Sitting of 2 May 1986

Preamble
The House met at half-past Nine o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Orders of the Day
  Children and Young Persons (Amendment) Bill
  As amended (in the Standing Committee), considered.
New Clause 1

  WARDSHIP
  '(1) At any time after the commencement of any proceedings to which this section applies a Juvenile Court may transfer such proceedings to the High Court in wardship on the grounds that:—

  (a) it is in the interests of the welfare of the child; or

  (b) it is in the interest of justice; or

  (c) it would be appropriate for the case to be dealt with under the wider powers of the High Court in wardship.

  (2) This section applies to:—

  (a) any proceedings under the Children and Young Persons Act 1969; or

  (b) any proceedings under the Child Care Act 1980; or

  (c) any proceedings under section 1 of this Act.

  (3) The power under subsection (1) may be exercised before or at any stage during the hearing and upon the application of any party or the court's own motion.'.—[Ms. Harman.]
  Brought up, and read the First time.
  9.34 am
  Ms. Harriet Harman: I beg to move, That the clause be read a Second time.
  Mr. Speaker: With this it will be convenient to take the following amendments: No. 25, in page 5, line 3, leave out clause 5.
  No. 26, in clause 5, page 5, line 5, leave out from 'Court' to end of line 15 and insert
  'on the grounds that proceedings in relation to the same child are already continuing in the High Court.
  (2) This section applies to—

  (a) any of the proceedings mentioned in paragraph (a) to (e) of section 4(1) above;

  (b) any proceedings under section 1 of this Act.'.

  No. 28, in clause 5, page 5, line 23, leave out
  'and who may re-transfer the proceedings to the Juvenile Court'.
  Ms. Harman: Most of these amendments should have been dealt with in Committee. To get the Bill on the statute book, which we obviously want to do, we shall have to rush through these quite substantial amendments which come before us for the first time. Because of the Government's handling of the Bill, the Committee stage was wasted. In all courtesy to the hon. Member for Westbury (Mr. Walters), who introduced the Bill, the Government should have got their act together and
  1196
  revealed their hand earlier. If the Government had undertaken meaningful discussions with the hon. Member for Westbury, who has been entirely reasonable about the Bill from the outset, we could have had a lengthy and extremely useful Committee stage. Because the Government had not decided what they wanted to do, the Committee stage lasted less than half a day. So we are more or less having the Committee stage now.
  The purpose of new clause 1, which deals with wardship, and the grouped amendments is to knock out clause 5 and insert a clause that would give any party to proceedings the right to apply to have a case heard in wardship. It is necessary to avoid the introduction of a further anomaly into child care legislation, arising with the right to transfer proceedings to the High Court. Currrently, many cases concerning children in care are dealt with in the High Court under the High Court's wardship jurisdiction. There are a number of reasons for that. The principal reason is the flexibility and wider powers that the court has in wardship. The most important point which the court has to consider is the best interests of the child, and in that respect it can make wide-ranging orders.
  Clause 5 as it stands proposes that cases may be transferred to the High Court, but it does not specify that that should be done within the wardship jurisdiction. As the amended Bill stands, there is no indication how such cases should be dealt with. Therefore, the court will have no greater powers than a juvenile court. It is difficult to see why a case should go through the delaying process of transfer to the High Court if the court cannot exercise its wider jurisdiction and flexibility which makes wardship a useful proceeding.
  Because of the decisions of the Judicial Committee of the Privy Council, from 1981 onwards, children and their relatives and friends have found it impossible to use the wardship jurisdiction where a child is in care unless the local authority concerned agrees. My proposed new clause would remedy the injustice faced by children, their families and other interested persons. If clause 5 were deleted and new clause 1 inserted, the power of transfer to the High Court—obviously it would be used only rarely—would be a useful addition.
  We are talking about an important part of a very much wider mechanism in the spectrum of jurisdiction in child care law. The Government have handled the issue badly. It is wrong that we have to put all the measures in one clause dealing with one part of the whole spectrum of child care law. We should be considering all parts at the same time. We should be looking at all the jurisdictions of all the different courts with a view to instituting a family court with wide jurisdiction which takes over the duties of all the other courts that now exercise jurisdiction over family and matrimonial matters.
  I hope that the new clause will bring about an improvement. I am disappointed that we have had to deal with it in such an unsatisfactory and piecemeal way. The blame lies at the Government's door. It is not too late for the Government to make a commitment to comprehensive legislation on child care. The child care law review imposed strict consultation timetables. Many organisations felt that the time limits were too short and had to abandon their other valuable work to prepare their comments to assist the Government. They were happy to do so because they felt that swift action would result. They are bitterly disappointed that there still appears to be no

  1197
  commitment that child care law will be completely and comprehensively redrawn, let alone any commitment on the time for action on a family court.
  Mr. Dennis Walters: Like the hon. Member for Peckham (Ms. Harman), I very much hope that the Government will make a commitment to introduce comprehensive legislation in the next Session—or if not then, as soon as practicable. I fully sympathise with the aims of the new clause. It is precisely the type of proposal that I should have liked to be contained in clause 5 of my original Bill. However, I recognised that its provisions represented a considerable change which was unlikely to be accepted by the Government at that time. My clause 5 was not nearly as far-reaching as new clause 1, but it was made abundantly clear to me that the Government were not in a position to accept it. I therefore agreed with the Minister that clause 5 should be dropped. Although I applaud the new clause, I realise that it has little chance of success.
  Mr. Ian Mikardo: This group of amendments includes amendment No. 25, which proposes to leave out clause 5. My hon. Friend the Member for Barking (Ms. Richardson) and I tabled that amendment, not knowing that our hon. Friend the Member for Peckham (Ms. Harman) and the Under-Secretary of State for Health and Social Security—the hon. Member for Wycombe (Mr. Whitney)—intended, independently, to table the same amendment at the same time. The House will recognise that this amendment is a ship with a pretty formidable if somewhat variegated crew.
  The Under-Secretary of State has tabled also two new clauses and no fewer than 14 amendments. I am bound to say a word of support about the comments of my hon. Friend the Member for Peckham. That is no way for the Government to treat a private Member's Bill. The Government are virtually hijacking the Bill, taking it out of the hands of the hon. Member for Westbury (Mr. Walters), and turning it into a Government Bill. That is grossly unfair to the hon. Gentleman. He was excited about winning, I think for the first time, a high place in the ballot. He was rightly congratulated. The hon. Gentleman obviously put a lot of thought and work into the legislation. But it has now, for all practical purposes, been snatched from his hands.
  9.45 am
  If the Government really wanted a Government Bill on child care, they should have introduced such a Bill, preferably one that fulfilled the promises that have been made for a long time. We see no signs that there will be a comprehensive Bill to clear up all the judicial problems and provide for family courts. We all know that, in the long run, family courts are the only sensible permanent solution. Over the years, the Government have been constantly ducking and putting off implementing that solution. I do not blame the Under-Secretary of State, because many of his predecessors did nothing. I feel for the hon. Member for Westbury. I believe that his feelings about his colleague the Under-Secretary of State are not all that friendly, because this takeover of his Bill is an act of daylight robbery.
  I am always anxious, in dealing with the complex and often delicate and sensitive cases covered by the
  1198
  legislation, that in the interests of the child—it is the child about whom we care most—a decision should be made at the moment it is needed. All too often, that is a moment when the decision is urgently needed.
  That point was put forcibly on Second Reading by the hon. Member for Surrey, South-West (Mrs. Bottomley). I hope that she will not mind my saying that she put the House and the Committee in her debt by bringing her many years of practical and professional experience to bear on our deliberations. She said:
  "in child care cases, of all cases, a speedy decision is vital."—[Official Report, 31 January 1986; Vol. 90, c. 1212.]
  I am sure that no hon. Member would dissent from that judgment which was strongly reinforced by some authoritative bodies whose views were quoted in Committee by my hon. Friend the Member for Peckham. She quoted from a document from the Law Society, which stated:
  "The Bill's provisions will almost inevitably lead to additional delay in decisions being taken about the future of children in local authority care, with consequent distress for both the children and families involved."
  My hon. Friend added:
  "That is also the view of the Association of Metropolitan Authorities and of the Legal Action Group."—[Official Report, Standing Committee C, 17 March 1986; c. 8.]
  Clause 5 and certain other clauses shunt a decision about a child care case—often an urgent decision—into the High Court. I am not a lawyer, but I know enough about the law to be able to say that it often takes a long time to get a case into the High Court. Once the case has got there, it often takes a long time to get it out again—that is to say, to get a finding.
  The Minister expressed some anxiety about that in Standing Committee. In columns 18 and 19 of the report he said:
  "I have some experience of the courts and can tell my hon. Friends that it often takes much longer to go to the High Court than to go back to a magistrates court for appropriate consideration to be given to a problem."—[Official Report, Standing Committee C, 19 March 1986; c. 18–19.]
  There is also the matter of the cost of actions in the High Court. Who will pay for High Court hearings which are often long and always expensive? There is no provision in the Bill as drafted for legal aid. There is no point in legislating for parents or for anyone else to have statutory rights that they cannot afford to exercise. That merely creates frustration. I know I must not anticipate the debate on new clause 2—you would be angry with me, Mr. Speaker, if I tried to do that—and I must not anticipate the conclusion the House may come to on that clause. Perhaps I could say in half a sentence that even if it is carried, it provides legal aid only in the juvenile court, which is not very costly, but not in the High Court, which can cost an arm and a leg. For those reasons I attach great importance to amendment No. 25 and I hope the House will support it.
  Ms. Jo Richardson: In response to my hon. Friend the Member for Peckham (Ms. Harman), the hon. Member for Westbury (Mr. Walters) said that he had some sympathy with what she said. I did not take part in the Second Reading debate and I was not on the Committee, but the thought that immediately came to my mind was: in that case, why did he not support her? The hon. Gentleman immediately supplied the answer, when he said that he thought my hon. Friend's new clause was too far-reaching, that his was a more modest approach, and that the new clause to replace clause 5 was a considerable

