Ayr, Monkton Hall, Ellington, Wearmouth, Wistow, Lady Windsor Abercynon, and other collieries I have visited since the end of the strike.
Productivity records have been broken week after week as miners fight to achieve the viable competitive industry
760
that is the only sure way to secure their jobs in the long term. I say to my hon. Friends who raised with me the matter of concessionary coal that I fully understand the strength of feeling that exists on this issue and the disappointment felt by mineworkers who, when they were working contributed to coal pools, but under the rules of the schemes to which they have contributed have no entitlement following redundancy. I listened carefully to my hon. Friends in the debate and also to what they said to me prior to this debate, but I fear that against the background of the industry and the decision of successive Governments, I will be able only to reach the conclusion of previous reviews: that further extensions to existing arrangements would not be justified—
It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).
Question put and agreed to.
Resolved,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order 1986, which was laid before this House on 10th March, be approved.
Resolved,
That the draft Coal Industry (Limit on Payments in respect of Redundant Mineworkers) Order 1986, which was laid before this House on 10th March, be approved.—[Mr. David Hunt.]

STATUTORY INSTRUMENTS, &c.
Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments &c.).
STATUTORY INSTRUMENTS, &c.
  BROADCASTING
  That the draft Broadcasting (Local Sound Broadcast Programme Contractors' Additional Payments) Order 1986, which was laid before this House on 4th March, be approved.—[Mr. Sainsbury.]

  HARBOUR, DOCKS, PIERS AND FERRIES
  That the draft Ports (Finance) Act 1985 (Increase of Grants Limit) Order 1986, which was laid before this House on 7th March, be approved.—[Mr. Sainsbury.]
  Question agreed to.

  EUROPEAN COMMUNITY DOCUMENTS
  Motion made, and Question put forthwith pursuant to Standing Order No. 80(5) (Standing Committees on European Community documents).

  POWERED INDUSTRIAL TRUCKS
  That this House takes note of European Community Document No. 6893/79, a proposal for a Council Directive on the approximation of the laws of the member states relating to self-propelled industrial trucks and of the supplementary explanatory memorandum for the Department of Trade and Industry dated 28th November 1985 and 17th February 1986; and accepts the need substantially to reduce current non-tariff barriers to the exports of United Kingdom-based manufacturers whilst ensuring a satisfactory level of health and safety protection.—[Mr. Sainsbury.]
  Question agreed to.

PETITION

  Sunday Trading
  Mr. Tom Sackville: I beg leave to present a petition to the House on behalf of 1,500 of my

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  constituents. It reflects their deep conviction that Sunday has special characteristics as a day of rest, recreation and worship for the benefit of family and community life. They believe that the current legislation before Parliament allowing for unlimited trading on Sunday will diminish those characteristics of Sunday.
  To lie upon the Table.

  English Estates
  Motion made and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]
  12.34 am
  Mr. Michael Fallon: I am grateful for the chance to instigate a short debate about English Industrial Estates Corporation, called English Estates. It is one of England's biggest developers and is certainly one of England's largest high-tech developers. That may not be as well known as it should be in the House, but it is known to us in the north-east, because over two thirds of its developing industrial footage lies in the northern region, just as its headquarters do. It is appropriate that a northeast Member should be sponsoring a debate about English Estates and allowing us the opportunity to explore with my hon. Friend the Under-Secretary the role of English Estates nationally and its particular importance for a region such as the north-east.
  This is also a timely debate, because last week my right hon. Friend the Secretary of State was able to announce a substantial increase in the funding for English Estates over and above that which was originally feared. It was originally suggested that some £25 million might be available for that year, and for each of the next three years. My right hon. Friend has been able to ensure spending, although perhaps not funding, of some £32 million. That is a modest increase on this year's £30·5 million. It will help English Estates to carry forward the programme that it envisaged last year, and to finance continuing development in the north-east, especially in the counties of Durham and Cleveland. I understand that that forward programming will include a substantial development in Darlington, and I hope that my hon. Friend the Under-Secretary may be able to say something about that.
  I welcome the increase in funding and the restoration of what was originally threatened to be a substantial cut. I particularly welcome the pledge that was originally given on 25 May 1984, that the provision made in English Estate's budget for the development at Chatham and the west would not affect its programmes and commitments in our assisted areas. There has been good news about funding and I hope that my hon. Friend the Under-Secretary will be able to confirm that.
  Another important aspect for English Estates, in securing the medium-term future, is the corporation's management. I was a little disappointed that the efforts to put together a management-led buy-out last August now appears to have floundered. There would have been considerable advantages for the Government, in both the capital receipts that would have accrued from such a buyout, and the knowledge that Government programmes would still have been commissioned and carried forward by English Estates, as a private company.
  There would also have been advantages to English Estates. It would have been able to set slightly longer-term objectives than the Government are often able to set for it. It might have been able to move towards a more broadly based and developed company, free of some of the constraints that Government and Treasury, of necessity, impose on such a public body. It would also have been free from the public expenditure survey committee lobbying and so on.
  The company might also have been able to replace some of the more strict terms laid down by Whitehall for

  763
  the pay and conditions of staff, with a more commercial and realistic set of incentives and awards based on performance. Although that has not happened, I hope that the moves towards improved management will not be relaxed, and that initiatives such as the northern subsiduary of English Estates will be pursued. I also hope that on pay and reward for staff, the Treasury might be persuaded, once it has resolved the small matter of the English Estates report and accounts for last year, to adopt in turn a more flexible approach.
  Another aspect which is relevant to the future of English Estates is the decision which will soon be made to end the three development corporations in the north-east—Aycliffe, Peterlee and Washington. Their life was extended again by the Government to 31 March 1988, which is less than two years away. I do not believe that there is any realistic prospect of a further extension being granted, even if we were in favour of it.
  It is appropriate for the Government to consider soon the bodies that are best suited to take over, not simply the physical estates of those three new town corporations but their role in attracting inward investment and in making the localities more attractive places for development and industrial growth.
  I realise that this is not entirely a matter for my hon. Friend the Parliamentary Under-Secretary of State for Trade and Industry and that his Department has to have consultations with another Department about it. I submit that English Estates, properly organised, is the best body to take on the development corporations' role. It is already based in the north-east. I believe that it could happily pool the estates of the development corporations with its own industrial estate to form a larger industrial portfolio. It might be able to sell the attractions of the north-east to a wider market, internationally and nationally, it might be able to retain some of the skills and expertise of the existing development corporations. It would certainly be able to ease the transition period by taking over an increasing part of the management of the estates.
  Assisted areas, such as the north-west and the northeast, are crucial to the role of English Estates. I am not denigrating the developments undertaken at Chatham and in the west midlands. I understand the reasons for the involvement of English Estates in those areas. However, I believe that the greater challenge lies in the north of Britain, especially in the north-east, because that is where the greater development potential lies. In the north-east we have perhaps the greatest potential of any English region for further and future development. We have the space which the modern company needs. We have an abundance of attractively priced land and housing. We have the attractive countryside, which the modern company likes to have around it. Too much of that land lies undeveloped.
  The register of publicly owned land, which was set up by the Government in 1980, reveals that a huge number of acres in public ownership are unused, undeveloped and awaiting development. There are more than 4,000 acres in Tyne and Wear, nearly 4,000 acres in Cleveland, nearly 3,000 acres in the county of Durham and nearly 2,000 acres in Northumbria—a total of just under 13,000 acres of publicly owned land—ripe for development but sat on by local councils. My hon. Friend the Under-Secretary of State may wish to consider when local councils are not prepared to develop land or to let other people have the
  764
  chance to develop it whether the Government, instead of ordering the land to be sold, should invite English Estates to develop some of it.
  In the north-east we have not only space but resources. There are the natural resources of energy, water, offshore gas and coal. There are also the human resources—the skills in engineering which have been transformed into skills in the new technologies and the biotechnologies. It is often forgotten that 16,000 people work in the north-east in electronics and another 5,000 work in pharmaceuticals.
  There is a fear in the region that we lose out to the south-east in high technology and new technology development and that too much applied research is heavily concentrated in the south. A recent survey shows that plants in the south-east have an average of 21 people employed directly in research and development. An equivalent plant in the north-east has only nine. The region has a lower record of product innovation. Those are all reasons why the role of high-tech development and the development of high-tech sites is pivotal to the future attractiveness of the north-east. That is why I believe that a successful English Estate, with its management given more freedom and its funding put on a surer footing, working increasingly in partnership with the local authorities and with the new towns as they come to the end of their natural life, is one of the keys that could unlock the door to a new and more prosperous north-east.
  12.40 am
  The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): I thank my hon. Friend the Member for Darlington (Mr. Fallon) for his timely observations this evening, not least because the moment is approaching when we will be able to confirm, as a result of his inquiries, the decision that we can make regarding his constituency, but also because it is right to give a full airing to the undoubted benefits and advantages of industry and commerce building up their operations in the north-east. The undoubted advantages of Northumberland and Durham in particular are well worth restating at this juncture in our deliberations on English Estates.
  Factory building has been an intrinsic part of successive Governments' regional policies for the past 50 years. Indeed, in the mid-1930s it was virtually the first and only form of regional assistance. Since that time a wide range of intiatives has been developed to encourage firms to set up, relocate or expand in the depressed areas of the United Kingdom. Over this time the factory building programme has evolved as an essential instrument of those policies, both complementing other measures and operating in its own right as an effective means of attracting employment to specific locations within the assisted areas.
  Our policy on English Estates, and its recent record, represents an outstanding success for the Government. That is my third reason for welcoming my hon. Friend's speech.
  On taking office in 1979, the Government came to the conclusion that measures intended to encourage business to set up, locate or expand in the assisted areas would not succeed if firms could not find suitable factories, workshops and offices. We asked ourselves if the private sector could be relied on to provide all the factories and industrial premises that would be needed in the assisted areas to ensure the success of our regional policies—a job it appeared to be doing quite adequately in the rest of

  765
  the country. Unfortunately, it could not. Some of the investment appeared to be too high-risk and to offer too low a rate of return to attract the large amount of institutional investment needed to ensure the adequate provision of suitable premises.
  Finally, we asked ourselves whether English Estates was doing the best possible job in providing these premises. I am afraid the answer to this final question was a definite no. Civil servants in Whitehall and in the region had been telling English Estates what type of property to develop and where to develop it, selected the occupants and told English Estates what rents to charge. The consequences of their decisions are still plain to see—large, echoing, empty factory sheds that provided impressive evidence of the previous Government's concern for the regions when they were being constructed, but which have stood empty since then and demonstrated that concern is not enough. The factories stand as mute evidence to a failed policy of building monuments to the past rather than workshops for the future. In order to turn equal concern for the problems of these areas into economic regeneration, it was necessary to understand industry and commerce's basic requirements for new premises. This could be done only by those versed in the disciplines of the market place.
  We quickly concluded that, although it was necessary to continue the advance factory programme, it was a job for property development experts and not for civil servants to carry this programme through. We therefore strengthened the board and management of English Estates with real experts in property development, and gave it financial and commercial objectives and broad policy guidelines to which to work. It was told by us to operate in the assisted areas, building factories where there was an underlying need in the market, but only in those locations where there was no prospect of finding private sector investors to undertake the development. We told it to concentrate on the type of development that would provide the most employment and bring a better balance to local economies. It was told to sell off the property as soon as it could, either to the tenants or to private investors. It was also told to secure the maximum rent that it could, without actually turning tenants away from factories that would otherwise stand empty.
  With these objectives in view, English Estates was told to plan, develop, market and manage the development programme, while exercising its best commercial judgment. The many civil servant posts previously required for this work were saved and English Estates took it on with no overall increase in its staffing level.
  The policy has proved to be an outstanding success. The new team at English Estates quickly identified an underlying demand for small units; many businesses in the assisted areas could not set up or expand because there was simply nowhere for them to carry on a business. English Estates pioneered the development of small factory units and the special rental terms and management techniques necessary to attract and nurture small business tenants.
  English Estates now manages over 3,000 small units and many hundreds of companies owe their existence to these English Estates developments. These companies have their roots in the assisted areas and as they grow, as many will, they will provide an increasing number of jobs firmly based in the areas where they were born. I know that
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  my hon. Friend is most anxious that this point should be borne in mind. Growing mighty oaks from the little acorns may be a slow business, but it stands more chance of success in the longer term than attempting to transplant mighty oaks into an alien soil.
  Under the old policies, English Estates was restricted to building premises for manufacturing industries. Its estates grew up without the mix of warehousing and offices that is so essential for balanced economic development at the local level. Under the Conservatives it has built warehousing and developed small suites of offices as well as factories. It has found institutional investment, up to £20 million so far, to help finance some of these developments. These units have found a ready market for businesses in the service sector that are anxious to service the manufacturing industries on the industrial estates. As a consequence, the estates are becoming more desirable locations for thriving modern industries.
  Perhaps the most innovative developments of all have been those in response to this Government's policies of encouraging the interaction beween higher educational establishments and businesses engaged in the new technologies. English Estates is now the largest single high-tech developer in the country. Its technology transfer centres on university campuses provide a model which private developers have followed in the more prosperous parts of the country. At Bradford university, for example, it has provided one of the most successful high-tech developments in the United Kingdom. Similar developments have now been completed at Leeds, Hull, York and at Durham, and more are planned.
  By means of this type of development, English Estates has provided a focus in the assisted areas for growth and prosperity in the industries of the future.
  The policy of selling factories at every possible opportunity and getting the best rents we could from the market has paid off handsomely. As a result, English Estates returns to the Government nearly £2 from rents and factory sales for every £3 which the taxpayer invests in its programmes.
  The success of the policy is demonstrated by the speed with which English Estates has filled its new units. Every one of the past five years has seen a record number of new factories occupied. The area of vacant factory space is now about half of what it was five years ago. In the north-east of England, lettings have shown a particularly encouraging trend. Not only is English Estates letting a record number of factories to new tenants there but over the past year a record number of existing tenants have expanded, creating more jobs in the process.
  All this has been achieved by English Estates while operating under a hitherto bureaucratic financing system which completely divorced its commercial performance from the size and content of its development programme. The Industrial Development Act 1985 was introduced to correct this and provides the basis for a more commercial funding system. From 1 April this year English Estates will be able to use its income from rents and factory sales to fund its capital investment. My right hon. Friend the Secretary of State announced to the House on 19 March how these new arrangements would work in practice.
  As for the actual size of the programme, over the past four years we have provided an average of £32 million grant-in-aid for English Estates to invest in new factory development in the assisted areas and in recent years in Chatham. In return, English Estates has surrendered about

  767
  £22 million in receipts from rents and factory sales in each of these years. On this basis, the net funding has averaged some £10 million a year. This year, English Estates will spend £31·7 million on capital investment, including about £2 million on the development in Chatham.
  Next year, English Estates will spend at least £32 million on new investment but all of that will now go into the assisted areas. We have agreed to provide £12·6 million grant-in-aid towards that investment. Quite separate financing arrangements have been agreed for the development at Chatham, which will no longer effect the size of the programme that English Estates can carry out in the assisted areas. If English Estates matches its recent performance on factory sales and rents—and we have every reason to believe that it will in fact do better than that—more money should be available for it to build up a reserve for future years or to spend on more capital investment. We have high hopes that an even higher proportion of future investment will be funded from its own resources.
  As for the £32 million to be spent in the assisted areas, the actual allocation to various locations within them is a matter for English Estates. It will allocate those funds to the travel-to-work areas in the assisted areas taking account of the level of unemployment in each. Those allocations have yet to be worked out, but, I am delighted to report to my hon. Friend that English Estates now has sufficient funds to undertake a £1 million development in Darlington shortly. English Estates is about to discuss with local interests how best to invest this sum to maximise job creation there.
  We shall, of course, continue our policy of asking the board and management of English Estates to use their
  768
  development expertise and management skills to provide the type of development that is best suited to the needs of each location in terms of generating the most jobs for the money. English Estates is now in a position to reopen negotiations and discussions with interested bodies, including the local authorities in the assisted areas, concerning the type of development that it will be undertaking in the years ahead.
  It is no secret that we have discussed with the management of English Estates whether we should now go the full way and privatise its organisation. But we have come to the conclusion that the present system, with English Estates implementing our policies through the disciplines of the market place, will continue to provide the most responsive and cost-effective means of carrying out the advance factory programme.
  I opened by saying that I had a success story to tell, and I would like to close by saying that we hope for even greater success under a more commercial and market-orientated system in the future. All that has been made possible by the dedication and professional expertise of the board, management and staff of English Estates.
  I should like to conclude by saying that I have listened carefully to what my hon. Friend said about the future of the three development corporations and I shall, as he invited me, refer his remarks tomorrow to my colleagues at the Department of the Environment, who will, no doubt, be getting in touch shortly in response to my hon. Friend's question.
  Question put and agreed to.
  Adjourned accordingly at two minutes to One o'clock.

ENVIRONMENT
  Water Pollution
  Water Pollution
  Management Agreements
  Management Agreements
  Nature Conservation
  Nature Conservation
  Sheltered Housing
  Sheltered Housing
  Planning Advice (Small Firms)
  Planning Advice (Small Firms)
  Palace of Westminster
  Palace of Westminster
EDUCATION AND SCIENCE
  GCSE
  GCSE
  Books (Primary Schools)
  Books (Primary Schools)
  Overseas Students
  Overseas Students
  Schools Inspectors
  Schools Inspectors
  Subject Teachers
  Subject Teachers
  Poundswick School, Manchester
  Poundswick School, Manchester
TRADE AND INDUSTRY
  Domestic Furniture (Fire Safety)
  Domestic Furniture (Fire Safety)
  Exchange Rate
  Exchange Rate
  Non-woven Fabrics
  Non-woven Fabrics
  Scientific Research
  Scientific Research
  Petrol
  Petrol
  Import Substitution
  Import Substitution
CHURCH COMMISSIONERS
  St. Mary's, Southampton
  St. Mary's, Southampton
PRIME MINISTER
  British Airways
  British Airways
  Leicester
  Leicester
  Energy Efficiency (Low Income Households)
  Energy Efficiency (Low Income Households)
HOME DEPARTMENT
  Autocrime
  Autocrime
  Police Interviews (Tape Recording)
  Police Interviews (Tape Recording)
  United States Air Force (Traffic Incident)
  United States Air Force (Traffic Incident)
  Licensing Hours
  Licensing Hours
  Leicester Prison
  Leicester Prison
  Rape Defendants
  Rape Defendants
  Indian Sub-continent (Visitors)
  Indian Sub-continent (Visitors)
  Prisoners (Visits)
  Prisoners (Visits)
  Seals
  Seals
  Manchester University (Home Secretary's Visit)
  Manchester University (Home Secretary's Visit)
  Repatriation
  Repatriation
  Magistrates' Court, Southampton
  Magistrates' Court, Southampton
  Immigration
  Immigration
  Protection of Animals Act 1911
  Protection of Animals Act 1911
  Crime Prevention
  Crime Prevention
FOREIGN AND COMMONWEALTH AFFAIRS
  Hong Kong
  Hong Kong
  Nicaragua
  Nicaragua
  Contras (Central America)
  Contras (Central America)
  Anglo-Irish Agreement
  Anglo-Irish Agreement
  USSR (Separate Recognition)
  USSR (Separate Recognition)
  Australia (EC Trade)
  Australia (EC Trade)
AGRICULTURE, FISHERIES AND FOOD
  Electricity Costs
  Electricity Costs
  Carcase Weights
  Carcase Weights
  Intervention Stores
  Intervention Stores
  Brown FK
  Brown FK
  Common Agricultural Policy
  Common Agricultural Policy
  Salmon Stocks
  Salmon Stocks
  Intervention Board (Headquarters)
  Intervention Board (Headquarters)
  Wheat
  Wheat
  Grain Exports
  Grain Exports
  Subsidies
  Subsidies
WALES
  Welsh Development Agency
  Welsh Development Agency
  Labour Statistics
  Labour Statistics
  British Rail
  British Rail
  Machynlleth Chest Hospital
  Machynlleth Chest Hospital
  Education
  Education
  Chirk and Ruabon Bypass
  Chirk and Ruabon Bypass
  University Hospital
  University Hospital
  South Glamorgan Health Authority
  South Glamorgan Health Authority
  Nurses' Homes
  Nurses' Homes
  Rural Areas (Support)
  Rural Areas (Support)
  Derelict Land
  Derelict Land
  Schools Inspectors
  Schools Inspectors
  M4 (Parking Areas)
  M4 (Parking Areas)
  Employment Statistics
  Employment Statistics
SCOTLAND
  Private Legislation Procedures
  Private Legislation Procedures
  Motor Vehicles (Theft)
  Motor Vehicles (Theft)
  State Hospital, Carstairs
  State Hospital, Carstairs
  Disabled Persons (Services, Consultation and Representation) Bill
  Disabled Persons (Services, Consultation and Representation) Bill
  Teachers (Pay and Conditions)
  Teachers (Pay and Conditions)
  Macaulay Institute for Soil Research
  Macaulay Institute for Soil Research
  Forestry
  Forestry
OVERSEAS DEVELOPMENT
  World Food Programme
  World Food Programme
  United Nations Special Session (Africa)
  United Nations Special Session (Africa)
  RMS St. Helena
  RMS St. Helena
EMPLOYMENT
  Young Workers Scheme
  Young Workers Scheme
  Working Population
  Working Population
  Coventry
  Coventry
  Departmental Budgeting
  Departmental Budgeting
  Labour Statistics
  Labour Statistics
  Labour Market
  Labour Market
  Farming Accidents
  Farming Accidents
  Agricultural Employment
  Agricultural Employment
  Job Start Scheme
  Job Start Scheme
TRANSPORT
  Channel Tunnel
  Channel Tunnel
  National Traffic Club
  National Traffic Club
  Glasgow Airport
  Glasgow Airport
  Humber Bridge
  Humber Bridge
  A19 (Accident Statistics)
  A19 (Accident Statistics)
  Ross-on-Wye (Goods Vehicles)
  Ross-on-Wye (Goods Vehicles)
  South Africa/Southampton (Trade)
  South Africa/Southampton (Trade)
  British Airways
  British Airways
  Bermuda 2 Agreement
  Bermuda 2 Agreement
  Motor Vehicles (Security)
  Motor Vehicles (Security)
  North Sea (Helicopters)
  North Sea (Helicopters)
  Liner Shipping Freight Rates
  Liner Shipping Freight Rates
  Airports Bill
  Airports Bill
  Chatteris Bypass
  Chatteris Bypass
  Road Safety Programmes
  Road Safety Programmes
  Stansted Airport
  Stansted Airport
  British Rail
  British Rail
  Marine Pilotage
  Marine Pilotage
  Foreign-registered Aircraft
  Foreign-registered Aircraft
  Dawn Waters (Loss)
  Dawn Waters (Loss)
NORTHERN IRELAND
  Primary Pupils (Swimming)
  Primary Pupils (Swimming)
  Day of Protest
  Day of Protest
  Assembly
  Assembly
  Motor Vehicles (Theft)
  Motor Vehicles (Theft)
  Action for Community Employment
  Action for Community Employment
  Divis Flats
  Divis Flats
  New Dwellings (Building Costs)
  New Dwellings (Building Costs)
  Anglo-Irish Agreement
  Anglo-Irish Agreement
  Exports
  Exports
SOCIAL SERVICES
  Tobacco Advertising
  Tobacco Advertising
  Severe Weather Payments
  Severe Weather Payments
  Benefits
  Benefits
  Income Support
  Income Support
  Unemployment and Supplementary Benefit
  Unemployment and Supplementary Benefit
  Single Clothing Payments
  Single Clothing Payments
  Urgent Needs Payments
  Urgent Needs Payments
  Benefits (Young Claimants)
  Benefits (Young Claimants)
  Single Payments
  Single Payments
  State Pension (Interest Payments)
  State Pension (Interest Payments)
  Supplementary Benefit
  Supplementary Benefit
  Dental Charges
  Dental Charges
  National Insurance Credits
  National Insurance Credits
  Hospital Laboratories (Crown Immunity)
  Hospital Laboratories (Crown Immunity)
  Junior Hospital Doctors
  Junior Hospital Doctors
  Orthopaedic Operations
  Orthopaedic Operations
  NHS (Property Disposal)
  NHS (Property Disposal)
  Speech Therapists
  Speech Therapists
  Medroxyprogesterone Acetate
  Medroxyprogesterone Acetate
  Health Authorities
  Health Authorities
  Accident and Emergency Departments
  Accident and Emergency Departments
  General Hospitals
  General Hospitals
  Housing Benefit
  Housing Benefit
  NHS (Private Contractors)
  NHS (Private Contractors)
  DHAs (Chairmanships)
  DHAs (Chairmanships)
NATIONAL FINANCE
  Covenanted Donations
  Covenanted Donations
  Small Businesses
  Small Businesses
  Taxpayers
  Taxpayers
  Oil Price (Effects)
  Oil Price (Effects)
  Base Lending Rate
  Base Lending Rate
  European Monetary System
  European Monetary System
  Acceptances in Lieu of Tax
  Acceptances in Lieu of Tax
  Customs and Excise (Job Sharing)
  Customs and Excise (Job Sharing)
  Private Schools
  Private Schools
THE ARTS
  Films
  Films
  Tyne and Wear
  Tyne and Wear
  Victoria and Albert Museum
  Victoria and Albert Museum
  Works of Art (International Trading)
  Works of Art (International Trading)
  Public Libraries and Museums Act 1984
  Public Libraries and Museums Act 1984
  East Midlands
  East Midlands
  Metropolitan Counties (Allocation)
  Metropolitan Counties (Allocation)
  South Bank
  South Bank
  Jubilee Gardens
  Jubilee Gardens
  Arts Council Members (Payments)
  Arts Council Members (Payments)
  National Heritage Act 1980
  National Heritage Act 1980
  Acceptances in Lieu of Tax
  Acceptances in Lieu of Tax
ENERGY
  Nuclear Reprocessing
  Nuclear Reprocessing
  Oil Rigs (Visits)
  Oil Rigs (Visits)
  Coal
  Coal
  Electricity Supply
  Electricity Supply
  Sellafield
  Sellafield
  Low-income Households
  Low-income Households
  Hot Dry Rocks
  Hot Dry Rocks
  St. Fergus Terminal
  St. Fergus Terminal
DEFENCE
  Visiting Military Aircraft
  Visiting Military Aircraft
  Military Bands
  Military Bands
  Strategic Defence Initiative
  Strategic Defence Initiative
  Tanks
  Tanks
  Home Base Defence
  Home Base Defence
  Airbus Frame
  Airbus Frame
  FV438 (Anti-tank Weapons)
  FV438 (Anti-tank Weapons)
  Royal Navy Target-Towing Contract
  Royal Navy Target-Towing Contract
Preamble
The House met at half-past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Southwark): The LORD CHANCELLOR on the Woolsack.

European Parliament: Election System
Lord Banks: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they can confirm that they are pressing for the adoption of a uniform system of election to the European Parliament in time for the 1989 election, and whether they will report on the progress made towards this end.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, the initiative rests with the European Parliament, which is required to submit proposals to the Council of Ministers. I understand that the Political Affairs Committee of the Parliament has prepared a report containing proposals for uniform elections, but these have not yet been considered by the Parliament.
Lord Banks: My Lords, I thank the noble Lord for that reply. May I ask him whether he is aware that we on these Benches regard the early introduction of a uniform system as essential? Do the Government accept that in order to secure agreement the uniform system must be proportional? By what date has legislation to pass through this Parliament in order that a uniform system may be operative for the 1989 election?
Lord Glenarthur: My Lords, I am well aware of the interest of the noble Lord and his party in this matter. We hope that agreement can be reached, but it is not for us to take any initiative while the matter is still with the European Parliament for it to make its proposals. We shall become actively involved if proposals are put by the Parliament to the Council of Ministers. So far as dates are concerned, we estimate that agreement would have to be reached in time for the necessary legislation to be introduced in the 1987–88 Session of Parliament in order to have the effect the noble Lord would like.
Lord Bottomley: My Lords, does the Minister agree that the government and the alternate government is the best system for this country? It has served our country for generations past and it assures security and peace.
Lord Glenarthur: My Lords, I very much agree with the noble Lord, as no doubt he would expect. I am sure that my noble friend Lord Boyd-Carpenter would also agree, since I believe I heard assenting noises from my right.
Lord Boyd-Carpenter: My Lords, will not the Government view favourably a uniform system of elections to the European Parliament, provided that system were one of the first past the post?
Lord Glenarthur: Yes, my Lords, particularly if it gets universal agreement.
Baroness White: My Lords, does the noble Lord recognise that there is not universal agreement even on his own Benches? The European Parliament is different in character from the type of Parliament we enjoy in this country. It might more properly be called a European Assembly. Considerations are very different, as has been mentioned in this House on previous occasions.
Lord Glenarthur: Yes, my Lords, I am aware of the fact that there are differences of view on this side of the House as well. I am also aware of the fact that European elections are somewhat different. What I think is essential is that there is uniform agreement in Europe for the adoption of any proposals.

Winter Heating Costs: Assistance
2.33 p.m.
Lord Mellish: 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 assist old-age pensioners with the high cost of heating during the recent prolonged cold spell.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, the main help with heating costs is through the supplementary benefit scale rates and weekly heating additions. Most householders in receipt of supplementary pensions who are over the age of 65 are entitled to a basic weekly heating addition, or a higher rate addition if they are over 85 or severely disabled. In addition, supplementary benefit claimants may, subject to the normal rules governing single payments, be eligible for a single payment to cover extra fuel costs arising from the recent exceptionally severe weather.
Lord Mellish: My Lords, I am obliged to the noble Baroness. May I put a case to her so that she can give me an answer? I have been approached by an elderly lady of 83 who has just received her gas bill from Segas for this dreadful winter we have gone through. If I may quote from it, she has consumed gas to the amount of £142.10, with a standing charge of £9.90. Her husband died 10 years ago and left her with about £700. She is unable to claim supplementary benefit. Will the noble Baroness be good enough to tell me what I am supposed to say to her? She is in great distress and does not know what to do.
Baroness Trumpington: My Lords, we are very concerned about old people. Not all claimants automatically qualify for this help when a period of

1153
exceptionally severe weather has been declared. For example, those who pay a fixed heating charge with their rent and those who have sufficient savings in excess of £500 to pay for the extra fuel used do not qualify. Other claimants may find that their quarterly bill, which may have covered a mild spell as well as a very cold spell, is no higher than they had budgeted for. The system last year worked on the basis of the weather over the whole period of the bill and not just over the severe spell. With regard to the bill for £9 odd, that is a matter for British Gas.
Lord Mellish: My Lords, I apologise to the House for coming in again so quickly. With respect to the noble Baroness, that is not good enough. I cannot repeat to an old lady of 83 who has only the income I have described the jargon I have just heard. She went to the DHSS and was told that she had more capital than was required: that is, more than £500. Also, is it not an absolute impertinence on the part of Segas or anybody else to throw a standing charge of £9.90 at old people like that, with no question of a rebate or other consideration? What in heaven's name am I supposed to say to her?
Baroness Trumpington: My Lords, I have already answered the point about having more than £500 in savings, and I have suggested that the noble Lord should contact British Gas about the bill.
Lord Molloy: My Lords, is the noble Baroness aware that it is very grim to have to say in this House that during the winter hundreds of our older citizens have died from hypothermia and there does not seem to be much evidence that the Government are doing a great deal about it? Does the noble Baroness agree that one cause of these deaths has been the type of heating some of these old people have, and particularly those who live alone, because it is totally insufficient? Would it not be an idea for local authorities to know when old people are living alone so that during such extremely inclement weather they can he visited? Should not that be compulsory on their social services?
Baroness Trumpington: My Lords, I think that good neighbours can do a great deal to help. We are very concerned about hypothermia and are investigating the increase in references to it on death certificates last year. In the meantime, we have done much to help those most at risk by the extra money which has been put into heating additions. We now spend £140 million more in real terms on heating additions than in 1979, when the Government took office.
Baroness Faithfull: My Lords, will the Minister agree that in answer to the noble Lord, Lord Mellish, the social services department should be asked to call on the old lady and consult with her on how best she can be helped either through social services or through supplementary benefit? I have dealt with many such cases.
Baroness Trumpington: My Lords, I am most grateful to my noble friend Lady Faithfull.
Baroness Jeger: My Lords, does the Minister not accept that this arithmetical competition in compassion keeps nobody warm and is most offensive to many old people and to many Members on both sides of this House? Can the Minister try to take this question a little further? Why not, for instance, add heating allowances automatically for people on supplementary benefit in the winter? Why do we have to have this argument about how cold the cold weather is? We all know that heating costs more in the winter than in the summer. I should have thought there would have been a great saving in administration if there was an automatic increase in heating allowances in the winter rather than to have a flat sum all the year round.
Secondly, may I ask the noble Baroness whether she will consult her friends in the Government, particularly in this energy year, about getting more repairs and insulation work done so that we are not wasting so much money trying to keep warm? Will she also consult with them about lowering the costs of gas and electricity, which are being kept by this Government artificially high, especially as the price of oil is going down?
Baroness Trumpington: My Lords, with regard to the latter part of the noble Baroness's supplementary question, I can do no better than quote my honourable friend the Minister of State for Social Security when he said during a recent interview:
"If we are going to change to a single payment as we have suggested we would in 1988, we shall need to make sure that there is some effective alternative to ensure the future of these schemes, but that is what we are determined to do".
Lord Paget of Northampton: My Lords, my noble friend who asked the original Question asked the noble Baroness what he should tell his old constituent. She has not answered him. Should he tell his old constituent that her lamentable condition is her fault or the Government's? It is one or the other.
Baroness Trumpington: My Lords, I have stated the case. My noble friend Lady Faithfull has made a most helpful suggestion. Following that, I am unable to suggest to any noble Lord what he should tell a friend of his in a private conversation.
Lord Avebury: My Lords, were there not incomprehensible difficulties between the payments made in one part of the country and those in another in the recent cold spell? How will the local authorities' social services departments be able to explain to an old person that she is not receiving additional heating allowance when somebody in the neighbouring borough is? Will the noble Baroness and the Government seriously consider whether the additional heating allowance should be made universal to all old people during spells of cold weather such as were experienced in February?
Baroness Trumpington: My Lords, the system which operated last year and which was based on data collected from weather stations was declared invalid by the social security commissioners. The chief adjudication officer has subsequently issued revised guidance. It is a regulated system, and Ministers cannot intervene in individual decisions.
Lord Glenamara: My Lords, can the noble Baroness tell us why it took so long in most areas to declare a period of exceptional weather when, during February, the whole country was in the grip of the coldest month for many, many years?
Baroness Trumpington: My Lords, this is a matter for the adjudication officers in DHSS local offices.
Lord Ennals: My Lords, can the noble Baroness say just what ministerial discretion there is? Is she aware that there were hospitals up and down the country that had to declare a red alert? They were unable to take in any other patients because of the patients who were admitted suffering from hypothermia or low blood temperature. She referred to exceptionally severe weather. Is there not some discretion by which the Minister can determine that these are exceptional circumstances, requiring exceptional action to save exceptional people, rather than the decision being taken after the crisis is over?
Baroness Trumpington: My Lords, the Government believe that the proposed system of premium payments which gives extra help to pensioners, the sick and the disabled, in particular, is the most effective means of getting help to those most in need.
Lord Mellish: My Lords, I apologise to the House for intervening again. May I clear up an anomaly? I am obliged to the noble Baroness, Lady Faithfull, who intervened. The DHSS has called and the people were kind and decent, but the fact is that the old lady does have over £500. She has actually about £800 which her husband left her when he died and which she has carefully conserved. She has no income other than the old-age pension. The DHSS said with the deepest regret that there was nothing that it could do. I am simply saying that I do not know where to go from here. She will pay the bill out of the £500, or whatever it is, that she has left. All I am saying is that the DHSS people have already been.
Baroness Trumpington: My Lords, the main help with heating is in the weekly scale rates. They have increased by more than 6 per cent. in real terms since 1978. We have also increased both the availability and value of heating additions. They are now worth £140 million more in real terms than in 1979. In particular, we have extended automatic entitlement to heating additions to those who are most likely to need extra warmth—the elderly, the chronically sick and disabled and families with young children. I am afraid that I have no more to offer them.
Baroness Jeger: My Lords, I apologise for coming back again, but I do not think that the noble Baroness has explained to the House why the heating allowance is the same in a hot summer as it is in a cold winter.
Baroness Trumpington: My Lords, because the heating allowance is covered by the weekly figures that people receive, and savings should be made over the whole year to cover the cold periods.