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  change. It is time that we thought about having such a change, so that we get the proper restructuring. That is the purpose of my hon. Friend's new clause. Clause 5 seeks to provide that care proceedings can be transferred to the High Court in certain circumstances. We all know that, but it does not provide any additional powers to deal with them, as the High Court would do in wardship.
  Until we get a comprehensive restructuring of the court system that creates a unified family court able to allocate cases to the requisite level of the judiciary, according to the complexity and sensitivity of the case, this provision would create additional difficulties, delay and confusion, and, far from satisfying the intention of the sponsor of the Bill—to move forward a little more slowly—the Bill might make things much more complicated than they were before. I have read the Second Reading debate and the report of the Committee stage. Various references are made to family courts and to the Finer report. I came to the House in 1974 and my early years here seemed to be studded with references and campaigns about Finer because that report came out in the first few years of the Labour Government. It caused a great deal of discussion and its findings were a challenge to the concept of courts dealing with matrimonial problems.
  Clause 5 attempts to fit judicial court cases into High Court procedures, but it does not provide the advantage of High Court's additonal powers of wardship. It is not clear, if the case were referred to the High Court, whether High Court procedures like the service of affidavits, directions, hearings, discovery and so on, would be followed. Perhaps the hon. Gentleman could clarify that, because I could not find any clarification in the Standing Committee report. It is something that we ought to know about. It is not clear on what grounds a court could decide that a case is of unusual difficulty or late, or whether the High Court could refuse to hear a case that it did not consider to be of unusual difficulty. That means there could be considerable delay and uncertainly for the child. As my hon. Friend the Member for Bow and Poplar (Mr. Mikardo) has said, we are all discussing the Bill with the child in mind.
  Mr. Clement Freud: Would the hon. Lady accept that, as a result of the inevitable delays that occur when a case goes to High Court, the situation of the child could easily change? For that reason, the Opposition have urged the Government not to tinker with Bills like this which would include family court procedures.
  Ms. Richardson: The hon. Gentleman has made a valid and cogent point. As I was saying, it is the child that we must bear in mind and any change in the procedures brought in by Parliament must be seen in that context. Any changes would have an effect on a lot of children and we must take that into account. Any party to a court hearing that wished to delay the proceedings could raise arguments in the High Court about the venue and the jurisdiction as well as about the nature of the evidence and the difficult points of law.
  I have put down two amendments to clause 5 which for convenience have been linked to the new clause that we are discussing. They are an alternative to deleting clause 5, although I thoroughly support the aims of my hon. Friend the Member for Peckham and follow her along that way. Perhaps I can briefly explain the purpose of amendments 26 and 28 which I have tabled. Clause 26 proposes to
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  "leave out from 'Court' to end of line 15 and insert 'on the grounds that proceedings in relation to the same child are already continuing in the High Court.
  (2) This section applies to—

  (a) any of the proceedings mentioned in paragraph (a) to (e) of section 4(1) above;

  (b) any proceedings under section 1 of this Act.".

  The amendment seeks to remove the ability to transfer care cases on the grounds that the case is of unusual difficulty or length or because a difficult question of law arises. I have had briefings from a number of different organisations, as I am sure other hon. Members will have had. It seems that people who are expert in these matters feel strongly that the powers to transfer cases on these grounds alone would create unnecessary delays in dealing with decisions affecting a child's future, although the clause provides no additional powers to the High Court to deal more effectively with them. Although people seem unconvinced that the clause as drafted would be of any benefit, I gather there would be less objection to the transfer of cases if this amendment, as an alternative and as a second bite at the cherry, were carried.
  Amendment No. 28, in clause 5, page 5, line 23, delete the words:
  "and who may re-transfer the proceedings to the Juvenile Court",
  is an alternative way of dealing with the matter, and improves the Bill. It appears to be unrealistic to allow a case to be retransferred in that way, as it would only add to the delay in reaching a decision on the child's future, in a way that appears to be simply for the convenience of the court. Again, we come back to the point about whose interests are to be the prime interests in the consideration of such cases. Obviously, it is the child's interests, not the court's.
  Each transfer appears to offer no additional powers to deal with the case. Delay in juvenile proceedings was identified as a serious problem, as hon. Members know, by the Select Committee on Social Services in its second report in 1984. It said so categorically. It seems that the provisions of the Bill would serve to increase rather than reduce delays in care proceedings and to use the Committee's words, "the evils attendant on" such delays do not appear to have been recognised.
  I hope that new clause 1 will be accepted, along with the deletion of clause 5. However, if that does not happen, I hope that consideration will be given to the two amendments to which I have referred, which would at least effect some improvement.
  10 am
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Ray Whitney): I should like to speak in support of amendment No. 25, which stands in my name and the names of some Opposition Members. As the hon. Member for Bow and Poplar (Mr. Mikardo) said, that is an intriguing combination.
  I have no wish to prolong unnecessarily the discussion on this part of the proceedings, or, indeed, the Bill as a whole. However, it is right that I should respond to some of the points that have been made, particularly by Opposition Members.
  The hon. Member for Peckham (Ms. Harman) made the charge that the Government's position has been inconsistent throughout the handling of the Bill. That is totally unjustified. The Government's position has been made clear from Second Reading and throughout the Committee. In Committee, the hon. Lady and I shared the

  1201
  same view about the vital part of the Bill of my hon. Friend the Member for Westbury (Mr. Walters), which concerns the proceedings and role that the magistrates play. However, while she and I voted in a particular direction on the Bill, none of her colleagues was present in Committee. That is one of the reasons why we are now tabling amendments, which we would have wished to avoid in handling such a Bill.
  We welcome the interest that the hon. Member for Bow and Poplar has taken in the proceedings. That is an innovation. He claimed that we have hijacked my hon. Friend's Bill in an unacceptable way, but I find that difficult to accept. It is true that my hon. Friend was forbearing enough—or perhaps farsighted enough—to accept a significant change in clauses 1 and 2 of the original Bill. That was because we had fundamental misgivings about his proposals. The implication of the remarks made by the hon. Member for Bow and Poplar was that he wished we had gone along with proposals that were resisted by so many people in the professions concerned in the handling of child cases.
  Ms. Harman: Why did the Minister not bring forward his amendment to delete clause 5 in Committee? Then there could have been a proper discussion. Nothing has happened since the Committee to change the situation. If the Minister had proposed the amendment that he has now tabled, we could have had a proper discussion in Committee. That is why I am suggesting that his strategy has been so shameful.
  Mr. Whitney: I see no difficulties about having a discussion now. It flows from other discussions with my hon. Friend the Member for Westbury.
  I do not wish to delay the House any longer than necessary, but I need to make one other point, which seems to have escaped the hon. Member for Peckham, about the Government's intentions. As the House knows extremely well, at the end of last year we launched our consultative document on the review and reform of child care law—a truly massive exercise, as the House understands. Therefore, we feel some nervousness and have some misgivings about legislation such as this. However, we do not use the piecemeal argument, saying, "If it goes in the right direction, let us have it."
  The House will be aware that yesterday, in response to a parliamentary question, my right hon. Friend the Secretary of State made it clear that the Government, having absorbed about 200 responses to the working party report on the review of child care law, will now draw up their own proposals for child care law and day care. The Government intend to publish them in the autumn as a basis for legislation. It will be introduced as soon as parliamentary time can be found.
  Mr. Ivan Lawrence: Will my hon. Friend give an undertaking that such legislation will be forthcoming within the lifetime of this Parliament?
  Mr. Whitney: That brings in several other issues on which I am not at liberty to comment now. However, I hope that the House will accept that it is a major step forward that the Government have given an undertaking to introduce that legislation. The rate of that response is, in no small measure, a reaction to the pressures generated
  1202
  by my hon. Friend the Member for Westbury and the importance of the discussions that he has prompted as a result of his Bill. The proposals for a major piece of legislation, absorbing those responses to the report, will be published in the autumn.
  Mr. Roger Sims: What the Minister has just said about a family law review is welcome. Hand in hand with that goes the question of family courts, to which reference has been made. How long do we have to wait before we have the Government's proposals? We have had suggestions that they are coming for a year or more. Now we hear that they will come out in a week or two. Can we have any assurance that we will see those proposals?
  Mr. Whitney: At this stage, I can say only that my hon. Friend's reference to a week or two is probably near the mark. I wish that I could say more than that at this stage, but I think that my hon. Friend is in the correct target area.
  I hope that we can agree on the proposal to delete clause 5. The purpose of the clause is well understood by all hon. Members present. It introduced a novel procedure, because it would require proceedings to be transferred from what is essentially a criminal court exercising a summary procedure to a civil court with a formal and much more elaborate procedure. While it would be possible to resolve that procedural problem, a great deal would be required by way of rules to achieve that.
  The serious disadvantage in what is proposed is that it would inevitably cause delay in dealing with child care cases beyond that which is now experienced, and which gives cause for concern. We are all worried about the delay to which the hon. Member for Cambridgeshire, North-East (Mr. Freud) referred. Delay would be inevitable in most cases because, until the case was ready for hearing, or even part heard, the parties would not know whether the case was one of unusual difficulty or length, or would give rise to an unusual or difficult question of law. The court would be able to transfer a case on its own motion only where the matter was part heard. Only then would it be possessed of the necessary information.
  When the decision had been made to transfer, it would be necessary for the magistrates court to give notice to the High Court, on receipt of which the proper officer of the High Court would give notice to the parties, and after the defendants had acknowledged service of that notice, an appointment for directions would have to be arranged.
  Mr. Freud: The Minister has described the litany of procedure. What will be done to monitor the changing circumstances of the child? I expect that cases could change radically between the beginning and end of legal proceedings if the High Court was invoked, because there are many stages in the legal process. A child is not a static human being.
  Mr. Whitney: I entirely accept that point. That is why we wish to delete the clause. That issue will be addressed when we introduce our child care law reforms. There will be difficulties in the transfer of such cases, and I hope that, in view of our consultations and the responses that we have received, which include an examination of delay and changing circumstances, when we produce our legislative proposals we can deal satisfactorily with the inevitable problems.
  The transfer of cases to the High Court could increase demands upon High Court judges and would be an

  1203
  unjustified burden upon the legal aid fund, without any of the offsetting savings which we hope will be made in the package that should emerge from our child care law reforms.
  Ms Harman: Should not the overriding criteria be the best interests of the child and the best judicial forum for assessing the interests of the child, not the requirements of the legal aid fund? Even if the Minister believes that clause 1 is unlikely to survive and, therefore, the transfer mentioned in clause 5 would not apply, would it not be useful to apply the transfer to the procedures set out in clause 4(1), paragraphs (a) to (f)?
  Mr. Whitney: I wish that the hon. Lady would make her point only once. Of course, children are important, as is the reduction of child abuse cases to the fewest possible. I understand and, to a large extent, sympathise with the high-and-mighty attitude that money should be no object. However, having accepted that we are struggling to find a set of arrangements, be they legal or administrative, to reduce to the absolute minimum—to eliminate completely is not for this world—cases of child abuse, there is a duty on any Government to take account of resources. I hope that the hon. Lady, having played her card once, will rest on that trick.
  Mr. Freud: It is absurd for the Minister to accuse the hon. Lady of repeating herself and doing so four times over. It is unhelpful to our proceedings.
  Mr. Whitney: Perhaps I am practising for "Just a Minute"—
  Mr. Freud: The Minister would be good at that.
  Mr. Whitney: Yes, I think I might be better than some.
  I am happy to agree with the Opposition that clause 5 should be deleted from the Bill. I do not recommend the House to accept new clause 1, mostly on grounds of principle but partly on grounds of resources. The objectives that will be set out in our review of child care law will improve care proceedings in juvenile courts so that recourse to wardship is reduced, while acknowledging that it would be available in exceptional cases. Although I shall be accused of repetition, I must say that new clause I would add considerably to costs and to delays in court proceedings, which the House would abhor. I urge the House to accept amendment No. 25.
  10.15 am
  Question put, That the clause be read a Second time:—
  The House divided: Ayes 14, Noes 22.

  Division No. 168]

  [10.15 am

  AYES

  Cook, Frank (Stockton North)

  Raynsford, Nick

  Dixon, Donald

  Richardson, Ms Jo

  Dubs, Alfred

  Roberts, Ernest (Hackney N)

  Freud, Clement

  Wigley, Dafydd

  Hamilton, W. W. (Fife Central)

  Williams, Rt Hon A.

  Harman, Ms Harriet

  Lawrence, Ivan

  Tellers for the Ayes:

  Miller, Dr M. S. (E Kilbride)

  Mrs. Gwyneth Dunwoody and

  Pavitt, Laurie

  Mr. Ian Mikardo.

  NOES

  Amess, David

  Greenway, Harry

  Braine, Rt Hon Sir Bernard

  Hamilton, Hon A. (Epsom)

  du Cann, Rt Hon Sir Edward

  Hargreaves, Kenneth

  Garel-Jones, Tristan

  Hirst, Michael

  Gow, Ian

  Lennox-Boyd, Hon Mark

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  Newton, Tony

  Walters, Dennis

  Rhys Williams, Sir Brandon

  Whitney, Raymond

  Sims, Roger

  Wilkinson, John

  Spicer, Jim (Dorset W)

  Wood, Timothy

  Squire, Robin

  Temple-Morris, Peter

  Tellers for the Noes:

  Thorne, Neil (llford S)

  Mr. Peter Lilley and

  Townsend, Cyril D. (B'heath)

  Mrs. Virginia Bottomley.

  Question accordingly negatived.

New Clause 2

  APPEALS
  '(1) In subsection (12) of section 2 of the Children and Young Persons Act 1969 (right of relevant infant to appeal against order made in care proceedings) after the words "the relevant infant" there shall be inserted the words "or, in a case where a parent or guardian of his was a party to the care proceedings by virtue of an order under section 32A of this Act, the parent or guardian" and for the word "him" there shall be substituted the words "the relevant infant".
  (2) In section 16(8) of that Act (appeals by the supervised person against certain supervision orders and dismissal of application to discharge such orders) after the words "the supervised person" there shall be inserted the words "or, in a case where a parent or guardian of his was a party to the proceedings on an application under the preceding section by virtue of an order under section 32A of this Act, the parent or guardian".
  (3) After subsection (4) of section 21 of that Act (variation and discharge of care orders) there shall be inserted—
  "(4A) In a case where a parent or guardian is a party to the proceedings on an application under subsection (2) of this section by virtue of an order under section 32A of this Act, the parent or guardian may appeal to the Crown Court against the making of a supervision order or the refusal of the court to discharge the care order.".
  (4) In section 22(4) of that Act (power of High Court, on application of person to whom interim order relates, to discharge order) after the word "relates" there shall be inserted the words ", or, in a case where the order was made in proceedings to which a parent or guardian was a party by virtue of an order under section 32A of this Act, of the parent or guardian,".'.—[Ms. Harman.]
  Brought up, and read the First time.
  Ms. Harman: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): With this it will be convenient to take the following:
  Government amendments Nos. 22 and 23.
  Amendment No. 24, in clause 4, page 4, line 35, at end insert
  'for a period of not less than three months ending not more than six weeks before the date of the application'.
  Government amendment No. 29.
  Ms. Harman: New clause 2 deals with legal aid, and is necessary to ensure that people who are made party to care proceedings are entitled to apply for legal aid. Clearly, without legal aid for parents or anyone else who may be made a party to the proceedings, the right to participate in those proceedings is absolutely hollow unless they can afford to provide legal representation. Obviously, many people cannot get legal representation unless they receive legal aid.
  A good illustration of why people need legal aid in care proceedings and why they cannot appear in court in person is given in new clause 5, which the Minister has tabled. The first sentence is absolutely incoherent, and should be submitted for a prize for legal gobbledegook. There is no way that people can begin to understand discussions about