Queen's Birthday: Commemorative Stamps
2.45 p.m.
Baroness Burton of Coventry: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the special issue of stamps to mark the Queen's 60th birthday on 21st April will include stamps at 12p and if not whether they will recommend to the chairman of the Post Office that such inclusion be given consideration.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, special stamp issues are a matter for the Post Office and I understand that the chairman of the board has recently corresponded with the noble Baroness about this matter.
Baroness Burton of Coventry: My Lords, yes, I have had a long, courteous, detailed and entirely negative letter from the chairman of the Post Office. As the Minister has not answered the Question on the Order Paper, which asks whether Her Majesty's Government would take certain action, perhaps I may ask the Minister this question. As we have a Christmas issue of second class stamps, because so many people want a special stamp, does he not think that many people would equally like a special stamp for the Queen's 60th birthday anniversary? Does he feel that the attention of the chairman of the Post Office could be drawn to that?
Lord Lucas of Chilworth: My Lords, most certainly the attention of the chairman of the Post Office Board will be drawn to the noble Baroness's question. For some years it has been the practice of the Post Office Board to produce only four stamps as a special issue. They range across the main price usages: 17p for the inland first class stamp, 22p for the European stamp, a 31p airmail stamp for Zone B (the Americas, India and South East Asia), and a 34p airmail stamp for Zone C (Australia, Japan and China). The Christmas edition has always been a particular one because the volume of second class mail increases quite significantly at that time,
Baroness Burton of Coventry: My Lords, does the Minister agree that we cannot always dwell in the past on this matter any more than on the first Question that was asked this afternoon? Does he not think that some attention should be given to people who use second class stamps instead of always giving it only for those who use first class stamps?
Lord Lucas of Chilworth: My Lords, in particular, there are design implications for the special issue celebrating Her Majesty's birthday in that the stamp is based on six photographs of Her Majesty—one from each decade of her life. It is an essential part of the design that the stamps are produced in attached se tenant pairs. That design would be upset were there to be an additional stamp. The usage of first class and second class mail is currently about the same so that there will be relatively no disadvantage.

Engineering Design: Training Courses
2.49 p.m.
Lord Rodney: 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 which universities and technical colleges have full-time courses for training mechanical design engineers.
Baroness Hooper: My Lords, courses in engineering design, including courses with a design element, are listed in a booklet called Design Courses in Britain 1986 published by the Design Council. A copy has been placed in the Library. This lists some 48 degree level courses, of which 16 link mechanical engineering with design.
Lord Rodney: My Lords, I should like to thank my noble friend for that Answer. She was kind enough to send me a copy of the booklet. I do not think that it in fact totally records the true situation. May I ask my noble friend whether Her Majesty's Government are aware that there are very few engineering professors who are directly responsible for the teaching and research of engineering design? Are they further aware that at the present time there are vacancies for professors and senior lecturers in engineering design which cannot be filled?
Baroness Hooper: My Lords, I can only say that as a result of this Question my right honourable friend the Secretary of State will be more aware of the problem. My noble friend has rendered a valuable service in drawing attention to the dearth of suitably qualified people in this field. It is vital that industry should co-operate with educational institutions and make clear their needs, and this is one of the objectives of Industry Year.
Baroness Seear: My Lords, does the noble Baroness agree that there will be even more vacancies if the present cuts continue in the universities and polytechnics?
Baroness Hooper: My Lords, in fact the Government have already taken several measures to provide substantial additional resources for engineering, most recently the £43 million to be spent on the engineering and technology programme.

Influenza Vaccine: Business Statement
Lord Ennals: My Lords, if that is the end of Starred Questions, may I ask the noble Viscount the Leader of the House whether he has had any indication of the intention of the Minister from the Department of Health and Social Services to make clear the Government's policy on 'flu vaccine? He will no doubt recall that on Thursday there was an exchange in this House, in which my noble friend Lord Cledwyn of Penrhos and I were involved, when the noble Baroness made a statement which was strongly critical of her own department's policy on 'flu vaccine.
Noble Lords: Order!
Lord Ennals: My Lords, my noble friend asked whether a Statement could be made, and I am asking the Leader of the House whether there is the intention that the Statement should be made—
Noble Lords: Order!
Lord Ennals: My Lords, what is out of order about that?
The Lord President of the Council (Viscount Whitelaw): My Lords, perhaps I should say that I understood that my noble friend said that if there was any necessity for such a Statement after the exchanges last week she would consider making one. She has not told me that she is going to do so. Since the noble Lord asks, I will of course look into the matter further.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Glenarthur will, with the leave of the House, repeat a Statement that is to be made in another place on Evelyn Glenholmes.

Drug Trafficking Offences Bill
2.52 p.m.
Lord Glenarthur: 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 Glenarthur.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 1 [Confiscation orders]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 1:
Page 2, line 2, leave out from ("trafficking") to end of line 3.
The noble Lord said: I beg to move Amendment No. 1, and it may be convenient to discuss at the same time Amendments Nos. 2 and 39. No point of substance is raised by these amendments, which are intended to clarify the Bill. At present Clauses 1 and 2, in defining what is meant by the terms "has benefited from drug trafficking" and "the proceeds of drug trafficking", provide that payments made partly in connection with drug trafficking and partly in some other connection are to be regarded as payments for drug trafficking. This is important, because it is not uncommon for traffickers to operate through apparently legitimate concerns and, for example, to deliver a consignment of drugs hidden among quite innocuous goods. It would be wrong to allow them to escape full liability by claiming that the payment they had received was primarily for the routine cargo. These proposed amendments delete the specific provisions to this effect in Clauses 1 and 2 and insert a general interpretation provision in Clause 28. I beg to move.
Lord Mishcon: It seems a most sensible amendment.
On Question, amendment agreed to.
Clause 1, as amended, agreed to.
Clause 2 [Assessing the proceeds of drug trafficking]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 2:
Page 3, line 8, leave out from ("are") to end of line 10 and insert ("his proceeds of drug trafficking").
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 3:
Page 3, line 12, leave out ("the proceeds of drug trafficking by him") and insert ("his proceeds of drug trafficking").
The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 4 to 14, 17, 18, 20 and 21, and 35, 36 and 37. This is a lengthy list of amendments, but I hope I need not take long in explaining their purpose. We want to ensure that what is viewed as the defendant's proceeds from drug trafficking will be consistent throughout the Bill. Clause 2(1)(a) makes it clear that "the proceeds of drug trafficking" by the defendant includes both money made from his own trafficking activities and any payments he has received in connection with trafficking by others.
The phrase "the proceeds of drug trafficking by the defendant" (or "by him") appears in a good many other places in the Bill, and we feel that there may be a risk that, in some circumstances, it might inadvertently be taken to mean only the proceeds of the defendant's own trafficking activities. A change of label is desirable to reflect more clearly the broader nature of what is intended; that is, to differentiate between the proceeds of drug trafficking and the notion of trafficking conducted by a person. I beg to move.
Lord Mishcon: The same observation applies as applied to the previous amendment. This is a very sensible series of amendments.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 4:
Page 3, line 19, leave out ("the proceeds of drug trafficking by him") and insert ("his proceeds of drug trafficking").
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 5 to 7:
Page 4, line 3, leave out ("the proceeds of drug trafficking by the defendant") and insert ("the defendant's proceeds of drug trafficking").
Page 4, line 8, leave out ("the proceeds of drug trafficking by the defendant") and insert ("the defendant's proceeds of drug trafficking").
Page 4, line 11, leave out ("proceeds of drug trafficking by him") and insert ("of his proceeds of drug trafficking").
On Question, amendments agreed to.
Clause 2, as amended, agreed to.
Clause 3 [Statements relating to drug trafficking]:
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 8 to 10:
Page 4, line 19, leave out ("the proceeds of drug trafficking by him") and insert ("his proceeds of drug trafficking").
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Page 4, line 41, leave out ("is the proceeds of drug trafficking by him") and insert ("was received by him in connection with drug trafficking carried on by him or another").
Page 5, line 17, leave out ("is the proceeds of drug trafficking by him") and insert ("was received by him in connection with drug trafficking carried on by him or another").
On Question, amendments agreed to.
Clause 3, as amended, agreed to.
Clause 4 [Amount to be recovered under confiscation order]:
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 11 and 12:
Page 5, leave out line 23 and insert ("the defendant's proceeds of drug trafficking").
Page 5, line 34, leave out ("the proceeds of drug trafficking by the defendant") and insert ("his proceeds of drug trafficking").
On Question, amendments agreed to.
Clause 4, as amended, agreed to.
Clause 5 [Confiscation orders: definition of terms]:
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 13 and 14:
Page 6, line 7, leave out ("the proceeds of drug trafficking by him") and insert ("received by him in connection with drug trafficking carried on by him or another").
Page 6, leave out line 9 and insert ("property received by him in that connection").
On Question, amendments agreed to.
Clause 5, as amended, agreed to.
Clauses 6 to 11 agreed to.
Clause 12 [Application of proceeds of realisation and other sums]:
3 p.m.
Lord Mishcon Lord Mishcon moved Amendment No. 15:
Page 14, line 37, after ("may") insert ("after giving the defendant an opportunity of being heard").
The noble Lord said: I hoped that a formula I have used up to now—namely, that the amendment is a sensible one and should be agreed to by the Committee—was one which we would hear from the Minister in answer to my amendment.
The clause deals with the application of proceeds of realisation and other sums which, under the Bill, as the Committee will remember, come into the hands of the receiver. After the taking out of such moneys as are necessary for a confiscation order, the rest of the funds have to be distributed equitably and in accordance with an order of the High Court, to which the receiver will apply. It does not say in the Bill that, after the moneys are taken from the confiscation order, the rest (which presumably are moneys that are not in any way affected by the iniquity of drugs) has to be distributed. It does not say that the defendant has any right of audience before the High Court judge in order to make submission as to the way in which those funds should be distributed. The sole purpose of this amendment is to give him that fair right.
Lord Glenarthur: I am grateful to the noble Lord for that explanation of the reasons behind his amendment. I fear that he is going to be a little

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disappointed in that I am going to try to adduce one or two reasons why I cannot follow the form of words which he used in relation to the other amendments.
I cannot agree with the noble Lord that the offender should be put in a special position at this point in the proceedings. That would be the effect of his amendment. The Bill recognises in Clause 11(8) that any person holding an interest in property which is liable to confiscation, whether the defendant or a third party, must be given a reasonable opportunity to make representations to the High Court before that property can be realised. Thus, a third party might argue that property in his hands should not have been included in the confiscation order because he gave full value for it; and the defendant might ask that, say, his shares should be realised rather than his house. It is right and proper that such representations should be made at that stage, before realisation begins. But we are here dealing with how any money left in the hands of a receiver after the confiscation order has been satisfied should be distributed.
In practice, the only cases in which distribution will arise are those where property has been taken not only from the defendant but from third parties as well. They, too, would no doubt have views on how surplus cash should be allocated. I should not favour the defendant being given an opportunity to indicate his preferences among them, which may have little to do with questions of justice, let alone to argue that his claims were greater than theirs. Nor would there seem to be much practical value in allowing all the possible claimants to come forward and argue why they should be given priority. All would simply seek the best possible deal for themselves, or could well do so. Such matters are, I believe, better left to the discretion of the High Court, taking account of all the circumstances of the case.
I hope that the noble Lord will see the force of that argument, and, in the light of the fact that Clause 11(8) has the effect it does on matters arising before the actual property can be realised, will see fit to withdraw his amendment.
Lord Mishcon: I would want to react graciously to anything that the noble Lord the Minister said in regard to a Bill for which, as everybody knows, there is wholehearted support in every quarter of the Committee, but I must confess that I do not understand his argument. If it is my fault, I shall apologise to him.
The noble Lord invokes in aid of his argument that there should be no representation open to a defendant in these cases the fact that there is a previous clause which gives the right of representation of any arguments before a High Court judge prior to realisation. There are two stages: first, the stage of whether you are allowed to realise, and, if so, the way in which you do it; and, after realisation, there are the proceeds of realisation. Therefore the previous clause has nothing to do with the submission I endeavoured to make in regard to this amendment. Realisation has taken place, and the right of audience therefore ceases under the previous clause. What we are dealing with here is what happens with the proceeds of realisation.
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I should quite understand it if the noble Lord were to say: "Before the confiscation order has been sufficiently dealt with there should be no right to make submissions at all; the realisation has taken place, the confiscation order has to be effective and the proceeds will obviously be the source from which the confiscation moneys are to be taken". We are now dealing with what is left of what is the defendant's money, one would have assumed prima facie, and how it is to be distributed. I should not have objected if the noble Lord were to say that he wanted to extend the range of representation to those who might claim any interest in exactly the same way as one gets it with stolen property, often with various claimants being allowed to be heard by the court before anything is done by way of order as to where that property goes. I should not have objected if he extended the right of audience and the right of representation. But to say that the High Court is to do that without any guidance whatsoever from the person to whom, prima facie, these moneys belong, and without the defendant being given a right to appear before the High Court judge, is an absolute negation of justice.
One assumes that after the confiscation order has been sufficiently dealt with, the rest of the money belongs to somebody else—it may be the accused; it may be somebody else—but how can the High Court decide this without there being the right of representation to a High Court judge? After all, the person whose money it appears to be ought certainly to be heard. I am afraid that I cannot understand the Minister's reply. If he will show me where I have gone wrong on this argument, I shall be delighted to consider what he has to say, but at the moment I press the point.
Lord Wigoder: Perhaps I may intervene to say that, having listened to the discussion on this amendment with an open mind, and having heard the contributions so far, I come down very much in favour of what has been said by the noble Lord, Lord Mishcon. I rather anticipated that the Minister might have attempted to put forward the suggestion and argument that the amendment was unnecessary because the High Court judge would, as a matter of elementary justice, ask that the defendant should be represented so that he can hear what had to be said. But the Minister has not said that at all. He has come down against giving the defendant a right to make representations over what seems to me to be an important stage in the disposal of what, prima facie, belongs to the defendant himself. I would therefore respectfully support what the noble Lord, Lord Mishcon, has said in urging this amendment upon the Government.
Lord Denning: I, too, have heard all that has been said. I think that the Minister has given a sufficient answer. If I may say so, I think that what my noble friend Lord Wigoder has said is the complete answer. If the judge of the High Court thinks it is necessary or desirable in the interests of justice to hear the defendant, he will certainly arrange accordingly. That is the answer which my noble friend Lord Wigoder suggested. I think it is a sufficient answer, and for myself I would not support the amendment.
Lord Edmund-Davies: I am unable to agree with the noble and learned Lord who has just spoken. The previous clause concluded with the words:
"has been given for persons holding any interest in the property to make representations to the court".
That, I realise, is in relation to the making of an order for the realisation. But the property which is realised might, for example, be a lease. It has to be realised to make up the necessary funds, but it may be that after satisfaction has been obtained there are surplus proceeds in relation to which the defendant and other persons might have an interest. Those parties ought to be heard.
I would have thought that the amendment proposed by the noble Lord, Lord Mishcon, ought to be extended by the adoption of some such formula as that which concludes the preceding clause. That one should rely upon the learned judge doing something that the statute does not find it necessary to include is to expect too much. It ought to be there.
Lord Glenarthur: I have listened with care to what has been said and I have noted the dissenting opinions of the two noble and learned Lords on the Cross-Benches on this issue. The noble and learned Lord, Lord Denning, picked up the point that I made at the end of my initial remarks, that this is very much a matter for the discretion of the High Court, taking into account the circumstances of any case. I would have thought that that could cover the point made by the noble and learned Lord, Lord Edmund-Davies; I would have thought that it could do so, but I cannot be absolutely certain without verifying the fact. Nevertheless, it is an important point.
My other point is that as well as the defendant in this case, there are possible third parties as well to be taken into account. The amendment of the noble Lord, Lord Mishcon, does not take them into account in any case. It is possible that it might not be the defendant's money that we are talking about here: it might well be money that has been confiscated from third parties. I cannot accept that the defendant should have a special position. In fact, that is what he will have under the amendment—a special position; that the hearing should consider the case for all those involved.
The best thing that I can do, without making any commitment to the noble Lord, is this. When matters of this kind are raised, I realise that the remarks made should be studied very carefully. I should like, without making any commitment, to study the arguments that have been put forward and perhaps then correspond with the noble Lord or find some other way of taking the matter forward with him. I do not believe that I can offer any more today. If the noble Lord will be happy to go ahead on that basis, then I will be very grateful.
Lord Mishcon: As I have said, it is the wish of all parts of the Committee to be co-operative in regard to this Bill. The noble Lord the Minister says that—without any commitment, as he emphasises—he is prepared to consider the submissions that have been made. Will he take it for granted from me—and obviously this became apparent from the discussions that have taken place—that if he came forward with an amendment that allowed for the discretion of the court
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to be exercised but embodied in the statute, for any party who claimed to have an interest in the balance left over after the compensation order moneys have been paid, then of course I would not oppose any such amendment but would support it? I hope therefore that we may helpfully come forward with a sensible answer to this problem. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Clauses 13 to 15 agreed to.
Clause 16 [Enforcement of orders in Scotland]:
3.15 p.m.
Lord Mishcon Lord Mishcon moved Amendment No. 16:
Page 17, line 27, after ("may") insert ("for the purposes set out in subsection (1) above").
The noble Lord said: I can deal with this amendment very briefly. It is more of a probing amendment—or if it is not, it is an amendment to try to ensure that we do not do something beyond that which we would want to do in Committee. Clause 16(2) says:
"An Order in Council under this section may amend or apply, with or without modifications, any enactment".
That is a very bold statement, and unless there is an explanation to the contrary that I have not seen it would appear to go beyond what one would want to do. One imagines that the purpose of subsection (2) is to have such an Order in Council that is capable of amending or applying, with or without modifications, any enactment for the purposes set out in subsection (1).
In case anyone should think that this amendment emanates from what little ingenuity I have, I may at once say that I received the amendment from that well-known organisation, Justice, which is very careful about such matters. I am indebted to that organisation for the amendment and it is only right that I should put its authorship where it properly belongs.
Lord Wigoder: I support this amendment. So far as I can see, it does not in any way change the sense of the existing Bill; it merely makes a statement that appears on the face of it to be a trifle bald and somewhat radical a little more moderate in its implications. I hope that the Minister will find a way to accept it.
Lord Glenarthur: I may tell both noble Lords that I can accept the amendment, but with one proviso. The noble Lord will remember that I mentioned on Second Reading that it was our intention to replace Clause 16 with new provisions that will specify in some detail the procedures by which the Bill will be enforced in Scotland.
I regret that I am not yet in a position to table the necessary amendments because they have proved technically to be rather complex due to the difficulties which are inherent in relating the two different legal systems to each other—that is, the Scottish and English legal systems. With your Lordships' permission, I shall be bringing forward the appropriate amendments on Report.

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Those amendments will provide for restraint orders made by the High Court in England and Wales to be recognised in Scotland and to be enforceable against assets held in Scotland following registration in the Court of Session. The powers of any receiver appointed under the Bill will also be recognised in Scotland, and Scottish police and customs officers will be given similar powers to those available to English and Welsh police under the Bill.
With that explanation of what is intended for the future, but in order to clarify matters as they stand at present, I believe the best thing to do is to accept the amendment.
Lord Mishcon: I am most grateful.
On Question, amendment agreed to.
Clause 16, as amended, agreed to.
Clause 17 [Assisting another to retain the benefit of drug trafficking]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 17:
Page 17, line 40, leave out ("the proceeds of drug trafficking by A") and insert ("A's proceeds of drug trafficking").
The noble Lord said: I spoke to this amendment with Amendment No. 3. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 18:
Page 18, line 1, leave out ("the proceeds of drug trafficking by A") and insert ("A's proceeds of drug trafficking").
On Question, amendment agreed to.
Viscount Davidson Viscount Davidson moved Amendment No. 19:
Page 18, line 7, after ("trafficking") insert ("or has benefited from drug trafficking").
The noble Viscount said: In speaking to this amendment, it may be for the convenience of the Committee to discuss also Amendments Nos. 22, 23 and 24. This series of amendments offers what we believe to be some useful improvements to Clause 17, which contains the provisions relating to the new laundering offence. The first amendment follows on from the point my noble friend made earlier; that a person may benefit from drug trafficking either by money derived from his own trafficking activities or by payments received in connection with trafficking by someone else. We want to make clear that where it can be shown that a person—in the terms of the clause, we call him "A"—has received payments in connection with his, or another's trafficking, then anyone who knowingly assists him to retain the benefits of those payments is guilty of the new laundering offence. It will not be necessary to prove that "A" has himself dealt in drugs, although, where he has received payments in connection with another's trafficking there will inevitably be some degree of complicity in drug dealing.
The other amendments seek to redefine, and to distinguish more clearly from each other, the two defences provided to a laundering charge. The second amendment narrows the scope of the defence in Clause 17(3)(a) by requiring the defendant to show, not
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simply that he did not know or suspect that the money with which he was dealing was a particular person's drug trafficking proceeds, but that he did not know it was drug proceeds at all. It would be wrong if the launderer could escape conviction by saying that, while he did suspect that the money must have come from drug dealing, he did not know or suspect that it derived specifically from a named person's trafficking.
The third and fourth amendments confine the second offence contained in Clause 17(3)(b) more clearly to the nature of the arrangement the defendant has entered into. He will have to show that he did not know or suspect that its effect would be to assist the particular person named in the charge to retain property or to invest funds. The reference to proceeds is unnecessary here. Ignorance of the provenance of the money will be dealt with by the first defence. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 20 and 21:
Page 18, line 9, leave out ("the proceeds of drug trafficking by any person") and insert ("any person's proceeds of drug trafficking").
Page 18, line 11, leave out ("the proceeds of drug trafficking by him") and insert ("his proceeds of drug trafficking").
The noble Lord said: I spoke to these amendments earlier. I beg to move them together.
On Question, amendments agreed to.
Viscount Davidson Viscount Davidson moved Amendment Nos. 22 to 24:
Page 18, line 16, leave out ("the proceeds of drug trafficking by A") and insert ("any person's proceeds of drug trafficking").
Page 18, line 18, leave out ("those proceeds") and insert ("any property").
Page 18, line 20, leave out ("those proceeds were") and insert ("any property was").
The noble Viscount said: I spoke to these amendments with Amendment No. 19. I beg to move them en bloc.
On Question, amendments agreed to.
Clause 17, as amended, agreed to.
Lord Denning Lord Denning moved Amendment No. 25:
After Clause 17, insert the following new clause:
("Powers and protection of financial institutions.
.—(1) If any bank or financial institution, or any other body, suspects that any proceeds of drug trafficking are or have been under its control or in passage through its banking or financial system, it may disclose the circumstances to the Chief Officer of police for the area, or to any constable in his stead, and may follow any directions which he may give.
(2) In disclosing information, or following the directions of the police, in accordance with subsection (1) above, any institution shall have statutory protection and shall not be liable to any person for breach of contract, confidence or duty in that respect.").
The noble and learned Lord said: This amendment is of more substance than we have hitherto discussed. Clause 17 deals with people who assist drug traffickers by laundering the money. Perhaps I should explain this Americanism, the word "launderers". It arises in this way. A drug trafficker obtains money in notes or otherwise and he wants to get rid of that money or keep it in hand as much as he can. He could take the notes in a suitcase to the hank, and bank them in his

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own name; but that would not suit his book, so he takes steps to conceal them.
For example, if he has his own business, such as a betting shop, which brings in proceeds, and he has a side business in drug trafficking, what does he do? He mixes the money together and pays it into the bank as though it is the proceeds of the genuine business. Who can then discover the money after that? Using that money through the genuine business he might buy a house in his wife's or lady friend's name; or he might buy a necklace, or anything like that. Who will then be able to track down those proceeds? If the man is modern enough he might order the bank to transfer the moneys to his numbered account in Switzerland.
There are no end of ways in which a drug trafficker can launder his dirty money and pass it through various channels, with concealment through various nominees, and so on, so that eventually the money appears to be clean. That is the launderer. The launderer and his assistants are now caught by Clause 17, which is a good, comprehensive clause that gets hold of all those who,
"by concealment, removal from the jurisdiction, transfer to nominees or otherwise"
conceal the proceeds of drug trafficking. They will be hit by Clause 17 unless they can prove, as stated in Clause 17, that they did not know or suspect that the money related to drug trafficking. That is very good as it stands.
But what about the bank handling these moneys? It may suspect that the moneys come from the proceeds of drug trafficking. The amounts may be so large that the bank thinks that they must come from drug trafficking; but what is it to do? I must tell your Lordships that the banks and financial institutions of this country are, by law, under a duty of confidence. They must not give notice to anyone of the state of their clients' accounts, the transactions passed through them, and whether or not an account is closed. There is an obligation of secrecy which was enunciated as long ago as 1924 by Lord Justice Atkin in the celebrated case of Tournier v. National Provincial Bank of England. In that case an employer suspected his servant of improperly handling money. He asked the hank manager about it. The bank manager said, "Oh, you need not worry about him. He is getting a lot of money from the bookmakers nowadays". The employee sued for damages for breach of confidence and succeeded because the bank manager had no right whatever to disclose his affairs to the employer.
The object of the new clause is to protect banks. If a bank manager suspects money has come from drug trafficking or anything of that kind, can he tell the police? He ought to be able to do so and to be protected. This is a new and recent problem which my noble friend Lord Harris of Greenwich has drawn to my attention. The Home Affairs Committee of the House of Commons reported last month, and in its first paragraph said,
"we have only one urgent, final recommendation to make. This relates to disposal or 'laundering' of drug money. We are greatly concerned at the apparent ease with which drug dealers are able to use the banking system to 'launder', that is to circulate and disguise the true origin of, drug money. It is a concern which is shared by the bankers themselves. We are satisfied that the banks are ready to co-operate fully with the authorities, provided that the law protects them from any legal action for disclosure of information which they
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believe to relate to drug money. We therefore recommend that the present law on the disclosure of confidential information by banks should be amended".
The report adds that in addition to the provisions which protect bankers,
"we recommend that there should be statutory protection for bankers who volunteer information to the authorities about their clients' finances when these seem to be connected with drug trafficking".
It is that recommendation which we seek to enact in the amendment. In the first part we say that if the bank "suspects" that any proceeds come from drug trafficking,
"it may disclose the circumstances to the Chief Officer of police… or to any constable… and may follow any directions which he may give".
The chief officer of police may say, "Hold that money", or he may say, "Let it go and see who it goes to". The bank may follow any directions which the chief officer of police may give. That is where the banks want protection.
Subsection (2) states:
"In disclosing information, or following the directions of the police… any institution shall have statutory protection and shall not be liable to any person for breach of contract, confidence or duty in that respect".
This is an attempt to carry out the very recent and modern recommendation of the Home Affairs Committee and I hope that the Government will accept it. I beg to move.
3.30 p.m.
Lord Lloyd of Kilgerran: Before the noble and learned Lord sits down, perhaps I may presume to ask him whether, when he emphasises the information that bankers have to produce in the circumstances which he has so clearly related, he is including in the generic term "bankers" the so-called bankers who are bankers of subsidiary organisations of Swiss banks? In other words, are the so-called Swiss bankers in London subject to this kind of compulsory disclosure? I ask purely from a state of ignorance.
Lord Denning: I was careful to say that this is voluntary disclosure. A later amendment may concern compulsory disclosure. We may come on later to the question of compulsory disclosure.
In this amendment I am dealing only with voluntary disclosure. If the banks voluntarily disclose the information, then they are protected. They are not in any breach of confidence in respect of the client. I hope that the Swiss banks here and all the banks will voluntarily disclose the information in order to enable us to get to the roots of drug trafficking. I hope that the Swiss banks will volunteer in the same way as our own banks.
Lord Lloyd of Kilgerran: I thank the noble and learned Lord for that reply.
Lord Boardman: I should like first of all to declare an interest as the chairman of one of the clearing banks which would be involved in the operation of this clause. At the same time perhaps I may say that I am quite sure that their objectives would be those of the noble and learned Lord, Lord Denning, in wishing to do whatever was practicable in tracing the laundering

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of drug money and stamping out that evil. The amendment of the noble and learned Lord amounts to the volunteering of suspicions. I should like to strike a cautionary note. I have said that banks would wish to co-operate in every way possible and, as the noble and learned Lord will know from the report of the Home Affairs Committee, they have said that they do not want "crooks on their books"—to use their rather catching phrase. The purpose of this clause, as the noble and learned Lord has said, is to enable the banks to volunteer their suspicions.
I wonder whether there is a danger of turning banking staff into amateur detectives. Very large sums of cash cross the banks' counters every day and there are something like 300 registered banks in this country plus hundreds of building societies and other financial institutions. Vast sums pass across the banking counters every day. The culture in this country is somewhat different from that in the United States of America where there are rather different provisions in this respect. In the United States of America cash is not a usual commodity. People operate very largely and to a much greater extent than we do with credit cards of one kind or another. In this country the amount of cash which passes across the counters of banks from operations in a whole field of activities, such as the retail trade, quite apart from the bookies, casinos and other such large handlers of cash, is very great indeed. Inevitably, some of that money will come from an illegitimate source, but it is almost impossible to know how much it is or how it can be traced. Some of it will no doubt be intended for the evasion of tax, but again it is impossible for banks to identify how much or to trace it. I suggest that it would be even more difficult to identify illegitimate cash from drug sources.
There must be a fear that, in putting pressure on people to volunteer information, they will be faced with this sort of dilemma. The too-persistent inquiries to a customer whom they believe may be involved in drug trafficking could put the staff of the bank at risk. On the other hand, insufficient inquiries before reporting a suspicion to the police could cause many innocent customers who are carrying on their normal business to be subjected to police investigation. That is a dilemma which I see arising from this new clause.
There is a very valuable provision in the Bill which enables banks to open their books under a judge's order. Where the police suspect that someone is trafficking in drugs and laundering the money, they can get a judge's order or warrant to compel the banks to open their books. I believe that this is a most valuable amendment which I am sure the financial institutions will welcome. But it is for the police to take the initiative. They are the people who are most likely to have suspicions and the opening of the books may enable them to produce the evidence.
The noble and learned Lord touched on the power under the Tournier decision to disclose information where there is a public duty. This could probably mean that where a banker was quite clear in his own mind that there had been illicit drug trafficking going on, he would probably be protected by Tournier—I bow to the noble and learned Lord on this matter, who
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has far greater experience than I—in disclosing those circumstances.
I am sure that all bankers and Members of the Committee support the objectives of the clause. However, I wonder whether it may be counter-productive. I believe that discussions are taking place on this subject, and it may be wise to await the outcome to see to what extent the fears which I personally have expressed might be justified before pressing the clause.
Lord Wheatley: I have had to deal with quite a number of people against whom this amendment is directed, and as I sit north of the Border, I normally would not wish to say or do anything which would differ from the opinions of the noble and learned Lord, Lord Denning, and his comments in connection with this proposed new clause.
However, there is one point which I feel I must raise. The test which the clause lays down is that the bank or financial institution "suspects". That is a purely subjective test, and accordingly I wonder whether it would be more proper if the clause were to read: "suspects or has reasonable ground for suspicion". That is a test which is applied under the Road Traffic Act in other circumstances. It seems to me that it is too absolute simply to say "suspects", because that would allow the banker who had no great degree of conscience merely to say, "Oh well, I thought there was something fishy about this", and that would be sufficient for the purpose; whereas, if the test is to have an element of objectivity it should include the words "and had reasonable ground for suspicion". I offer that suggestion to the noble and learned Lord to consider whether or not he is prepared so to modify the clause.
Lord Denning: I accept it at once.
Lord Edmund-Davies: I should like to support the suggestion that has just been made by the noble and learned Lord, Lord Wheatley, in relation to the addition to the word "suspects". Having said that, I should like to express my wholehearted acceptance of this eminently suitable and required clause. As the noble and learned Lord, Lord Denning, has said, it does not impose any compulsion of disclosure upon the bank. It leaves it to the bank's discretion.
I am worried about the suggestion that it should be contingent upon a judge's order being made because even the inquiring authorities, the police or other bodies, may not know at all about the existence of a certain account and therefore not knowing it there can be no judge's order in respect of it. This amendment enables a bank or the officials of a bank who hold an account which is run by a person whom they suspect has been involved in drug trafficking to offer voluntary disclosure to the responsible authorities. But the clause is a good one. I want to be identified with it and I thank the noble and learned Lord, Lord Denning, and the noble Lord, Lord Harris, for proposing it.
Lord Mishcon: It has been said previously and I think with very good reason, that the duty of Parliament in this dreadful era of drug trafficking is a heavy one. It has a duty to protect the public and to pursue the ringleaders of this iniquitous trade. As I

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have so repeatedly said, there is no division in any part of the Committee about that duty and that very proper endeavour. There is equally a duty to see to it that principles that are precious in our law are preserved, if at all possible, and that we do not create precedents that future Parliaments may quote in order to excuse an invasion into a right or a sacred principle of our law in circumstances which today we should not envisage. This in no way causes me to oppose the amendment. As the Committee will hear subsequently, if your Lordships are kind enough to hear me, it will lead me to oppose Amendment No. 30 which is a very different kettle of fish, if I may use that expression.
Having said that, let me utter a few words of most respectful warning. As this is a particularly exceptional case, is it proper that a constable should be allowed to be the recipient of this confidential information and for the bank to follow such directions as a constable may give in regard to the utilisation of the information which the bank thinks that it has? I should have thought that in such an exceptional case it ought to be a high-ranking police officer who is the recipient of this confidential information and certainly who is the giver of advice or directions.
Lord Denning: Let me say that I would accept that, too.
Lord Mishcon: I have never known the noble and learned Lord in such a receptive mood. He is prepared to accept almost anything in order to get this amendment through, and I admire him for that.
Having said that, let me come to a second word of warning which goes the other way round. The noble and learned Lord said at once that he would accept the amendment which in many ways was so wisely put forward by the noble and learned Lord, Lord Wheatley; namely, that suspicion should be covered by the words "has reasonable grounds to suspect". Before the noble and learned Lord, with his great wisdom on these matters, accepts that amendment, may I issue this caveat? The bank is excepted from the normal law of contract and confidentiality by this clause, but if one limits that exception to the bank having reasonable cause to suspect, as against bona fide suspecting, do you not then open the floodgates to litigation from people who will sue banks by saying, "You disclosed this information. No charge has been brought against me. Two years have elapsed. You had no right to do that, and I challenge your reasonable grounds for suspecting"?
That would not be an avenue, if I may mix my metaphors for a moment, that would be open to anyone if the clause stood as it does now; namely, "the bank suspected". Once you put that additional ingredient in of its having to have reasonable grounds for suspecting, I (if I may use the phrase) smell litigation of a kind that I do not think the noble and learned Lords, Lord Denning or Lord Wheatley, would want to encourage.
With those remarks which qualify the amendment, I accept the spirit of it.
3.45 p.m.
Lord Glenarthur: I am grateful to the noble and learned Lord, Lord Denning, for his explanation of the
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intention which lies behind his amendment. During the Second Reading of the Bill he referred to the vital importance of information held by banks about suspects' financial dealings, and the amendment in his name is very much in line with the recommendation put forward earlier this month by the Select Committee on Home Affairs in another place, to which my noble friend Lord Boardman referred.
The Government have undertaken to consider that recommendation and are at present consulting the banks about it. I very much hope that the noble and learned Lord will not press me to accept this amendment before those consultations are complete. I certainly share his concern that information that would be helpful to the police in investigating drug trafficking should be made available to them. So far, we have considered that any specific provision of this sort is unnecessary, given the view the Court of Appeal expressed in Tournier v. the National Provincial Bank of England, to which my noble friend Lord Boardman referred, that the banks' duty of confidentiality did not prevent them disclosing information in the public interest under existing law.
I have expressed sympathy with the noble and learned Lord so far as his amendment is concerned. It is clearly an important issue, and we want to consider it further, not just in the light of the view of my noble friend Lord Boardman and that of the Select Committee of another place, but also in the light of the suggestions which have been made by the noble and learned Lords, Lord Wheatley and Lord Edmund-Davies.
I hope that the noble and learned Lord, Lord Denning, will agree that consideration of all those aspects is important before we decide precisely what is to be done. Once that consultation has been completed, we would hope that we would decide where to go and that that would take place before the Report stage of this Bill.
Lord Harris of Greenwich: Let me just say a few words on that point, because the noble Lord, Lord Glenarthur, anticipated the question I was about to ask him. I am sure that my noble and learned ally, if I may so describe him, on this amendment would accept what the noble Lord, Lord Glenarthur, has just said, as long as, and clearly on the understanding that, we are able to come back to this issue either at Report stage or, if the discussions with the banks have not been completed by then, on Third Reading. I do not believe that at the moment this Bill deals adequately with the question of money laundering. I think many of our anxieties would be put at rest if either this amendment or something similar to it were written into the Bill.
I am sure the banks are anxious to co-operate, as the noble Lord, Lord Boardman, said a few moments ago, but we have to recognise the fact that, as the noble Lord, Lord Glenarthur, said when winding up the debate on Second Reading, money laundering is in reality at the heart of the issues that lie behind the drug trafficking problem in this country. Unless we get this right, future generations will blame us for not having dealt adequately with the issue at a time when we had the opportunity of doing so. If the noble Lord, Lord Glenarthur, comes forward at a later stage with a