  1205
  what is, perhaps, the most important feature of their lives—what is happening to their children—without legal representation.
  The Minister made some backhanded remarks about a comment I made on legal aid when we discussed new clause 1. We are not simply making "money-no-object" points—we are talking about people's ability to enforce the legal rights which the House has seen fit to put on the statute book. The Government are always talking about law and order, but the law is absolutely meaningless and not worth the paper it is written on unless people can have representation to enforce those rights and to participate in proceedings which will profoundly affect their future.
  At present there is a great problem with legal aid. Some firms are going out of business because of the restrictions being exercised on the legal aid system. Other firms, although still in business, are reducing the amount of legal aid work they will do in favour of increasing the amount of privately paid work. Therefore, the availability of legal representation for people on the legal aid scheme is being reduced seriously, and with it all the rights people could have enforced, had they had that legal representation.
  There is also a problem facing law centres, and at present their future is in doubt. They are a further way by which people can obtain legal representation to enforce their rights and to be party to proceedings which will affect their future. Without them, some people could not participate meaningfully in court proceedings.
  We have rather got used to the idea that the law centre movement is part of the legal scene, and is here to stay. However, there are only a few law centres, and there is by no means the comprehensive spread that there should be. Moreover, their future is in doubt because of a whole range of funding problems. It is highly regrettable that the Government have not seen fit to say that they will secure their future and extend their provision to other parts of the country.
  Consequently, the new clause is important. It is not a question of money being no object. We are talking about basic justice and basic legal rights. The Minister raised the point about money when we discussed new clause 1, but it is more relevant to this new clause. However, let us see what the Government are prepared to find money for. It has been estimated that the attempt to abolish capital transfer tax and to return to some sort of voluntary estate duty will mean a saving for just one man—the Duke of Westminster—of about £600 million in tax on his estate. As the Government have just facilitated that, it ill behoves them to talk about being thrifty in the case of legal aid, which merely enables people to enforce their legal and basic rights.
  10.30 am
  I am not happy with Government amendments Nos. 22 and 23. Amendment No. 23 restricts those who could be parties to the proceedings to the parent or guardian. The Bill recognises that more people have a legitimate interest in being parties to a case than just the parent or guardian. In the Jasmine Beckford case, the foster parents could well have been a party to the case and could have considerably assisted the magistrates. The magistrates might not then have made the disastrous comments that were so heavily criticised by Louis Blom-Cooper and his inquiry team.
  1206
  The amendment means that foster parents or anyone else with a legitimate interest or involvement with the child could not be a party.
  The Bill makes a considerable improvement to child care law in recognising the contribution that parties other than the parent or guardian can made to the proceedings. Obviously, the court has discretion and flexibility about who should be involved, so that those who do not have a legitimate involvement cannot be parties. I believe that it can be safely left to the court to exercise its discretion, using guidance on the criteria that should be taken into account.
  I am not entirely happy with amendment No. 24, which stands in the name of my hon. Friend the Member for Barking (Ms. Richardson). It narrows the opportunity for foster parents to become involved in proceedings and to be made party to them. They could be made party to the proceedings only if they had cared for the child for a period of three months, ending
  "not more than six weeks before the date of the application."
  I cannot quite remember the dates now, but in the Jasmine Beckford case I think that the foster parents had not been looking after the child six weeks before. Consequently, I think that the amendment is unduly restrictive. I understand that its aim is to be consistent with other child care law. Obviously, that is important as we have a tangled enough web as it is. Indeed, we need a comprehensive review of child care law. However, imposing an absolute limit might exclude some people who have a contribution to make. Therefore, I hope that new clause 2 will be accepted, but that amendments Nos. 22, 23 and 24 will be rejected.
  Mr. Harry Greenway: I have considerable sympathy with the call for legal aid to be provided to parents faced with the problem of adoption proceedings for their children. All hon. Members will have had parents in their surgeries with similar problems. Members of Parliament and those who are not qualified in law find it difficult to give them helpful advice. Moreover, to my knowledge not as many lawyers are qualified in child care as in divorce law, commercial law, the law for fraud and so on. That is a counter-argument to that put forward by the hon. Member for Peckham (Ms. Harman).
  Although I have general sympathy for the hon. Member for Peckham, I was unhappy about her approach when she said that the money could come from the changes made in the Budget. It was a little beneath her to talk of money coming from the estate of the Duke of Westminister. Although a flood of money has been released by the change in capital transfer tax, it was a one-off thing and does not support her argument.
  The principle of legal aid for parents faced with adoption proceedings should stand or fall on its own. If the House feels that the principle is right, it should will the means. But I do not want to become involved in the rather cheap arguments that have been put forward. I have 23 years' experience of being a schoolmaster and seven years' experience as the head of a mixed school with more than 2,000 children. Parents who face adoption problems are often people with difficulties of their own. They are sometimes inadequate people, and they have a job to put a case together. That is not always true, but on the whole those people need to be able to talk their problems through

  1207
  with someone who is qualified and who is in a position to help them. I rather fancy that suitably qualified lawyers are the best people to do that.
  Parents involved in adoption proceedings are in a sensitive and emotional state, and often understandably find it difficult to make an objective case for themselves. After all, it is essential to be objective in legal proceedings because ultimately the decision will have to be taken objectively in the interest of the child's welfare. If parents are struggling and fighting—some of them do when they are involved in these matters—they are often not in a position to be subjective. Parents have come to my surgery begging to be allowed to see their own children. I find that heart-breaking—I do not want to load the debate emotionally—and I feel that the House and individual Members have an obligation to lean over backwards to assist those who are in that difficult position.
  I have found in my long experience that parents tend to lean on anyone who will listen and who may have some means of giving sensible and useful advice. These third parties may include schoolmasters, headmasters, social workers or vicars. A multitude of sympathetic people can be brought into these matters. However, unless the pesson on whom a parent leans can pinpoint the law, describe how it stands and describe how it can be called in aid in the individual case, the parent will not receive the right sort of assistance that he or she needs and deserves.
  I know of a school in a fairly deprived area where 10 per cent. of children are said to be involved in adoption proceedings. The problem is considerable and needs to be faced by the House. The care and welfare of the child must come first and if parents can be assisted to ensure that that happens, the House should make that assistance available.
  Mr. Mikardo: Like the hon. Member for Ealing, North (Mr. Greenway), parents have come to my surgery—not many—to complain that they have not been allowed to see their child. The last parent to complain to me on that ground had treated the child abominably before it had been taken from him. He subsequently treated the child abominably when he had a chance to see it. All these matters must be dealt with on a case-by-case basis and in a way that relates to the particular circumstances.
  I wish to say through you, Mr. Deputy Speaker, to the Under-Secretary of State that if he wants us to have a pleasant and effective discussion of the Bill, which is what the rest of us want, he will have to treat the House with rather more courtesy and respect than he did in the course of his previous speech, in which he was disgustingly patronising to my hon. Friend the Member for Peckham (Ms. Harman). He insulted the intelligence of the House in the reason that he gave for not tabling amendments in Committee. He said, "I did not table the amendments in Committee because no Opposition Members were present in Committee and we could not discuss them". Amendments that come before a Committee have to be tabled at least 48 hours before the Committee meets. Unless the Minister has taken on the mantle of Isaiah, Nostradamus or Old Moore, of almanack fame, he cannot know 48 hours before a Committee meets how many Members will attend it. His explanation was nonsensical.
  My hon. Friend the Member for Peckham was right. If the Minister wanted to change the Bill in the way in which the Government are now changing it, and if he could have obtained the agreement of his hon. Friend the Member for Westbury (Mr. Walters), the sponsor of the Bill, so to do,
  1208
  he should have tabled amendments for the Committee to consider. That would have enabled a proper discussion to take place because the Committee members would have had reasonable time to study the amendments and to take advice on them. Instead, we saw the amendments only yesterday, and that is treating the House cavalierly.
  I applaud the attempt of my hon. Friend the Member for Peckham to secure legal aid for those who are involved in juvenile court proceedings, but if there is to be High Court involvement it is there, more than in the juvenile court, that legal aid will be required. If it is not to be granted, however, we are merely giving statutory rights to parents in the knowledge that they will not be able to take advantage of them through lack of resources. That will frustrate parents and embitter them. We shall appear to give them a gift, but it will be so tightly wrapped in an impregnable box that it will be of no value to them.
  10.45 am
  Amendment No. 24 stands in my name and the name of my hon. Friend the Member for Barking (Ms. Richardson). The subsection gives rights of evidence to
  "any person with whom the child is or has been boarded out".
  That will be foster parents generally, and foster parents will know and understand the child if they have had it for a while, and recently. I did not table the amendment to make the Bill consistent with other legal provisions. It was an original thought and the amendment is designed to ensure that a foster parent who wants to give evidence shall be one who has reasonable knowledge of the child, and reasonably recent knowledge. As matters stand, someone could demand to give evidence who had had the child with them for a couple of days only two years ago. He or she could be entirely unacquainted with the present circumstances.
  I accept that the figures which I have chosen—
  "for a period of not less than three months ending not more than six weeks before the date of the application"—
  may not be the best ones. I admit at once that they were plucked out of the air. If there are better figures, or figures which would be supported by those with greater knowledge of these matters than I have, there will be an opportunity in another place, if the principle is accepted, of inserting them. It is not unfair to have some restriction because evidence of a child's condition and attitudes is not of much value unless it is recent and based on reasonable experience with the child. Even if the amendment is not accepted, I hope that the sponsor will be disposed to say that he is willing to think about it and perhaps to consider what might be done when the Bill goes to another place.
  Mr. Sims: The hon. Member for Peckham (Ms. Harman) has complained that amendment No. 23 is too narrow. I suspect that my hon. Friend the Minister will complain that the original clause 4 was too wide. That is the problem that we face. In the proceedings which we are discussing, there will be many who could have an interest in and knowledge of the child and something to contribute to the court proceedings.
  I am not a lawyer and my experience is limited to sitting as a magistrate in the juvenile courts. My understanding is that, once someone is made a party to the proceedings, he or she has legal status and the court is obliged to hear them. That person—this is what worried the Government—will be entitled to legal aid. As the hon.

  1209
  Member for Bow and Poplar (Mr. Mikardo) has said, the various categories that are set out in clause 4 are quite wide. They go wider than
  "any person with whom the child is or has been boarded out".
  Subsection (3)(c) states:
  "any other person appearing to the court to have a proper interest in the welfare of the child."
  That is an extremely wide provision.
  If my hon. Friend the Under-Secretary of State is to ask the House to accept the far narrower definition of amendment No. 23, for the reasons that I anticipate he will give to us, may I ask him to look closely at the present position with regard to other persons appearing before the court in these proceedings. They do not necessarily have to be parties to the proceedings in a legal sense. However, there could be circumstances in which it would be highly desirable that people who do not fall within the normal legal categories should be heard by the magistrates court. For example, the lady next door, who is not a relative but who knows a good deal about what has been going on in that house for some years, perhaps ought to be heard by the court. That might also apply to the lady round the corner whom the child knows as "auntie" and with whom the child stays for much of the day while mummy is out at work. I realise the difficulty of giving to those people the status of parties to the proceedings in a legal sense, but the court would benefit from hearing what they have to say.
  Ms. Harman: The hon. Gentleman is confusing the question of the court being able to hear evidence from somebody who lives next door and whether that person has sufficient concern, interest and involvement to be a party to the proceedings. Does he agree that he has slightly misled the House by saying that my view is that clause 4 has been drawn too wide? Will he accept that I do not think that it has been drawn too wide but that I think that it is too woolly? There should be a wide clause, but guidance should be given to the magistrates about how to exercise their discretion. The new clause has been tabled to include such a provision in the Bill. Will the hon. Gentleman accept that, although I believe that the Government's proposal is too narrow, I do not believe that clause 4 is too wide?
  Mr. Sims: I apologise if I gave that impression. I said that the hon. Lady thought that it was too narrow and that my hon. Friend the Under-Secretary of State thought that it was too wide. I was seeking to say exactly what the hon. Lady has just said: that it is important that guidance should be given to the courts by means of rules, guidance, or circulars, to ensure that the interested parties, in the layman's expression, are able to appear in court.
  My experience of sitting in these proceedings is that it might be an advantage to grant legal aid to people so that they may be represented by solicitors but that there are occasions when this might be a disadvantage and that it would be of help to the court to hear people informally and listen to the information that they are able to give to the court.
  I understand why my hon. Friend the Under-Secretary of State will ask the House to accept amendment No. 23. However, I ask him to ensure that the courts are fully
  1210
  advised of the desirability in these proceedings of listening to anybody who, in the normal layman's expression, would have an interest in the outcome of the proceedings.
  Mr. Whitney: Amendments Nos. 22, 23 and 29 would remove clause 4 on parties in care and related proceedings and substitute a new provision with three separate inserts in the legislation.
  Subsection (1) adds to section 32A of the 1969 Act that a separate representation order in care proceedings carries with it party status for the parent or guardian. "Guardian" here means not legal guardian but the 1933 definition of
  "any person who in the opinion of the court has for the time being the charge of or control over the child".
  Subsection (2) adds a new section to the 1969 Act providing for grandparents in circumstances specified in rules of court to be made parties by leave of the court, which can be a single justice.
  Subsection (3) provides legal aid for parents, guardians and grandparents where made parties.
  These are the differences from clause 4, to which I shall draw attention.
  First, the amendment relates to care and related proceedings under the 1969 Act but not to the Child Care Act 1980 proceedings when parents are already parties. Secondly, the amendment relates to parents and guardians only if a separate representation order has been made because there is a conflict of interest with the child. Thirdly, the amendment allows party status to grandparents but not to any relative, any person with whom the child is or has been boarded out and any other person appearing to have a proper interest in the welfare of the child. However, the extended definition of guardian will bring in those relatives who have the control and care of the child.
  Mr. Mikardo: One person who might have something worthwhile to contribute but who seems to have been left out of the picture altogether is the child's teacher. Why has the teacher been left out?
  Mr. Whitney: That would be a matter for the court. There could be cases in which a teacher could play a role, but the contribution of the teacher is not automatically provided for.
  The amendment leaves for rules of court the criteria for giving party status to grandparents.
  Amendment No. 29 is a technical amendment to clarify the rule-making power. As foreshadowed in Committee, I have discussed the clause with my hon. Friend and I hope he will support the amendments I have now tabled. I appreciate that he is disappointed we cannot go further at this stage. We shall, of course, come to this whole area again in our own legislative proposals. At this point we have been able to conclude only two of the more important possibilities in this Bill. The first of the two is parents and guardians in care proceedings where there is a separate representation order. This is wider than it seems, because in this context "guardian" includes any person who had charge or control immediately before care proceedings started, or has the charge or control of the child for the time being, in the judgment of the court. This seems to me an urgent improvement. I was also much impressed by my hon. Friend's arguments about the contribution which in some circumstances grandparents can make to obtaining the best outcome for the child. We endorse that point and recognise that grandparents can often play a major role in the child's life.

  1211
  As for new clause 2, we accept that legal aid should be granted to parties to the proceedings. However, the way forward proposed in amendments Nos. 22, 23 and 29 is the better way forward. Therefore, I hope that the hon. Member for Peckham (Ms. Harman) will withdraw new clause 2 and accept our amendments.
  Mrs. Virginia Bottomley: The suggestion, even the possibility, that teachers might become parties in care cases fills me with absolute horror. The suggestion by the hon. Member for Bow and Poplar (Mr. Mikardo) shows a misunderstanding of the complexity of our court proceedings. If one becomes a full party to the proceedings, it means that one can not only give evidence but cross-examine all the other witnesses. That highlights the misunderstanding about clause 4 and the need for people to give evidence.
  Care proceedings are traumatic, emotional and difficult occasions. I feel very strongly that all those who have a contribution to make to a child's welfare and future should be able to give their opinion to the court and make representations, but that is a million miles away from granting full party standing to them. The idea that each and every one of them should have legal aid and be able to employ a lawyer—which would result in a wonderful job creation scheme for the legal profession, a matter about which my hon. and learned Friend the Member for Burton (Mr. Lawrence) may care to comment—fills me with horror. I agree with my hon. Friend the Member for Chislehurst (Mr. Sims), who often speaks in a similar vein and who has presided over many difficult care cases.
  In the past, the standing of parents has been equivocal, to say the least. If the least that my hon. Friend the Member for Westbury (Mr. Walters) is able to achieve is to give formal standing to parents in care cases, it will be a great step forward. For the most part, the modifications to the Bill have been an improvement. I feel strongly that clause 4 is too wide. I said so on Second Reading, and I welcome the modification that has been made.
  11 am
  It is fair that grandparents should be given leave to be parties, although it would not be helpful or right for them automatically to have the full standing of parties. The review of child care law has been much discussed, and many hon. Members were pleased to hear the welcome news that there is to be concrete action and a timetable for legislation in at least the foreseeable future. It is better than anything that we have been able to hope for in the past. The review of child care law must make the distinction between the need of those who might want to make representations to feel that they are involved in the decision over the child and the need for them to have full party status.
  Mr. Walters: The new clause is the result of discussions between me and some of my sponsors and the Government. I single out my hon. Friends the Members for Surrey, South-West (Mrs. Bottomley) and for Chislehurst (Mr. Sims) for their continuous and invaluable support throughout the discussions. I welcome the fact that the Government have been able to extend the right to be a party to parents and guardians and have accepted that, in appropriate circumstances, grandparents may become parties as well.
  In my Bill I specified the circumstances in which grandparents might become parties—normally when
  1212
  they have an important contribution to make. I am a little concerned that the Government's proposals leave it entirely to the rules of court to do this. I would much appreciate a commitment from my hon. Friend the Minister that, when the Bill is enacted, the rules of court will not be framed in an unduly restrictive manner. If it is not possible for him to spell it out this morning, perhaps it can be made clear in another place.
  I am delighted to have achieved this important improvement, and the flood of letters that I have received from grandparents all over the country recounting some sad and moving stories of the unhappy consequences of the present state of the law leaves me in no doubt about how welcome, right and beneficial this provision will be.
  The new clause leaves unclear whether the definition of grandparent would extend to the grandparents through the father of an illegitimate child. By use of the word "relative" and its statutory definition in the Child Care Act 1980, my clause made it plain that the father and grandparents of an illegitimate child were also included. It is established that the reference to parents normally excludes the putative father. There is no definition of grandparents in any of the relevant statutes, and I hope that when the Bill goes to the other place this point will be clarified, and that the grandparents of the illegitimate child will also be included. In such cases, it is not infrequent that such grandparents are involved.
  Whatever view is taken about the rights of the putative father, I can see no possible welfare grounds for distinguishing between the classes of grandparents. Therefore, I hope that this matter will be clarified in the other place.