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Government amendment which deals with this issue, I am sure the anxieties of many of us will be stilled. On that assumption, I suspect the noble and learned Lord, Lord Denning, will be content, for the time being at least.
Lord Shepherd: I had intended to ask the Minister what was the definition of "financial institutions" which is in the amendment that has been moved by the noble and learned Lord, Lord Denning. I entirely support the objectives of the noble and learned Lord in his amendment, but I agree very much with the noble Lord, Lord Harris, that the question of laundering is absolutely fundamental to the problem.
My experience—not personal experience, but my knowledge of laundering overseas, out in the Far East—is that a great deal of the laundering of, shall I say, illegal or illicit money is not so much done through the recognised banks as done through the money changers. I do not know whether money changers are a financial institution, as stated in the amendment. It seems to me, however, that if one is to achieve the real benefits of the amendment moved by the noble and learned Lord, Lord Denning, one has to look at the entire range of methods by which money is laundered. One of the first objectives of those having illicit money, it seems to me, is to move it into another currency. This can be done through a bank. But it is a good deal easier through a money changer.
This is a matter that needs to be examined not solely in terms of banks or financial institutions, if that is another phrase for banks. One has to look at the whole gamut of means by which currency can be moved. I hope that the Government, in giving thought to the proposal of the noble and learned Lord, Lord Denning, will look at the wider ramifications and difficulties and that they will examine laundering in real depth to see whether we can overcome the benefits that drug traffickers may receive through the laundering of money other than through recognised banks.
Lord Glenarthur: In reply to the noble Lord, Lord Harris, I can most certainly confirm that there is no question of not being able to come back to this matter at some future stage. The aims of the Bill, which have received universal praise in your Lordships' House, lead us against what the noble Lord, Lord Mishcon, has described as fairly fundamental principles of law, or words to that effect. So there is a difficult balance to be struck. There is no difficulty in taking on board the point made by the noble Lord, Lord Shepherd, about the wider means of moving currency around. I shall make sure that his remarks are taken into account.
Lord Mishcon: Would the noble Lord the Minister be kind enough to add to his points of consideration the two that I ventured to make about the reasonable grounds for suspicion and the rank of the officer concerned?
Lord Glenarthur: Certainly I can give that assurance in respect of reasonable grounds for suspicion. I thought that I had done so in answer to the point made by the noble and learned Lord, Lord Wheatley. As for rank, I shall certainly also consider that. I am sorry; I forgot to mention it.
Lord Denning: I should like to thank everyone who has contributed to the discussion. It seems to me to have been most valuable. I should also like to thank the noble Lord, Lord Glenarthur, for saying that the Government will consider the matter carefully. It needs consideration and careful drafting if all the points are to be dealt with. Offhand, I am not sure that "suspects" is not right. Equally, however, we have to bring in all those other chaps. Without a clause such as this, all this money will get away. The drug traffickers are clever enough to pass it through the banks and money changers and switch it abroad. One will never get hold of it without the co-operation of the banks and such like in voluntarily letting us know. In that way, the chief officer of police will be able to make his inquiries, very discreetly, if you please, without, of course, disclosing his source or anything of that kind. By this means, one would hope to prevent drug trafficking money going abroad.
As for the point made by the noble Lord, Lord Boardman, I recognise that if a bank knows and can prove that drug money is involved, there is no need for any provision in any statute. As in the case of Initial Services, we have heard that there is no breach of confidence involved in disclosure in respect of iniquity. If a bank knows that it is iniquitous drug dealing, it can disclose this as the law now stands without any fear. But that is not known in nearly every case: the bank merely suspects. It seems to me that as the law stands at the moment a bank must not disclose its suspicions. If it does, it is liable for breach of confidence or contract. So, please, let the banks disclose under the full protection of the law to the chief officer of police. I am grateful to the noble Lord the Minister for what he said, and I look forward to, perhaps, a Government amendment on Report. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Davidson: This may be a convenient moment for taking the Statement. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Miss Evelyn Glenholmes
3.55 p.m.
Lord Glenarthur: My Lords, with the leave of the House, I shall now repeat a Statement on Evelyn Glenholmes being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"Nine endorsed warrants for the return of Miss Glenholmes were first issued on 31st October 1984 and submitted to the Irish authorities for endorsement in accordance with the UK-Irish extradition legislation. The offences covered by the warrants related to various terrorist offences committed between 1981 and 1982, including murder, attempted murder, firearms and explosives offences. The original warrants were returned by the Irish authorities, who asked for some technical changes to

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be made to their wording. Fresh warrants were accordingly submitted on 6th November 1984, but by that time details of the extradition request had been disclosed in the press and Miss Glenholmes disappeared from view.
"She was subsequently arrested in Dublin on 12th March 1986, and the hearing of the extradition request opened in the District Court of Dublin last Wednesday on the basis of the warrants issued in November 1984.
"Throughout last week's court hearing, there was close co-operation between the Irish prosecuting authorities and officers from the Metropolitan Police and the Office of the Director of Public Prosecutions.
"On Saturday morning, having heard submissions from defence counsel that the extradition warrants were defective, the court discharged Miss Glenholmes. I understand that the principal consideration which underlay the court's decision was that, whereas the standard wording printed on the warrants referred to information on oath as having been laid on the day the warrants were issued (i.e. 6th November 1984), the court considered that the relevant information was that laid when the original warrants had been issued on 31st October 1984. I understand that the magistrate in London treated the further application on 6th November as having been made under oath adopting the information already laid but not resworn. The information required for both sets of warrants was identical, but was not sworn again on 6th November, which would have avoided the difficulty which later arose.
"Even before Miss Glenholmes was released, the United Kingdom authorities had made arrangements for the issue of a fresh warrant covering one of the charges of murder. On the basis of this fresh warrant, the Garda obtained a new provisional warrant for Miss Glenholmes' arrest. Once Miss Glenholmes had been re-arrrested, she was brought back to the District Court. I understand that Miss Glenholmes was then released, this time on the grounds that the court was not satisfied, in spite of a telephone call from New Scotland Yard to the Garda, that there was evidence that a fresh warrant had been issued in London that morning or that Miss Glenholmes had in effect been at liberty between her earlier release and her re-arrest.
"Following Miss Glenholmes' second release, the fresh warrant was sent to Dublin this morning. Earlier today, additional warrants were obtained covering the remaining eight charges and these will be sent to the authorities in Dublin later today.
"My right honourable and learned friend the Attorney-General and I have looked carefully at the information so far available to us. On the basis of that information it is clear that the extradition application failed because of a technical objection taken by the Dublin court. My right honourable and learned friend and I regret that this technical objection was not foreseen in time and fresh warrants obtained. We are considering urgently the need for a review of procedures and the handling of this sort of case. My right honourable and learned
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friend the Attorney-General has instructed the Directors of Public Prosecutions for England and Wales, and for Northern Ireland, to ensure personally that all outstanding warrants in respect of terrorist offences are checked at once for accuracy and sufficiency. Under the auspices of the intergovernmental conference work has already begun on a range of legal matters relating to extradition; the lessons of the past few days will be studied in that context.
"I should also inform the House, for the sake of completeness, that our inquiries have shown that in giving evidence to the court in Dublin an officer from the Metropolitan Police made an error in referring to the dates on which the warrants were issued. I understand that he sought to correct this error, but that an opportunity for him to do so was not forthcoming. This does not, however, appear to have influenced the court in its decision to release Miss Glenholmes.
"It is deeply disappointing that it has not so far proved possible to obtain the extradition of Miss Glenholmes to face justice in a British court. It is essential that we all learn the right lessons for the future from this failure".
My Lords, that concludes the Statement.
Lord Mishcon: My Lords, while I thank the noble Lord the Minister for repeating the Statement made by his right honourable friend the Secretary of State for Home Affairs in another place, it really is my duty to say from these Benches that this discloses a most scandalous state of affairs. I say this with every sense of responsibility. We were dealing here with a case of alleged murder on our streets. One would have imagined that the most consummate care would have been taken to see that everything was in order in regard to this application for extradition. In saying that, I realise that we are all human, and human error can occur in the best-regulated circles. But this is a chapter of errors in regard to this most important case.
First—and I ask the noble Lord the Minister to correct me if I am wrong—warrants were issued on information in October 1984. They were found, says the Statement, to have some technical errors. I think that this House deserves to know what those technical errors were. My information—and I am open to correction—is that among the errors was a complete mis-spelling of the alleged defendant's name. I ask the Minister to disclose what the first set of errors was.
Then, when the warrants were sent back it was decided to apply for fresh warrants. One would have thought that anyone, let alone someone in a professional legal office, would assume that if fresh warrants were to be issued as against an amended warrant the information had to be up to date with the warrant that was issued.
An official of the director's department (again, will the noble Lord the Minister correct me if I am wrong?) went along to the magistrates' court without the person available to swear the information, and relied upon past information, as, indeed, the learned magistrate must have done. Whether or not it was in the immediate past was irrelevant, because the information was sworn in respect of different warrants; but he relied upon the past information and had no

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fresh information sworn before him. The warrant reads that information is to be sworn relevant to that warrant on the day on which the warrant is issued.
After that what happened? We are told in the Statement that throughout last week's court hearings there was close co-operation between the Irish prosecuting authorities and officers from the metropolitan police and the office of the Director of Public Prosecutions. There the Statement ends. There must be a point in mentioning that there was this co-operation. Did the co-operation extend during that week to pointing out to those in London that a fresh error had apparently been made and that the fresh information may not have been sworn as it should have been? I ask the noble Lord the Minister: was any hint of that given?
I next ask him: when did the Director of Public Prosecutions have the first hint that this technical point was being taken? Was any step taken to secure an adjournment so that the Director could himself put the matters right and go over to Dublin; or did he send an official, and of what rank was that official?
It is not enough to say that lessons have been learned. This is too bitter an experience and too bitter a lesson. Will the noble Lord the Minister consult with the Secretary of State with a view to an immediate inquiry being held and a report given to Parliament as to what really occurred? I repeat that it is a scandal.
Lord Wigoder: My Lords, three matters are quite obvious, are they not? First, extradition proceedings are invariably full of technicalities. Anyone who has ever been involved with them knows that perfectly well. Second warning was given (if warning were needed, and I do not believe that it was) some 16 months ago, when these very warrants were returned from Dublin because they contained some technicalities. Third, I think that anyone who does not live in a political vacuum must recognise the fact that there are some Irish Judges who, in the course of perfectly properly exercising their judicial independence, are likely to look somewhat more enthusiastically for irregularities and technicalities than some of their colleagues.
In that situation, was it not completely self-evident that any warrant for extradition, particularly of a person charged with these appallingly serious crimes, should have been checked from start to finish by a very senior person here in this country? I believe that the blame—and unhappily one has to say this—lies very heavily on the shoulders of somebody on this side of the water.
There is one matter in this Ministerial Statement with which I venture to disagree. It is the observation:
"it is clear that the extradition application failed because of a technical objection taken by the Dublin court".
That is quite wrong. It failed because of a mistake made in this country. I hope that we shall be brave enough to admit that fact and not seek to put the responsibility on the Irish in any way, as this Statement appears to do in that sentence.
I have only two other observations that I wish to make. First, I have seen comments in at least two newspapers today to the effect that the Irish court, on
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discovering that the warrant was apparently defective, might have adjourned the proceedings and remanded the defendant in custody in order that a valid warrant might subsequently be produced. Would the noble Lord the Minister not agree that that would have been totally improper behaviour by any court? Indeed, any court seeking to do that would have had no answer to a writ of habeus corpus if it had been moved straightaway.
The only other observation I would wish to make is this. I believe in facing up to our responsibilities in this matter. The very great majority of Members in your Lordships' House expressed their enthusiastic support of the Anglo-Irish agreement when it was entered into, and we should not allow our support for that agreement to be weakened in any way.
Lord Glenarthur: My Lords, I am grateful to both noble Lords for their comments on this serious matter, and I shall endeavour to answer the points which have been raised by them. The fact is that to a very large extent we are concerned with technical matters when it comes to the issuing of warrants, and I can assure both noble Lords that in the opinion of those concerned here the greatest care had been taken over the question of the deposition—the statement of facts—that was attached to the warrants. It was our view that the date on the deposition could precede that on the warrants, which it did. The original deposition—the statement of facts—was on 30th October, and the warrants themselves referred to 6th November.
The warrants first issued in 1984 conformed to the information that the police had available at that time, but the main concern was to satisfy new requirements by the Irish authorities on the terminology used. The noble Lord, Lord Mishcon, asked me directly when the Director of Public Prosecutions heard that there was any problem about these warrants. I have to say to the noble Lord that the Director learned about this issue on Friday, and a senior lawyer from the department of the Director of Public Prosecutions was sent to Dublin immediately.
Lord Mishcon: My Lords, will the noble Lord the Minister forgive me for interrupting? I promise I shall not interrupt him again. I asked the Minister a very relevant question; namely, for this House to be informed of the errors in the first set of warrants. I told the Minister what I had been informed, and I asked him if it was correct.
Lord Glenarthur: My Lords, if the noble Lord will allow me, I shall endeavour to return to that point in a moment. The point which I was answering and about which the noble Lord asked me was when we learned that things were not in order. I told the noble Lord just now that we heard on Friday and that a senior lawyer from the DPP's office was sent to Dublin immediately. As for the suggestion that a magistrate or some other person should have gone to Dublin, I have to say that it is not certain that that would have affected the outcome in any way at all.
As to the point raised by the noble Lord, Lord Wigoder, I point out that when the new warrants were obtained on 6th November they were sent to the

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Republic and the terms of those warrants satisfied the authorities there. I hope that the noble Lord will understand that, in our eyes, to have the knowledge or the clear understanding of the fact that the authorities there were satisfied with them was a point which had to be taken into account. However, the fact is that technical matters were raised on the warrants by the Irish authorities, and the Irish of course were helpful in what they suggested so far as those technical matters were concerned. I cannot give the noble Lord, Lord Mishcon, precise details of those technicalities. I am sorry that I cannot give him that information, but it is really a matter which has to be considered in the light of the fact that we are talking about two separate legal systems.
Lord Mishcon: My Lords, I am afraid that the noble Lord has made me break my promise not to interrupt him again, but I was taking it for granted that I would receive a full and frank answer. I am sure that the noble Lord is frank with the House, but I absolutely decry the lack of information which has been given to the noble Lord the Minister. I have asked the following question: what is the nature of the technicalities in the first set of errors which occurred with the warrants? For example do they include a misspelling of the defendant's name?
4.15 p.m.
Lord Glenarthur: No, my Lords, apparently they do not include a misspelling of the defendant's name; that information is not correct. We understand that the errors were matters of technical terminology—nothing greater nor less than that. For example, the term, "The Central Criminal Court, London"—or words to that effect—were used in the warrants, and it was felt by the Irish authorities that they should have referred to, "The Central Criminal Court, England and Wales". Those were the minor points upon which the Irish authorities based their rejection of those warrants. I can reassure the noble Lord again by saying that so far as I am aware there is no question of the name being spelled wrongly.
The noble Lord, Lord Mishcon, suggested to me that this was a matter upon which I should consult my right honourable friend about holding an inquiry. Of course I shall take his comments away to my right honourable friend. However, I am not sure that my right honourable friend would agree that it would be necessary or right to have an inquiry, because we know the facts and we know the lessons for the future which have been learned from this experience. The discussions taking place in the context of the inter-Governmental conference will also take in the deficiencies in the warrant procedure which this case has highlighted.
There may well have been other questions raised, but I think that the bulk of the questions which have been asked by the noble Lord, Lord Mishcon, and the noble Lord, Lord Wigoder, have been taken into account in the response that I have made. I realise that this is a matter which arouses the very greatest feeling. I certainly stand here responding with all sincerity to the criticisms that have been made. Noble Lords will be aware that a case like this, which involves other countries as well as our own, is a matter of the very
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gravest concern, but it is also one as regards which we have to bear in mind with very great care the issues which the different legal systems of two countries can take into account.
Lord Fitt: My Lords, since the onset of the present IRA campaign, would the Minister not agree that the question of extradition has been the most crucial question that has arisen between the two Governments, often amid roaring and raging controversy? Would he also agree that the only two groups of people both in Ireland and in Britain who can take any solace from this development are the Provisional IRA and those Unionists in the North of Ireland who never believed that the Irish authorities would co-operate on the question of extradition?
As this matter was of such crucial importance, would it not have entered the minds of the authorities in Britain that only persons of a most senior rank in the department of the Director of Public Prosecutions should have the final say on the extradition warrants? Is it possible that one of those officials could have gone to Dublin and could have been in the court when the application was being made? Is it a fact that there was an official from the department in Dublin but that he left before the court appearance? Is it a fact that that official was known, rather incongruously, as Mr. Gerry Adams and was in the employment of the department of the Director of Public Prosecutions?
In that situation, let me reinforce with all the vehemence at my command—because I think it is of the most crucial importance, not only to this case but to the whole future of the whole Anglo-Irish agreement—the words which have been repeated by the Minister; namely, that in the three or four days in the run-up to this case coming before the courts last Saturday there was the utmost co-operation with the Irish authorities. Is it a fact that that is so? Could the Irish authorities, looking at this warrant, not have advised the British that the warrant was invalid in its present form? The only people, it appears to me, on the Republic of Ireland side who have come out of this acting in a fair and courageous way have been the Irish police.
Lord Glenarthur: My Lords, I am grateful to the noble Lord for his comments. I agree with him that extradition is crucial. I do not feel, as he will not, that the Anglo-Irish agreement is in any sense worthless. On the contrary, I think that the incident underlines the need for a forum such as the inter-governmental conference within which matters of mutual concern can be discussed, and Article 8 of the agreement provides that the conference shall be concerned with legal matters, including policy aspects of extradition. I can say that officials are already undertaking work on this extremely important area. The fact that it is crucial is one reason why it should be, and is being, undertaken by the inter-governmental conference.
So far as co-operation by the authorities is concerned, I can assure the House that this has been most helpful. There is no indication that it would have been otherwise. As for the person who attended the court, that is a matter for the Director of Public Prosecutions to decide. I assure the noble Lord that there was absolutely no reason to suppose—indeed,

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there is no reason to suppose—that the person who went was in any way inadequate.
An official was also in Dublin, but the guidance of the Irish prosecuting authorities was that it was not necessary for him to appear. That is a question for the Irish prosecuting authorities to decide, and it is advice which naturally those concerned have to follow. I recognise the force of the noble Lord's concerns but I hope that what I have said in relation to the Anglo-Irish agreement in particular will reassure him.
The Earl of Onslow: My Lords, is not this about the most incompetent piece of bungling by somebody for a very long time? A woman who is charged with the most serious possible crimes is now loose, and God knows where she is! Somebody has made the most frightful error, and I sincerely hope that that somebody, or those same people, will never go on to earn their index-linked pension. I sincerely hope that they will be sacked, if they do not resign forthwith, because we shall not be making Irish jokes; we shall be making "DPP" jokes.
Lord Glenarthur: My Lords, I simply say to my noble friend that nobody for one single moment underestimates the significance of this matter. I can also assure him that those who set out to perform the task that they were given, based upon the warrants which were issued in 1984, would have done so only on the perfectly clear advice that the interpretation of the law that was made was the correct interpretation. That is what was done. The fact that things have come to pass which show that now there is scope for tightening up is a matter to which I referred when I read the Statement. No doubt the point that my noble friend makes will be considered, as will all the other points that have been raised in your Lordships' House.
Lord Hunt: My Lords, the whole House will have noted the warm approval given to the concluding remarks of my noble friend Lord Wigoder in regard to the Anglo-Irish accord and the effect that this affair may well have on that accord. Do not the exchanges that have taken place since the noble Lord concluded his comments on the Statement, and the tendency for it to be put about that the blame somehow lies with the Irish Government, underscore the importance of the Government accepting, and accepting quickly, full responsibility for what has happened to bring this about?
Lord Glenarthur: My Lords, what I said in answer to the noble Lord, Lord Fitt, was that the incident underlines the need for a forum such as the inter-governmental conference, because matters like this can be taken into account. What I certainly cannot do, because it would be entirely wrong for me to do so, is to comment on the decision of the Irish courts, and I am sure that the noble Lord will understand that.
I believe that what comes out of this Statement, as indeed my right honourable friend in another place said, is that we must urgently look at the need for a review of procedures in the handling of this sort of case. Indeed, my right honourable and learned friend the Attorney-General has set in hand instructions to
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the Directors of Public Prosecutions both for England and Wales and for Northern Ireland. I do not think that that needs to affect in any way, other than to highlight it, the importance of the Anglo-Irish agreement, which I believe will add greatly to what is hoped for in these areas.
Lord Renton: My Lords, is my noble friend aware that the correct description of the whereabouts of the Central Criminal Court is London, and that nobody on this side of the Irish Sea can be blamed for using that description?
Lord Glenarthur: My Lords, I am grateful to my noble friend for that observation. As he is aware, that is not the view taken by those who looked at this document in Ireland. I can go no further than to tell my noble friend that the interpretation placed upon the warrant was that it should have related to England and Wales. I can say no more.
Lord Donaldson of Kingsbridge: My Lords, I am sure that the noble Lord will agree that the feeling of the House is so strong about this that we should have a much more detailed answer as a result of a full inquiry. I agree with him absolutely that at this stage to start saying that the Irish are guilty or not guilty, or the English are guilty or not guilty, is quite wrong. We ought to have the things done step by step so that we can see who to blame, and then blame them.
Lord Glenarthur: My Lords, I am grateful to the noble Lord. What I said was that I would pass on the concern that had been expressed by the noble Lord, Lord Mishcon, that there ought to be some sort of inquiry. I went on to say that I did not necessarily feel that my right honourable friend would be able to agree to that because most of the facts had been deduced already, as I think the noble Lord, Lord Donaldson, will appreciate. Lessons will have been learnt—they always are from these things—and I very much regret that this arose. But I stress to the noble Lord that one or more of the reasons for the issue to have arisen was very much the point that my noble friend Lord Renton raised.
Lord Wigoder: My Lords, will the noble Lord make it clear so that there is no confusion that the question as to where the Central Criminal Court is arose in 1984, and has absolutely nothing to do with the reason why the warrants on this occasion were found to be invalid?
Lord Glenarthur: My Lords, the fact is that they are related. The question that the noble Lord, Lord Mishcon, asked me was precisely what were the errors contained in the warrants, and I gave him an example of what those errors were. My noble friend Lord Renton did not agree that the judgment made upon the warrant was the correct judgment, and he pointed out that so far as he was concerned that court was in London and should not have been referred to as "England and Wales".
Lord Mishcon: My Lords, to abbreviate this matter will the noble Lord be good enough to have a list of the technicalities complained of in regard to the October warrants presented in the Library of the House?
Lord Glenarthur: My Lords, I shall look into the matter. I cannot tell the noble Lord here and now whether it will be possible to produce that list.
Lord Mishcon: Why not, my Lords?
Lord Glenarthur: My Lords, the answer to that is that this is a judgment made by the Irish authorities and it may not be possible to do so. I shall endeavour to do so, but I cannot promise standing at this Box to guaranteee that it will be possible. What I can guarantee to do, if it is not possible to produce a list, is to explain fully why not.
Lord Monson: My Lords, will the noble Lord the Minister perhaps agree that whereas the police in the Irish Republic seem to be unreservedly opposed to the IRA, the same zeal is not always evident in other circles in the Irish Republic?
Lord Glenarthur: I note the noble Lord's point of view, my Lords.
Lord Wilson of Langside: My Lords, will the noble Lord the Minister acknowledge that the situation disclosed both by the reports in the press and by the Statement made today that what is now required to satisfy those both within the House and the public outside is not just some sort of inquiry, as the Minister suggested, but a most thorough and comprehensive inquiry which will make the position and the responsibility for that position clear beyond peradventure?
Lord Glenarthur: My Lords, all I can say to the noble Lord is that in conjunction with the request that the noble Lord, Lord Mishcon, made that I draw those views to the attention of my right honourable friend the Home Secretary that I shall do so.
Lord Harris of Greenwich: My Lords, is the noble Lord aware that no one who is aware of the critical situation in Northern Ireland wants to create trouble between London and Dublin? Is he aware that that would be the height of irresponsibility? Is he also aware of the fact that there is concern in all parts of the House about how this sad situation arose? Will he agree that it is desirable to have as early as possible a more detailed factual statement? It would be far better to have an inquiry but if we cannot have that many of us feel that there should be a detailed factual statement on this whole matter which will undoubtedly take some time to compile, but it would enable Members of this House and another place to form a far more balanced view of this grave situation than they can this afternoon.
Lord Glenarthur: My Lords, I believe that the facts have largely been adduced. I am not sure that it would serve any useful purpose to produce a more detailed statement because what has been said is already detailed and explains what has happened. Nevertheless, I am sure that my right honourable friend will note the noble Lord's remarks.

Drug Trafficking Offences Bill
4.34 p.m.
Committee stage resumed.
Clause 18 agreed to.
Clause 19 [Enforcement of other external orders]:
Viscount Davidson Viscount Davidson moved Amendment No. 26:
Page 19, line 33, leave out ("the proceeds of drug trafficking by any person") and insert ("payments or other rewards received in connection with drug trafficking or their value").
The noble Viscount said: This clause makes provision for an Order in Council to be made allowing our courts to restrain and confiscate property needed to satisfy a confiscation order imposed in another country. This will, we hope, form the basis of a range of mutual enforcement agreements, so that orders made by courts here can be enforced against property held overseas. But we believe that some expansion is necessary in the Bill's definition of the types of orders we shall be prepared to enforce. At the moment, Clause 19(1)(b) refers to an order made for the purpose of recovering the proceeds of drug trafficking: it may well be that other countries' legislation, like the Bill at present before this Committee, will allow the recovery of the value of such proceeds, without being limited to the tainted money. We need to reflect that possibility in Clause 19 so that our courts will be able to assist with the enforcement of orders of that type. The amendment has been devised for that purpose. I beg to move.
On Question, amendment agreed to.
Clause 19, as amended, agreed to.
Clause 20 [Order to make evidence available]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 27:
Page 22, line 15, after ("discharge") insert ("and variation").
The noble Lord said: The need for this amendment arises out of an improvement made to the Bill in another place.
We originally provided that an order made by a circuit judge requiring the holder of material to produce it to the police or Customs, would allow seven days for compliance, or such longer period as the judge might specify. In another place, it was pointed out that there could be circumstances in which the judge might want—and might think it reasonable—to specify a shorter time; and Clause 20(3) now allows that to be done. In general, the holder of the material will have had an opportunity to be present when the application for the order is heard, and therefore to indicate whether a particular timescale would cause difficulties. But there may be circumstances where an order is made without the holder of the information being present, or where, for whatever reason, the period allowed by the judge for the production of information is genuinely insufficient. There may, for example, be unexpected problems in locating material, or retrieving it from a regional office. In these circumstances, we believe that provision must be made for the holder of the material to seek an extension of the time given to comply, and that is the

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purpose of this amendment. The procedure will be established by Crown Court rules. I beg to move.
On Question, amendment agreed to.
Clause 20, as amended, agreed to.
Clause 21 agreed to.
Clause 22 [Sections 20 and 21: supplementary provisions]:
Viscount Davidson Viscount Davidson moved Amendment No. 28:
Page 24, line 10, leave out subsection (2).
The noble Viscount said: In speaking to this amendment, it may also be convenient to discuss Amendment No. 29. These are two straightforward and I trust uncontroversial amendments to remove from this clause elements that have become unnecessary. Subsection (2) at present states that various provisions of the Police and Criminal Evidence Act should apply in relation to customs officers in the same way as they do to the police. Such specific provision is not now needed, because these and other parts of the 1984 Act have now been applied to Customs by Statutory Instrument No. 1800 of 1985, which came into force earlier this year. I am therefore proposing the deletion of subsection (2). The words at the beginning of subsection (3) are a relic from an earlier stage in the drafting of the Bill, and need to be removed. I beg to move.
On Question, amendment agreed to.
Viscount Davidson Viscount Davidson moved Amendment No. 29:
Page 24, line 19, leave out ("In this section and").
On Question, amendment agreed to.
Clause 22, as amended, agreed to.
Clause 23 agreed to.
Lord Denning Lord Denning moved Amendment No. 30:
After Clause 23, insert the following new clause:
("Information on financial transactions.
.—(1) For the purpose of tracing and recovering the proceeds of drug trafficking, the Secretary of State may draw up a scheme requiring banks and financial institutions to report to such authorities as he shall determine any deposit of or transaction in currency exceeding such limit as he shall determine.
(2) If any hank or financial institution reports any deposit or transaction to the authorities in pursuance of such a scheme, it shall be protected by law from any action or complaint by anyone alleging breach of confidence or contract or otherwise.
(3) A draft of such a scheme shall be laid before and subject to affirmative resolution by each House of Parliament.")
The noble and learned Lord said: This is related to the last amendment which we discussed at large, but it is different. In the amendment we discussed before it was entirely voluntary for the banks or financial institutions to report to the chief officer of police their suspicions of drug trafficking. The object of this amendment is to avoid the voluntary nature and to require banks and financial institutions to notify not necessarily a suspicion but large amounts of cash or other property passing through their hands.
The provenance of this provision takes its origin from the United States of America where they have much greater problems than we have with drug trafficking. They have found it necessary to have some
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such provision as this; namely, that the banks and financial institutions should disclose to the authorities very large sums (because there are often millions of dollars involved) so that they are put on the alert. These too must be put together. I realise that if they are so bound they ought to be protected in regard to any breach of confidence or anything of that kind, and so in subsection (2) there is the corresponding provision for them to be protected against any complaint from a customer or client for giving that information. The next amendment, Amendment No. 31, omits that, but I am sure it ought to be read with this. The primary amendment is Amendment No. 30.
One would like to know how this has worked. I am told by a United States lawyer that there have been prosecutions in the United States of banks who have not disclosed what they ought to have disclosed in regard to such offences, in effect, helping the drug traffickers in that way. Those prosecutions have shown the banks to be guilty; in other words, they are not doing their duty. In the United States that has been felt to be an important way of chasing up these drug traffickers and getting to know the source of the large funds which are passing through the banks' hands.
This would be a difficult matter to incorporate into our law, and therefore this proposal is not that we should do it as such at the moment, but that a scheme should be drawn up, no doubt in consultation with the banks and with others, saying that they are to report certain sums which have been deposited with them. If they fail to report such things, they will no doubt be made liable and punishable accordingly. It could not be done by amendment to this Bill, but the proposal is that a scheme should be drawn up for the purpose of tracing and recovering the proceeds of drug trafficking. That is the object of it, and I would suggest to the Committee that a scheme such as this, following the example of the United States, could and should be prepared as a further aid to our getting hold of the proceeds of drug trafficking. I beg to move.
Lord Mishcon: When we were considering an earlier amendment, I ventured to say to your Lordships that every conceivable assistance ought to be given within the circumference of acceptable legal propositions to catch the big dealers, and this Chamber and, one hopes, another place will indeed sanction them. That was the background against which I ventured to approach from these Benches Amendment No. 25. That amendment referred to a voluntary scheme which dealt with banks and financial institutions which were permitted to escape from the normal consequences of breach of contract and confidentiality if they endeavoured to assist the authorities. As the noble and learned Lord, Lord Denning, has fairly said, this is a very different proposition. This is mandatory, and when looking at something mandatory upon the banks to disclose confidential information, I beg the Committee to realise what is being done.
4.45 p.m.
Let me take as my first point the fact that your Lordships will see that this mandate upon the banks does not occur only when a charge has been preferred. It is there at any time in connection with drug offences. By way of contrast, the Committee will see at the very

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outset of Clause 23, where there is provision for disclosure of information held by government departments, that this is only to be effective at any time after proceedings have been instituted against the defendant for a drug trafficking offence. No such words occur in this amendment.
Secondly, the Commitee will find at the top of page 25 of the Bill, in subsection (3), that:
"An order under subsection (1) above shall not require the disclosure of any material unless it appears to the High Court that the disclosure is likely to facilitate the exercise of the powers conferred on the court by sections 8 to 11 of this Act or on a receiver appointed as mentioned in subsection (1) above".
In other words, the learned judge has to be satisfied that the information which is going to be disclosed is going to assist. There is no such provision in this clause.
Before I go on to deal with the ambit of this clause, let me enunciate a principle which I believe the Committee will find acceptable? It is this. It is all very well for Parliament to create a precedent and then say that in the course of discussion it is realised that one is dealing with a very exceptional case. In the course of discussion a section becomes incorporated in an Act of Parliament, with the background that Parliament has said, "This is an extraordinary situation to be dealt with in an extraordinary way".
All too often, when Members of your Lordships' House have endeavoured to fight against what they believe to be an unnecessary exercise of power by the Executive, a Minister with perfect propriety gets up to say, "We have done this once before in the Customs and Excise Act"—or some other Act—"and there is a precedent for it". We must be safeguarded against the reiteration in Parliament at some future date when this extraordinary power is taken, if the Committee passes this amendment, so that it is not to be construed as a precedent. And what a dangerous precedent it is! Confidentiality goes by the board. In a sacred matter as between banker and customer the bank has to disclose amounts of currency above a certain limit deposited with it.
The noble and learned Lord said in the course of his remarks (I took it down) "money or other property". I believe, in fairness, that as this refers only to currency the words "or other property" were not mentioned with the care that we know he always exercises when he makes any utterance at all. It is indeed only currency. But let me tell the Committee, if I may, as a practising solicitor, that there have often been occasions when people have come to me in very personal circumstances—it could be the birth of an illegitimate child; it could be looking after a mistress who has been given up because matrimonial life has been resumed—and cash sums are lodged in a bank account, the owner of that cash not wishing (With great propriety) to have his name disclosed. Under this section matters of that kind will be disclosable.
There is no question of the bank having a suspicion that it has anything to do with drug offences; there is no question of anybody having been charged. The bank will be under a duty to say that yesterday Mr. X lodged into the bank account of Y a certain sum of money or that Y now has a certain sum of money. Is that what we want? If we want it, is it not something that should be left in abeyance, as the noble and
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learned Lord said, to be dealt with by order or regulation (affirmative, it may be)? Do we not have the courage, if we are to do this, to say exactly what the limit and circumstances are that we have in mind, instead of leaving it to a scheme subsequently drawn up by some government, one knows not where or when, for uses that may be for an entirely different purpose? It could be £10 or £20 or more.
The noble and learned Lord may answer me by saying that we have such a requirement with the Revenue for deposit accounts. May I tell him with great respect that were he to make that point it would not be a valid one, because everybody knows that interest on deposit accounts is liable to tax and that all that the Revenue is doing is seeing that it has the tax that it ought to have? It has nothing to do with a current account cash deposit or something of that kind.
We know what orders and regulations mean. They come before the House. We can do only one thing with them. We can pass them. If there is a government with a sufficient majority they will get them through. But we cannot get up and move an amendment and say that the cost limit is too high or the circumstances too rigorous. We have to vote for or against them or abstain. Those are the only things that we can do.
The amendment is grappling with a difficulty that I know we have, but in trying to deal with a very great problem do not let us go beyond where we should go. I uphold the principle of Amendment No. 25 from these Benches. Speaking personally now—I have no other mandate—I see that there are greater problems created by Amendment No. 30 than ever it will solve.
Lord Harris of Greenwich: Not altogether surprisingly, I take the view rather different from the one that has just been expressed by the noble Lord, Lord Mishcon, who, as always, has spoken in a most persuasive fashion. I am bound to say that he was not so persuasive as to explain to my satisfaction why the dangerous precedent which he saw was being established by the amendment did not apply to Clauses 1, 2, 3 and 4 as well.
As the noble Lord will recall, one of the points that he made on Second Reading was the danger implicit in the Bill of the precedent that was being established. He went on to say, as did my noble friend Lord Hooson, that we may be talking about drug trafficking today but tomorrow we may be talking about complicated fraud cases. Indeed, we read in the press that Ministers are at the moment considering just such an approach for offences outside trafficking in narcotics.
Having pointed out that at first glance there appears to be some inconsistency between the noble Lord's position on this amendment and that which underlines the first part of the Bill, I could perhaps go back to one point made by the noble Lord, Lord Glenarthur when he wound up the Second Reading debate and used the words with which I very much agree. He said:
"We cannot and dare not be complacent about the threat that the drugs menace poses for the United Kingdom. We must make every possible strong and determined effort, to use the words of the noble and learned Lord, Lord Denning, in his powerful speech, to intensify law enforcement against drug traffickers by attacking their profits and by preventing the laundering of those profits".—[Official Report, 4/3/86; col. 126.]