  Royal Assent
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

  1. Gaming (Amendment) Act 1986

  2. Statute Law (Repeals) Act 1986

  3. Highways (Amendment) Act 1986

  4. Yorkshire Water Authority Act 1986

  Children and Young Persons (Amendment) Bill
  Question again proposed, That the clause be read a Second time.
  Ms. Richardson: This has been a most interesting debate. The hon. Member for Westbury (Mr. Walters) has raised an interesting point about the grandparents of an illegitimate child who are the parents of the putative father. That supports the theory that I think is shared by my hon. Friend the Member for Peckham (Ms. Harman) that, while we think it right that grandparents, if they so wish, can make an application, so can other people, and the court would deal with any frivolous applications.
  Ms. Harman: Does my hon. Friend agree that it is sad and inappropriate that the hon. Member for Westbury (Mr. Walters), having raised this important point about the grandparents of the illegitimate child, should be talking about amendments that might have to be made in the other place to clarify the position? If the Bill had been dealt with

  1213
  properly by the Government, those points would have been raised in Committee and then we would have been clearing it up now and making the situation satisfactory on Report. The hon. Member for Westbury does not sit in the other place. Therefore, does he support the point made earlier, that the Bill has been hijacked by the Government and taken out of his control?
  Ms. Richardson: I am glad that my hon. Friend has raised that point. I was not on the Committee, being engaged in Committee on the Social Security Bill, but I have read the debate. It seems to me from the remarks that the hon. Member for Westbury has just made that it has just occurred to him that the Bill is being stitched together as we go along. Bits are being snipped out and other bits are being stitched in. That may be the tradition in legislation, but it is normally a process carried out in Committee. It is rather strange that, in effect, we are having a Committee on the Floor of the House, with new ideas being trailed, and this is not necessarily the right time to deal with them.
  I support legal aid. I speak as a lay person. I have never been a magistrate, and I have great admiration for those who have devoted much of their spare time to that valuable work. I am not a lawyer like my hon. Friend the Member for Peckham—I am a lay person in every sense of the word. However, I have had complaints, not on child care, but on other subjects, about the difficulties that some people have in getting legal aid in magistrates courts. They are not necessarily refused legal aid, but they do not know about it and it is not pointed out to them.
  A few years ago, I had a long and somewhat acrimonious discussion with the now retired clerk of my local magistrates court. I discovered that Barking magistrates court was towards the bottom of the league table of legal aid granted in courts. I tried to find out why. The clerk was frank and said that he wanted to save the Crown money. My reaction was that it was not for him to make that decision. If people qualify for legal aid they must be encouraged and shown how to claim it.
  The amendment suggested by the Family Rights Group attempts to ensure that people made parties to care proceedings are entitled to apply for legal aid. The group says that its case work with parents prior to the introduction of legal aid for parents in care proceedings showed that a right to participate was an empty right unless parents were able to obtain legal representation.
  I can see that the provision might create a field day for the legal profession, but not many people would apply. I can see the nub of the concern, but the problem is overplayed. Against the possibility of lining solicitors' pockets, we must set the rights of, and the responsibilities which we have towards, people making application to a court to be parties in care proceedings.
  Mr. Chris Smith: It is crucial in such proceedings to ensure that those who are party have access to the best representation. Is it not therefore vital that the new clause be included in the Bill?
  Ms. Richardson: I agree that the new clause is necessary. No one is in a worse position than the person who is not represented or who is represented by someone not of their choice and given at the last moment. I know that the proposal is costly, but it is a cost that we must
  1214
  bear. The rights of people must be made known. People should be able to engage the person with whom they feel most comfortable. In a court action, the person acting for the party must command trust. I support the new clause.
  Mr. Whitney: The Government amendments, specifically amendment No. 23, make it clear that legal aid would be provided for parents, guardians and grandparents who are made parties in such cases. The word "guardian" means, not a legal guardian, but is as defined in the 1933 Act which states:
  "any person who in the opinion of the court … has for the time being the charge of or control over the child."
  I am grateful to my hon. Friend the Member for Westbury (Mr. Walters) for his remarks about how we were able to co-operate. We shall consider what he said, including his remarks about the illegitimate child. The rules of court will be outlined in the House of Lords. The consultation process, in particular with the rules committee, might take a little time. The matter is the Home Secretary's responsibility, but I shall pass on my hon. Friend's comments.
  Question put and negatived.

New Clause 3

  REVOCATION AND DISCHARGE PROCEEDINGS
  'Either a parent or guardian or the child may apply under section 15(1) or section 21(2) of the Children and Young Persons Act 1969 for the discharge of a care or supervision order, or under section 5(4) for the revocation of a parental rights resolution.'.—[Ms. Harman.]
  Brought up, and read the First time.
  11.15 am
  Ms. Harman: I beg to move, That the clause be read a Second time.
  The clause deals with revocation and discharge proceedings. Earlier clauses make parents parties in all care and related proceedings. That is an important step. New clause 3 is designed to make it clear that not only can parents or guardians be parties to applications but that they can initiate revocation and discharge proceedings.
  Parents face many problems because they are not necessarily parties to discharge proceedings. There is a technical right to initiate discharge proceedings but the legal position is currently complex. Following the decision in 1985 in the Avon county council case, it is possible that parents will not be able to proceed with an application to discharge if there is a guardian ad litem and where that guardian ad litem does not support the application by the parents for a discharge.
  Parents have to go through legal contortions in fighting their way through an application for discharge. A system which deprives parents of the right to seek the return of their children but gives them rights to be parties only when the application is made by the local authority cannot be fair or just. That is why I have tabled the new clause. I hope that it will be accepted.
  Mr. Whitney: I am advised that the practical effect of the new clause would be small because under section 70(2) of the 1969 Act an application can be made on behalf of a child by a parent or guardian as defined, but including someone who was guardian when the original order was made.
  I urge the House not to press the new clause as it would not fit in with Government amendments 22 and 23 by

  1215
  which party status is given to parents and guardians only when a separate representation order is made because of a conflict of interests with the child. When we present our own proposals for comprehensive legislation, I shall take account of the comments by the hon. Member for Peckham (Ms. Harman).
  Ms. Harman: Does the Minister accept that section 70(2) of the 1969 Act was hedged around in the court decision in the Avon county council case? That means that section 70(2) no longer applies. The Minister assures us that in the far distant future we shall benefit from the child care law review, but now the situation remains unclear.
  Mr. Whitney: I do not accept that it is wrong to wait while we complete the comprehensive process of revising legislation. I have already said that our concrete proposals will be made in the autumn. I am sure that it is right to take account of that and of section 70(2) of the 1969 Act as it now applies.
  Question put and negatived.

New Clause 4

  ACCESS
  '(1) The following subsections shall be substituted for sections 12A, l2B and 12C of the Child Care Act 1980.
  (2) The Court, pending a final determination or on making a care order in any of the proceedings referred to in subsection (3) of this section may, on the application of a parent, guardian or relative of the child, make an order requiring the local authority to give access to the child to the parent, guardian or relative.
  (3) The proceedings to which subsection (2) above applies are:

  (a) an application for a care order or an interim care order under sections 1 and 2(10) of the Children and Young Persons Act 1969;

  (b) an application under section 2(12) of the Children and Young Persons Act 1969 for the discharge of a care order;

  (c) an appeal under section 2(12) of the Children and Young Persons Act 1969;

  (d) an appeal under section 21(4) of the Children and Young Persons Act 1969;

  (e) a complaint made by a local authority to the Juvenile Court under section 3(5) and (6) of the Child Care Act 1980;

  (f) a complaint made under section 5(4) of the Child Care Act 1980 requesting the determination of a resolution made under section 3 of that Act;

  (g) an appeal to the High Court under section 6 of the Child Care Act 1980;

  (h) proceedings in the Magistrates' Court in relation to a child or young person on an information charging him with an offence; and

  (i) an appeal to the Crown Court against an order made by a magistrates' court in relation to a child or young person found guilty of an offence.

  (4) Where a child is in the care of a local authority under an enactment the parent, guardian or relative of that child may apply to the magistrates' court for an order requiring the local authority to give access to the child to the parent, guardian or relative.
  (5) An application under subsection (4) shall be made by way of a complaint to an appropriate Juvenile Court.
  (6) An access order shall be an order requiring the authority to allow the child's parent, guardian or relative access to the child subject to such conditions as the order may specify with regard to commencement, frequency, duration or place of access or to any other matter for which it appears to the court that provision ought to be made in connection with the requirement to allow access.
  (7) A Juvenile Court is an appropriate Juvenile Court for the purposes of the Part of the Act if it has jurisdiction in the area of the authority who has the care of the child.
  (8) "Relative" in subsections (2) and (4) is a relative within the meaning of section 87 of the Child Care Act 1980.'.—[Ms. Harman.]
  Brought up, and read the First time.
  Ms. Harman: I beg to move, That the clause be read a Second time.
  The new clause recognises the critical importance of access in rehabilitation. It is agreed that, wherever it is possible and safe to do so, a child should be returned to live with its parents and that the period spent in care should be as short as possible.
  The contact that the child maintains with the parents while it is in care and the access allowed to the parents are critical to rehabilitation. If parents lose touch with the child because they do not have proper access, rehabilitation can be simply a paper exercise, because the bonds between parent and child may have been broken.
  The new clause provides that a parent, guardian or relative may apply for any matter involving access to be decided by the courts. When making access orders, courts could impose specific conditions on the access.
  Hon. Members may think that the clause is too wide, but it gives courts extensive powers to impose conditions when granting access. It says that courts may impose conditions on the
  "frequency, duration or place of access"
  and on any other matters. If a court were worried about the common law husband or boy friend of the mother, it could order that access should not take place in the presence of the man. It might also order that the child should not be taken on a visit to see that person.
  Mrs. Virginia Bottomley: Does not the hon. Member see a contradiction between her view that the court should be given these powers on access and her vote against clause 1 in Committee? Clause 1 gave the courts small powers covering simply the return home. Decisions about access would be multiplied endlessly compared s with that initial decision.
  Ms. Harman: There was wide agreement in the child care law review that access decisions should be made by the courts. The new clause is in line with the general spirit of the Bill and with the recommendations of the review.
  At present, only parents may apply for access to children in care. The Bill recognises the importance of other relatives and people who are interested in the child's life, as does the new clause, which extends the range of people who may apply for access.
  At present, courts can make orders for access only when it has been stopped by the local authority. No doubt hon. Members have met parents in their surgeries and know of cases where local authorities have not stopped access, but have imposed conditions that render access unsatisfactory. The new clause would allow parents to apply to a court and to say, "Although the local authority has not denied us access, the terms on which it has granted it are so unsatisfactory as to make it virtually impossible." The court could then agree with the conditions imposed by the local authority, scrap them, or impose new conditions.
  The child care law review recommended that all disputes over access should be decided by the courts. We should prefer the forum in which access was decided to be an experienced, well-trained and consistent judiciary under a family court system. That would make the new clause a much more important step. I believe that it is important, but at present it is limited.

  1217
  The European Commission of Human Rights has recently found the Government to be in breach of the convention that protects family life in, I think, five cases where parents have been denied access to their children in local authority care. The new clause would open up the situation, but the orders and conditions that the courts could impose would prevent it from getting out of control.
  A major anxiety about children in care and their families is that insufficient work is done to enable children to return home. They must be able to see and to keep in touch with their parents as much as possible. Therefore, it would be right to allow a parent or relative to challenge a local authority's decision. If a child is very young or is to be in care for some time, access is important in rehabilitation, but there may never be rehabilitation and it is also important to ensure that there is close scrutiny of the conditions under which parents are allowed to see their children.
  Mr. Walters: The new clause, which would extend the rights of parents or relatives to apply for access orders, is outside the scope of anything in the Bill.
  I have some sympathy with the aims of the new clause, but I cannot resist the observation, already tellingly made by my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley), that it would considerably increase the involvement of magistrates courts in the management of children in care, and the hon. Member for Peckham (Ms. Harman) firmly and, in my view, regrettably resisted that move in relation to my proposals in clause 1.
  Mr. Mikardo: Subsection (5) of the new clause places within the purview of the juvenile courts the decision on a matter on which decisions are not always easy. It induces me to make some observations about that subsection and about other references in the Bill to juvenile courts.
  I have to be careful that nothing I say could be interpreted as being derogatory of juvenile courts. I have a daughter who is a magistrate and who sits in a juvenile court in the north of England and I would not want to say anything that might import tension into what has hitherto been a loving and relaxed family. I know that she and her colleagues spent a considerable time reading and attending seminars to prepare themselves for their role.
  11.30 am
  We must bear in mind that it is a long time since the children of lay magistrates were young and a long time since those magistrates had day-to-day contact with children. My daughter would be the first to admit that, notwithstanding the study involved, the qualifications of a lay magistrate to make difficult judgments on child care cases, including access cases, on average—there are exceptions—are well below the qualifications of a trained, professional certificated social worker. The judgment of such a social worker should not, therefore, be cast aside.
  Ms. Harman: Does my hon. Friend agree that the greater involvement which would be provided to the courts under the new clause is realistic, because, by definition, the parents and the local authority would be on opposite sides? Therefore, the magistrate would have to choose between contending cases. Does my hon. Friend recognise that clause 1, as it was first brought before the House, provided that the parents and the local authority would be,
  1218
  by definition, on the same side and, therefore, the scrutiny would not be realistic? Does my hon. Friend recognise that that was one of the reasons why we opposed clause 1?
  Mr. Mikardo: I understand that. I do not seek to make more of the argument than it justifies or to make too much of the position. I know that lay magistrates place importance on the opinions expressed to them by social workers. A magistrate should not be over-influenced by what may well be an understandable and human fellow feeling for a parent and lightly discard—I use that word carefully—the views of the professional officer who is trained for the job and has probably studied the child closely over a long period.
  Notwithstanding the disclaimer of the hon. Member for Westbury (Mr. Walters)—I do not cast any doubt on his integrity—it is clear that the introduction of the Bill at this time was inspired, at least in part, by a small number of recent cases of gross abuse of a child by one or both of his parents—cases which have horrified us all. I refer particularly to the Jasmine Beckford case. To the overwhelming majority of people, and especially parents, such cases are not merely horrifying; they are incomprehensible. Normal people cannot understand a parent behaving in that incredible way. They find it hard to believe that such a monstrous thing could happen. Our strong reaction is to overlook the fact that these abnormal cases represent only a tiny fraction of the many thousands of child care cases that are handled every day of the week by social workers. No one hears about those cases because they are brought to a satisfactory conclusion.
  I appreciated the remarks of the hon. Member for Surrey, South-West (Mrs. Bottomley) on Second Reading—she took a crack at me earlier—when she said:
  "The history of child care law has, in my view, been too frequently an over-reaction to appalling incidents."
  She continued:
  "It is very easy at a time of emotional strain and difficulty, especially when there is a great deal of press and public interest, to look for scapegoats."—[Official Report, 31 January 1986; Vol. 90, c. 1211.]
  She cited the Jasmine Beckford case. She was absolutely right. We must remember that, in the Jasmine Beckford case, it was the court, not the social worker, that made an error which in the end, unhappily, turned out to be fatal.
  Mr. Walters: In the Jasmine Beckford case, the magistrates, having made the order, commented that they would like the child to be returned to the home as soon as practicable. In retrospect, that was a grave mistake and a great pity. The decision to return the child was entirely that of the social workers.
  Mr. Mikardo: That is not as I read the case and as some pretty authoritative people have interpreted it. Many people think that the social services department of the borough council involved in that case was made a scapegoat in the way that the hon. Member for Surrey, South-West said.
  Ms. Harman: Is my hon. Friend aware that the inquiry chaired by Louis Blom-Cooper felt that, although the social workers said in evidence that they had not placed undue weight on the remarks of the magistrates, the remarks of the magistrates had been critical in leading to the decision? In fact, the report stated that the magistrates should be publicly upbraided.
  Mr. Lawrence: Rubbish.
  Ms. Harman: The hon. and learned Gentleman says, "Rubbish." I am simply bringing to the attention of my hon. Friend the Member for Bow and Poplar (Mr. Mikardo) something of which he is probably aware—that the Blom-Cooper inquiry felt that the error of the magistrates was significant and, combined with the error of the social workers, disastrous.
  Mr. Mikardo: My hon. Friend should not be surprised that the hon. and learned Gentleman said, "Rubbish." Honourable and learned Gentlemen never agree with their learned friends about anything under the sun. Obviously, they do not like Mr. Blom-Cooper. However, we do not have to become involved in high-level legal quarrels.
  I refer to the intervention of my hon. Friend and that of the hon. Member for Westbury. The least one can say is that responsibility in that case must be shared. The professional people were disciplined and their careers put in jeopardy. To that extent, they were made scapegoats for a decision that was not entirely theirs. That is the point which I took the hon. Member for Surrey, South-West to be making. She returned to the point, with good effect, in Standing Committee. She said:
  "Having been a psychiatric social worker for 10 years, I feel strongly about the value of the profession, the importance of people's judgments, their skills, the need for further training and the respect which they should have from the public. I have felt incensed in many cases where things have gone wrong that the social worker was all too easily the scapegoat."
  The hon. Lady was strongly supported by the Under-Secretary of State for Health and Social Security—the hon. Member for Wycombe (Mr. Whitney)—who said:
  "The implication—indeed, the practice—of what is now proposed would be to ask the magistrates to get involved in detail of child placement and in making provisions which would take this whole subject into a different area. I suggest that the experience we have would not necessarily lead to the conclusion that this would provide the better answers in child care that we are all seeking."
  Later in the sitting, the hon. Gentleman returned to the subject when he said:
  "the local authority will … take the professional decisions on case management, such as the placement of the child. Because of its composition and procedure, the court is not an appropriate forum for reviewing such professional decisions."
  Later he stated:
  "Our social services inspectorate, in consultation with the field agencies, will offer a more comprehensive and appropriate way of dealing with an issue than a bench of magistrates."
  That is putting it more forcefully than the hon. Member for Westbury (Mr. Walters) or I would.
  The Under-Secretary of State was not finished with the point, because he said:
  "I suggest that a careful examination of the cases which have gone wrong, whether the Jasmine Beckford case or others, does not lead me to the conclusion that to bring the magistrates back into the process at this stage … would improve the possibilities of achieving better management in child care cases. Rather, it would lead to delays. It would introduce another court element which inevitably would have a degree of confrontation about it."—[Official Report, Standing Committee C, 19 March 1986; c. 4, 6, 14–15.]
  We should bear this major consideration in mind not only in relation to the new clause, especially subsection (5), but throughout our deliberations.
  Mr. Chris Smith: I support the new clause tabled by my hon. Friend the Member for Peckham (Ms. Harman) for two major reasons. First, we must all recognise, as my hon. Friends the Members for Peckham and for Bow and Poplar (Mr. Mikardo) have done, that the issue of access is crucial, not simply for the mere fact of access but
  1220
  because access is a preparation for any future change in the relationship between a parent or guardian and the child. If a person who may, in due course, again be given the care of the child does not have access for some months and if the change in care status happens cold, the chances that a successful relationship will develop and hold will be much fewer than if access were available. Access is important not simply for the well-being of the child and for the peace of mind of its relatives or parents but because it prepares people for what might happen later. That is an extremely important point.
  11.45 am
  Secondly, I am sympathetic to the new clause because it seeks to enable not only parents but other relatives to apply for access. Hon. Members have commented on the importance of grandparents. One example in my constituency immediately springs to mind because in the past week I have been attempting to assist those involved. A grandparent whose daughter died just before Christmas is developing an extremely close relationship with her daughter's child. The father has disappeared from the scene. The relationship that is developing, in the absence of parents, is mirrored by many similar relationships in Britain. In such circumstances, surely it is right that relatives other than parents should be able to apply for access.
  Mrs. Virginia Bottomley: Is the hon. Gentleman aware that the legislation of my hon. Friend the Member for Westbury (Mr. Walters) has passed the stage where it was agreed that grandparents with the leave of the court would be parties and would, therefore, have the right to be heard? That is a substantial achievement.
  Mr. Smith: I am, of course, aware of that fact. I was simply using the example of a case in my constituency to emphasise that not only parents but other relatives have an interest in the welfare of the child and in building up a good relationship with him. I am delighted about the improved status of grandparents which has been achieved by the hon. Member for Westbury (Mr. Walters). I would not wish to imply that I was not delighted about that.
  I make one caveat about the new clause. I imply no criticism of my hon. Friend the Member for Peckham, because she has to work within the existing legal framework. It is difficult and daunting for many people to approach any sort of court in the present legal system to apply for access or to make any other request concerning their relationship with their child.
  I should like to make one other point. I may be straying a little from the new clause but, Mr. Deputy Speaker, I hope that you will allow me to press the point. I hope that the efforts by my hon. Friend the Member for Torfaen (Mr. Abse) and other hon. Members to try to establish a completely different system for court consideration of such matters will have greater success than they appear to have had hitherto. The more we can do to make court and legal proceedings less daunting and less difficult for parents, grandparents and other relatives the better. Given the legal system under which we have to operate, this new clause is a sensible provision and will enlarge the scope for those involved in the welfare of children and enable them to seek access. I support the new clause.
  Mr. Whitney: I agree with hon. Members who have spoken about the importance of access in child care cases.