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That is precisely the issue that we are discussing today. The laundering of profits, as the noble and learned Lord, Lord Denning, said on an earlier amendment, is absolutely fundamental to the question that we are debating today.
If we want to have an idea of the scale of this traffic we have only to look at an Answer given to me by the noble Lord, Lord Young of Graffham It will appear in Hansard of today's date. In a Written Answer he points out that in the first quarter of 1979 heroin to a value of approximately £775,000 was seized by the Customs and Excise. In the last quarter of last year that figure has risen to £12,519,000.
It would be encouraging to imagine that we were being more successful and that the Customs was able to intercept more heroin coming into this country. In reality, it is probably seizing just about the same proportion of heroin now as it did in 1979. If one tries to make a series of mathematical calculations as to what is the approximate size of the trafficking, as I said on Second Reading, it will be arbitrary. It is foolish to try to be precise in such matters. Nevertheless, in 1984, it is probable that heroin with a street value of about £350 million was introduced illicitly into this country. We are also seeing a rapid growth in the trafficking of cocaine. As a result of the fact that the American market is now saturated with cocaine, entrepreneurs, as I endeavoured to point out on Second Reading, are identifying Western Europe as their target. This huge business is, therefore, expanding at a tremendous rate.
When debating such matters it is necessary to maintain a proper and sensible balance; but it is also right to look for a moment at the problem facing the criminal entrepreneurs who are responsible for organising this trafficking. They have a single problem; it is a substantial one. How are they to launder the massive proceeds from their criminal activities which run possibly into hundreds of millions of pounds? Unless they are prepared to take the immense risks involved in walking around with suitcases with large quantities of bank notes, they have in some way to introduce that money into the banking system. The question is how they will do it.
At the moment we know, as a matter of cold fact, that such people can do it without risk that the transaction will be reported to the authorities. How can that possibly be right? Is it not absolutely essential that when debating such a Bill we do everything that we can to introduce machinery to make their task as difficult as possible? How can it be right not to have some provision making it necessary to report a transaction above a certain level to some public agency? The noble Lord, Lord Mishcon, drew attention to some of the practical problems involved, but one of the points with which he did not deal was what had been the experience of the United States. The Americans have a great deal more experience of dealing with narcotics than we have.
5 p.m.
There is absolutely no doubt, on the part of the Federal authorities, that an essential element of their defences against drug trafficking is the requirement to
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report cash transactions above a certain level. The Attorney-General of the United States, as I pointed out at Second Reading, made his position on this matter absolutely clear. Indeed, in doing so he announced that the Department of Justice and the Treasury Department were not satisfied with the existing requirements of the Bank Secrecy Act, under which all cash transactions of over 10,000 dollars have to be reported. They have introduced through the chairman of the Senate Judiciary Committee a new Bill which is aimed at strengthening those reporting requirements and the enforcement procedures involved in the Bank Secrecy Act.
When I put this point to the noble Lord, Lord Glenarthur at Second Reading on 4th March, he replied (at col. 126 of the Official Report):
"… we do not believe that any useful purpose would be served by imposing a requirement on banks and other financial institutions to report large cash transactions."
He said that in the United States reporting had been only casually observed. I think that is absolutely true and that is why there have been a formidable number of prosecutions against American banks for failing to report. Indeed, there is little doubt that American banks are now far more aware than they were some months ago of the absolute statutory requirement upon them to live up to the central purpose of this legislation. I think that those prosecutions indicate the seriousness with which the American Government is now attempting to enforce the legislation.
I return to the position in this country. When speaking to the last amendment, the noble and learned Lord referred to the report of the Home Affairs Committee, and I should like to refer to the views of the Parliamentary Under-Secretary at the Home Office, Mr. Mellor, at page 149 of that report, when he pointed out, quite fairly, a number of problems that had arisen in the United States about the reporting arrangements so far as banks were concerned. The points he made were entirely reasonable.
But he went on to say this about the 10,000 dollars reporting requirement, because he was asked by a member of the committee whether we were going to move in the same direction. He said:
"We certainly considered it. Like all of these arguments, nothing is ever rejected forever. Basically we are producing our first-line proposals. I would not rule out at some future point, if these provisions were not as effective as we would wish, that one would want to return to that".
That is Mr. Mellor's view and I agree with it, at least to the extent that he accepts the validity of part of the argument. But what I regret is the fact that he is not prepared to do it now, because I believe that the need for this is clear and urgent.
If anyone has any doubts about that, he has only to turn to page 126 of the same report of the House of Commons Home Affairs Committee, when Assistant Commissioner Dellow, the head of crime division at Scotland Yard, was being interrogated by members of the committee on exactly this point. Mr. Dellow said:
"I think that some of the American laws with regard to the notification of the movement of amounts of money over $10,000, the movement of money outside the country, the movement of money backwards and forwards through barriers and so on, although tending to be regulatory and restrictive, I am afraid are the sort of regulations that are going to assist in terms of controlling this sort of money in this country".

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That is the voice of one of the officers with most detailed knowledge of the drug situation in this country, speaking on behalf of the Metropolitan Police where the problem is perhaps at its most serious. I do not argue for a moment that, because a policeman, however senior his rank, maybe advocates a certain course of action, Parliament should uncritically accept it—of course not. All I am saying—and I hope the Committee will recognise this—is that we are going to take a very substantial risk if we simply ignore what he said.
I return to the point that I made at the beginning of my speech. Large sums of money made as a result of this trading in narcotics are now washing around in this country. It seems to me highly desirable to move in the direction advocated by the noble and learned Lord, Lord Denning, in this amendment, which the noble Baroness, Lady Phillips, my noble friend Lord Hooson and I support, because if we do not seize an opportunity like this when we are discussing this very serious matter it may be some substantial time before Parliament has the opportunity of coming back to it.
Lord Boardman: Your Lordships will remember that I declared my interest in a bank on a previous amendment. May I now sound a somewhat cautionary note in regard to the amendment of the noble and learned Lord? The noble Lord, Lord Mishcon, raised a number of points with which in large measure I am in agreement as regards the problems which arise from the noble and learned Lord's amendment and I would add two further points.
First, we should distinguish between what happens in this country and what happens in the United States. On an earlier occasion, I said that the United States is largely a cashless society. There they have imposed a limit of 10,000 dollars, and above that amount a transaction has to be reported. To place a comparable limit in this country—and I know that the amendment leaves that open—would mean a vast amount of work. The number of transactions of comparable size which take place every day are quite vast. Therefore, the answer might be to raise the limit and have a figure very much more substantial than 10,000 dollars; for example, 100,000. I remind your Lordships that there are some 295 registered banks, 300 bona fide licensed depositories and scores of building societies. Someone who had large sums could, if the limit were raised to £100,000, spread it around, which would not be a vast task, and could thereby avoid reporting.
Another point I would make is that, while reporting in the United States has led to a number of prosecutions, my information is that in many cases the law has been respected more in the breach than in the observance. I am not aware that the legislation has led to tracking down or convicting drug traffickers. My final point is that the amount of bureaucracy that would be necessary would be vast and I ask the noble and learned Lord whom he would expect to monitor his scheme.
Having expressed my reservations, may I tell your Lordships again that if there were a method by which we could eliminate the laundering of money I have no doubt that the financial institutions and the banks would accept a great deal of bureaucracy and a great
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many handicaps, inconveniences and even breaches of some of the fundamental principles of confidentiality, in order to stamp out the evil trade of drug trafficking? I hope that my noble friend the Minister will feel that before he can accept this amendment he should have further consultations and look at some of the practical problems that would arise from carrying into effect the proposals in this very well-intentioned, but somewhat impracticable, amendment.
Lord Glenarthur: I recall that the noble Lord, Lord Harris of Greenwich, raised this issue during the debate at Second Reading, and the noble and learned Lord, Lord Denning, has now joined him in pressing this point. I fully recognise the force of the point of view of the noble Lord, Lord Harris, that concern about drugs is increasing. The noble Lord has quoted some statistics today which add weight to his words. My noble friend Lord Boardman agreed with him, too, on that point.
This is a question which the Government have considered very carefully in the context of preparing this legislation in the light, among other things, of the comments that were made in the Select Committee report to which the noble Lord referred. We looked at the American experience and thought about the implications for the financial community in this country; and I have to say that we concluded that the results were not likely to justify the degree of effort that would be required for a great many people to operate such a system. Banks in this country frequently receive large sums in cash. In seaside and tourist resorts, just to take two simple cases, or in areas with large numbers of antique shops—these are just examples, and nothing more than that; no relevance is attached to any of them in particular—substantial cash deposits will be specially common. A requirement to report all such transactions would impose a very substantial burden on the banks, as I know my noble friend Lord Boardman will agree, and on some individual branches in particular. I do not believe that it would be right to ask them to shoulder that very heavy burden unless we thought that there would be significant benefits in terms of identifying traffickers and tracing their proceeds.
The noble Lord, Lord Harris, believes that the benefits would exist, but I have to say to him that the practical difficulties and burdens which it would impose are very much along the lines which my noble friend has expressed. Whoever had the task of scrutinising the reports received would find it difficult or impossible to distinguish those which required further investigation from the welter of information that would stream in on deposits of cash arising from perfectly legitimate activities. Indeed, it seems likely that it would be the legitimate cash that would be caught by the reporting requirements. The drug traffickers with whom we are concerned are among the most sophisticated of criminals; I do not think anyone denies that. I cannot believe that they would find it difficult to avoid transactions of a size that would need to be reported. In America, the practice known as "smurfing" has developed, where a number of deposits is made, each just below the reporting threshold. I understand, too, that in America the reporting requirements have in any case been only

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patchily observed—I know that I said precisely that at Second Reading—even by large and highly respectable financial institutions.
For all those reasons the Government concluded that it would be undesirable to proceed with a bank reporting requirement here. I recognise that it is an argument different from the earlier argument which the noble and learned Lord, Lord Denning, put forward. I have to say to him that I must resist these amendments. We believe that the powers given by Clauses 20 and 21 of the Bill for the police and Customs to obtain access to information held by banks and others at a very early stage of a drug trafficking investigation will prove a more effective means of identifying and tracing the proceeds of drug trafficking.
I do not think that the noble Lord, Lord Harris, would want me to stress any further the concern that I share with him about the great efforts that have to be made in tackling this terrible problem in every possible way. I agree very much with the noble Lord, Lord Mishcon, that what we are achieving here would not only be impracticable but probably would not have the effect desired because of the way experience has shown it to operate in the United States. With the benefit of my views on that, I hope that the noble and learned Lord, Lord Denning, may feel able to withdraw his amendment.
Lord Harris of Greenwich: Perhaps I may say just two things to the noble Lord, Lord Glenarthur, before the noble and learned Lord replies. Speaking for myself as one of the noble and learned Lord's supporters, I would prefer not to press the amendment today but to wait and see what the Government come up with on the earlier amendment. It does not cover exactly the same ground; it goes far wider—that is certainly true. But I think at that stage we shall be able to form a view, quite bluntly, of whether we are satisfied with the general direction in which the Government are going.
My second point is that in my experience it has been some time since I have heard a Home Office Minister reply to a debate of this kind, on a Bill involving criminal justice policy, basing his argument primarily on the position of the banks—an important point which I admit immediately. The noble Lord did not make a single reference to the attitude of the police. I find that astonishing, but perhaps not altogether surprising given the evidence of Assistant Commissioner Dellow before the Home Affairs Select Committee. He said quite clearly on that occasion that a provision along these general lines was in his view—I do not want to put words into his mouth; the Committee heard the earlier quotation—desirable.
If we do not do it in this Bill we shall come back to it. Indeed, the Parliamentary Under-Secretary who is responsible for Government policy on drugs implied the same thing himself when he gave evidence to the Home Affairs Select Committee. I would far prefer that we continue this debate at a later stage of the Bill when we see what progress we have made on the other questions. I do not know whether my noble and learned ally agrees with me, but I think that that might perhaps be the best way to proceed.
5.15 p.m.
Lord Denning: I thank everybody very much. I quite appreciate the point of my noble friend Lord Mishcon. I hoped that those matters—whether a person had to apply to a High Court judge and get an order from him: whether we could deal with such matters as the banks; whether it should be some or all, and as to the amount and so forth—could be dealt with in a scheme. In other words, it was deliberately vague so as to allow all the details to be worked out later and the objections considered. It will very much need the co-operation of the banks. But, equally, having said that, I thank the Minister for the consideration given by the Home Office to this very problem. It is evidently being looked into very carefully at the moment. I hope they will consider it further. In the light of our progress already on Amendment No. 25, I shall not press Amendment No. 30.
Amendment, by leave, withdrawn.
[Amendment No. 31 not moved.]
Clause 24 agreed to.
Viscount Davidson Viscount Davidson moved Amendment No. 32:
After Clause 24 insert the following new clause:
("Authorisation of delay in notifying arrest.
.—(1) In section 56 of the Police and Criminal Evidence Act 1984 (right to have someone informed when arrested), at the beginning of subsection (5) there is inserted "Subject to subsection (5A) below" and after that subsection there is inserted—
"(5A) An officer may also authorise delay where the serious arrestable offence is a drug trafficking offence and the officer has reasonable grounds for believing—

(a) that the detained person has benefited from drug trafficking, and

(b) that the recovery of the value of that person's proceeds of drug trafficking will be hindered by telling the named person of the arrest".

(2) In section 58 of that Act (access to legal advice) at the beginning of subsection (8) there is inserted "Subject to subsection (8A) below" and after that subsection there is inserted—
"(8A) An officer may also authorise delay where the serious arrestable offence is a drug trafficking offence and the officer has reasonable grounds for believing—

(a) that the detained person has benefited from drug trafficking, and

(b) that the recovery of the value of that person's proceeds of drug trafficking will be hindered by the exercise of the right conferred by subsection (1) above."

(3) In section 65 of that Act (interpretation)—
(a) after the definition of "appropriate consent" there is inserted—
" "drug trafficking" and "drug trafficking offence" have the same meaning as in the Drug Trafficking Offences Act 1986", and
(b) at the end of that section there is inserted "and references in this Part to any person's proceeds of drug trafficking are to be construed in accordance with the Drug Trafficking Offences Act 1986".
(4) Without prejudice to section 20(2) of the Interpretation Act 1978, the Police and Criminal Evidence Act 1984 (Application to Customs and Excise) Order 1985 applies to sections 56 and 58 of the Police and Criminal Evidence Act 1984 as those sections have effect by virtue of this section.").
The noble Viscount said: The intention behind this new clause is to minimise the risk that the defendant's property might be disposed of by his family or friends before the High Court has had an opportunity to take action to restrain it.
In the Police and Criminal Evidence Act, people taken into custody have clearly defined rights to have a friend or relative notified of their arrest, and to

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consult a solicitor. Those are important rights, which Parliament has agreed should be restricted only in very limited circumstances, which are set out in that Act. For notification of arrest or access to a solicitor to be delayed, the offence for which the person has been detained must be a "serious arrestable offence" under the terms of the Act, and this will be the case with the drug traffickers and launderers with whom we are concerned. But before delay can be authorised, there must also be reasonable grounds for believing that the immediate exercise of the suspect's rights would have one or more highly undesirable or prejudicial effects, such as interference with evidence, possible injury to others, alerting other suspects, or hindrance of the recovery of stolen property. We believe that to this list should be added another proper justification for delaying notification of arrest and access to a solicitor: that such notification or access would put at risk the recovery of a person's proceeds from drug trafficking.
There will be occasions when the police or Customs need to effect a person's arrest before they have had an opportunity to seek a High Court order restraining his property. It is not difficult to envisage that a telephone call to the trafficker's wife, brother or friend might give him or her a chance to put some of the defendant's assets beyond the reach of the courts before a restraint order could be made. Consultations with his solicitor could in some cases carry a similar risk.
The effectiveness of the provisions of this Bill would thus be seriously undermined. The Government believe that that is unacceptable and therefore propose that there should be power to authorise delay in such situations, just as there is in the kind of circumstances that I indicated a few minutes ago.
That provision would of couse be subject to the safeguards already provided in the Police and Criminal Evidence Act. Delay would be for a maximum of 36 hours and could only be authorised by an officer of superintendent or equivalent rank. The person detained would have to be told the reason for the delay and it would also have to be noted on his custody record. I believe that the provision is an important one and that it will close a small but significant loophole in our restraint and confiscation procedures. I beg to move.
Lord Wheatley: When we were discussing Amendment No. 25 and the new clause that was introduced by the noble and learned Lord, Lord Denning, I indicated that I shared with all Members in all parts of the Committee an abhorrence of the iniquitous traffic that is continuing at the present time. Before I retired just a few months ago, I was not only in the fortunate position of being able to indicate in the courts of Scotland how the law regarded such traffic with abhorrence and believed that it should be visited with the most condign punishment, but I also had the opportunity, as Lord Justice Clerk, of setting the pattern of the method of disposal.
I say that by way of a preface, lest it be thought that I am in any way trying to ameliorate the strength of purpose behind this amendment or any of the other amendments that we have been discussing. However, I have suggested that it would be undesirable to use a formula that might be applied in other cases where the
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circumstances did not warrant its use. That point is one that the noble Lord, Lord Mishcon, has reiterated time and time again.
I have suggested that, in conformity with a formula that was used for the Road Traffic Act, instead of using just the words,
"suspects that any proceeds of drug trafficking",
etc., there should be inserted by way of a qualification, modification or addendum the words,
"or has reasonable grounds for suspecting".
I believe that that suggestion found acceptance by the noble and learned Lord, Lord Denning. He indicated that he was prepared to accept it, and the noble Lord, Lord Glenarthur, in winding up, said that that point would be dealt with along with other points that were raised during the course of our debate.
I wish to point out to the Government and in particular to the noble Lord, Lord Glenarthur, that when it comes to Amendment No. 32 it will be observed that the qualification I suggested in respect of the earlier clause has already been adopted by the Government for this clause. Subsection (5A) states:
"An officer may also authorise delay where the serious arrestable offence is a drug trafficking offence and the officer has reasonable grounds for believing".
That is perhaps a more stringent test than reasonable grounds for suspicion, but it is the same principle.
I direct the attention of the noble Lord to the fact that the Government have already accepted that formula in principle in their proposed amendment, when he comes to consider the new clause that the Government have undertaken to consider in relation to the previous amendment of the noble and learned Lord, Lord Denning.
Viscount Davidson: I am most grateful to the noble and learned Lord, Lord Wheatley, for his comments. We shall examine his words very carefully indeed before the next stage of this Bill.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 33:
After Clause 24, insert the following new clause:
("Prohibition of supply etc. of articles for administering controlled drugs.
—(1) After section 9 of the Misuse of Drugs Act 1971 there is inserted the following section—
"Prohibition of supply etc. of articles for administering controlled drugs
9A.—(1) A person who supplies or offers to supply any article which may be used or adapted to be used (whether by itself or in combination with another article or other articles) in the administration by any person of a controlled drug to himself or another, believing that the article (or the article as adapted) is to be so used, is guilty of an offence.
(2) It is not an offence under subsection (1) above to supply or offer to supply a hypodermic syringe, or any part of one.
(3) In proceedings against a person for an offence under this section in respect of any article it is a defence to prove that he believed on reasonable grounds that the article was to be used—

(a) in the administration by any person of a controlled drug to another in circumstances where the administration of the drug would not be unlawful under section 4(1) of this Act, or

(b) in the administration by any person of a controlled drug to himself in circumstances where having the controlled drug in his possession would not be unlawful under section 5(1) of this Act.

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(4) In this section, references to administration by any person of a controlled drug to himself include a reference to his administering it to himself with the assistance of another".
(2) In Schedule 4 to that Act, after the entry relating to section 9 there is inserted—
"Section 9A.
Prohibition of supply etc. of articles for administering controlled drugs.
Summary — — —
6 months or level 5 on on the standard scale, or both.".").
The noble Lord said: In moving this amendment, it may be convenient to discuss with it Amendments Nos. 43, 44, and 45. This proposed new clause meets an undertaking given in another place, and repeated by me during the debate on the Second Reading of this Bill, to introduce a provision to ban the sale of drug paraphernalia. The immediate cause for public concern was the open sale of cocaine kits, which have appeared in the shops in central London and elsewhere. But we believe that the new provision should cover articles that may be used for the administration of any controlled drug: there is no good reason for simply confining it to cocaine.
Your Lordships will also see that we propose that the new offence should cover individual items sold for the administration of a controlled drug, and not simply combinations of items, or kits. It would, I think, be anomalous and unacceptable to say that items could be sold separately for the administration of a controlled drug, but could not be sold together. Moreover, "combination" is a difficult concept to define with precision. There are some articles made up of several parts that might reasonably be viewed by a court either as a single item or as a combination of items. To confine the new offence to "combinations" of items would therefore leave its scope unclear.
An essential component of the proposed offence, however, is belief on the part of the supplier that the article or articles he sold would be used for the administration of a controlled drug. The burden will be on the prosecution to establish such belief beyond reasonable doubt. This will, in our view, adequately safeguard the position of honest shopkeepers, who might inadvertently and in good faith sell an item that is in fact to be used for drug taking, and whom nobody wants to see put at risk by the creation of this new offence.
There are a couple of other points that I should draw to your Lordships' attention. We are providing in subparagraph (3) a defence for the supplier if he believes on reasonable grounds that the items he sells will be used for administering a drug for medical purposes. And in subparagraph (2), we are specifically excluding from the scope of the offence hypodermic syringes, or any parts of them, such as hypodermic needles. Although that latter point may appear in some ways to go against the purposes of the new clause, it is done for a good reason. It is important because of the increased risks of AIDS and hepatitis that could result from re-use of those items. The new offence is to be triable in magistrates' courts, and the maximum penalties will be six months and/or a fine of level 5 on the standard scale, which is currently £2,000.
While I am asking the Committee to agree to this new clause, I should mention that my right honourable friend the Home Secretary is considering the possibility of extending the scope of the offence to
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cover items used to prepare drugs for administration, as well as those used for administering drugs. The cocaine kits that have caused so much public concern recently usually contain only one item that is used for administering the drug: all the rest are used for preparing it. If that one item—the tube—were to be removed from the kits and sold separately, we could easily see the appearance on sale of "cocaine preparation kits", which would be just as offensive as the kits currently in the shops.
Provided the burden remained clearly on the prosecution to establish the necessary degree of belief on the part of the supplier as to the intended use of the articles he was selling, we do not believe that such an extension would threaten the position of honest shopkeepers. My right honourable friend, in considering that possibility further, would be interested in any views your Lordships might wish to express at this stage, and if he concludes that an extension on the lines I have described is desirable, we shall table a further amendment on Report.
The amendment proposed provides that the new offence will be created for Scotland and Northern Ireland as well for as England and Wales. I hope that the Committee will agree also to a necessary consequential amendment to the Title of the Bill. I beg to move.
Lord Mishcon: I immediately rise to give my wholehearted support to this amendment and to the extension mentioned by the noble Lord the Minister. I have received a letter, as I believe the Minister has, from the Retail Consortium—and it is very worthy of that organisation—saying that it wholeheartedly supports the amendment and feels that the ingredient of mens rea, to which the noble Lord referred, is an adequate and proper safeguard for the innocent shopkeeper. Otherwise, it supports the amendment and it is much to its credit that it does.
5.30 p.m.
Lord Denning: I support the amendment but I should like to strengthen it a little. I would not leave it at believing that it was to be "adapted", and so on, or having reason to believe, or suspecting. It will be hard to prove the belief. We have had it in the Salmon Bill and in other cases. Do not leave it to having to prove belief. Having had "reason to believe" or suspect should be brought in; otherwise, he will get away with it.
Lord Harris of Greenwich: Speaking on behalf of my noble friends and myself, I agree that it will probably be sensible to move in the direction foreshadowed by the noble Lord, Lord Glenarthur. I think it might create certain evidential problems, but nevertheless I believe it is right to do it for the reasons he indicated.
I too have had a letter from Mr. McNally on behalf of the Retail Consortium, as have some of my noble friends. I think, with the noble Lord, that it is extremely praiseworthy that it has approached the matter in this way. It was a very responsible act on its part and we should all pay tribute to it for having done so. Having said that, I think a further amendment on

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the lines foreshadowed by the noble Lord is probably a sensible proposal.
Lord Glenarthur: I am grateful to the two noble Lords and the noble and learned Lord for their comments. I entirely share their sentiments about the Retail Consortium. It is a responsible attitude to take and I am glad that it has been able to approve of what we are doing.
As regards strengthening the clause further in the way suggested by the noble and learned Lord, Lord Denning, it is a matter which I shall certainly reflect upon. I am not quite sure of the relevance of the words that he chose to suggest—"reason to believe"—and I can see that they would have the effect of strengthening the clause. However, I shall consider his proposal to see what can be done, but without commitment.
On Question, amendment agreed to.
Clauses 25 to 27 agreed to.
Clause 28 [Interpretation]:
Viscount Davidson Viscount Davidson moved Amendment No. 34:
Page 27, line 14, leave out ("(d)") and insert ("and includes a person doing the following, whether in England and Wales or elsewhere, that is").
The noble Viscount said: Although Clause 28 provides that the new laundering offence created by Clause 17 is to be a "drug trafficking offence" for the purposes of this Bill—so that confiscation procedures will apply to the offenders—it is felt that to say in the Bill that drug trafficking means (that is, is synonymous with) money laundering is an undesirable use of language. To avoid stretching the words, while enabling benefits from earlier and overseas laundering to be taken into account in the confiscation order, the proposed amendment provides that laundering shall be included in the notion of drug trafficking. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 35:
Page 27, line 17, leave out ("of the proceeds of drug trafficking by him") and insert ("person of the other person's proceeds of drug trafficking").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 36 and 37:
Page 27, line 19, at end insert ("person").
Page 27, line 21, leave out from beginning to ("benefit") and insert ("the other person's disposal or are used for the other person's").
The noble Lord said: I have already spoken to these amendments. I beg to move them together.
On Question, amendments agreed to.
Viscount Davidson Viscount Davidson moved Amendment No. 38:
Page 27, line 26, at end insert—
("(aa) an offence under section 20 of that Act (assisting in or inducing commission outside United Kingdom of offence punishable under a corresponding law).").
The noble Viscount said: Section 20 of the Misuse of Drugs Act makes it an offence to take action in the
1200
United Kingdom to assist or induce the commission of a drug trafficking offence overseas. We believe that where a person has made money from such assistance or inducement it should be confiscated in the same way as it would be if he had assisted in the commission of a drug trafficking offence here. The amendment therefore adds these Section 20 offences to the list of offences which will in future give rise to confiscation orders. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 39:
Page 28, line 23, at end insert—
("(3A) References in this Act to anything received in connection with drug trafficking include a reference to anything received both in that connection and in some other connection.").
The noble Lord said: I have already spoken to this with Amendments Nos. 1 and 2. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 40 and 41
Page 29, line 24, leave out ("making") and insert ("having made").
Page 29, line 26, leave out paragraph (f) and insert—
("(f) the satisfaction of a confiscation order made in the proceedings (whether by payment of the amount due under the order or by the defendant serving imprisonment in default).").
The noble Lord said: It may be for the convenience of the Committee if I move Amendments No. 40 and 41 at the same time. Subsection (9) of Clause 28 contains a lengthy list of possible ways in which proceedings may be concluded. We should like to clarify this list in two ways. First, we need to allow for the possibility that the court may not sentence an offender, or make a confiscation order, immediately upon conviction, but may require him to return to the court on a subsequent occasion. The first amendment is designed to cover that situation. The second amendment reflects the possibility that in some cases—we hope not too many—the defendant may choose to serve a period of imprisonment in default rather than pay the amount needed to satisfy the confiscation order. Once he has served such a period of imprisonment, clearly the proceedings must be regarded as at an end. I beg to move.
Lord Mishcon: May I put just a brief question? Has the noble Lord considered, and if not is he prepared to consider, whether in this class of offence where we are making exceptional laws it would not be proper to give no alternative in regard to a confiscation order and to serve a term of imprisonment in default? One of the matters raised on Second Reading, I remember, was that there are many people who would prefer a term of imprisonment and come out with their ill-gotten gains in their millions. One wonders, therefore, whether the confiscation order should not be an order made by the court without any alternative being given to the defendant.
Lord Glenarthur: That is certainly a matter upon which I shall need to reflect and seek advice. I undertake to do precisely that.
Lord Harris of Greenwich: Before we move from that point, obviously one would, like the noble Lord,

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Lord Glenarthur, want to consider this matter before coming to a firm conclusion. However, I think there is significant merit in what the noble Lord, Lord Mishcon, said. There are—and one is talking about very substantial sums of money—some people who would far prefer to serve a sentence of imprisonment. However, the noble Lord says that he will reflect on this issue, and perhaps after he has done so he will correspond with us. It may well be that we are entirely mistaken, but we should like to think about it and we should be aided in doing that were we to have some helpful advice from the noble Lord.
Lord Glenarthur: I shall certainly do my best to provide helpful advice before the next stage of the Bill.
On Question, amendments agreed to.
Clause 28, as amended, agreed to.
Clause 29 agreed to.
Clause 30 [Short title, commencement and extent]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 42:
Page 30, line 7, leave out ("27") and insert ("25")
The noble Lord said: This is simply a drafting amendment. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment Nos. 43 and 44:
Page 30, leave out line 12 and insert—
(" (3) Subject to subsection (4) below, this Act")
Page 30, line 13, at end insert—
(" (4) Section 16 of this Act extends also to Scotland and section [Prohibition of supply etc. of articles for administering controlled drugs] extends also to Scotland and Northern Ireland.")
The noble Lord said: I have already spoken to these amendments. I beg to move them together.
On Question, amendments agreed to.
Clause 30, as amended, agreed to.
In The Title:
Lord Glenarthur Lord Glenarthur moved Amendment No. 45:
Line 3, after ("trafficking") insert ("to make provision about the supply of articles which may be used or adapted for use in the administration of controlled drugs")
The noble Lord said: I spoke to this amendment earlier. I beg to move.
On Question, amendment agreed to.
House resumed: Bill reported with the amendments.

Professions Supplementary to Medicine (Winding up of Remedial Gymnasts Board) Order of Council 1986
5.40 p.m.
Baroness Trumpington Baroness Trumpington rose to move, That the draft order laid before the House on 10th March be approved. [15th Report from the Joint Committee.]
The noble Baroness said: My Lords, this order marks a unique development in the history of the National Health Service which I believe will be welcome to all parts of the House. This is the first occasion on which a profession supplementary to medicine has voluntarily given up its identity and consented to what is effectively a merger with another profession in a way requiring formal ratification by Parliament.
The order of Council before you for approval by resolution of this House will amend the Professions Supplementary to Medicine Act 1960 (the 1960 Act) to reflect the merger of the remedial gymnastics profession with the physiotherapy profession, which took place on 16th November 1985. This is a development which has been welcomed by members of both professions throughout the United Kingdom.
The 1960 Act provides for the registration of the members of certain professions and for the regulation of their professional education and conduct. It established a board for each profession, to be coordinated and supervised by a Council for Professions Supplementary to Medicine.
The purpose of the 1960 Act was two-fold: to ensure that a consistent standard of training, qualification and conduct would be achieved by the registered practitioners of these professions, and to establish state registration as a "kite-mark" by which the public would be able to recognise practitioners who had attained this standard.
The Council for Professions Supplementary to Medicine is an independent body financed entirely from initial registration and annual renewal fees from the members of the constituent professions. The proposals which it makes for the revision of students' qualification, examination and training requirements require the ultimate approval of the Privy Council. Section 10 of the 1960 Act provides for the Privy Council, on a recommendation of the Council for Professions Supplementary to Medicine, to make an order to extend or restrict its application, and it is under the power of this section that the order before the House is made. As such an order in effect amends an Act, provision is made for an affirmative resolution of both Houses.
A little history is of relevance here. Like so many other developments in medicine, the remedial gymnastics profession had its origin in the special circumstances of the Second World War, when special rehabilitation units of the armed forces were created to tackle the two problems of dealing with recruits of poor physical standard and the ever-increasing numbers of injured personnel who needed to be returned speedily to active duty. These units especially stressed active and group therapy which was in essence a modified form of physical training.
So beneficial did this active approach prove to be that after the war the then Ministries of Labour and Health took action to ensure its continuance in civilian life and a course was developed and implemented at Pinderfields General Hospital (as it then was) at Wakefield, as a school of remedial gymnastics, originally as a conversion course for ex-military physical training instructors. This was the origin of the profession, which became one of those covered by the provisions of the 1960 Act.
In the years since the profession came into being, changes in the activities and clinical practice of remedial gymnastics have brought it into closer relationship with the practice of physiotherapy, to an extent where a measurable degree of overlap prevails. This fact has been recognised for some time and indeed a merger between the two professions was being mooted as far back as 1973, when it received the support of a recommendation by the working group on the remedial professions, set up by the then Secretary of State for Social Services under the chairmanship of Mr. E. L. McMillan. But the Society of Remedial Gymnasts and Recreational Therapists, the body which represented the interests of remedial gymnasts, was a cautious if not a reluctant bride, and progress was slow until 1983 when the Chartered Society of Physiotherapy decided to offer to extend its membership to those remedial gymnasts who would undertake to acquire the additional skills which would bring their training into line with that of physiotherapists. However, the course of true amalgamation still did not run smooth, and because of difficulties connected with the status of the Society of Remedial Gymnasts and Recreational Therapists as a limited company, the knot was not finally tied until 16th November 1985. At an extraordinary general meeting the Society of Remedial Gymnasts and Recreational Therapists Limited, taking note of a ballot of its full membership, which was significantly in favour of merger, decided in an act of great faith in the future to wind itself up.
Simultaneously, former members of the Society were offered membership of the Chartered Society of Physiotherapy under the terms of the provisions of their Royal charter. Provision has of course been made for these practitioners to undergo the necessary complementary skills training to allow them to practice as physiotherapists. Within the NHS arrangements have been made for the necessary protection of terms and conditions of service of former remedial gymnasts. I understand no major difficulties have been encountered.
There remain a number of legal steps which require to be taken to wind up the state registration machinery for this profession. Some of these are related to the amendment of a number of internal rules of the Council for Professions Supplementary to Medicine and its boards and there are others which do not require an affirmative resolution of both Houses. The significant step of abolishing the registration board of the remedial gymnastics profession itself however requires, as I mentioned earlier, such an affirmative resolution. The order before the House will cause the provisions of the 1960 Act to cease to refer to the profession of remedial gymnastics. It will also abolish the remedial gymnasts board and extend the function and membership of the physiotherapists board to cover former registered remedial gymnasts, enabling them to register as physiotherapists.
At this point I should like again to acknowledge both the courage of the members of the remedial gymnastics profession in taking the unique step of voluntarily relinquishing their identity and casting their lot in with another larger professsion, and the far-sightedness of the Chartered Society of Physiotherapy in making the proposal of marriage. It
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is not that the philosophy of remedial gymnastics will be lost. It will continue to be acknowledged within physiotherapy. Moreover, Pinderfields School in the Wakefield Health Authority, long the leading centre for remedial gymnastics training, is being converted, with financial help from the Department of Health and Social Security and from the Yorkshire Regional Health Authority, to a physiotherapy school, to function in that role from the beginning of the academic year 1986–87. It will continue to give due emphasis to the philosophy and practice of remedial gymnastics.
I wish also to use this opportunity to recognise the work of past and present members of the remedial gymnasts board, particularly its chairmen, and to thank all the members of the remedial gymnastics profession for their valued contribution to health care. I am sure that your Lordships would like to join with me in wishing the amalgamated group of physiotherapists and remedial gymnasts all good fortune in the future.
In view, therefore, of the decision to join ranks by the two professions concerned and of the support that their action has received from the Council for Professions Supplementary to Medicine and the Privy Council (after due consultation with the appropriate professional boards), I ask your Lordships to make an affirmative resolution to approve the draft order of the Council. I beg to move.
Moved, That the draft order laid before the House on 10th March be approved. [15th Report from the Joint Committee.]—(Baroness Trumpington.)
Lord Ennals: My Lords, it is not always that the noble Baroness and I are in total agreement, but we are in absolute agreement on the order that is laid before us. Not only do I want warmly to support the noble Baroness in her proposal but I should like to express my gratitude to her for giving us a little bit of the history that led to this amalgamation. I would agree with her that amalgamations are always welcome where they are due to the success of those concerned; all too often organisations of one sort or another find themselves open to splitting or to multiplying, and actually to get them to come together is always a difficult task. I think that both organisations are entitled to the thanks and congratulations not only of the whole House but of the National Health Service. This does enable us just to say a few words, as the noble Baroness did, of thanks and congratulations to both organisations.
Obviously, the occupational therapists are the major organisation of the two, with roughly 22,000 occupational therapists operating in the country, while the remedial gymnasts only have about 700. But it was not a takeover bid in the sense that made the remedial gymnasts feel that their work had not been apreciated. It was that as the physiotherapists gradually and steadily increased their skills they incorporated the skills which are held by the remedial gymnasts. I should like to pay my own personal tribute to the physiotherapists and now the remedial gymnasts who have joined them. I cannot claim that I was ever knowingly treated by a remedial gymnast, but over 40 years ago at the end of the war, when I suffered serious injuries, I had reason to be thankful to the

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physiotherapists; and in very recent times—nay, this week—I have had reason to be thankful to the physiotherapists.
I understand that both the noble Baroness and I shall be invited to share the celebration of the union between the two organisations on 28th April. I hope that the noble Baroness will be able to accept, and I hope that I shall.
I have only one other comment which I should like to make to your Lordships: that is, that if we ever come to make a change again I should like to see the title changed. I would rather see "Professions Complementary to Medicine" than "Professions Supplementary to Medicine". I recognise that these professions act under medical advice, but they have skills which the medical profession do not have, and they are often very precious skills. So I simply say to the noble Baroness that, if she is in her place at a time when any further change has to be made, I hope she will think of calling them professions "complementary to" rather than "supplementary to" medicine. I only say that as an additional tribute to two professions which have come together for the mutual benefit of each of them.
On Question. Motion agreed to.

Legal Aid (Scotland) Bill [H.L.]
5.53 p.m.
The Lord Advocate (Lord Cameron of Lochbroom): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD WELLS-PESTELL in the Chair.]
Clause 21 [Scope and nature of criminal legal aid]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 51:
Page 14, line 30, leave out subsection (2).
The noble Lord said: The Amendment is to leave out subsection (2) of Clause 21. This clause illustrates the lack of independence of the board and shows that it is just a creature, a puppet or a pawn of the Secretary of State because the Secretary of State may, by this clause, make regulations in relation to criminal legal aid saying at what class or stage of proceedings criminal legal aid shall not be available. It gives a total power, for example—to take it to a ludicrous extent—to say that legal aid will not be available in the High Court for cases of rape or murder, which no doubt he would not intend. It is a very wide power, and is a power which seems to be wholly wrong. It would be interesting to know if the Government or whoever drafted this Bill had in mind the European Convention on Human Rights, Article 6.6 of which provides that:
"Everyone charged with a criminal offence has the following minimum rights:—… to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require:"
Of course, under the provisions legal aid has only to be granted when the interests of justice so require, so how can the Secretary of State make regulations taking out classes of proceedings or stages of proceedings and still comply with the European Convention on Human Rights? I beg to move.
Lord Elwyn-Jones: This really is a most remarkable provision. Clause 21(2) says: "The Secretary of State may, by regulations made under this section, prescribe by reference to such considerations as appear to him to be appropriate"—that is the Secretary of State—"any class or stage of proceedings in connection with which criminal legal aid shall or, as the case may be, shall not be available." It gives him the complete discretion to ride a coach and four through all the criminal legal aid provisions of Part 4. It is a remarkable provision.
Will the Secretary of State enjoy such powers as this, I wonder. There is to be no restriction on him. He is the boss; he is the master; he will be the master of the board. Really, I cannot think of any precedent for a provision granting such power as that.
I recollect that the noble Earl, Lord Selkirk, speaking earlier—if he does not mind being quoted—said, "I don't like the Bill; it is full of regulations. There is one regulation for every two clauses." This is about the most notorious, if I may so describe it, of the mass of regulations we face, and I was not surprised when he used language that perhaps I ought to be nervous of using, when he described it as a travesty of a Bill. This is one of the passages which merit that fierce condemnation.
One cannot help noticing in passing—we shall come to Clause 22 in a moment—that in the marginal note to Clause 22 it states, "Automatic availability of criminal legal aid". This is not so; there is nothing automatic about it. It is all subject to the control of the Secretary of State and, as my noble and learned friend has said, he has power at any time to say "No, you can't have criminal legal aid for Class A or Class B of work", and in this way to deny what should be a legal right—namely, the right to criminal legal aid when the resources of the accused person make it impossible for him to provide for his own defence and representation. The provision of legal aid is not a marginal benefit on the fringe of the welfare state: it is a right—a right that the citizen should enjoy. It is a matter of rejoicing that since the war we have produced the scheme within the defined but established limits where it is available. Subsection (2) of Clause 21 is a defiance of the principles of the grant of legal aid especially in the criminal field. I am expecting (I can scarcely wait) to hear the noble and learned Lord the Lord Advocate say that the Government must take this matter back and think about it again.
6 p.m.
Lord Denning: I, too, should like to support the amendment. We have nothing like this in respect of criminal legal aid in England. We go by the report of Mr. Justice Widgery (that is, Lord Widgery) which was against any classification. In respect of superior courts, the report said:
"Persons committed to assizes or quarter session for trial or sentence… should, as a general practice, be granted legal aid. The

1207
courts should retain a discretionary power to refuse legal aid on grounds other than means…".
That was in respect of superior courts. As to summary jurisdiction, the report said:
"We found, however, that it was impossible to specify with certainty offences where legal aid should never be granted, or, at the other end of the scale, offences for which it should always be granted. One difficulty was that the headings under which crime is classified are often broad ones, and a heading such as larceny covers a considerable number of offences differing widely in their seriousness and complexity. After considering various possibilities we reached the conclusion that the classification of summary proceedings into those where legal aid should be mandatory, discretionary or not available is impracticable and that the grant of legal aid in these proceedings must remain at the discretion of the court".
The truth is that the Widgery Committee looked into the question of classification and whether legal aid should be granted in larceny cases, rape cases or burglary cases, but said that there could not be such classification because it was impracticable. It also suggested that guidance be given. You cannot do this by regulation. It should be done as it is in England and as Lord Widgery's report states. I would be against regulation.
Lord Wheatley: I find myself in complete agreement with the noble and learned Lords, Lord Elwyn-Jones and Lord Denning. The more we go into this Bill, the more I keep posing in my mind the question, "What is it that English lawyers have that Scottish lawyers do not have that causes this great distinction between the operation of the legal aid system in England as compared with Scotland?" Why is it that English judges can be trusted to do certain things that Scottish judges cannot? Why is it that certain full rights are granted to people south of the Border but may be denied to them north of the Border? There has been no answer to that series of questions since the beginning of this Bill. I would invite the noble and learned Lord the Lord Advocate to give some explanation of this enigma that has puzzled me throughout our proceedings.
Let us get back to fundamentals. The noble and learned Lord, Lord Elwyn-Jones, has pointed out that this is not a fringe benefit of the welfare state. It is probably one of the most important things in the field of criminal law—we are dealing with legal aid in criminal causes—that has taken place in the history of Scottish law. It gives full and complete right to a person to have proper representation and defence when charged with a criminal offence in our criminal courts. That is a very important matter. The fact that it is endorsed by the Convention on Human Rights is merely another glimpse of the obvious. To compound this problem, we find that the wording, mentioned by the noble and learned Lord, Lord Elwyn-Jones, refers to the right of the Secretary of State to restrict still further the pittance that we already have by cutting down on the class of crime, no doubt, and the class of person, no doubt, entitled to legal aid, or the stages at which legal aid might be given.
It is proposed that this should be done, not in the Bill but by affirmative resolution of either House. I would have thought that this invasion of such a fundamental right was something, if it were to be done, that should be done in primary legislation that can be examined carefully and amended where necessary. But, as the noble Lord, Lord Mishcon, explained
1208
earlier today, there is, under the affirmative resolution procedure, no opportunity to amend. You either endorse it or you reject it. In allowing this invasion of the rights of persons in respect of class or stage, of which we know nothing at present except by generalisation, to come before the House, the Government feel no doubt that they can carry whatever they want to do by the majority that they have in the other place, and by the convention, almost, of this place, without having to yield one inch in respect of any arguments, however persuasive and logical, advanced in your Lordships' House.
In those circumstances, I would suggest to the noble and learned Lord the Lord Advocate that not only is this a matter that he should take away but also that he should persuade the Secretary of State for Scotland, who, being a member of the Faculty of Advocates, should not need any persuading, that this is not the way to go about things. If the Government want a severe curtailment of legal aid in Scotland that is not being followed in England, let them have the courage of their convictions and bring it into the primary legislation of the Bill.
Lord Foot: I should like to speak briefly from these Benches in respect of this matter. On first reading the provision in Clause 21(2) I had doubts about whether I had properly understood it. I did not believe that it could be so draconian as it apeared. However, having listened to the words that have been spoken, and the surprise and astonishment already expressed, I am comforted to believe that I did understand it. This is not a matter that is concerned simply with legal aid in Scotland: it concerns the way we legislate. It is really something of a constitutional issue. According to my understanding, subsection (2), by which the Secretary of State can make regulations about the class, and so on, of proceedings, and about proceedings where legal aid shall be available and proceedings where it shall not, governs the whole of Part IV, except possibly Clause 23. Clause 22 purports to set up what are the occasions when there is automatic availability of criminal legal aid. But the whole thing is prefaced by being subject to the regulations of Clause 21(2). If one turns over the page and looks at Clause 24, there we find what is meant to be the definition of the right to legal aid in summary proceedings; and, there again, it is qualified at the beginning by Clause 21(2). Finally when one comes to legal aid in appeals, in Clause 25 one finds exactly the same position. At the top of the page it says "subject to regulations", and so on.
As I understand it, in considering this Bill we are supposed to be defining what are the occasions and when legal aid will be properly available to people who seek it in the Scottish courts. The noble and learned Lord the Lord Advocate will correct me if I am wrong. As I understand it, theoretically this objectionable subsection gives the Secretary of State power, if he so wishes to abrogate completely all the provisions of those clauses that are contained in Part IV. In other words, we are not being asked here in the High Court of Parliament to define what is to be the future situation of criminal legal aid in Scotland. We are being asked to give a blank cheque to the Secretary of State to make such regulations later on as he thinks fit.

1209
I cannot remember an occasion when we have ever been presented with anything as blatant and draconian as that. I do not know whether the noble Lord, Lord Morton, has the intention of taking this matter to a Division, but if he did it would surely be very deplorable that the Government should use their majority in this House in order to force through something which is so universally condemned.
Lord Wilson of Langside: I have listened with enormous interest to everything that has been said from all sides of the Committee. I do not propose to take issue with any part of it. However, I felt that rather than stay silent on these Benches in the face of the attack which has been made I should confess that I find the situation paradoxic. As I understand it, unless my researches have led me astray, this provision derives from Section 1(3) of the 1967 Legal Aid (Scotland) Act which was passed by a Government of which both the noble and learned Lord, Lord Elwyn-Jones, and myself were members.
The Earl of Selkirk: May I say one word about this. There is very little more to add to the distinguished statements which have been made. This means that the Secretary of State has no confidence in the board at all. These are essentially the kinds of decisions that the board which he himself is nominating should make. This is not a political decision. It is essentially a decision in regard to the administration of legal aid. That should be made by the board and not by the Secretary of State—however wise, however great a sense of justice he may have. This is not his function. If one does not trust the board to do this then the board must be changed to something else.
Lord Silkin of Dulwich: I should like to add one word to what has been said so forcefully. It is to draw attention to what one might call the guidance given to the Secretary of State by the subsection in his decision as to the regulations being made. That guidance is by reference to such considerations as appear to him to be appropriate. In other words, he has no guidance at all. Parliament is not telling him what he should give consideration to, or what matters ought to affect his mind. It is entirely open to the decision of the Secretary of State himself. That surely cannot be right.
6.15 p.m.
Lord Cameron of Lochbroom: I assure the Committee that there is nothing new in what is proposed here. The noble and learned Lord, Lord Wilson, reminded us of the fact that there is a parentage for this. May I say where it starts? It begins in 1949 in the first statute that gave life to legal aid in Scotland. In Section 1(3) of that Act Parliament provides this:
"the proceedings in connection with which legal aid may be given may be varied by regulations,"—
there is no reference to the considerations—
"and the regulations may describe the proceedings to be included or excluded by reference to the court or tribunal, to the issues involved "—
I ask the Committee to observe:
"to the capacity in which the person requiring legal aid is concerned"—
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and these words—
"Or otherwise".
I was therefore slightly surprised to hear certain noble Lords suggest that there was no precedent for this. What clearer precedent could there be than those words? They were taken into the 1967 Legal Aid (Scotland) Act and repeated in extenso there.
There is good parentage for this. The purpose is quite clear, the board operates within statute. It is not to operate outside statute. The purpose of this power is simply to enable the Secretary of State to specify, if he considers it appropriate, both the stages and the classes of proceedings for which criminal legal aid will be available. This is a power which has been inherent in the legislaton since 1949 and has been inherent in the legislation, so far as it applies to criminal legal aid, since that was introduced into Scotland.
Some of the stages which are specified on the face of the Bill—for instance, in Clause 21(3)—say that criminal legal aid will be available for summary proceedings after
"the conclusion of the first diet at which the accused has tendered a plea of not guilty".
However, the reference to stages is intended to provide a greater degree of flexibility and, for example, to make clear the stages at which, on the one hand criminal aid, and on the other hand, assistance by way of representation, may appropriately be given.
I have already explained in Committee that provisions for assistance by way of representation is made under Clause 9 and the regulations that are provided for there. Again, I wish to make it quite clear that if, as I think was suggested, perhaps a slight reductio ad absurdum, the Secretary of State were to prescribe by reference to considerations as they appear to him that all proceedings should no longer be available for criminal legal aid, I should have thought it perfectly clear that in so doing he was acting ultra vires. The purpose of these regulations is perfectly plain in my submission.
I would also point out that, like the existing power—the one to which I have referred in the 1967 Act, which is the current Act—the power under subsection (2) can be exercised only by regulations which are subject to affirmative resolution, and hence to Parliamentary scrutiny. As I have explained previously, one of the objectives of the Secretary of State is to ensure that legal aid is available where it is most required. This provision could be used as necessary to help him achieve this objective.
I do not accept that there is anything in this which is either new or which offends against any of the statements in the convention. Indeed, if this offends, so does the existing legislation. I cannot think that this would have been a point which had not been made before.
The scheme of this Part of the Bill is perfectly plain. It is one which I have pointed out before. In solemn procedure the applicant will be entitled to criminal legal aid if he establishes hardship. So far as summary criminal proceedings are concerned, they are dealt with by the terms of Clause 21(3). Of course, there is further provision for automatic availability of criminal legal aid in summary proceedings in, for instance, Clause 22, which deals with the position where the

1211
accused is in custody. Moreover, as the noble Lord, Lord Foot, pointed out, the matter is also dealt with in Clause 24 in that once an application is made it is to be dealt with on the basis of what is set out there. We shall come to another issue arising under Clause 24 in due course.
However, I must most strongly demur from the suggestions which have been made by your Lordships that there is anything unusual or strange about this subsection. For that reason I cannot give any undertaking that the Government will not proceed with the subsection in those terms.
The noble and learned Lord, Lord Silkin, made a point about the words:
"by reference to such considerations as appear to him to be appropriate".
All I would say is that that is at least something new inasmuch as what is in the existing legislation is entirely silent, and as I indicated earlier that provision would permit the board to make certain suggestions to the Secretary of State if that were necessary.
However, as I have said, I would most strongly resist the amendment. If I may say so, some of the comments which have been made have been wholly misconceived. I find references to English procedure dangerous for me, but I am advised, in response to the point made by the noble and learned Lord, Lord Elwyn-Jones, that there is a comparable power for England and Wales in Section 7 of the Legal Aid Act 1974 in relation to civil legal aid in England. There, again, I can point even south of the Border to something which supports the provision which is made here. However, I do not do that by way of praying in aid: I merely point out that it is not something which is foreign to statute south of the Border.
Lord Morton of Shuna: We do not seem to have progressed very much since 6th March. Subsection (2) seems to me to be in an entirely different frame of mind from Section 1(2) of the Legal Aid (Scotland) Act 1967, which says:
"Unless and until regulations otherwise provide, the proceedings in connection with which or, in the case of legal aid mentioned in subsection 5(b) below, in contemplation of which legal aid may be given, are proceedings …".
There is nothing there which gives a blanket power for the Secretary of State, if it appears to be appropriate, to do various things.
I thought that the purpose of the Bill—and perhaps I thought wrongly—was to improve the legal aid legislation and make it clearer and more appropriate. All that the noble and learned Lord the Lord Advocate seems to be able to say in defence of this subsection is that it has been in previous Acts. If I may say so, that is not a defence; it is just a statement that it has been there before—in which case, why do we need this Bill at all?
I also suggest that there is no power apparent in the Bill—and we went over this matter a fortnight ago—for the board to give the Secretary of State any advice. It is all the other way round: it is the Secretary of State who gives the board guidance, advice and directions. I regret that I cannot find the noble and learned Lord's answer satisfactory, and I must, therefore, ask that the opinion of the Committee be tested.
6.25 p.m.
On Question, Whether the said amendment (No. 51) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 76.

DIVISION NO. 1

CONTENTS

Amherst, E.

Kilbracken, L.

Brockway, L.

Kirkhill, L.

Brooks of Tremorfa, L.

Lawrence, L.

Bruce of Donington, L.

Lloyd of Kilgerran, L.

Caradon, L.

McIntosh of Haringey, L.

Carmichael of Kelvingrove, L.

Mackie of Benshie, L.

Cledwyn of Penrhos, L.

McNair, L.

Collison, L.

Meston, L.

Crawshaw of Aintree, L.

Mishcon, L.

David, B. [Teller.]

Morton of Shuna, L.

Davies of Penrhys, L.

Northfield, L.

Dean of Beswick, L.

Oram, L.

Denning, L.

Perth, E.

Elwyn-Jones, L.

Ponsonby of Shulbrede, L. [Teller.]

Ennals, L.

Evans of Claughton, L.

Prys-Davies, L.

Fisher of Rednal, B.

Ross of Marnock, L.

Foot, L.

St. Davids, V.

Gallacher, L.

Saltoun of Abernethy, Ly.

Galpern, L.

Seear, B.

Glenamara, L.

Selkirk, E.

Graham of Edmonton, L.

Silkin of Dulwich, L.

Greenway, L.

Somers, L.

Grey, E.

Stewart of Fulham, L.

Halsbury, E.

Stoddart of Swindon, L.

Hampton, L.

Strabolgi, L.

Harris of Greenwich, L.

Taylor of Mansfield, L.

Heycock, L.

Tordoff, L.

Hooson, L.

Turner of Camden, B.

Houghton of Sowerby, L.

Wallace of Coslany, L.

Hylton-Foster, B.

Wells-Pestell, L.

Jenkins of Putney, L.

Wheatley, L.

John-Mackie, L.

White, B.

NOT-CONTENTS

Airey of Abingdon, B.

Glanusk, L.

Alexander of Tunis, E.

Glenarthur, L.

Ashbourne, L.

Hailsham of Saint Marylebone, L.

Auckland, L.

Belhaven and Stenton, L.

Harmar-Nicholls, L.

Beloff, L.

Home of the Hirsel, L.

Belstead, L.

Hooper, B.

Birdwood, L.

Kaberry of Adel, L.

Blake, L.

Kimball, L.

Boardman, L.

Kimberley, E.

Boyd-Carpenter, L.

Lane-Fox, B.

Brabazon of Tara, L.

Lauderdale, E.

Bruce-Gardyne, L.

Long, V.

Caithness, E.

Lucas of Chilworth, L.

Cameron of Lochbroom, L.

Lyell, L.

Campbell of Croy, L.

McAlpine of Moffat, L.

Carnegy of Lour, B.

Mancroft, L.

Cathcart, E.

Margadale, L.

Chelwood, L.

Maude of Stratford-upon-Avon, L.

Coleraine, L.

Colwyn, L.

Merrivale, L.

Cork and Orrery, E.

Mersey, V.

Craigavon, V.

Mottistone, L.

Davidson, V.

Mountevans, L.

Denham, L. [Teller.]

Mowbray and Stourton, L.

Digby, L.

Murton of Lindisfarne, L.

Dilhorne, V.

Pender, L.

Drumalbyn, L.

Peyton of Yeovil, L.

Elliot of Harwood, B.

Reay, L.

Elphinstone, L.

Reigate, L.

Elton, L.

Renton, L.

Forester, L.

Rodney, L.

Fortescue, E.

Sanderson of Bowden, L.

Fraser of Kilmorack, L.

Shannon, E.

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Skelmersdale, L.

Trumpington, B.

Swinfen, L.

Vickers, B.

Swinton, E. [Teller.]

Vivian, L.

Teynham, L.

Ward of Witley, V.

Tranmire, L.

Whitelaw, V.

Resolved in the negative, and amendment disagreed to accordingly.
6.33 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 52.
Page 14, line 35, leave out subsection (3).
The noble Lord said: As is normal in many of the clauses of this Bill, the subsection starts with the words "Subject to regulations", and the amendment is to leave it out. It says:
"Subject to regulations made under this section and to sections 22 and 23 of this Act, criminal legal aid shall not be available in connection with summary criminal proceedings until the conclusion of the first diet at which the accused has tendered a plea of not guilty".
This is another illustration of how the draftsman has no knowledge of the criminal procedure of the courts. It is not clear what "Subject to regulations" may mean, but the first diet at which the accused has tendered a plea of not guilty may happen about a year after the complaint has been served. One does not plead guilty if one is challenging the competence, the jurisdiction or the time within which the complaint is brought or the relevancy of the complaint; and these are all complicated issues which may make proceedings drag on for many months, if not years, before there is a question of a plea of guilty or of not guilty.
As an illustration, there was a case last week in the Criminal Appeal Court as to whether a time bar applied. That was a road traffic case in which the first attempt to serve a complaint was in March 1985; the man has not yet pleaded guilty or not guilty, and the matter has been to the Criminal Appeal Court. According to subsection (3) he would not get legal aid for that. He would get only representation, which is wholly inappropriate. I beg to move.
Lord Wheatley: There is no real excuse for the Government not knowing of the problems referred to by the noble Lord, Lord Morton of Shuna. These long delays arise out of a procedure introduced by this Government, or rather their predecessor, in the Criminal Justice (Scotland) Act 1980. You can have these preliminary hearings on primary points; a procedure we did not have before but which was introduced under that Act. That was an Act of this Government's predecessor. They should have been very much aware of that situation when framing this and of the difficulties which would arise, as referred to by the noble Lord.
The Earl of Selkirk: Are the Government wise to say that no advice is needed before pleading? One of the most important decisions in any case is whether to plead guilty or not guilty. In many cases it would be in the interests of justice to encourage people to plead guilty. It shortens the process, and in many cases it is the wiser course to take. One is leaving this entirely in the hands of an accused person, who is uninformed as to the processes of law or what they mean. Often
1214
advice on this vital issue may be of great consequence, and I wonder whether it is wise to allow legal aid or advice to come in only after that date. This is a point which requires more consideration than this subsection gives it.
Lord Denning: I should like to support the amendment. Quite often it is important for a man to have legal aid before he is called upon to plead. I cannot say anything about Scotland, but again I go back to the Widgery report. It would be impracticable to require applicants for legal aid to plead before their applications are considered, and so forth. At all events we should not have it in England, and I do not see why you should have it in Scotland.
Lord Elwyn-Jones: I should like to join this chorus of criticism. I would merely say that I should have thought that it was desirable to give the accused person the benefit of advice as soon as practicable. After all, counsel often advises a client to plead guilty if he is satisfied of his guilt and he is prepared to plead, and this would be a saving of the time of the courts.
Lord Foot: I very much hesitate to express any view about Scottish procedure, but my belief is that this clause might have exactly the opposite effect to that which is intended. If there were the same situation in the English courts I should suppose that the accused person would be advised by his solicitor to plead not guilty in order that he could get the legal aid certificate, and then perhaps change his plea at a later stage.
Lord Wilson of Langside: I find this provision somewhat puzzling, and I hope that the Lord Advocate will be able to explain it. The situation at least some years ago when I was last involved was that legal aid was immediately available before an accused appeared and tendered a plea. There may be some technical explanation, but it is difficult to comprehend what it might be.
Lord Cameron of Lochbroom: I should like, in as little detail as I can, to put your Lordships' minds at rest about the intention of this subsection. Perhaps the best way to do it would be to deal in two ways with the position under summary criminal proceedings. But, before doing so, perhaps I should make clear that this subsection is an important part of what we are intending in this part of the Bill. The arrangement whereby criminal legal aid shall not be available, subject to regulations and to Clauses 22 and 23 of the Bill (this is of some importance), is that it is not until the conclusion of the first diet for which the accused has tendered a plea of not guilty that criminal legal aid will become available. That is to assist in restricting the scope for abuse, because the accused will have to decide whether to plead guilty or not guilty before he knows whether or not he will receive criminal legal aid if he pleads not guilty.
Under present arrangements there is a risk that an accused will plead not guilty simply to increase his chances of receiving assistance in the preliminary proceedings. But what is intended here does not derogate from the protection of the accused when he chooses to plead not guilty and can justify his application for legal aid.

1215
Your Lordships will recognise that in Clause 22, particularly subsections (1)(c) and (d), there is provision for automatic availability of criminal legal aid in advance of the first diet for a person who is in custody. The point of concern to certain of your Lordships arises in relation to a person who is out on bail. Perhaps I can best explain what is within the Bill if I deal with that accused. He will, before he is required to plead at the first diet, be entitled to automatic legal aid if he is on bail for any identification parade. That is to be found in Clauses 21(4)(b) and 22(10)(a). If financially eligible under Clause 8, he would be able to receive advice and assistance.
I think I have already outlined that a person is not barred from obtaining legal advice and assistance prior to being entitled to criminal legal aid but would be entitled to receive advice and assistance on application to a solicitor about what steps he should take in connection with a prosecution before the first diet. That will take care of the point on which I fully realise noble Lords were entitled to seek an answer about whether he should plead guilty or not guilty. Furthermore, he would be entitled to assistance by way of representation for preliminary proceedings if the solicitor thought he was eligible under the regulations under Clause 9. If he is eligible for such assistance by way of representation, having decided to plead guilty to the charge, then he would receive it for all proceedings up to the final disposal of the case, including pleas in mitigation, continuance of the case for social inquiry report, and so on.
Furthermore it is the intention that for certain preliminary pleas of the kind which the noble Lord, Lord Morton, outlined (pleas to competency and relevancy) he would also be entitled under regulations to receive assistance by way of representation, though it is possible that in such circumstances—this is unlike the case where such asssistance would be available in connection with guilty pleas—it may require the board to give its approval to such assistance.
6.45 p.m.
Within the Bill there is already provision for assistance from legal aid, but in a different form from that which is comprehended within criminal legal aid in this part of the Bill. Perhaps I should say that, in relation to preliminary pleas such as those I have outlined, this could involve the use of counsel if the board gave approval or otherwise. That is often done at the moment under legal advice and assistance—for example, obtaining counsel's opinion.
This is not in any sense a clause which intends to cut out a person's right to legal aid. It is intended to make provision by way of a kind of legal aid different from what is customary at present. As I have said already, that is to restrict the scope for abuse. But it would not cut him out from representation in the kinds of areas where noble Lords were perfectly properly expressing concern that he would not be able to be represented if eligible.
Lord Wheatley: Is it not the case that under the system that the noble and learned Lord has just outlined the legally-aided person is not receiving
1216
advice from a solicitor or counsel of his own choice? He will be dependent upon a man who will be appointed for this particular job under the Bill and he will receive representation in that sense. But he will not receive legal aid and advice from the solicitor or the counsel of his own choosing. It is because of that difference that anxiety arises, in that, if it is a question of competency or relevancy of the complaints that have been issued against him, it is then that he wants the best possible advice from a man of his own choosing.
Lord Cameron of Lochbroom: I am advised, and it was my understanding, that this person will be able to go to a solicitor of his own choosing for advice just as is the case under the present legal advice and assistance scheme.
The Earl of Selkirk: May I ask for clarification? What do the words "subject to regulations" mean? Does that mean that any article in this Bill can be changed by regulation? That is what it appears to mean. The clause reads:
"Subject to regulations made under",
this section—that is, Clause 22. Does that mean that the actual statute is subjected to the regulations? It is important that we should know that.
Lord Cameron of Lochbroom: In a sense I have already answered this in what I said about subsection (2). The regulations which are made are those under subsection (2) and the extent and form of those regulations are focused within subsection (2). Indeed, as I am reminded, the regulations can make legal aid available, just as they might, in certain circumstances, be said to be restrictive.
Lord Ross of Marnock: But under this subsection the whole gist is to make legal aid not available. The only protection anyone will have is some possible change of derogation under the regulations that the Secretary of State may or may not produce, and in producing them he pleases himself, subject to,
"such considerations as appear to him to be appropriate".
It would appear to me to be right, if the Secretary of State is going to depart from this blanket refusal of legal aid, that this is the time to tell us.
I am perfectly sure the Government must have some regulations in mind. It will be far better if we can have a pledge that before the next stage of the Bill the intentions in respect of the regulations should be produced. It is no good the noble and learned Lord the Lord Advocate saying, "I covered this in our discussion on the last amendment." With all due respect, I listened to him—and I am not a layman, Scots, English, Irish or Welsh for that matter—but I did not understand a word that he said. That detracted from the nature and the power that we have given to the Secretary of State in subsection (2). He has the power to do what he likes and to refuse what he likes. Here we are with one or two back-benchers and two Scots—and half the Scots voted against the Government on the last occasion, from the other side of the Committee, anyhow. And Englishmen who have never had a word to say during the debate will come trotting into the Lobby.

1217
To my mind it is not good enough. The words used by the noble and learned Lord were, "what we are intending" and his first intention was, "to prevent abuse". That is the real purpose of this, and any good or any possible safeguard that is in this will come from regulations that we know nothing about, and we have not been told anything about them. Could the Lord Advocate try again?
Lord Cameron of Lochbroom: I am sorry that I did not make it clear earlier, but the terms of subsection (3) make it clear that the regulations and Sections 22 and 23 of the Act, so far as they apply to subsection (3), will in fact extend or may extend criminal legal aid. If one reads the subsection without those introductory words one finds that criminal legal aid shall not be available in connection with summary criminal proceedings until the conclusion, subject to regulations made under this section and to Sections 22 and 23 of this Act.
As I have pointed out, those sections in fact extend criminal legal aid in summary proceedings to procedures prior to conclusion of the first diet. It is true that they also deal with circumstances taking place after, but the effect of subsection (3) is to make criminal legal aid not available unless Clauses 22 and 23 or the regulations otherwise provide. In a sense, it is therefore a power which extends and not one which takes away.
Lord Morton of Shuna: This seems to me a very unsatisfactory reply. I am told we have to look at Clause 22(1)(c) and 22(1)(d) to find out where this helps us in Clause 21(3), which deals with the situation up to the time when the accused tenders a plea of not guilty. Clause 22(1)(d) does not seem to help because it applies to a person who has already tendered a plea of not guilty. Clause 22(1)(c) only helps the person in custody, and one hopes it is not the intention that the majority of people on summary complaints will be held in custody until they plead.
Clause 23 does not appear to help at all because it first deals with solemn procedure, which is not summary, and then where a person has obviously been found guilty or had pleaded guilty and the sheriff is considering a sentence of detention or imprisonment; so it seems to me that these sections do not really take us very far.
Perhaps I may remind the noble and learned Lord the Lord Advocate on the matter of legal aid advice and representation that he fought for and defended the provision in Clause 9(2)(e) that gives power to restrict the limit for representation to those people in receipt of supplementary benefit only. The purpose of this is apparently to prevent abuse. We keep on being told it is to prevent abuse; but what abuse is being talked about? Is it abuse for somebody who says to the Crown prosecuting him, "Prove it"? Is that abuse? Is it abuse for the solicitor investigating the case to investigate it, which he is not entitled to do if he is only doing representation, to find out what the evidence is before advising him whether to plead? If that is abuse and has to be stamped out, we are going to have very many pleas of not guilty to allow the solicitor to investigate the situation. I regret that I find the answer as unsatisfactory as before, and must test the opinion of the Committee.
6.56 p.m.
On Question, Whether the said amendment (No. 52) shall be agreed to?
Their Lordships divided: Contents, 66; Not-Contents, 63.

DIVISION NO. 2

CONTENTS

Airedale, L.

Kilmarnock, L.

Attlee, E.

Kinloss, Ly.

Brockway, L.

Kirkhill, L.

Brooks of Tremorfa, L.

Kissin, L.

Bruce of Donington, L.

Lawrence, L.

Caradon, L.

McIntosh of Haringey, L.

Carmichael of Kelvingrove, L.

Mackie of Benshie, L.

Cledwyn of Penrhos, L.

McNair, L.

Collison, L.

Meston, L.

Crawshaw of Aintree, L.

Mishcon, L.

David, B. [Teller.]

Morton of Shuna, L.

Davies of Penrhys, L.

Northfield, L.

Dean of Beswick, L.

Perth, E.

Denning, L.

Pitt of Hampstead, L.

Elwyn-Jones, L.

Ponsonby of Shulbrede, L. [Teller.]

Ennals, L.

Evans of Claughton, L.

Ross of Marnock, L.

Ewart-Biggs, B.

Saltoun of Abernethy, Ly.

Feversham, L.

Seear, B.

Fisher of Rednal, B.

Selkirk, E.

Foot, L.

Somers, L.

Gallacher, L.

Stewart of Fulham, L.

Galpern, L.

Stoddart of Swindon, L.

Glenamara, L.

Strabolgi, L.

Graham of Edmonton, L.

Taylor of Blackburn, L.

Grey, E.

Taylor of Mansfield, L.

Hampton, L.

Tordoff, L.

Harris of Greenwich, L.

Turner of Camden, B.

Hatch of Lusby, L.

Wells-Pestell, L.

Heycock, L.

Whaddon, L.

Howie of Troon, L.

Wheatley, L.

Jenkins of Putney, L.

White, B.

John-Mackie, L.

Wilson of Langside, L.

Kilbracken, L.

NOT-CONTENTS

Airey of Abingdon, B.

Harmar-Nicholls, L.

Alexander of Tunis, E.

Home of the Hirsel, L.

Ashbourne, L.

Hooper, B.

Belhaven and Stenton, L.

Hylton-Foster, B.

Beloff, L.

Lane-Fox, B.

Belstead, L.

Lauderdale, E.

Boardman, L.

Long, V.

Boyd-Carpenter, L.

Lyell, L.

Brabazon of Tara, L.

Macleod of Borve, B.

Bridgeman, V.

Margadale, L.

Bruce-Gardyne, L.

Marshall of Leeds, L.

Cameron of Lochbroom, L.

Merrivale, L.

Carnegy of Lour, B.

Mersey, V.

Cathcart, E.

Mottistone, L.

Chelwood, L.

Mountevans, L.

Coleraine, L.

Mowbray and Stourton, L.

Colwyn, L.

Mutton of Lindisfarne, L.

Cork and Orrery, E.

Pender, L.

Craigavon, V.

Renton, L.

Davidson, V.

Rodney, L.

Denham, L. [Teller.]

St. Davids, V.

Digby, L.

Sanderson of Bowden, L.

Drumalbyn, L.

Shannon, E.

Elliot of Harwood, B.

Simon of Glaisdale, L.

Elton, L.

Skelmersdale, L.

Forester, L.

Swinfen, L.

Fortescue, E.

Swinton, E. [Teller.]

Glanusk, L.

Tranmire, L.

Glenarthur, L.

Trefgarne, L.

Hailsham of Saint Marylebone, L.

Trumpington, B.

Vickers, B.

Halsbury, E.

Ypres, E.

Resolved in the affirmative, and amendment agreed to accordingly.
7.4 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 53:
Page 14, line 42, leave out ("(so far as necessary)").
The noble Lord said: I shall be very short on this amendment. The provision calls for criminal legal aid to consist of representation by solicitors "so far as necessary". We discussed the point as regards civil legal aid on a previous amendment. "So far as necessary" seems unnecessarily restrictive. "Where appropriate" would seem to be a better form of words if the phrase is not left out entirely, as the amendment suggests. I beg to move.
Lord Cameron of Lochbroom: As the noble Lord has indicated, this is a phrase which is common to civil and criminal legal aid. I undertook to consider the wording with regard to civil legal aid. I shall give the same consideration to this phrase. It is right to say that it is a phrase which has appeared since 1949. I am not aware of it having given any difficulty in the granting of legal aid. I undertook to consider the wording last time and, equally, I shall consider it this time as well.
Lord Morton of Shuna: In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 54:
Page 15, line 6, at end insert—
("( ) The grant of legal aid under the provisions of section 23 of this act shall without prejudice to the provisions of this subsection extend to representation at all diets in the case at first instance and for any appeal arising therefrom under the provisions of section 76A and section 105(5) of the Criminal Procedure (Scotland) Act 1975 and for any appeal by way of Bill of Suspension against the granting of any incidental warrant; and the grant of criminal legal aid under the provisions of section 24 of this Act shall without prejudice to this subsection extend to representation at all diets in the case at first instance and for any appeal arising therefrom under the provision of sections 331A(3) and section 334(2A) of the Criminal Procedure (Scotland) Act 1975 and for any appeal by way of Bill of Suspension against the granting of any incidental warrant.").
The noble Lord said: The purpose of the amendment is to provide that legal aid under Clause 23 should be available for the type of appeal that may arise prior to a plea of not guilty in a summary case. It is the type of appeal to which I referred earlier relating to jurisdiction, time bar or something of that nature. The purpose of this fairly long amendment is to provide that legal aid would cover such an appeal. I hope that the amendment will be acceptable. I beg to move.
Lord Cameron of Lochbroom: The Bill as drafted is intended to achieve the result which the noble Lord has indicated in this amendment. I am generally confident that the terms of Clauses 23 and 24, as they stand, secure that result but I am perfectly happy to look again at the terms of the Bill in the light of what he has just said and the examples that he has given.
I am always concerned, when one has particular examples, that by reference to the brocard inclusio unius exclusio alterius one may have done more damage than good. I should also say that if there were any doubt, there is the possibility that the Secretary of State could clarify the position by regulation under Clause 36(2)(c) by providing that such proceedings are
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not separate proceedings for the purpose of legal aid. I accept that we want to be quite clear that those fall within the provisions of the Bill, and if the noble Lord will accept the reassurance that I shall look at the Bill in the light of what is in the amendment, I hope that he will feel able to withdraw the amendment.
Lord Morton of Shuna: If the noble and learned Lord is going to adopt that friendly attitude, certainly. I assure him that I should not have put down the amendment if I had not thought that there was a possibility that the matter was not covered by Clauses 23 and 24. However, if he will look at it again, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21, as amended, agreed to.
Clause 22 [Automatic availability of crimininal legal aid]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 55:
Page 15, line 24, after ("of;") insert ("or "(iii) where he is unfit to plead until his case is finally disposed of;")
The noble Lord said: This, again, is a fairly technical amendment and certainly is not a party political one. It appears that there is an omission from Clause 22 of the situation where a person is unable to plead, and the purpose of Amendment No. 55 is to cover that situation. Somebody may well be unfit to plead through mental illness, and that situation does not seem to have been covered. I beg to move.
Lord Cameron of Lochbroom: I entirely accept the desirability of the result which the noble Lord wishes to achieve, but in this instance I would reassure him that his amendment is not necessary. Clause 22(1)(c)(i) provides that a person in custody on a summary charge is eligible for automatic legal aid,
"until the conclusion of the first diet at which he tenders a plea of guilty or not guilty".
If the accused is unfit to plead, then by definition that terminus will not be reached and he will continue to be eligible for automatic legal aid until his case is finally disposed of. With that explanation, perhaps the noble Lord will wish to withdraw the amendment.
Lord Morton of Shuna: I beg to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 56:
Page 15, line 25, after ("custody") insert ("or liberated by the police in terms of section 8 of the Bail etc. (Scotland) Act 1980")
The noble Lord said: This is an amendment which, I hope, has more merit to it. The purpose is to add after the word "custody", in line 25, the words,
"or liberated by the police in terms of section 8 of the Bail etc. (Scotland) Act 1980."
The position under the 1980 Act is that persons are released by the police on giving an undertaking to attend the court and are treated as notional custody cases. The intention of the Bail etc. (Scotland) Act was that people should not be detained in police stations awaiting appearance in court if that was at all possible. But it did not reduce the seriousness of the crimes with

1221
which persons were charged. These people are, in some views, technically in custody and they should, even if they have been released under Section 8, have the benefit of the provisions of subsection (1)(d), which is what the amendment is designed to achieve. I beg to move.
Lord Cameron of Lochbroom: I have some difficulty in understanding this amendment as it is presently proposed, because it appears in a sub-paragraph which requires a person to be in custody and to be being prosecuted under summary procedure where he has already tendered a plea of not guilty. I suspect that what the noble Lord probably had in mind was for this to be placed in sub-paragraph (c), but even if that be so I cannot agree with the intention behind the amendment.
Since the introduction of criminal legal aid, it has been thought right to make special provision for the representation of persons held in custody. The reasons for this are obvious, and the present Bill continues that special provision. But a person who, having been arrested, is then liberated by the police under Section 8 of the Bail etc. (Scotland) Act is, of course, not in custody any more than a person who is granted bail by the court is in custody. In general, I can see no reason why he should be treated as if he is. Such a person could, of course, be able, if he were eligible, to obtain advice and assistance from a solicitor, and if he pleaded not guilty to apply to the board for legal aid.
However, that said, I take the point that it might be said that, in some circumstances, the time available to a person who has been liberated by the police after giving an undertaking to appear in court next day, or shortly thereafterwards, may be so short, in practice, as to make it difficult for him to consult a solicitor in the normal way, and in such cases I can see that it might be appropriate to make legal aid available through the duty solicitor.
I should like to make some further inquiry into this, and if it appears that any changes in the terms of the Bill may be needed we shall consider bringing forward an appropriate amendment at a later stage. But I repeat that I do not think it can be appropriate to make the services of the duty solicitor available to every person who obtains interim police liberation, because, as I think the noble Lord will know, it is sometimes given without any undertaking at all in relation to appearance in court. But I am grateful to the noble Lord for having brought this matter before the Committee.
Lord Morton of Shuna: In those circumstances, and with that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.15 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 57:
Page 15, line 35, at end insert ("and in connection with any appeal to the High Court of Justiciary under the provisions of section 334(2A) of the Criminal Procedure (Scotland) Act 1975").
The noble Lord said: This is an amendment which I think is important, and I hope that it will be accepted.
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It is to add at the end of line 35 the provision that criminal legal aid will cover any appeal to the High Court. Subsection (2) provides that criminal legal aid made available should also be available in connection with any steps or representations in connection with an application for liberation, but, of course, there are also situations prior to the plea of guilty or not guilty where there may be an appeal. I am sure it is the intention of the Government that legal aid will cover that, but it does not appear to have been specifically covered and the reference to applications for liberation suggests that the intention is that it should not be covered. I beg to move.
Lord Cameron of Lochbroom: I accept that the automatic legal aid under Clause 22 should be wide enough to cover such appeals which derive from a section of the 1975 Act which gives the right of appeal to the High Court against a decision on a preliminary objection in summary proceedings. It may be—and, indeed, I would accept—that Clause 22 as it stands may not achieve that result since, as the noble Lord has said, an appeal can normally be taken only prior to the accused stating how he pleads to the charge. That being so, I should like to consider the position further. I am not entirely satisfied that it would be appropriate to do it by the means which this amendment suggests, and I will bring forward any necessary amendment at a later stage to make the matter clear.
The Earl of Selkirk: May I ask my noble and learned friend whether I am right in saying that in solemn procedure legal aid will be automatic and in any case coming before the High Court of Justiciary? I understand that this Bill is very complicated, marred by masses of regulations, and it is extremely difficult to know how far this goes, But I understood that that position, at least, was clear.
Lord Cameron of Lochbroom: Perhaps I may respond to my noble friend and in so doing correct something that I think I mistakenly stated earlier, because appeals of this kind are taken after the accused has stated how he pleads to the charge under the necessary act of adjournal. It is one of the curiosities. But that does not in any way cause me to change what I have already undertaken to do.
In response to my noble friend, perhaps I should say that we are talking here about a right of appeal to the Court of Criminal Appeal in relation to summary proceedings on a preliminary matter. That is not covered by the terms of Clause 25. We are not dealing, however, with the issue of the provision of legal aid in solemn procedure before the High Court itself. I hope that that clarifies the position for my noble friend.
Lord Morton of Shuna: Subject to the observation that there are appeals to the High Court before a plea of guilty or not guilty is tendered, and in the light of the noble and learned Lord's remarks, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 22 agreed to.
Clause 23 [Power of the court to grant legal aid]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No.58:
Page 15, line 39, after ("procedure") insert ("and shall continue to be available notwithstanding the reduction of the procedure to summary proceedings")
The noble Lord said: This amendment is designed to cover the situation where proceedings start off as solemn proceedings and then the Crown decides to reduce them to summary proceedings. If legal aid is granted to the person being prosecuted under solemn procedure, the same legal aid certificate should cover the proceedings as they continue as summary. I beg to move.
Lord Cameron of Lochbroom: I must ask the Committee not to accept this amendment. The view which I suggest is a proper one is that where there has been a material change in the reduction of a charge to summary procedure, it is appropriate that the situation should be reviewed and decided in accordance with rules relevant to summary procedure. It may be that such cases are among the comparatively serious ones which are dealt with by summary procedure, but this will not always be so. There is really no good reason why they should not be tested by the same criteria as apply in other summary cases. These are primarily interests of justice and financial hardship.
I suggest that it would be unfair if all summary cases were not dealt with according to the same criteria. If the accused is in custody he would of course have the assistance of the duty solicitor both for preliminary proceedings and for the preparation of his application for criminal legal aid. In these circumstances, I cannot accept this amendment, and in the light of what I have said I would invite the noble Lord to withdraw it.
Lord Morton of Shuna: I have no wish to divide the Committee on this amendment. Subject to the remark that I may possibly return with this later, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 59:
Page 16, line 4 at end insert ("or
("( ) where the court is satisfied that having regard to the interests of witnesses, of the court, of the accused or for any other reason it is appropriate that the accused person should be represented").
The noble Lord said: This amendment gives the court power:
"where the court is satisfied that having regard to the interests of witnesses, of the court, of the accused or for any other reason it is appropriate that the accused person should be represented".
Circumstances may well arise, such as where somebody who has not consulted a lawyer turns up on a fairly serious charge involving children as witnesses who would otherwise be subject to cross-examination by the accused, or even an accused with a speech impediment, in which the sheriff or the magistrate may wish for the good of the court and for other people mentioned that the accused person be represented. There should be power for this to be able to happen. I beg to move.
Lord Cameron of Lochbroom: I can understand the reasons which are put forward for suggesting that summary courts should be given this reserve power. We did consult the sheriffs, among others, on the desirability of including a power which would be similar to that in Section 2(4) of the Legal Aid (Scotland) Act 1967. They made it abundantly plain that they would not welcome it. Indeed they took the view that it would be quite inappropriate for them to be involved under new arrangements in considering applications for legal aid. Clearly this would prove particularly awkward in cases where an accused might with good reason have been refused legal aid by the board, and in the event it would clearly be undesirable if two separate ways of applying for legal aid were practicable. In general it seems reasonable that those who wish legal aid should have to apply for it in the normal way. There is already on the statute book the section to which I have referred. I understand indeed that under the present arrangements very little use has been made of it.
If after the experience of the new arrangements the courts were to find that it would be useful for them to be able to authorise a solicitor to act for the accused in specified circumstances, I am sure that my right honourable and learned friend the Secretary of State would be prepared to consider whether assistance by way of representation might, for example, be provided by the duty solicitor.
I make it clear that there is still provision in an appropriate case where an application has not already been made, if the court permits it, to adjourn to allow such an application to be made. But the amendment as it is presently framed is clearly inappropriate and inconsistent with the new arrangements. I therefore cannot accept it as it stands for the reasons stated.
Lord Morton of Shuna: I regret that the noble and learned Lord the Lord Advocate seemed entirely to have missed the point of the amendment. It was not a case where the man would make an application; it is where the sheriff would consider it in the interests of the witnesses or the court that the man should have representation. The noble and learned Lord has not really dealt with that situation. It is where you have, say, a person accused of molestation of children. You do not want him to cross-examine the prosecution witnesses who are children. That is the type of situation which the amendment has in mind.
Lord Cameron of Lochbroom: My response to that must be a slightly different one. If an accused person chooses to represent himself—I remind the noble Lord of the convention to which he referred earlier in debate this afternoon—the court is not entitled to force representation upon him. I understood the point that the noble Lord was putting forward. This matter has been discussed with the sheriffs and they are not willing to take it on.
Lord Morton of Shuna: Under those circumstances, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 60:
Page 16, line 19, at end insert—
("(3) Any grant of criminal legal aid under the provisions of subsection (1)(a) of this section shall, without predudice to section 21(4) above extend to respresentation of all diets in the case at first instance and for any appeal arising therefrom under the provisions of section 76A and section 101(5) of the Criminal Procedure (Scotland) Act 1975 including any appeal by way of Bill of Suspension against the granting of any incidental warrant.").
The noble Lord said: This is another of the amendments which is intended to cover the question of the incidental appeal. I presume that the remarks of the noble and learned Lord the Lord Advocate on previous amendments of this type would cover it. I beg to move.
Lord Cameron of Lochbroom: I am happy to give that assurance.
Lord Morton of Shuna: In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 23 agreed to.
Clause 24 [Legal aid in summary proceedings]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 61:
Page 16, line 20, leave out from beginning to ("criminal") in line 22.
The noble Lord said: This is a fairly drastic amendment and I have no doubt that the noble and learned Lord the Lord Advocate will not be happy with it. It seeks to take out the first three lines, so that subsection (1) would begin:
"Criminal legal aid shall be available to an accused person in summary proceedings on an application made to the board".
It would remove the words "Subject to regulations" etc. That is the intention of the amendment. I beg to move.
7.30 p.m.
Lord Cameron of Lochbroom: I must make it clear that I cannot ask the Committee to accept this amendment. It follows on from Clause 21(2), and in the circumstances, and as I have already made my position clear on that matter, I ask the noble Lord to withdraw his amendment.
Lord Morton of Shuna: We have already virtually had a vote on this matter and so I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Renton): Before calling Amendment No. 62, I must point out that if it is agreed to, I cannot call Amendments Nos. 63 and 64.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 62:
Page 16, line 28, leave out from ("dependants") to end of line 40.
The noble Lord said: Amendments Nos. 62, 63 and 64 are all connected. Clause 24 provides that legal aid is to be granted if the board is satisfied:
"(a) after consideration of the financial circumstances of the accused person"
and,
"(b) that in all the circumstances of the case it is in the interests of justice".
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Subsection (3) provides that regulations
"may prescribe factors to be taken into account … in determining whether it is in the interests of justice".
The purpose of Amendment No. 62 is to make legal aid available only on the basis of the financial circumstances of the accused person. In my submission, such is the appropriate test. It would mean leaving out the whole issue of the interests of justice, because it is in the interests of justice that somebody who is incapable but without financial hardship should be defended or represented when facing a criminal charge. It is, therefore, unnecessary to cite all the factors that may render the question of interests of justice necessary, because representation is by itself in the interests of justice if the person concerned wishes such representation.
If Amendment No. 62 does not appeal to the Committee, then Amendment No. 63 is an attempt to narrate what might be the interests of justice. It states in paragraph (a) that legal aid shall be provided where,
"the accused supplies with his application"Ĥ
that is, of course, for the board or whichever unknown person will be dealing with the matter on behalf of the boardĤ
"a statement of his defence which if held true by the Court would be bound"Ĥ
and I emphasise the word "bound"Ĥ
"to result in the accused's acquittal of all or any of the charges libelled or in the deletion of any material part of a charge, or"Ĥ
and paragraph (b) continues
"it appears on the basis of information supplied … that the accused will not be able to follow the proceedings".
Paragraphs (b), (c), (d) and (e) are really restatements of the Widgery committee's basis of whether legal aid should be granted. The addition of (a) is perhaps the most vital alteration: What is there is, in my submission, appropriate, because if the court would be bound if the defence was accepted
"to result in the accused's acquittal",
then he must have a probable cause and he must have the interests of justice in favour of him being represented.
Subsection (3) states:
"The Board may determine that it is in the interests of justice that legal aid be granted in such other circumstances as they see fit",
That is an attempt to define the matter in the Bill. In my submission, it is in the primary legislation that it is appropriate, if the interests of justice are to be defined anywhere, that the factors should be defined—and not in regulations.
Amendment No. 64 is to leave out the power to make regulations prescribing factors. The effect of that amendment would be to leave the legal aid situation as it is at present; that the body deciding whether legal aid should be granted must consider whether it is in the interests of justice, and it has that power of consideration without anybody telling it what are the factors that it must take into account when it makes up its mind. My belief is that the best answer is Amendment No. 62, and it is that amendment that I now beg to move.
Lord Cameron of Lochbroom: I shall follow the noble Lord in speaking to all three amendments. In

1227
providing that summary criminal legal aid will be available only where that is in the interests of justice, the Bill merely preserves the effect of the existing legislation. It does not seem reasonable that legal aid should be available for any and every offence, including, for example, minor motoring offences where the accused would often not wish even to appear on his own behalf. On the other hand, there is no disagreement between myself and the noble Lord opposite that legal aid should be provided for financially eligible accused who face grave charges that put them at serious risk of loss of liberty or livelihood.
It is for that reason that the interests of justice criterion is not applied for solemn procedure cases, since a case under solemn procedure is by definition a grave one. Conversely, the fact that the interests of justice criterion does not apply to solemn procedure does not in itself provide a rationale for not applying it to summary cases.
The chief criticism of the existing application of the interests of justice tests by the courts has been inconsistent interpretation. In summary courts, award rates for summary legal aid vary from just under 60 per cent. to almost 100 per cent. Giving to the board the responsibility for applying the tests is designed to ensure that the tests are applied with a greater degree of consistency.
It seems necessary to define what factors are relevant when applying the tests of interests of justice in order to help the board to achieve such consistency. At present that is done under the Bill by regulations that are subject to affirmative resolution, and hence to parliamentary scrutiny. That would be an advance on the present position, where criteria have been issued to district courts but only as non-statutory guidance. I therefore strongly suggest that the interests of justice tests must be preserved for summary procedure and that the factors determining them should be defined to ensure consistency.
I accept that the factors determining the interests of justice are sufficiently important to require parliamentary scrutiny. However, it must be possible to alter them by regulations subject to the affirmative procedure in order to give the necessary flexibility that will allow them to be changed where practical experience demonstrates the need for that, or to take account, for example, of changes in criminal procedure.
In view of the concern that has been expressed on this matter, my right honourable friend the Secretary of State is prepared to consider setting out the factors in the Bill itself, with provision for amendment by regulations subject to affirmative resolution. Since the preparation of such an amendment, which will take account of the views expressed on consultation and also in your Lordships' House, may take some time, it will have to be made in another place.
The Secretary of State has not yet decided what the factors should be, although they may include some items that are similar to those contained in Amendment No. 63. I wish to say that as a result of the consultations undertaken last year, my right honourable friend has decided that the grant of legal aid should not depend on the accused's criminal record.
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In the light of those statements, it may be that the noble Lord will feel able to withdraw his amendment. I must make it clear that I resist the loss of the interests of justice criteria. I believe that I have made a reasonable response to the views that have been expressed forcibly in the Committee and in previous debates.
The Earl of Selkirk: May I draw attention to this aspect? You appoint a board to look after matters. You then have regulations explaining what the "interests of justice" are. Is that not precisely what the board is set up for? If the board does not know what are the interests of justice, then you want another board. I feel that subsection (3) goes a little far in demonstrating the complete domination of the board by the Secretary of State. That is a criticism which runs right through this Bill and I must say that I find the position unacceptable.
Lord Foot: May I say a few words in support of that proposition? Subsection (3) does not enable the Secretary of State merely to advise the board or give the board guidance as to how it should interpret the words "in the interests of justice". It says that the Secretary of State "may prescribe" the factors, which will be absolutely binding. There will be no discretion left in the board at all.
There is another matter which I hope the noble and learned Lord will be prepared to consider. As I understand it, he said it was the intention to prepare regulations to try to indicate what is considered to be "in the interests of justice". However, the noble Lord, Lord Morton, in commending Amendment No. 63, said that these largely followed the Widgery conditions. I do not think that is quite right. I think that, as a matter of fact, the noble Lord's amendment is an improvement on the Widgery conditions. One of the considerations in the Widgery list is whether the accused person is in any serious danger of losing his liberty. That is a question which has caused, in my experience, very considerable difficulty in the magistrates' courts in England and Wales, because it is often very difficult to ascertain before the case is heard whether the person is in such risk or not, particularly as you do not know whether he has any previous convictions, and so on. Therefore, I hope that when these regulations appear in the other place they will be an improvement on the Widgery conditions.
Lord Cameron of Lochbroom: May I respond to what the noble Lord, Lord Foot, has just said? I was trying to make clear that factors which would be relevant for the board to consider in relation to an application for legal aid will, in fact, be incorporated within the Bill itself. However, allied to that would be a further provision for power to alter those factors by regulations which will be subject to affirmative resolution. I make clear that I have noted what the noble Lord said about the factors suggested. I have some criticisms of them but it is valuable to have them to study before my right honourable and learned friend considers his position in another place.
Lord Morton of Shuna: It clearly would be better to have the factors if we must have factors in the Bill. On

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the basis of the Government's position I ask leave to withdraw the amendment. If it is in order to do so, I state now that I shall not be moving Amendments Nos. 63 and 64.
Amendment, by leave, withdrawn.
[Amendments Nos. 63 and 64 not moved.]
7.45 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 65:
Page 16, line 40, at end insert—
("( ) The Board shall provide a method of appeal against the refusal by the Board of Criminal Legal Aid under this section.")
The noble Lord said: We dealt with this at our previous sitting. It is absolutely essential that there should be some method of appeal against the refusal of legal aid. Since the previous Committee sitting on this Bill it has come to my notice that permanent staff of the legal aid authorities have provided to the Home and Health Department a method of appeal that could readily be operated with no material delay so that appeals against refusal of legal aid would be decided within a week. It is inappropriate that there should be no right of appeal.
One of the difficulties of the previous system was that sheriffs were refusing legal aid and there were complaints that their decisions were wrong. What will happen now is that faceless reporters will make these decisions with nobody having the right of appeal. At least on recent occasions where a sheriff gave reasons why he was not granting legal aid the results were dealt with by the criminal appeal court. It is difficult to see how anyone can deal with this unless there is a method of appeal against refusal of legal aid. I beg to move.
Lord Cameron of Lochbroom: In a sense I have already set out the Government's position on this matter. At present there is no appeal against the refusal of criminal legal aid and I am not aware of that fact in itself having given rise to concern. The issue, which has always been of extreme concern to those who have commented upon the consultation paper, was that delays in the granting of legal aid should be avoided at all costs. A review of procedure would be most likely to lead to delays even on the basis of a fairly rapid review procedure.
I am advised that certain proposals were put forward about a suggested review procedure, but I am told that what was proposed was not practical. The review procedure which is likely to lead to delays and the postponement of trial dates cannot be in the interests of the accused or the general interests of the public. The issue which has given rise to the change in the procedure for granting applications for criminal legal aid is to secure consistency. We are having an independent board with legally qualified persons instead of a multitude of courts. The board will be able to issue guidance to its reporters to secure that there is consistency. Indeed, it will be able to consider difficult cases at first instance in order to ensure consistent standards in dealing with all applications, including those granted at first application.
I am not persuaded, I regret to say, that it is essential to provide a method of appeal. Certainly it is provided
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for in civil cases; indeed, I have already explained about that in our earlier discussions. However, I should point out that, leaving aside the consistency which we are hoping to achieve by the use of the board and the internal guidance which a board can give, there is of course in criminal cases no other party to contest the award of legal aid, since it would be quite inappropriate for the procurator fiscal to do so.
Where legal aid is refused it may well be open in appropriate cases for the accused to submit a fresh application if he can produce relevant new material in support of it. Apart from that, I cannot accept the suggestion in this amendment that there shall be a method of appeal provided against refusal of criminal legal aid by the board.
The noble Lord opposite talked about a faceless reporter, but if the reporter is faceless, then is the Appeal Committee to be any the less faceless—if one uses the term "faceless"? No, one has to trust the judgment of a properly appointed reporter, with the provision that the board may give proper guidance in these cases in order to secure expedition. Therefore I strongly resist this amendment.
Lord Morton of Shuna: This is a wholly unsatisfactory position, but I do not wish to take up more of the Committee's time. Who says that this scheme which was produced by the legal aid authorities is impracticable? If it is only the Home and Health Department, have they told the people who put forward the scheme that it is impracticable? The scheme's proponents certainly consider that it is perfectly practicable. My understanding is that nobody has ever asked the writer of the scheme any questions whatever about it. I think that the best I can do is to say that I may well return to this matter at Report stage and ask leave now to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 24 agreed to.
Clause 25 [Legal aid in appeals]:
Lord Morton of Shuna Lord Morton of Shuna had given notice of his intention to move Amendment No. 66:
Page 17, line 26, after ("otherwise)") insert ("and to all appeals by way of Bill of Suspension or Advocation.").
The noble Lord said: Perhaps I can deal with this amendment in shorthand and say that this is another of the appeal provisions which is perhaps covered by what the noble and learned Lord the Lord Advocate said he would do about these appeals. I trust that this is covered by the undertaking that the noble and learned Lord the Lord Advocate gave about appeals.
[Amendment No. 66 not moved.]
Clause 25 agreed to.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 67:
After Clause 25, insert the following new clause:
("Accused person's right.
. Where a doubt arises whether criminal legal aid should be made available to an accused person the doubt shall be resolved in that person's favour.").
The noble Lord said: This is a clause which I am informed is in the English and Welsh legal aid

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provisions. It only gives the balance of doubt in favour of the accused if there is such a doubt. I beg to move.
Lord Cameron of Lochbroom: I explained at Second Reading that there are some very significant differences both in criminal procedure and in the arrangements for criminal legal aid north and south of the Border. I cannot claim to be familiar with Part II of the Legal Aid Act 1974 and the way in which it operates, but it is quite clear that there would be dangers in seeking to import piecemeal elements of the English arrangements into the Scottish ones or, I suppose it might be said, vice versa.
Scotland has operated successfully without such a provision since the inception of legal aid, and I see no reason for importing it now. In Scotland the court or, under the new arrangements, the court or the board must be satisfied that certain criteria are met. It seems right that the onus should be on the applicant to produce the relevant material so to satisfy the court or the board.
I do not know how the English arrangements operate in practice, but in a Scottish context there would seem to be risks in incorporating a benefit of the doubt provision. Quite apart from the inconsistency with the requirement on the body making the decision to satisfy itself on various points before granting an application, arguably it could encourage less precise applications on the basis that the applicant should be given the benefit of any doubt. It is clearly more satisfactory that the decision-making body should not grant a certificate unless it is satisfied that the relevant criteria are met. I remind the Committee that we are hoping to incorporate certain factors in relation to the grant of criminal legal aid within the Bill itself. I suggest that this provision from English statute could not readily be accommodated in the Scottish arrangements, and accordingly that it should be rejected.
Lord Wheatley: I should like the noble and learned Lord the Lord Advocate to be more explicit about the reasons why this could not be done. It would seem that this is another instance of an accused person not enjoying the benefit of the doubt. Instead of dealing with technicalities of procedure, I think that this is a matter which ought to be decided on broad general principles. If, therefore, it is the broad general principle in England and Wales that if there is a doubt the applicant should get the benefit of it, then I fail to see why this principle should not apply equally in Scotland.
I have to repeat the question I have posed time and again during the passage of this Bill. What is it that exists in England which enables certain things to be done which does not exist in Scotland? What are the difficulties in the Scottish procedure which make a principle which can be adopted in England—a procedure which the noble and learned Lord the Lord Advocate confesses he knows nothing at all about—a principle which would not work in Scotland? I ask why.
Lord Cameron of Lochbroom: With respect to the noble and learned Lord, I thought I had indicated the principle upon which the Scottish arrangements have operated in the past and will continue to do so;
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namely, that the applicant brings before the decision-making body, which is currently the Law Society acting through the Central Legal Aid Committee and its committees, material upon which they may grant an application having regard to the criteria set out. I pointed out that if one sets out the criteria, then in my submission there is no need to add a benefit of the doubt principle in addition, particularly since, as I have made quite clear, it could encourage less precise applications on the basis that the applicant would then be given the benefit of any doubt.
If there are criteria and these are spelled out in the Bill, it seems appropriate to require the applicant in the first place to satisfy the board that he falls within those criteria. The benefit of the doubt, in my submission, is not a principle which need be brought into the Scottish arrangements.
Lord Morton of Shuna: I had thought that up to now criminal legal aid was not granted by the Law Society at all but was granted by the court, except in the case of applications for criminal appeals.
Lord Cameron of Lochbroom: I apologise to the noble Lord. My mind wandered to an earlier part of this Bill. The noble Lord is absolutely right; it is of course the courts.
Lord Morton of Shuna: This only applies to criminal cases, as is obvious. If the person is given the benefit of the doubt as to whether or not he is guilty, it is very difficult to see why he should not be given the benefit of the doubt when one is considering at an early stage whether he has a reasonable chance, if I can put it in non-technical language, of succeeding in beating off the accusation of the Crown that he is guilty. I really cannot see why it can be fair that in England, where a doubt arises as to whether criminal legal aid should be made available to an accused person, the doubt should be resolved in that person's favour, yet the same citizen of the same United Kingdom who happens to live in Scotland should have the onus placed the other way. It seems to me to be a totally unsatisfactory situation, to which I may return at a later stage, but at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna had given notice of his intention to move Amendment No. 68:
After Clause 25, insert the following new clause:
("Legal Aid Appeals Committee.
.—(1) In the event of an application for criminal legal aid being refused, an accused person shall have the right to appeal to the "Legal Aid Appeals Committee".
(2) The Legal Aid Appeals Committee shall comprise not less than 5 persons appointed by the Lord President of the Court of Session.
(3) The Legal Aid Appeals Committee shall have the powers to make criminal legal aid available in the same way as it could have been made available by the Court or the Board.").
The noble Lord said: This is another method of attempting to give a right of appeal for criminal legal aid, and in the light of what the noble and learned Lord the Lord Advocate has said earlier I do not propose to move the amendment in the assurance that one or other of my amendments may come back at Report stage.
[Amendment No. 68 not moved.]
8 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 69:
After Clause 25, insert the following new clause:
("Prosecution under 1975 Act.
.—(1) In all cases in which the High Court of Justicary authorises a new prosecution of a person under the provisions of sections 255 or 452B of the Criminal Procedure (Scotland) Act 1975, and such a prosecution is instituted against him, that person shall be entitled to criminal legal aid in terms of this Act.
(2) Such a person as is mentioned in subsection (1) above who wishes to receive criminal legal aid shall apply to the court in which such a prosecution is instituted, and the court shall grant his application forthwith without regard to his resources or to any other criteria.").
The noble Lord said: This is one of those provisions to provide for legal aid where the High Court authorises a new prosecution. It may be that under the old prosecution you did not have legal aid, but something went wrong with that and it went on appeal to the court which ordered a retrial. It would seem appropriate in these fairly new proceedings in Scotland of a retrial that there should be an automatic right to legal aid. I beg to move.
Lord Wheatley: If I speak now, it might give the Lord Advocate the opportunity of dealing with the points raised in favour of this amendment. I have some personal experience of this procedure which was introduced under the Criminal Justice Act 1983 of allowing new trials to take place in given circumstances in Scotland. This situation presupposes that the accused person has been found guilty and that for some reason or another the Court of Appeal has found that there has been a miscarriage of justice, because it is a prerequisite to allowing the Lord Advocate to re-indict and therefore bring about a new trial that he is so advised that there has been a miscarriage of justice, which is the only remaining ground of appeal so far as criminal appeal is concerned.
It may take various forms. I have presided over courts which have ordered such a new trial; and the manifestly clear case which we have had to deal with more than once is when the trial judge in an indictable case has given a misdirection in law to the jury. There is nobody at fault except the judge in that case. The prosecution has not been at fault; the defence has not been at fault; and, most particularly, the accused has not been at fault. If in those circumstances, instead of quashing the conviction, which is another alternative, the criminal appeal court puts aside the verdict of the court below and authorises the Lord Advocate to bring a fresh indictment, if so advised, in that situation it seems manifest on any aspect of justice that the accused who is innocent of the situation which has arisen should be provided with legal aid automatically. For that reason and by way of that illustration, I ask the Lord Advocate to accept this amendment.
Lord Cameron of Lochbroom: I have listened with great care to what both the noble Lord and the noble and learned Lord have said. The situation is that the indictment in the new trial may not be in precisely the same form as the indictment in the original trial. I have personal experience of that, where, for instance, a murder charge was, to be fair, reduced by the jury on conviction to culpable homicide, and it was a charge of culpable homicide which was then on the indictment
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in the new trial. In some sense, if that is so, and that can arise in regard to the new indictment, it would suggest that there should be a fresh application for legal aid if it be a matter for the board rather than the court. If it is in the High Court or solemn procedure, it will follow the normal procedure whereby the court would grant legal aid.
I should like to consider the position in the light of what has been said. I am not entirely persuaded that this is a case where there should be automatic grant. I accept, however, that these are matters which I trust will be comparatively rare. With that assurance, perhaps the noble Lord might at this stage wish to withdraw the amendment. There are certain difficulties which I conceive of.
Lord Wheatley: Before the noble Lord withdraws the amendment, may I say a word or two in answer to that point? I remind the Lord Advocate, because we have both been involved possibly in the same case where this has arisen, that, while it is a matter for a new indictment when the Lord Advocate has been authorised by the appeal court to formulate a new indictment if so advised, so far as the accused person is concerned he has been put in double jeopardy. In the first place, you could say it was his own fault because he may have committed the offence, but on the second occasion he is brought to trial not because of anything he had done but ex hypothesi, taking the situation I have given, as a result of a mistake by the presiding judge. That is an entirely different situation, and anyone who is put in that position in all fairness should certainly be given legal aid. I trust the noble and learned Lord will keep that in mind when he is reconsidering the position.
Lord Morton of Shuna: In the light of the Lord Advocate's position, I beg leave to withdraw that amendment.
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 70:
After Clause 25, insert the following new clause:
("Legal Aid in High Court.
.—(1) Where the Secretary of State has exercised his powers under section 263 of the Criminal Procedure (Scotland) Act 1975 to refer the case of a person to the High Court of Justiciary, such a person shall be entitled to criminal legal aid in terms of this Act.
(2) Such a person as is mentioned in subsection (1) above who wishes to receive criminal legal aid shall apply to the Board, which shall grant his application forthwith without regard to his resources or to any other criteria.").
The noble Lord said: I am sure this is an amendment which the noble and learned Lord will accept because it saves him money. There is an error, for which I apologise. It should be Section 263A of the Criminal Procedure (Scotland) Act which provides for the Lord Advocate's reference, and in the case of a person who has been tried on indictment and acquitted, the Lord Advocate can refer a point of law to the High Court and the person acquitted has a right to be heard at the appeal. The provisions of this amendment are that he should get legal aid for it. I imagine that would save the Lord Advocate money, because if he is represented, Section 263A(4) provides that the cost of representation under this section shall be paid by the Lord Advocate. I beg to move.
Lord Cameron of Lochbroom: I agree that a person whose case is referred to the High Court by the Secretary of State for consideration under Section 263 of the 1975 Act should be eligible to apply for criminal legal aid as for an appeal. It is not clear that the Bill presently allows for this, and I shall, if on consideration clarification seems to be needed, bring forward an appropriate amendment to Clause 25 at a later stage.
Lord Morton of Shuna: In that situation, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 26 [Employment to which Part V applies]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 71:
Page 17, line 36, at end insert ("by regulations made under this section").
The noble and learned Lord said: This is a drafting amendment. It makes clear that the prescription of any particular cases to which it is intended the provisions of Clause 26(1)(b) are to apply is to be made by the Secretary of State by means of regulations. I beg to move.
On Question, amendment agreed to.
Clause 26, as amended, agreed to.
Clauses 27 and 28 agreed to.
Clause 29 [Legal aid in certain proceedings relating to children]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 72:
Page 20, leave out lines 4 and 5.
The noble Lord said: This clause deals with legal aid for children. It provides for legal aid to be available on application to the sheriff,
"if the sheriff is satisfied that it is necessary in the interests of the child that legal aid be made available".
There then follows the financial provision. In my submission, when dealing with children, one should not have to consider that it is necessary in the interests of the child. It would always be in the interests of the child that legal aid should be made available if the financial criteria are fulfilled. This is the reason for the amendment to leave out lines 4 and 5. I beg to move.
The Earl of Selkirk: I am looking forward with much interest to my noble and learned friend explaining why, in some cases, children will not need some kind of professional representation. I find it intolerable that children should have no representation at all and yet be expected to take an intelligent part in the proceedings.
Lord Cameron of Lochbroom: The provision that the amendment seeks to delete merely repeats a provision already contained in Section 1(6)(a) of the 1967 Act. It refers to the interests of the child because it is concerned with appeals relating to children's hearings. It is a fundamental principle of children's hearings, and indeed a statutory requirement, that the principal concern should be the interests of the child.
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Therefore, the interests of the child should also be taken into account in connection with proceedings before the sheriff arising out of referrals and appeals from the children's hearings.
There is also the consideration that it is conceivable that the interests of the child may clash with the interests of his parent, for example, if the referral to the children's hearing was because he was in moral or physical danger at home. In such cases, the child's interests must be protected separately.
Subsection (4)(a) of Clause 29 makes it clear that even where the applicant is not the child, the child's interests must come first. I hope that what I have said will answer the problem mentioned by my noble friend. This is not a question of refusing legal aid to a child. What is involved is making clear that in the granting of legal aid it will always be the paramount principle that the interests of the child come first.
The Earl of Selkirk: That is not what the Bill says. There is nothing about the paramount interest of the child. It appears that you have to prove that the child has an interest. To my mind, the child always has an interest and, in most cases, is unable to express that interest personally. I would much prefer to see the word "interests" taken out.
Lord Morton of Shuna: The clause states,
"Legal aid shall be available under subsection 2(a)(ii) or (b) above on an application made to the sheriff if the sheriff is satisfied that it is necessary in the interests of the child that legal aid be made available and after consideration of the financial circumstances".
I understood from what the noble and learned Lord the Lord Advocate was saying that he was interpreting the word "and" as "or". That does not seem to be the case. In the hope that the noble and learned Lord will consider this again, I would ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 29 agreed to.
8.15 p.m.
Clause 30 [Legal aid in contempt proceedings]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 73:
Page 21, line 4, leave out from ("dependants") to end of line 7.
The noble Lord said: This is a special situation dealing with contempt of court, which is of course a serious offence. It is to take out of the provisions the question of the interests of justice. There cannot be a situation where the interests of justice do not require that there should be representation. It is always necessary, or at least advisable, that someone being dealt with for contempt of court should be represented. I cannot conceive of circumstances where it could be thought that it was not in the interests of justice that he should have representation. I beg to move.
Lord Cameron of Lochbroom: It has to be borne in mind that, like any criminal offence, there are degrees of gravity of contempt of court. I am aware of instances, as, no doubt, the noble Lord opposite is, where the contempt may have been committed and

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the court makes a finding, but the sentence passed by the court may amount to no more than an admonition. It would surely not be right that legal aid was automatically granted in such a case. On the other hand, I accept that there are severe cases when imprisonment is involved. All that I am attempting to provide is that the court should have a discretion in dealing with such cases using precisely the same criterion—the interests of justice—as is to be found elsewhere in dealing with criminal legal aid. It is, I suggest, appropriate that such a discretion should be retained to deal perhaps only with a minority of cases. I cannot therefore accept the amendment.
Lord Morton of Shuna: With the intention of assisting us to make rapid progress, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 30 agreed to.
Clause 31 [Solicitors and counsel]:
Lord Wilson of Langside Lord Wilson of Langside moved Amendment No. 74:
Page 23, line 4, at end insert—(";
(c) in relation either to a solicitor or an advocate, the Board").
The noble and learned Lord said: This is a simple little amendment. However, if accepted, it will, I am persuaded, make a not insignificant contribution to the successful working of the new scheme under the new board. Section 6(3) of the 1967 Act empowers the Law Society in the case of solicitors and the Faculty of Advocates in the case of advocates to exclude a solicitor or advocate from being selected under the scheme on the ground that there is good reason for exclusion arising out of three possibilities: first, his conduct when acting under the scheme; secondly, his professional conduct generally; and, thirdly, in the case of a member of a firm, such conduct on the part of a person who is a member of the firm.
Clause 31, as your Lordships know, effectively reenacts these provisions of Section 6 of the 1967 Act with some modifications. It leaves a similar power to the Law Society and to the Faculty of Advocates. The purpose of the amendment is to extend a similar power to the new board. It seems to me that this would be a sensible and appropriate provision. It would certainly be logical, the new board being the body that takes the place, in relation to the new scheme, of the Law Society of Scotland.
From time to time I have been critical of certain corners of my own profession. With that in mind, it is important that I should say that the inspiration for this amendment comes from two present lay members of the Legal Aid Central Committee. It would not have occurred to me. They are deeply concerned that the opportunities presented by this Bill are grasped and that advantage is taken of the opportunity to correct little local clay-to-day problems which arise in the course of the workings of the present scheme.
Those who suggested to me that this amendment would be appropriate are lay people who have become deeply involved in the day-to-day practical work of the administration of the legal aid scheme. They are familiar with that and the problems that it presents.
As I am sure the Committee is aware, the scope of the power goes wider than questions of professional misconduct such as might go to the disciplinary committee of the Law Society, or might give rise to an action of professional negligence.
The amendment in effect seeks to put the board in the same position as a client whose solicitor's or advocate's performance fell short. The ordinary client is entitled to dispense with the services of his solicitor or legal adviser if his performance falls short. And why not? Those who have advised me of their experience working on the legal aid central committee have been somewhat critical of the way in which the Law Society had made use of this power in the past. They are anxious that this should be corrected. They say that there have been instances in their experience over the past years where the exercise of the power, or consideration thereof, would certainly have been more 'speedy, more effective, and more appropriate than the normal complaints procedure which the Law Society has tended to be influenced to use.
At such a late hour I shall not detain the Committee with any more of the detail they have put in the paper which they have submitted to me. However, in effect their argument is that for the effective administration of legal aid, and for the encouragement of efficient, conscientious and economic service, it is essential for the board—which will assume the role of the Law Society—to have a similar power to that which the Law Society has enjoyed until now. They are very conscious that the existence of such a power will encourage those who have perhaps fallen short in the performance of their professional duties to have in mind that the board is not without teeth.
It has to be remembered that they have a right of appeal from the exercise of this power to the Court of Session. If the noble and learned Lord the Lord Advocate does not accept this amendment tonight I should certainly hope to have some assurance that he has weighed up these kinds of considerations. I have no doubt that this would have been considered when the Bill was being prepared. Perhaps the noble and learned Lord the Lord Advocate will give more thought to the matter and possibly consult with the lay element in the legal aid central committee who have expressed this concern in the matter. I should imagine that the Government will be anxious to show willing by bringing the lay element into consideration of decisions as to whether the performance of those working under the legal aid scheme has come up to the desirable standard. I beg to move.
Lord Morton of Shuna: I strongly oppose this amendment which seems to me wholly misconceived and totally out of place.
First, I would suggest that there is a power in the Bill to the client—who is not the legal aid board, but the accused person, or the person receiving legal aid, the individual requiring legal aid—to choose the solicitor or advocate of his choice. It seems to me that that is entirely contradicted if some board is saying. "You can choose anybody so long as we approve of them". That is the first matter.
Secondly, I know of no professional body which subjects itself to any form of disciplinary procedure by

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bodies which are not of that profession. For example, in the National Health Service the committees to which complaints by patients go are predominently staffed by members of the profession which the complaints are against, whether doctors, dentists or pharmacists.
It is surprising to me that, so far as I am aware, the noble and learned Lord, Lord Wilson, did not consult with the dean of the Faculty of Advocates. It would certainly be difficult to fit this procedure into the position of the Faculty of Advocates where an advocate is an officer of the court. The Faculty of Advocates do not have power to exclude an advocate from practising. It is only the Court of Session which has the power. It seems odd suddenly to give that power to some lay board. Certainly the inclusion of this power would not meet with the approval, as far as I can tell, of the Faculty of Advocates and might well mean that a large number of the Faculty would consider that they did not want to have anything to do with the legal aid scheme.
With regard to the solicitors, we have heard a great deal about abuses. We have heard a great deal about complaints, but with a total lack of specification. We know only that the lay observer on the Law Society complaints' procedure has very few criticisms out of the many complaints which are handled. It therefore seems that this is an entirely misconceived amendment, and I would wholly oppose it.
Lord Cameron of Lochbroom: I am bound to say that we gave careful consideration as to whether the board or the respective professional body should have the responsibility for determining whether a solicitor or advocate should be excluded. I can assure the noble and learned Lord on that matter. I think that it would not be reasonable, and would lead to practical difficulties, for both the board and professional body to have this power. For that reason, we decided on balance that it was preferable—since professional conduct was in question—that the responsibility should rest with the professional body which dealt with disciplinary questions.
There are additional safeguards for the board in the Bill. They have power under Schedule 3 to complain directly to the Scottish Solicitors' Discipline Tribunal. They may, if they are not satisfied with an account, reduce it on the grounds of overcharging or otherwise, and of course if a lawyer continually fails to submit proper accounts it could well be a matter like a mishandled or unnecessarily prolonged case which might be referred to the appropriate disciplinary authority. Therefore, I cannot accept the noble and learned Lord's amendment.
8.30 p.m.
Lord Wilson of Langside: I had not expected a great deal of support. However, I am interested in how often the noble Lord, Lord Morton of Shuna, has complained at not having been given any evidence about shortcomings and abuse in the working of the legal aid scheme in the past. I shall take the opportunity of telling him something of my experience of that over the last few years, but not tonight. Third Reading may present the appropriate opportunity.
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However, I shall show the noble and learned Lord the Lord Advocate the paper which I have received from the lay observers, whom the noble Lord, Lord Morton of Shuna, was rather cavalier in dismissing.
I am sorry that I have to beg leave to withdraw the amendment. Far from being ill-conceived, I think that there have been shortcomings in the working of the scheme over the last 30 or 40 years which have never been properly looked at. However, in the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 31 agreed to.
Clause 32 [Restriction on payment and employment of solicitor or counsel]:
On Question, Whether Clause 32 shall stand part of the Bill?
Lord Morton of Shuna: I oppose the Question, That this clause stand part of the Bill on the basis that there are many situations in which legal aid is granted only for part of the proceedings. From the way in which this clause is framed, it appears to prevent payment of the non legally-aided part. It is on that basis that I oppose the clause. In the hope that the nods that I see on the other side of the Committee may have some effect at a later stage, that is all that I intend to say on the matter.
Lord Cameron of Lochbroom: I am very grateful to the noble Lord. As I understand it, he simply desires an assurance that a solicitor who provides assistance privately before a certain stage in proceedings as regards which a legal aid application is thereafter granted, will not be prevented from obtaining private payment for those preliminary stages. That is not the intention of the clause. Obviously I would wish to look at it again to see whether it requires any adjustment to make the intention quite clear. If it does require adjustment we shall bring forward an appropriate amendment at Report.
The Earl of Selkirk: I should like to ask one question. According to Clause 32 no payment must be made except through the fund. However, if you look at Clause 12(3) you see the following words:
"fees or outlays to which this section applies shall be paid to the solicitor as follows—
(a) first, out of any contribution payable by the client".
I do not know whether or not it is intended, but it seems to me to run directly contary to what is said in Clause 32.
Lord Cameron of Lochbroom: No, the purpose of Clause 32 is simply to provide that what is called "topping up" should not take place—that is to say, a person who is in receipt of legal aid should then use his own private funds to obtain and purchase additional representation. Clause 12 is dealing with the circumstances where the contribution actually paid by the client for the purpose of obtaining legal aid is then to be paid over to the solicitors. Perhaps I should make clear that this probably applies rather to civil legal aid than to criminal proceedings, as regards which there is no contribution system anyway.
The Earl of Selkirk: That means that payment direct from the client to the solicitor or counsel is not cut out entirely by Clause 32. This is an important point because it almost looks as though it is an offence to do that and I understand from my noble and learned friend that that is not true.
Clause 32 agreed to.
Clause 33 [Fees and outlays of solicitors and counsel]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 75:
Page 24, line 5, at end insert ("and in making regulations under this section as to the amounts payable to counsel or a solicitor who acts for any person by providing legal aid or advice and assistance under this Act, and any person by whom any such amount falls to be assessed, taxed or reviewed under the regulations, the Secretary of State shall have regard to the principle of allowing fair remuneration according to the work actually and reasonably done.").
The noble Lord said: I am sure that the Government will want to accept this amendment. It is an amendment which incorporates provisions which are in the English legal aid arrangements. It suggests that, in making regulations as regards fees:
the Secretary of State shall have regard to the principle of allowing fair remuneration according to the work actually and reasonably done.
I shall be interested to hear whether the noble and learned Lord opposes that proposal. I beg to move.
Lord Cameron of Lochbroom: I can tell the noble Lord opposite that I do not look upon this amendment with favour. As the noble Lord made clear, this amendment derives from arrangements in England and, indeed, I think that their application is presently sub judice. Therefore, it will be no surprise to noble Lords to hear that I have no desire that such a provision should be contained within Scottish legislation.
The present provisions are reproduced from provisions in the existing legislation which were enacted as recently as 1983 because the Secretary of State was dissatisfied with arrangements which in effect gave him no direct control over this element of public sector remuneration. There is no sound basis for changing the provisions then enacted with, as I recall, general support from all parties, although I think with perhaps understandably less enthusiasm on the part of the Law Society.
It may be of interest to the Committee to know that it has recently been agreed between representatives of the Scottish Home and Health Department and of the Law Society and, separately, with representatives of the Faculty of Advocates that talks should begin shortly on the review of the existing fee structure for civil legal aid, criminal legal aid and advice and assistance, which contains some obvious anomalies. In the case of solicitors, this review will be assisted by the report by management consultants on a survey of solicitors' costs which was submitted last month to my right honourable and learned friend the Secretary of State and to the Law Society.
Consideration will be given to the changes that should be made in the regulations and what should be the relevant factors in those instances in which the fees are not specifically prescribed. I hope that, with that
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explanation, the noble Lord will feel able to withdraw his amendment.
Lord Morton of Shuna: Not at all, but I shall withdraw it at this stage. I shall certainly come back to the amendment. I see no reason why the basis should not be fair remuneration for work actually done, and nothing that the noble and learned Lord has said convinces me otherwise. However, rather than deal with it now, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 33 agreed to.
Clauses 34 and 35 agreed to.
Clause 36 [Regulations]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 76:
Page 25, line 27, after ("may") insert ("on the advice of the Board").
The noble Lord said: I beg to move Amendment No. 76 and it may be convenient to deal also with Amendment No. 77 because it deals with very much the same matter. The amendment concerns the power to make regulations,
"on the advice of the Board",
as appear to be necessary or desirable.
Amendment No. 77 deletes the phrase:
"or for preventing abuses of",
because it does not serve any useful purpose except to repeat the unspecific allegation that there are abuses. I beg to move.
Lord Cameron of Lochbroom: In reply, perhaps I may also speak to Amendment No. 80, which I think goes along with Amendment No. 76. Amendments Nos. 76 and 80 have rather a suggestion of the tail wagging the dog. There is no need for any formal provisions obliging the Secretary of State to consult the board before making regulations, since he would do this in any case on matters on which, as the noble Lord has suggested, the board has special knowledge and expertise.
However, it would be undesirable for all the board's views to be laid before Parliament since these might refer to confidential matters. For instance, the board might wish to refer to papers on individual cases which showed up defects in existing regulations. There would also be regulations on which the board have no expertise or locus, such as those relating to fees. The important factor is that there should be adequate Parliamentary scrutiny of the subordinate legislation, and this is already provided for in the Bill as framed.
So far as Amendment No. 77 is concerned, the phrase which is omitted is not a new one. It is derived from Section 15(1) of the Legal Aid (Scotland) Act 1967. I am aware that the subject of abuses of the legal aid system is a vexed one, and touches on an area of sensitivity so far as the legal profession is concerned, but the provisions of the Bill as framed are not to be interpreted as referring only, or even primarily, to the actions of lawyers. They are couched in general terms and could also cover abuses by applicants and others.
When introducing a system which is, in some respects, new, it is even more important to have power

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to stop up quickly any loopholes which appear in the new arrangements. Regulations made by the Secretary of State under Clause 36(1) would allow this to be done. If the regulatory powers were deleted from the Bill primary legislation would be required to stop abuses. This would be a serious disadvantage, not least because of the resulting delays. For these reasons I cannot commend to your Lordships any of the three amendments to which I have spoken.
Lord Morton of Shuna: Again the noble and learned Lord has shown the total dependence of the board, which he asserts is to be independent, because whether it is the tail or the dog they are connected in his simile. If it is necessary or desirable to make regulations, that surely would cover the situation whether it was an abuse or otherwise. However, I shall withdraw the amendment.
Lord Wheatley: On a point of information, could either of the two noble Lords enlighten me? If the board is required to give advice to the Secretary of State, will the board be obliged, in terms of Clause 3(4), to have regard to the guidance given to it in that matter by the Secretary of State?
Lord Cameron of Lochbroom: Perhaps I might write to the noble and learned Lord on this matter.
Lord Ross of Marnock: Would the noble and learned Lord like to write to the rest of us as well?
Lord Cameron of Lochbroom: I would always be perfectly happy to write to the remainder of the noble Lords, or indeed put the letter in the Library, which would perhaps be the best way of making the matter clear to all.
Amendment, by leave, withdrawn.
[Amendment No. 77 not moved.]
On Question, whether Clause 36 shall stand part of the Bill?
The Earl of Selkirk: I think it is noteworthy that in subsection (2)(g) the Government are not content with regulations, they want the power to "modify any provision of this Act". That is going quite a long way, and I do not know how anyone is going to be notified about it. It is true that it applies particularly to subsection (3), but still that might be done by regulation. This is a modification about which no public notice is given whatever. I think that my noble and learned friend should look at that. If you are going to modify a statute, there must be some way in which it should be publicly understood and known.
Lord Cameron of Lochbroom: As I understand this subsection it commences with words saying that regulations made under this section may do certain things, of which (g) is one. Therefore, it is a regulation-making power which will give public notice, and of course it is only to deal with the special circumstances referred to in subsection (3). That may answer my noble friend.
The Earl of Selkirk: Does that mean that it will be made public? The noble and learned Lord has not said that.
Lord Cameron of Lochbroom: Regulations become a public document.
Clause 36 agreed to.
Clause 27 [Parliamentary procedure]:
8.45 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 78:
Page 27, line 19, after ("section") insert ("9")
The noble Lord said: Perhaps it would be convenient if we take Amendments Nos. 78 and 79 together. These are to add to the list of regulations under various sections which need affirmative resolutions. Clause 9 is the power to make regulations in relation to legal aid and advice, prescribing the proceedings and modifying the financial limits, and it would appear appropriate that they should be subject to affirmative resolution. Further, Clause 36(2)(g)—the one that the noble Earl, Lord Selkirk, has just dealt with—is a fairly radical power to make regulations, and would again appear to be more appropriately subject to affirmative resolution. Clause 42 is the power to deal with regulations dealing with disposable income, or disposable capital, and regulations prescribing the deductions in respect of maintenance of dependants, and again it would appear more suitable that this should be subject to affirmative resolution rather than annulment procedure. I beg to move.
Lord Cameron of Lochbroom: So far as Amendment No. 78 is concerned, I have considered this amendment and I am prepared to accept it on the basis that the Bill will then give a clear indication that assistance in criminal proceedings is being looked at in the round, with your Lordships' House being given a clear opportunity to consider the important changes in the arrangements in relation to assistance by way of representation as well as legal aid.
So far as the changes sought in Amendment No. 79 are concerned, I cannot be quite so forthcoming. These deal with matters which are derived from the present legislation, which again are dealt with under present legislation by way of negative resolution procedures. The same power, for instance, in Clause 36(2)(g) is mirrored in the present legislation in Section 15(3) of the Legal Aid (Scotland) Act 1967, where regulations made under that power are subject only to negative resolution procedure. For these reasons, and no special arguments having been put forward to justify a change, I cannot accept Amendment No. 79 but accept Amendment No. 78.
Lord Simon of Glaisdale: I am afraid that it is an impertinence for an English lawyer to intervene on a Scottish legal aid Bill, but I hope that the noble and learned Lord will look again at the point on Clause 36(2)(g) made by the noble Earl. It seems to me to be a most drastic provision going far beyond in principle the ambit of a Scottish statute, and will no doubt be quoted as a precedent just as the noble and learned Lord the Lord Advocate has quoted other provisions as a precedent. I very much hope that he will say that he will look again at that provision, if at no other.
The Earl of Selkirk: May I add one word? I wonder whether the noble and learned Lord ought not to include Clause 42. Clause 42 is far-reaching, and I shall have something to say about it presently. It undoubtedly should be brought in draft before your Lordships' House.
Lord Cameron of Lochbroom: I would simply say that my mind is not closed. I shall bear in mind what has been said by my noble friend and by the noble and learned Lord. However, I suggest from what I have said already that we are not dealing with new powers; we are dealing with powers which are already in existing legislation. But I shall look at this again.
Lord Morton of Shuna: It is part of the aim of Parliament to improve a Bill, but in the light of what the noble and learned Lord has said I shall not move Amendment No. 79, though it is a triumph to have had Amendment No. 78 accepted.
On Question, amendment agreed to.
[Amendment No. 79 not moved.]
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 80:
Page 27, line 24, at end insert—
("( ) Where the Secretary of State proposes to make regulations under this Act he shall refer the proposals in the form of draft regulations or otherwise to the Board.
( ) The Board shall consider any proposals referred to it by the Secretary of State under this section and shall make to the Secretary of State a report containing such recommendations with regard to the subject matter of the proposals as they think appropriate.
( ) If after receiving a report from the Board the Secretary of State lays before Parliament any regulations which comprise the whole or any part of the subject matter of the proposals referred to the Board he shall lay with the regulations a copy of the Board's report and a statement showing—

(a) the extent (if any) to which he has in framing the regulations given effect to the Board's recommendation, and

(b) in so far as effect has not been given to them, his reasons why not.")

The noble Lord said: This has been answered before I moved it, but its purpose is to ensure that regulations made under the Bill shall have some form of discussion by the board and that the board shall consider them and report on them so that Parliament shall have the benefit of a report from the board as well as the draft regulations from the Secretary of State. I beg to move.
Lord Cameron of Lochbroom: I do not wish to repeat what I have said already. I spoke to this amendment when dealing with Amendment No. 76. I made it quite clear why I could not accept it. I stand by those reasons.
Lord Ross of Marnock: But surely the wording of this amendment is very different. If I remember correctly, previously it required the approval of the board. This does not require the approval of the board, it requires the advice of the board and a report given on that advice. Whether that is accepted or not, Parliament is to be informed of that, presumably when the regulation, if it is to be put before Parliament, is brought forward. It is not exactly the same as the previous amendment on which the noble and learned Lord the Lord Advocate spoke and to which he now refers.
Lord Cameron of Lochbroom: I reiterate what I said last time. I made it clear that I thought it was undesirable for all the board's views to be laid before Parliament, as these might refer to confidential matters. For example, the board might wish to refer to papers on individual cases which showed up defects in the existing regulations. There may also be regulations on which the board has no expertise or locus such as those relating to fees. It is for those reasons, which I have stated, that I cannot accept the basic premise of this amendment, that the board's report should be laid, along with the copy of the regulations.
Lord Morton of Shuna: I can see no difficulty, if the board knows its report is to be laid before Parliament, in it drafting a suitable report. But, with the prospect of returning to the matter at a later stage, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 37, as amended, agreed to.
Clause 38 [Rules of court]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 81:
Page 28, line 10, leave out ("party receiving legal aid") and insert ("legally assisted person").
The noble and learned Lord said: This is a drafting amendment which has the same effect as Amendment No. 47 to Clause 19, which was agreed on the last occasion when the Committee sat. I beg to move.
On Question, amendment agreed to.
Clause 38, as amended, agreed to.
Clause 39 [Adaptation of rights to indemnity]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment Nos. 82 to 84:
Page 28, line 32, leave out ("for the purpose of adapting").
Page 28, line 33, leave out ("this Act").
Page 28, line 37, leave out ("for the purposes of this section") and insert ("in respect of any such right").
The noble and learned Lord said: These amendments are designed to make Amendment No. 39(2) clearer. It is a free-standing provision which prescribes that any right to be indemnified against the expenses of proceedings cannot be taken away in whole or in part simply because the person entitled to the right has not applied for legal aid for the same proceedings. I beg to move.
On Question, amendments agreed to.
Clause 39, as amended, agreed to,
Clauses 40 and 41 agreed to.
Clause 42 [Disposable income and capital]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 85:
Page 30, line 30, leave out ("do") and insert ("does")
The noble and learned Lord said: This is a drafting amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Selkirk The Earl of Selkirk moved Amendment No. 86:
Page 30, line 37, leave out subsection (3).
The noble Earl said: This is a most peculiar clause. In the first place it is the one clause in which the Treasury do not trust the Secretary of State for Scotland to do anything about the matter. In the second place I admit that I do not find the drafting easy and the amendment of the noble and learned Lord makes it even more difficult because I do not know what is the subject referred to under (1)(b) on the second line. What one does know is that it is now singular and it is neither deductions, allowances nor regulations, because they are all in the plural. I am quite at a loss to know what the subject is. It would be helpful to know. The clause deals with what is called "disposable income". We should be given the full story of the intention behind "disposable income". One finds some curious items under Clause 18:
"None of the following … a … person's house, wearing apparel, household furniture and the tools",
shall be part of it, as far as I can understand, but in other places notably under Clause 11, a:
"disposable income exceeds £54 a week."
Is that after deductions or before deductions? This is a form of means test and we should be given a full picture of exactly how this will work out.
Then we come to the part of the clause to which I have drawn attention, subsection (3). This states two things: first, that the spouse of the person may be charged as much as the Treasury likes. This is in marriage. I shall take the liberty of copying a recent publication on the equality of women which quotes Blackstone. I shall quote Blackstone here:
"The very being or legal existence of the wife is suspended during marriage or at least incorporated and consolidated totally in her husband."
That appears to be the view of the Treasury, though nowadays it would be disregarded outside. What is being said is that the wife is fully responsible for any liability the husband may be involved in.
If one goes further, one reads,
"other special cases, for taking into account the resources of other persons."
What is meant by that? It is utterly vague and uncertain and it is in the form of a kind of means test. In fairness we should be given a fair description of what the Government have in mind. In the meantime, subsection (3) should be taken right out of the Bill. I should like to know whether the Government are prepared to answer that and if they cannot answer now we must have an answer at Report stage.
9 p.m.
Lord Morton of Shuna: I support the amendment. No doubt we shall be told by the noble and learned Lord the Lord Advocate that this was in the 1949 and 1967 Acts; but things have moved since then, and the general situation is that people who are married do not consider that the income of their spouse is their income or vice versa. There is no reason why the legal aid authority should deal with it in this way. It is a wholly iniquitous situation in the present state of society, and I would strongly support the amendment.
Lord Cameron of Lochbroom: Perhaps I might speak first in relation to the amendment of my noble friend; indeed, the noble Lord has anticipated me. What we are doing is no more than retaining a provision which is already found in existing legislation, in particular, Section 4 of the 1967 Act. Subsection (3) of this clause repeats Section 4(4) of the 1967 Act. It is included on the basis that, where people live together as husband and wife and use resources in common, their joint resources should also be treated as one when assessing one of their number's ability to take legal proceedings. It will also be noted that there is a two-way process under Clause 42. If resources are combined, liabilities including such joint items as taxes and rents, as well as the maintenance of dependants, are also taken into account under Clause 42(1).
Perhaps I might in passing explain to my noble friend that what is the subject of the word "does" in the last line are the phrases "disposable income" or "disposable capital" in the first and second lines, which,
"in relation to any person means his income"
and then goes on—
"does not include the subject matter of the dispute".
Clause 42(3) provides for regulations exempting applicants from its provision. I can give an undertaking that as at present regulations will provide that the resources of the spouse should not be treated as a person's resources where the spouse has a contrary interest in the dispute in respect of which the application for a certificate is made, or where the person concerned and the spouse are living separate and apart.
I would make it clear that I do not consider there is anything inherently unfair about the resources of and allowances for spouses being considered jointly. Moreover, the practical difficulties of making separate assessment in every case and not just those where there was a contrary interest or where the couple are living separately would indeed be formidable.
My noble friend has put certain other questions to me. Again, I think I must make it clear that there is nothing new so far as this clause is concerned. It is derived specifically from Section 4 of the 1967 Act, and in particular subsection (2) is to be found in Section 4(2) of that Act. I find difficulty in giving precise answers to my noble friend's detailed questions, although I think I answered some of them earlier during the Committee stage. If I have not covered anything just now, I will certainly write to him and see that a copy of my letter is placed in the Library as regards the details he has raised with me.
Lord Ross of Marnock: Before the Lord Advocate finally leaves this, will he have a look at the last two lines:
"regulations may also make provision in relation to minors and pupils and other special cases, for taking into account the resources of other persons"?
Can he define "other persons" for me?
Lord Cameron of Lochbroom: I apologise. I should have made reference to that, because that is repeating

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the words which are to be found in Section 4(4) of the 1967 Act which are in these terms and which may be familiar:
"and regulations may also make provision, in relation to minors and pupils and other special cases, for taking into account the resources of other persons".
I shall certainly bear in mind what the noble Lord has said, but there is nothing new in what is provided in the Bill and regulations have proceeded on that basis in the past. An instance which I would give would be that the provision would cover, for example, the resources of the parent and guardian of a child applying for legal aid.
The Earl of Selkirk: I must admit I am not satisfied with this. This is a form of means test. We ought to have a precise definition of what is meant by "disposable income". This is the definition of disposable income and it goes back into various stages before that. Does that apply to other cases, for example Clause 11(2)(a):
"a client's disposable income exceeds £54".?
That is after deductions have been made. A person has a surplus or disposable income of £54 a week.
I do not necessarily want to press the noble and learned Lord now, but I think it is fair to the Committee that we should have a clear idea what disposable income is considered to be and whether it covers the list here, which I may say does not include housing. I notice that it includes the maintenance of dependants. That means that the wife or the husband presumably do not have their food included but that dependants may have their food included. I mention these things because the provision is hopelessly vague. We are reforming the law; we are not just sitting back and accepting the law as it was passed. I also point out that the status of women has changed greatly in the last 25 years. I think that is something we have to recognise as we go on. If my noble and learned friend does not wish to say anything further, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 42, as amended, agreed to.
Clauses 43 to 45 agreed to.
Schedule 3 [Minor and Consequential Amendments]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 87:
Page 37, line 42, at end insert—
("The Sex Discrimination Act 1975.
2A. In section 75(4) of the Sex Discrimination Act 1975 for the words "the Legal Aid and Advice (Scotland) Acts 1967 and 1972" there shall be substituted the words "the Legal Aid (Scotland) Act 1986".").
The noble and learned Lord said: This is a drafting amendment intended to update the reference to legal aid legislation in the Sex Discrimination Act 1975. I beg to move.
On Question, amendment agreed to.
Schedule 3, as amended, agreed to.
Lord Simon of Glaisdale: May I ask whether we have dealt with Schedules 1 and 2?
The Deputy Chairman of Committees: Yes, I understand that we did so at an earlier stage.
Schedule 4 agreed to.
Schedule 5 [Repeals]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 88:
Page 41, line 39, column 3, at beginning insert ("Section 13(4)").
The noble and learned Lord said: This amendment repeals the reference to legal aid legislation in Section 13(4) of the Contempt of Court Act 1981 which will be obsolete with the enactment of the Bill. I beg to move.
On Question, amendment agreed to.
Schedule 5, as amended, agreed to.
Clause 46 agreed to.
House resumed: Bill reported with the amendments.

Broadcasting (Local Sound Broadcasting Programme Contractors' Additional Payments) Order 1986
9.11 p.m.
Viscount Davidson Viscount Davidson rose to move, The the draft order laid before the House on 4th March be approved. [15th Report from the Joint Committee.]
The noble Viscount said: The draft order relates to additional payments—usually known as the "levy"—which independent local radio companies are required under the Broadcasting Act 1981 to pay into the Consolidated Fund if they make sufficient profits. The levy was introduced for ILR in October 1981. Under the current arrangements, companies must pay a levy of 40 per cent. on profits above a certain threshold; that threshold is either the first £250,000 of an ILR company's profits, or profits equivalent to 2 per cent. of advertising income, whichever is the greater. The draft order seeks to reduce the rate of ILR levy to nil, and would thus remove from ILR companies the requirement to make levy payments into public funds. We propose that it whould take effect from 1st April, which is the half year point in the companies' financial year. Their liability to pay corporation tax would however continue in the usual way.
Our proposals stem from a review of the ITV and ILR levies carried out last year by a working group of officials from the Home Office, Treasury and IBA. In the case of radio, the review showed that the ILR companies' revenue fell substantially following the introduction of the ILR levy in 1981, and has not since recovered in real terms. Profit yields for all but the largest metropolitan stations have been very modest. In the autumn of 1984, the IBA announced a package of measures designed to relieve the pressure on the ILR system, including a 10 per cent. cut in primary rental payments with effect from 1st April 1985. The position has not improved since the working group's

1251
review was completed last year, and there are no firm grounds for believing that there will be a substantial increase in ILR profitability in the future. Rather, ILR seems likely to face increasing competitive challenges by way of free-sheets, the new technologies and other broadcasting media. In fact, ILR has already faced significant competition for revenue from Breakfast Television, which operates during ILR's peak earning period, and from Channel 4. The future holds the prospects of extended broadcasting hours on terrestial television, satellite broadcasting and cable.
Two particular developments, to which the working group referred as sources of further competition for ILR were community radio and independent national radio. So far as community radio is concerned, your Lordships will know that the Government intend to establish a small number of community radio stations on an experimental basis. These stations will be different in kind from ILR stations, but we recognise that the development of community radio raises important questions for existing sound broadcasting services, including ILR. We think it right that these matters should be the subject of wider consultation and we therefore propose to publish a Green Paper during the period of the community radio experiment. By the same token, there are important interrelationships between independent local radio and national radio, and the Government may want to have regard to these in framing the Green Paper.
Against the background of the financial and competitive pressures which I have outlined, the working group concluded that there was a strong case for removing the additional burden of levy from the ILR companies. The Government accept that view and my right honourable friend recently made an announcement to that effect in another place. In the last complete financial year (ending on 31st March 1985) for which figures are available, the sums paid by way of levy were £623,000. On the basis of the most recent forecasts only three companies—Capital in London, Piccadilly in Manchester and Clyde in Glasgow—would be liable for levy during the current year. If the levy rate is reduced to zero these companies will benefit in the six months from 1st April to 30th
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September 1986 by some £196,000 in total. The sums involved are therefore small relative to the equivalent levy on ITV companies; but the burden is large relative to the wealth of the ILR industry and to the resources of the individual companies subject to levy.
I might add that the internal review recommended that the IBA be invited to consider means by which the rental arrangements might be adjusted, so that sums otherwise payable in levy would be re-distributed throughout the ILR system. The IBA has since concluded that it would not be practicable to introduce such a system, and the Government accept that conclusion. There is already a measure of support from the larger, more profitable companies to the smaller, less profitable companies. Programmes made by the large stations can be made available for networking at low cost for the benefit of the industry as a whole; and larger stations contribute disproportionately to the common services provided by the Association of Independent Radio Contractors and the Radio Marketing Bureau. There are therefore various ways in which gains to the most successful companies will work to the benefit of the industry as a whole. My Lords, I beg to move.
Moved, That the draft order laid before the House on 4th March be approved. [15th Report from the Joint Committee.]—(Viscount Davidson.)
Baroness Ewart-Biggs: My Lords, we should like to say how grateful we are for the very clear explanation that we have received from the Minister about this order. I cannot help feeling that a measure that will help the ILR industry can only be welcomed, and that the working group that was set up to identify and discover this can only be very much respected. So may I say that a measure which relieves these contractors from a liability to the tune of 40 per cent. can only be applauded, and we on this side of the House should like to give our support to this order.
Viscount Davidson: My Lords, I am most grateful to the noble Baroness, Lady Ewart-Biggs, for her welcome of this order.
On Question, Motion agreed to.

Marriage (Prohibited Degrees of Relationship) Bill [H.L.]
9.18 p.m.
Read a third time.
Clause 1 [Marriage between certain persons related by affinity not to be void]:
Lord Meston Lord Meston moved Amendment No. 1:
Page 1, line 11, leave out ("eighteen") and insert ("twenty-one").
The noble Lord said: My Lords, with your Lordships' permission I should also like to speak to Amendments Nos. 2, 16, 17, 19, 20, 21, 22, 23, 24, 25, 26 and 27. They are all identical. These amendments relate to the minimum age for marriages between step-relations covered by this Bill and seek to increase the minimum age from 18 to 21. These amendments are brought forward in response to amendments moved by the noble Baroness, Lady Ewart-Biggs, in the name of herself and the noble Lord, Lord Mishcon, at Committee stage, which were withdrawn by the noble Baroness upon my undertaking to reconsider the matter.
There are many arguments either way relating to age limits. One is faced with the fact that all age limits in relation to marriage or anything else are arbitrary. I respect the unease expressed at Second Reading by the noble Lord, Lord Mishcon, and echoed at the Committee stage by the noble Baroness, Lady Ewan-Biggs. I have considerable respect for the arguments for an age limit of 21 in this kind of marriage although to provide for it would bring such marriages, in a sense, out of line with the minimum age limits for other forms of marriage. But consistency is not everything. Lawyers thrive on inconsistencies, I am glad to say.
There are clear and cogent arguments that marriages of this kind will probably need greater maturity. The parties involved may have more to cope with than in an ordinary marriage. It is therefore thought desirable to introduce a minimum age of 21, which it is hoped provides a safeguard without being over-protective. In relation to step-relations—step-parents and stepchildren—the anxiety has always been to ensure that vulnerable young people should not be exposed to pressures within the family. Even if the younger partner has never been a child of the family within the meaning of the law it is thought that a minimum age limit of 21 will provide an added safeguard. I emphasise, as I emphasised at the Committee stage, that the intention is not to redefine the concept of "child of the family" also within the Bill. I beg to move.
The Lord Bishop of Ely: My Lords, perhaps I may speak very briefly to the amendments just proposed. As a Bishop who has followed the progress of the Bill of the noble Lord, Lord Meston, with close and sympathetic interest, may I say that as I understand it the Bishops would hope to see the Bill proceed whether or not amended in this particular. It is recognised that this amendment is designed to give a measure of protection to the young in the face of possible
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pressures in the family, but there is even so, on the part of the Bishops, who have been following the Bill most closely, an openness either way about the proposal to make the minimum age of marriage in such circumstances 21 rather than 18.
Lord Simon of Glaisdale: My Lords, I approach this group of amendments, and indeed all the amendments this evening, on a dual basis. The first is that all your Lordships who have been concerned in this Bill are agreed that it is worthwhile, although I know that the noble Baroness, Lady Seear, would add "so far as it goes". The second is that this is really the last chance we have of getting the Bill right. Unless we are agreed this evening, the Bill, I should judge, will be lost for the Session. If it is going to pass this Session it can do so only on the basis of passing in the other place on the nod.
The first two amendments are a compromise. Amendment No. 1 stipulates that both parties shall be 21 at the time of marriage. Amendment No. 2 stipulates that the younger party has not been a child of the family in respect of the other party before the age of 18. At an earlier stage—I think it was the Report stage—the noble Baroness, Lady Ewart-Biggs, wanted the age of 21 for both. I myself wanted 18 for both as being the general age at which we accord responsibility and power of choice at large to young persons. 'This is a compromise. I am myself prepared to accept it. Unless we do so the Scottish amendment, Amendment No. 32, will be out of line, and so will the "in-law" amendments, Amendments Nos. 6 and 7, which I think in all sense ought to follow the same pattern as to age. I therefore readily accept this amendment as a compromise.
Lord Denning: My Lords, perhaps I may say how much I welcome this amendment. Twenty-one is a much more sensible age, as I have always thought, than 18. To bring this matter into line, and to get the Bill through, would be of the first value.
Baroness Ewart-Biggs: My Lords, I should like to say how grateful I am to the noble Lord, Lord Meston, for bringing forward these amendments, which go a long way to satisfying the request that my noble friend Lord Mishcon and I put forward in Committee.
We felt that it would be better if the age of the child of the family relationship was also changed to bring it up to 21 years. However, the noble Lord, Lord Meston, has made an important change. If one is 21 years of age, one is perhaps less susceptible to persuasion. It is a less volatile age. As it is a question of deciding whether or not to get married, it is important that the age should be moved from 18, which is not a very mature age judging by my experience of young people. We are most grateful to the noble Lord, Lord Meston, for making this amendment. I hope very much that it will receive a welcome from all parts of the House, including the Government Benches.
Viscount Davidson: My Lords, as the House must be well aware by now, the Government are neutral on the main aims of the Bill. It is for your Lordships to decide

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whether it is necessary and desirable that stepchildren and grand-stepchildren who have not lived as children of the family of their step-parents and grand step-parents should have to wait until they are 21 before marrying step-parents or grand step-parents.
Lord Meston: My Lords, I am grateful to all noble Lords who have ventured to support the amendments. As the noble and learned Lord, Lord Simon, said, this is indeed a last chance to get it right. I hope that this amendment does get it right. The noble and learned Lord is also correct in saying that it is a compromise. There is now, in a sense, a dual test. I was anxious to accommodate those who suggested 21 as the minimum age for the type of marriage in question, without redefining the concept of child of the family.
As to the future amendments, Amendments Nos. 6 and 7 will bring the limit of 21 years of age into line when the House comes to consider marriages as between in-laws. I commend this amendment to the House.
On Question, amendment agreed to.
Lord Meston Lord Meston moved Amendment No. 2:
Page 1, line 12, leave out ("that age") and insert ("the age of eighteen")
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Baroness Seear Baroness Seear moved Amendment No. 3:
Page 1, line 15, leave out ("mother or")
The noble Baroness said: My Lords, with the leave of the House, I should like to speak also to Amendments Nos. 4 and 5. They are simply revisions of amendments that were moved at the Committee stage because of defective drafting at that stage. They do not in any sense alter the meaning of the amendments accepted in Committee. I beg to move.
Lord Simon of Glaisdale: My Lords, as the noble Baroness said, this is merely redrafting and does not alter the effect. I preferred the original version, which I thought was clear and more economical. However, I shall not oppose this redrafting, if only because Amendments Nos. 6 and 7, which are necessary to bring the in-law into line with the step relation, are dependent on the new draft of the noble Baroness. As I said, we have to get this right tonight or the Bill will not pass before the end of this Session. I support the amendment.
Lord Meston: My Lords, I, too, accept the amendments, both in principle and as they are drafted.
On Question, amendment agreed to.
9.30 p.m.
Baroness Seear Baroness Seear moved Amendment No. 5:
Page 1, line 17, leave out ("son or")
On Question, amendment agreed to.
Baroness Seear Baroness Seear moved Amendment No. 5:
Page 1, line 19, leave out from ("relationship") to end of line 21 and insert—
("( ) A marriage solemnized after the commencement of this Act between a man and a woman who is the mother of a former
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spouse of his shall not be void by reason only of that relationship if the marriage is solemnized after the death of both that spouse and the father of that spouse.
( ) A marriage solemnized after the commencement of this Act between a man and a woman who is a former spouse of his son shall not be void by reason only of that relationship if the marriage is solemnized after the death of both his son and the mother of his son.")
The noble Baroness said: My Lords, I have already spoken to this amendment. I beg to move.
Lord Meston Lord Meston moved, as an amendment to Amendment No. 5, Amendment No. 6:
Line 7, at end insert ("and after both the parties to the marriage have attained the age of twenty-one")
The noble Lord said: My Lords, with permission I shall also speak to Amendment No. 7. As I have indicated, this introduces a consistent minimum age for marriages as between in-laws. Again, the same arguments apply in relation to maturity, but in practice very rarely will the situation arise that either party will be anywhere near the age of 21. Nevertheless, it is helpful and sensible to have the same age limit for marriages to be permitted under this Bill which, of course, seeks to permit some marriages within the degrees of affinity. It gives some weight to the concern expressed by the minority in No Just Cause that the young in-law should be secure in his or her relationship within the new spouse's family. I beg to move.
On Question, amendment to the amendment agreed to.
Lord Meston Lord Meston moved, as an amendment to Amendment No. 5, Amendment No. 7:
Line 12, at end insert ("and after both the parties to the marriage have attained the age of twenty-one")
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment to the amendment agreed to.
On Question, amendment agreed to.
Lord Meston Lord Meston moved Amendment No. 8:
Page 2, line 2, leave out from ("has") to ("lived") in line 3.
The noble Lord said: My Lords, I speak also to Amendment No. 28. The purpose of this amendment is to take out the words "for a period" in the part of the Bill which seeks to define the child of the family. That has been done in response to the request of the noble Viscount, Lord Davidson, on Report to reconsider the usefulness of the phrase "for a period" within that subsection. It has been accepted that those words do not add significantly to the definition of a child of the family and it is on that basis that I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 9:
After Clause 1, insert the following new clause:
("Marriage between certain persons related by affinity—Scotland. 1977 c. 15.
. Schedule (Amendment of Marriage (Scotland) Act 1977) (which amends the Marriage (Scotland) Act 1977 so as to permit—

(a) the marriage of a man and a woman who is the grandmother of a former spouse of his or is a former spouse of his grandson;

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(b) the marriage of a woman and a man who is the grandfather of a former spouse of hers or is a former spouse of her grand-daughter, and

(c) under certain conditions, the marriage of persons related in certain other degrees of affinity)

shall have effect.".
The noble and learned Lord said: My Lords, on Report I gave notice of the Government's intention to extend the provisions of the Bill to Scotland; a decision taken on the basis of the consensus of support in your Lordships' House for the Bill and the practice of seeking to maintain consistency in the laws of marriage for Scotland, England and Wales.
The amendment in my name is intended, therefore, to apply the provisions of the Bill in a form approved by your Lordships to Scotland in terms of amendments to the Marriage (Scotland) Act 1977. I wish to make it clear, like my noble friend, that in moving these amendments the Government do not depart in the least degree from their attitude of benevolent neutrality.
I speak also to Amendment No. 32, and these amendments bring into effect a new schedule to the Bill which amends the Marriage (Scotland) Act 1977 so as to permit marriages between certain persons who are at present prohibited from marrying each other on account of relationship by affinity. Paragraphs (a) and (b) explain in detail the fact that marriage can now take place between grandparents-in-law and grandchildren-in-law and the Bill achieves this by substituting for paragraph 2 of Schedule 1 to the 1977 Act two new paragraphs, paragraphs 2 and 2(a), and in so doing it deletes from the previously forbidden degrees of relationship for the purpose of marriage relationships between grandparents-in-law and grandchildren-in-law.
Paragraph (c) refers to marriages which may now take place subject to the conditions stipulated in the new schedule between step-parents and stepchildren and between parents-in-law and children-in-law. The schedule provides for Scotland therefore in a manner corresponding to what is proposed for England and Wales elsewhere in the Bill in amendments which have been and will be proposed by the noble Lord, Lord Meston, and the noble Baroness, Lady Seear, I think with the exception of Amendment No. 15. I beg to move.
Lord Simon of Glaisdale: My Lords, though I have learned a certain amount about Scottish law by listening to the debates on the Scottish legal aid Bill, and though the noble and learned Lord the Lord Advocate dealt with paragraph (c), I am afraid that I still do not understand what is within its ambit. I hope he will be able to give a slightly more full explanation to the following:
"under certain conditions, the marriage of persons related in certain other degrees of affinity shall have effect".
I am not at all sure what that is really getting at.
Lord Cameron of Lochbroom: My Lords, the important matter is to be found in the schedule to the Bill. There are circumstances in which certain conditions have to be satisfied before parties may marry. I am looking at the schedule itself in paragraph 2(c) where it is provided that after subsection (4)—this is subsection (4) of Section 2 of the Marriage
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(Scotland) Act 1977—there shall be inserted the following new subsection:
"where the parties intending to marry are related in a degree specified in paragraph 2 of Schedule 1 to this Act, either party may apply to the Court of Session for a declaration that the conditions specified in paragraphs (a) and (b) of Subsection (1A) above are fulfilled in relation to the intended marriage".
That is in relation to the attainment of a certain age, which is 21, and that the younger party has not at any time before attaining the age of 18 lived in the same household.
These are the forms and conditions which have to be satisfied before there can be a marriage between persons related in certain other degrees of affinity.
I accept that it is rather a circumlocutory way of achieving an objective which may be achieved otherwise in the English legislation. But I can assure the noble and learned Lord that that is the intention of this subsection in relation to the schedule.
Lord Simon of Glaisdale: My Lords, I thank the noble and learned Lord for his explanation. It is not very easy to understand that new paragraph but I think it is now clear what the provision to which it refers intends.
Lord Meston: My Lords, I simply accept these amendments with gratitude and indeed I accept the explanation for the amendments given by the noble and learned Lord. Though my heart may be in the highlands, my knowledge of the law is firmly south of the Border. I thank the noble and learned Lord for these amendments which of course bring Scotland into line under this Bill. I should also like to thank those responsible for the extensive drafting involved.
On Question, amendment agreed to.
Clause 5 [Short title, citation, commencement and extent]:
Lord Meston Lord Meston moved Amendment No. 10:
Page 3, line 2, leave out ("and this Act and") and insert—
("( ) This Act so far as it extends to England and Wales may be cited with").
The noble Lord said: My Lords, if I may speak also to Amendment No. 11, these amendments simply effect alterations to the citation clause consequential upon the extension of this Bill to Scotland.
Lord Simon of Glaisdale: My Lords, I am not sure whether the noble Lord, Lord Meston, also spoke to Amendment No. 14 on which I had a question as to whether the words, "save as aforesaid this" were proper; in other words, whether sufficient of the Scottish provisions had been referred to.
I let the noble and learned Lord the Lord Advocate know of my misgivings—at a very late date I am afraid. The provision about which I was not sure was the subject matter of Amendment No. 12, which seemed Scottish, and in Clause 5(3).
Lord Meston: I hesitate to interrupt the noble and learned Lord, but I did not speak to Amendment No. 14. I did not do so deliberately because although on the Marshalled List Amendments Nos. 12, 13 and 14 appear in my name, in fact they

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should have appeared in the name of the noble and learned Lord, Lord Cameron, and I therefore disclaim all responsibility for Amendments Nos. 12, 13 and 14.
Lord Cameron of Lochbroom: Perhaps I may say at this stage, just in response to something that the noble and learned Lord let drop, that he brought a certain matter to my attention. I will deal with this, if I may, in speaking to Amendment No. 14, because I think the noble and learned Lord has a point which I would hope perhaps the House might deal with even at this late stage.
On Question, amendment agreed to.
Lord Meston Lord Meston moved Amendment No. 11:
Page 3, line 3, leave out ("may be cited").
The noble Lord said: My Lords, I have already spoken to this. I beg to move.
On Question, amendment agreed to.
The Deputy Speaker: As has already been said, I should point out that Amendments Nos. 12, 13 and 14 are in the name of Lord Cameron of Lochbroom and not in the name of Lord Meston, as printed on the Marshalled List.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 12:
Page 3, line 4, at end insert—
("( ) This Act so far as it relates to the Marriage (Scotland) Act 1977 may be cited with that Act as the Marriage (Scotland) Acts 1977 and 1986.").
The noble and learned Lord said: My Lords, this amendment makes an adjustment to Clause 5 in consequence of the Bill being extended to Scotland. I therefore beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 13:
Page 3, line 9, at end insert ("and different days may be so appointed for different provisions").
The noble and learned Lord said: My Lords, the purpose of this amendment is to provide that separate commencement orders may be made for Scotland and for England and Wales. While ideally it would be desirable to achieve the same commencement date for both jurisdictions, this amendment allows for the possibility that simultaneous commencement may not be practicable. With that explanation, I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 14:
Page 3, line 10, leave out ("This") and insert—
("Section (Marriage between certain persons related by affinity—Scotland) and Schedule (Amendments of Marriage (Scotland) Act 1977) shall extend to Scotland only, but save as aforesaid this").
The noble and learned Lord said: My Lords, as I hinted earlier, I am very grateful to the noble and learned Lord, Lord Simon of Glaisdale, for bringing a matter to my attention. I have checked it with those who advise me. The amendment as presently framed on the Marshalled List extends two matters—a section which was the new clause under Amendment 9, and the schedule to which I have already spoken—to
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Scotland. But the noble and learned Lord drew to my attention—he is quite right about this—the consequence that Amendments Nos. 12 and 13 bring into Clause 5 of the Bill material that also relates to Scotland and might not therefore appear on the face of Amendment No. 14 to be comprehended by that amendment.
9.45 p.m.
If the House would be prepared to accept a slight alteration to Amendment No. 14, it would read:
"("Section (Marriage between certain persons related by affinity—Scotland)",
and then,
"This Section",
which would refer to Clause 5,
"and Schedule (Amendments of Marriage (Scotland) Act 1977) shall extend to Scotland":
The word "only" is then deleted, and the amendment concludes,
"but save as aforesaid this".
That would cure entirely the drafting blunder that would arise as a result of your Lordships' House having accepted Amendments Nos. 12 and 13 and make clear beyond peradventure that Clause 5 also extends to Scotland. If your Lordships were of a mind, I would, with that addition and that deletion from the amendment, beg to move the amendment in those terms. I am advised that this would have to be framed by way of a manuscript amendment. No, that is not right. I regret that I have advice from the Table that what I am trying to do cannot be done in your Lordships' House. For that, I must apologise to your Lordships. I shall simply beg to move the amendment as it presently stands in the hope that matters can perhaps be put right at a later stage.
Lord Simon of Glaisdale: My Lords, I rise only to express my gratitude to the noble and learned Lord and to ask if it is really the case that this change cannot be made by a manuscript amendment at this stage. I have known, certainly not on Third Reading, but at earlier stages, manuscript amendments to be accepted by the Chair provided that there was no objection elsewhere in the House. I see that the noble and learned Lord has just been briefed.
Lord Cameron of Lochbroom: My Lords, I regret to say that the brief I have been given accords with what I have just stated to your Lordships' House. Regrettably, the rules do not provide for this at Third Reading, although it may be done at earlier stages of the Bill's progress. I can only tender my apologies to your Lordships that this should have arisen. It may require to be cured elsewhere. I accept that it is unfortunate.
On Question, amendment agreed to.
In the Schedule [Amendments of Marriage Act 1949]:
[Amendment No. 15 not moved.]
Lord Meston Lord Meston moved Amendments Nos. 16 and 17:
Page 4, line 14, leave out ("eighteen") and insert ("twenty-one")
Page 4, line 16, leave out ("that age") and insert ("the age of eighteen")
The noble Lord said: My Lords, I have already spoken to this amendment and also to Amendment No. 17. I beg to move.
The Deputy Speaker (Earl Cathcart): My Lords, with the leave of the House, Amendments Nos. 16 and 17 are proposed en bloc.
On Question, amendments agreed to.
Lord Meston Lord Meston moved Amendment No. 18:
Page 4, line 17, at end insert—
(" (4) Subject to subsection (5) of this section, a marriage solemnized between a man and any of the persons mentioned in the first column of Part III of the First Schedule to this Act or between a woman and any of the persons mentioned in the second column of the said Part III shall be void.
(5) Any such marriage as is mentioned in subsection (4) of this section shall not be void by reason only of affinity if both the parties to the marriage have attained the age of twenty-one at the time of the marriage and the marriage is solemnized—

(a) in the case of a marriage between a man and the mother of a former wife of his, after the death of both the former wife and the father of the former wife;

(b) in the case of a marriage between a man and the former wife of his son, after the death of both his son and the mother of his son;

(c) in the case of a marriage between a woman and the father of a former husband of hers, after the death of both the former husband and the mother of the former husband;

(d) in the case of a marriage between a woman and a former husband of her daughter, after the death of both her daughter and the father of her daughter.")

The noble Lord said: My Lords, I should like to speak also to Amendments Nos. 29, 30 and 31. This is a revised version of the amendment of my noble friend Lady Seear proposed on Report to permit marriage between in-laws where the connecting spouse has died. The amendments cure a weakness in the text created by acceptance of her amendment. The new scheme proposed is a three-part schedule to the Marriage Act 1949 following the style of that Act. In Amendment No. 31, your Lordships will see that there is a new Part III to the schedule to the Marriage Act 1949 created to deal with in-law relationships. Amendments Nos. 29 and 30 are part and parcel of the same scheme. With that explanation, I beg to move.
On Question, amendment agreed to.
Lord Meston Lord Meston moved Amendment No. 18A.
Page 4, line 24, leave out ("subsection") and insert ("subsections")
The noble Lord said: My Lords, on behalf of my noble friend Lord Kilmarnock, I beg to move this amendment and speak also to Amendments Nos. 20A, 24A and 27A. These amendments have been introduced at a late stage to provide procedural safeguards which were considered desirable in respect of marriages by common licence and by superintendent registrar's certificate, with particular regard to marriages now to be permitted as a result of the amendments of my noble friend which were accepted at the Report stage.
They parallel the procedure in the Bill as it was originally drafted for step-relation marriages. They are also much closer to the safeguards which already exist
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under the general Scottish law in relation to marriage, where it appears that they are perhaps less sporting but rather more cautious in these matters. I beg to move.
On Question, amendment agreed to.
Lord Meston Lord Meston moved Amendments Nos. 19 and 20:
Page 4, line 31, leave out ("eighteen") and insert ("twenty-one")
Page 4,line 36, leave out ("that age") and insert ("the age of eighteen")
The noble Lord said: My Lords, I have already spoken to Amendments Nos. 19 and 20. I beg to move.
On Question, amendments agreed to.
Lord Meston Lord Meston moved Amentment No. 20A:
Page 4, line 37, at end insert—
("(1B) In the case of a marriage mentioned in subsection (4) of section 1 of this Act which by virtue of subsection (5) of that section is valid only if at the time of the marriage both the parties to the marriage have attained the age of twenty-one and the death has taken place of two other persons related to those parties in the manner mentioned in the said subsection (5), a common licence shall not be granted for the solemnization of the marriage unless the person having authority to grant the licence is satisfied by the production of evidence—

(a) that both the parties to the marriage have attained the age of twenty-one; and

(b) that both those other persons are dead".").

The noble Lord said: On behalf of my noble friend Lord Kilmarnock, I have already spoken to this amendment and I beg to move.
On Question, amendment agreed to.
Lord Meston Lord Meston moved Amendments Nos. 21 to 24:
Page 4, line 46, leave out ("eighteen") and insert ("twenty-one").
Page 5, line 1, leave out ("that age") and insert ("the age of eighteen");
Page 5, line 11, leave out ("eighteen") and insert ("twenty-one");
Page 5, line 12, leave out ("that age") and insert ("the age of eighteen").
The noble Lord said: My Lords, I have already spoken to Amendments Nos. 21, 22, 23 and 24. I beg to move.
On Question, amendments agreed to.
Lord Meston Lord Meston moved Amendment No. 24A:
Page 5, line 19, leave out ("section") and insert ("sections").
The noble Lord said: My Lords, on behalf of my noble friend Lord Kilmarnock, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Meston Lord Meston moved Amendments Nos. 25 to 27:
Page 5, line 28, leave out ("eighteen") and insert ("twenty-one").
Page 6, line 5, leave out ("eighteen") and insert ("twenty-one").
Page 6, line 6, leave out ("that age") and insert ("the age of eighteen").
The noble Lord said: My Lords, I have already spoken to Amendments Nos. 25, 26 and 27. I beg to move.
On Question, amendments agreed to.
Lord Meston Lord Meston moved Amendment No. 27A:
Page 6, line 18, at end insert—
("Provisions relating to section 1(5) marriages.
27C. In the case of a marriage mentioned in subsection (4) of section 1 of this Act which by virtue of subsection (5) of that

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section is valid only if at the time of the marriage both the parties to the marriage have attained the age of twenty-one and the death has taken place of two other persons related to those parties in the manner mentioned in the said subsection (5), the superintendent registrar shall not enter notice of the marriage in the marriage notice book unless he is satisfied by the production of evidence—

(a) that both the parties to the marriage have attained the age of twenty-one, and

(b) that both those other persons are dead".").

The noble Lord said: My Lords, on behalf of my noble friend Lord Kilmarnock, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Meston Lord Meston moved Amendments Nos. 28 to 31:
Page 6, line 30, leave out from ("has") to end of line.
Page 6, line 35, leave out from ("words") to ("to") in line 37 and insert ("from "Wife's mother" ")
Page 6, line 38, leave out from ("words") to ("to") in line 40 and insert ("from "Husband's father" ")
Page 7, leave out lines 4 to 9 and insert—

("Daughter of former wife

Son of former husband

Former wife of father

Former husband of mother

Former wife of father's father

Former husband of father's mother

Former wife of mother's father

Former husband of mother's mother

Daughter of son of former wife

Son of son of former husband

Daughter of daughter of former wife

Son of daughter of former husband

PART III

Degrees of affinity referred to in section 1(4) and (5) of this Act.

Mother of former wife

Father of former husband

Former wife of son

Former husband of daughter")

The noble Lord said: My Lords, I have already spoken to Amendments Nos. 28, 29, 30 and 31. I beg to move.
On Question, amendments agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 32:
After the Schedule insert the following new Schedule—
("AMENDMENTS OF MARRIAGE (SCOTLAND) ACT 1977 (c. 15)
1. The Marriage (Scotland) Act 1977 shall be amended as follows.
2. In section 2 (prohibited degrees for marriage of related persons)—

(a) at the beginning of subsection (1) there shall be inserted the words "Subject to subsections (1A) and (1B) below,";

(b) after subsection (1) there shall be inserted the following subsection—

"(1A) Subsection (1) above does not apply to a marriage between a man and any woman related to him in a degree specified in column 1 of paragraph 2 of Schedule 1 to this Act, or between a woman and any man related to her in a degree specified in column 2 of that paragraph, if—

(a) both parties have attained the age of 21 at the time of the marriage; and

(b) the younger party has not at any time before attaining the age of 18 lived in the same household as the other party and been treated by the other party as a child of his family.

(1B) Subsection (1) above does not apply to a marriage between a man and any woman related to him in a degree specified in column 1 of paragraph 2A of Schedule 1to this Act, or between a woman and any man related to her in a degree specified in column 2 of that paragraph, if both parties to the marriage have attained the age of 21 and the marriage is solemnised—

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(a) in the case of a man marrying the mother of a former wife of his, after the death of both the former wife and the former wife's father;

(b) in the case of a man marrying a former wife of his son, after the death of both his son and his son's mother,

(c) in the case of a woman marrying the father of a former husband of hers, after the death of both the former husband and the former husband's mother;

(d) in the case of a woman marrying a former husband of her daughter, after the death of both her daughter and her daughter's father."; and

(c) after subsection (4) there shall be inserted the following subsection—

"(5) Where the parties to an intended marriage are related in a degree specified in paragraph 2 of Schedule 1 to this Act, either party may (whether or not an objection to the marriage has been submitted in accordance with section 5(1) of this Act) apply to the Court of Session for a declarator that the conditions specified in paragraphs (a) and (b) of subsection (1A) above are fulfilled in relation to the intended marriage.".
3. In section 3(1) (notice of intention to marry), after paragraph (c) there shall be inserted the following paragraph—
"(d) where he is related to the other party in a degree specified in paragraph 2 of Schedule 1 to this Act, a declaration in the prescribed form stating—

(i) the degree of relationship; and

(ii) that the youngest party has not at any time before attaining the age of 18 lived in the same household as the other party and been treated by the other party as a child of his family.".

4. In section 5 (objections to marriage)—

(a) at the beginning of subsection (3) there shall be inserted the words "Subject to subsection (3A) below,";

(b) after subsection (3) there shall be inserted the following subsection—

"(3A) Where—

(a) an objection of which the Registrar General has received notification under subsection (2)(b)(i) above is on the ground that—

(i) the parties are related in a degree specified in paragraph 2 of Schedule 1 to this Act; and

(ii) the conditions specified in paragraphs (a) and (b) of section 2(1A) of this Act are not satisfied; and

(b) an extract decree of declarator that those conditions are satisfied, granted on an application under section 2(5) of this Act, is produced to the Registrar General, the Registrar General shall inform the district registrar that there is no legal impediment to the marriage on that ground."; and

(c) in subsection (4), for the words "subsection (3) above" there shall be substituted the words "this section".

5. In section 6(1) (the Marriage Schedule), after "5(3)(b)" there shall be inserted "or (3A)".
6. In section 7(1) (marriage outside Scotland where a party resides in Scotland), for the words "(a) and (b)" there shall be substituted the words "(a), (b) and (d)".
7. For paragraph 2 of Schedule 1 (relationship by affinity) there shall be substituted the following paragraphs—

"2—Relationship by affinity referred to in section 2(1A)

Daughter of former wife;

Son of former husband;

Former wife of father,

Former husband of mother,

Former wife of father's father,

Former husband of father's mother,

Former wife of mother's father,

Former husband of mother's mother,

Daughter of son of former wife;

Son of son of former husband;

Daughter of daughter of former wife;

Son of daughter of former husband.

2A.—Relationship by affinity referred to in section 2(1B)

Mother of former wife;

Father of former husband;

Former wife of son;

Former husband of daughter.")

The noble and learned Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Meston: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass—(Lord Meston.)
Lord Denning: My Lords, I should like to thank the noble Lord, Lord Meston, for introducing the Bill and for carrying it through, and I should also like to thank everyone for the most valuable amendments which have been made to the Bill. I only raise the point about the administration of the Bill because unless the provisions of the Bill are complied with, any supposed marriage will be completely void.
One of the important provisions is contained in Clause 1 where it says:
"the younger party has not at any time before attaining that age"—
the age of 18—
"been a child of the family in relation to the other party".
Sometimes that will be a most difficult question to decide. Is the superintendent registrar to decide it? Is the clergyman who is to marry them to decide it? It is a most difficult question. Surely in future there must be circulars or instructions to the registrars and to the clergy. As the Bill carries through the major recommendations of the majority of the No Just Cause group, I should like to see what they said about the difficult situation which involves a child of the family under the age of 18. In paragraph 234 it says:
"The question though simple to frame could often involve great difficulties in establishing evidence and the absence of adversarial proceedings would seem to indicate the desirability of involving a senior court. Jurisdiction might be given initially to the Family Division of the High Court, with powers for the Lord Chancellor to remit cases to County Courts as a result of an accumulated experience".
I hope that as a result of the Bill there will not be great problems involved for superintendent registrars or for the clergy. I hope that it will not be necessary to have to go to the courts to decide the matter. However, I should like all those concerned with implementing the Bill to consider the point which I have just raised as to how it should be administered in practice by those registrars and clergy. Subject to that one qualification, I endorse the Bill and congratulate and thank all concerned for enabling it to go forward.
Baroness Ewart-Biggs: My Lords, first, I should like to congratulate the noble Lord, Lord Meston, on presenting, explaining and steering the Bill through its different stages. I should also like to say how grateful we are on these Benches for the concessions which he made to us as regards what we considered to be important basic points of the Bill. I was glad of the contribution of the noble Baroness, Lady Seear, in bringing forward amendments permitting the marriages of in-laws in certain circumstances, because they, surely, have been the subject of so many painful, lengthy and cumbersome private Bills of which we are all aware. In my view, those amendments are a
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valuable addition to Lord Meston' s original Bill. I was also pleased that throughout our deliberations on the Bill we heard contributions from the right reverend Prelates who gave their views, their approbation and their agreement to the different proposals which it contained.
One can surely only welcome measures which enable those who wish to get married—those who for the most part wish to enter into this most fundamental and sacred of unions—to do so. Anything that can remove barriers can surely only be welcomed in these days when so sadly we see the very reverse happening and so many marriages breaking apart. Therefore, I thank the noble Lord, Lord Meston, for all the work that he has clearly put into the Bill and I express my hope that it will be given a welcome and a good passage in another place. I wish it good luck and good speed on its way.
10 p.m.
Lord Simon of Glaisdale: My Lords, your Lordships have debated the main issues which arise, social and moral issues of great importance, and this is no time to go into them again. I desire only to say in relation to what was said by my noble and learned friend Lord Denning that I do not apprehend practical difficulties. I think any problem posed by the Bill to a superintendent registrar is no different from the problem which he already has to face in relation to the age of the parties who come before him. During all my time as a matrimonial judge I had only one case in reference to a superintendent registrar's decision, and that was on a difficult question of private international law; never a question of assessing age, which must arise constantly.
Having said that, there is nothing to say except to congratulate the noble Lord, Lord Meston, on the admirable way in which he has piloted the Bill and mastered the material down to the smallest detail. It would be quite unfitting for us to pass from this Bill without paying a renewed tribute to the noble Baroness, Lady Seear. The whole of the Bill is based on the wonderfully clear and copious report of the committee over which she presided, and I was glad that she got a concession, an amendment made, which was important to her and indeed an important amendment. It has been a very agreeable experience having this Bill conducted by the noble Lord, Lord Meston, and having the noble Baroness able to give the majority report view on its provisions, and I wish the Bill well.
Baroness Seear: My Lords, I should like briefly to thank my noble friend Lord Meston for steering this Bill through. It seemed a small Bill to start with, but it has had an inordinately long life so far. It seems a long time since the noble Baroness, Lady Wootton, first produced a Bill to deal with this subject, and I am glad that we have now been able, with the support of the Bench of Bishops, to get as far as this Bill has taken us.
As your Lordships are aware, it is not quite the Bill that I myself supported, representing the majority report of the committee set up by the most reverend Primate, but nonetheless it makes progress in a matter on which progress was needed. I am most grateful for the interest that has been taken and the support that has been given.

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I echo the noble Baroness, Lady Ewart-Biggs, in saying that I hope that time will be found for this Bill in the House of Commons. It is necessary that these changes should be made, and it would be a great pity if, after all the work that has been done, the Bill did not ultimately reach the statute book.
Viscount Davidson: My Lords, I should not like this Bill to pass without saying a few words on behalf of the Government. I have no doubt wearied your Lordships with repeating constantly that the Government remain neutral on the substantive issues which we have discussed during the passage of this Bill. If we have taken sides, as it were, it has been only for the purpose of suggesting drafting amendments. We have not sought to recommend any destination but only the best way to get there.
I should nevertheless like to say that the Government are happy with the outcome, and I trust that the noble Lord's Bill will have a fair passage through another place. If enacted, the Bill would, I think, remove from Parliament the great majority of those cases where a couple, in order to marry, have to promote a personal Bill in Parliament. It is costly to them; it takes up a lot of parliamentary time and, perhaps more seriously, it can be highly embarrassing to the couple concerned to hear intimate details of their lives discussed on the Floor of the House.
Many of your Lordships have described the personal Bills procedure as inappropriate. The noble Baroness, Lady Wootton of Abinger, and the noble Lord, Lord Lloyd of Kilgerran, have promoted general marriage enabling Bills. The noble Lord, Lord Lloyd of Kilgerran, withdrew his Bill in the knowledge of the group being set up by the most reverend Primate the Archbishop of Canterbury. The report of the group, No Just Cause, has provided the background to the debates in this House at all its stages. The minority report formed the basis of the original Bill, but the amended Bill has some features of the majority report, in that it makes some relaxation of restrictions on marriage between parents and children-in-law.
The Bill, if enacted, would remove most impediments to marriages between affines, those themselves related by marriage. This result is achieved by a Bill which is, one must admit, already of considerable complexity, but this is perhaps only to be expected when one considers the complications introduced by the various types of relationship, the need to balance the interests of the couple with the interests of society at large and the two legal systems. I should like to end, and I know that my noble and learned friend Lord Cameron of Lochbroom joins me in this, by congratulating the noble Lord, Lord Meston, on his foresight and tenacity in introducing the Bill and on successfully piloting it through your Lordships' House.
Lord Meston: My Lords, may I briefly thank all noble Lords who have spoken both this evening and throughout the passage of the Bill? It is, I hope, a useful Bill, with its origin in the report No Just Cause. I join in paying tribute to my noble friend Lady Seear for the excellence of that report, which has proved to be of great assistance to us in understanding the issues
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involved in this sometimes complex area. I suggest that it has become a better Bill in its passage through your Lordships' House. It has been extended to Scotland. It has been extended, with qualification, to in-laws and it now has the additional safeguard of a minimum age of 21 years for marriage. It is a Bill which has enjoyed, I am grateful to say, constructive help and support and comment from all sides, not least from the Bench of Bishops, who added their considerable weight and authority to this Bill.
I am also grateful for the Government's stance on the matter. They have been benevolent, neutral and helpful. I am particularly grateful. I hope that that attitude will continue, if not improve.
The noble and learned Lord, Lord Denning, touched very sensibly upon the practicalities of how this Bill, if enacted, will work in practice. As I have already stressed several times in the passage of the Bill, there are safeguards written into it. There will nevertheless be difficult and borderline cases. They must be inherent in the deliberately vague definition of the "child of the family". But like the noble and learned Lord, I share the view that when these difficult cases arise it should be a matter for decision by the most senior judges who sit at first instance in this area of the law.
This is not a party matter. It is a Bill which will benefit people at all levels and all strata of society. I certainly hope this is a Bill which will have a fair wind and some of the Government's precious time in another place.
On Question, Bill passed, and sent to the Commons.

Yorkshire Water Authority Bill
Reported from the Unopposed Bill Committee, with amendments.
House adjourned at ten minutes past ten o'clock.

  BLOOD DONATIONS FROM PRISONERS
  BLOOD DONATIONS FROM PRISONERS
  BLIND AND PARTIALLY SIGHTED PERSONS: COLLECTION OF DATA
  BLIND AND PARTIALLY SIGHTED PERSONS: COLLECTION OF DATA
  NORTHERN IRELAND: HEALTH CARE EXPENDITURE
  NORTHERN IRELAND: HEALTH CARE EXPENDITURE
  NORTHERN IRELAND: SCHOOL BUS PASSES
  NORTHERN IRELAND: SCHOOL BUS PASSES
  THE BUILDING INDUSTRY: SKILLS
  THE BUILDING INDUSTRY: SKILLS
  CUSTOMS AND EXCISE: STRENGTH
  CUSTOMS AND EXCISE: STRENGTH
  CUSTOMS AND EXCISE DRUG SEIZURES
  CUSTOMS AND EXCISE DRUG SEIZURES
  TAX REVENUE 1964–86
  TAX REVENUE 1964–86
  EC ENTERPRISE AND DEREGULATION UNIT
  EC ENTERPRISE AND DEREGULATION UNIT
  DEREGULATION: PROPOSALS TO EUROPEAN COMMISSION AND COUNCIL
  DEREGULATION: PROPOSALS TO EUROPEAN COMMISSION AND COUNCIL
  DEREGULATION: DISCUSSIONS WITH MEMBER STATES
  DEREGULATION: DISCUSSIONS WITH MEMBER STATES
  DEREGULATION: PROPOSALS
  DEREGULATION: PROPOSALS
  INFRASTRUCTURE CAPITAL EXPENDITURE
  INFRASTRUCTURE CAPITAL EXPENDITURE
  COPYRIGHT LAW
  COPYRIGHT LAW
  CHANNEL FIXED LINK
  CHANNEL FIXED LINK
  COUNTY HALL
  COUNTY HALL
  NATURE CONSERVATION: LOCAL GOVERNMENT PROPOSALS
  NATURE CONSERVATION: LOCAL GOVERNMENT PROPOSALS
  INFLUENZA VACCINATIONS: EFFECTIVENESS
  INFLUENZA VACCINATIONS: EFFECTIVENESS