  1221
  That is why in the Health and Social Services and Social Security Adjudications Act 1983, or SSASSA, as we call it in my trade, we introduced a new arrangement under which parents, guardians or custodians could appeal against termination or refusal of access to a child who was subject to a care order. In December 1983, we published a statutory code of practice under the provisions of that Act.
  The work of the social services inspectorate is an important part of the DHSS operation. It has recently been concentrating on this area and has completed an inspection. We recognise the importance of access and are taking practical steps to ensure that it is improved. Our now much-trailered proposals on the reform of child care law will, as the hon. Member for Peckham (Ms. Harman) suggested, cover this area.
  The hon. Lady's clause goes much further than the suggestions in our review document, where a total package is proposed. That package differs considerably from the scope of the present clause which has serious and unacceptable implications. For example, it would allow a wide range of relatives to apply for access. It would bring in a new procedure that would apply to voluntary care and was drafted in the expectation that an order would delineate in advance all the main parameters of the arrangements. It suffers from all the main disadvantages of the original clauses 1 and 2 of the Bill. My hon. Friends the Members for Westbury (Mr. Walters) and for Surrey, South-West (Mrs. Bottomley) have already said that it would necessitate the detailed involvement of the court. I hope that the hon. Lady will accept that we recognise this area as important.
  Ms. Harman: Does not the Minister think that it is totally unsatisfactory that, when a number of new clauses are brought before the House and he acknowledges that they raise important points and will be dealt with when the legislation arising out of the child care law reivew comes before the House, he fails to give us a date for that? He recognises the importance of the issues but says that for technical reasons he will not at this time accept the new clause but will wait until some far distant time in the future. That is entirely unsatisfactory and unacceptable.
  Mr. Whitney: I do not accept that. The hon. Lady normally accepts that one of the dangers in this area is piecemeal legislation. We do not object to what my hon. Friend's Bill seeks to achieve, but having set in train the process of the massive review of the child care legislation it would not make sense to pick and choose out of the whole corpus of review material. I shall be charged again with repetition by the hon. Member for Bow and Poplar (Mr. Mikardo). I said that these proposals will be published in the autumn as a basis for legislation, but because of the nature of parliamentary arrangements I cannot give a date for that legislation. I hope that the hon. Lady will find it in her heart to be generous enough to accept that that is a firm undertaking. As I have already said, the clause has serious drawbacks. However, we accept the importance of access and the importance of improving arrangements for it, and to the extent that those improvements can be widely agreed we look forward to making recommendations in our own Bill.
  Ms. Richardson: This has been an interesting debate. As hon. Members were speaking I felt that we were all
  1222
  thinking of examples of relatives or constituents who had faced these problems. I certainly had that feeling when my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) was speaking. This new clause reflects the recommendation of the child care law review and I am a bit surprised that its acceptance is being resisted when such an august body thought it worth pursuing. This was recommendation 193 and, although I have not read the whole of the review, the fact that it is recommendation 193 leads me to believe that a lot of thought must have gone into putting together so many recommendations. That distinguished body has looked at the subject seriously and the House ought to take its recommendations seriously.
  Mr. Whitney: The hon. Lady spoke about recommendation 193. This a complex package that is being instituted, and there are serious dangers in taking little bits and pieces when it is a package that is at issue.
  Ms. Richardson: That brings me to the point that was made many times in the debate. We are adding bits on because in a Bill of this sort we have no alternative. If we had a proper comprehensive Bill, which is what I hope we will eventually get, we would not have this problem and would not have to look around for what we see as gaps or tears in the fabric of the patchwork and then try to fill them in. I accept the Minister's point that recommendation 193 is only one recommendation, but I was trying to underline its importance and saying that that was why we sought to put the new clause into effect.
  Mr. Alfred Dubs: I apologise to the House for not being in the Chamber during the early part of the debate.
  This new clause seems to be moving in the right direction. For a number of years I served on a local authority social services committee, and I remember the difficulties that we faced when we considered precisely the terms of access in cases where children might be at risk and where the officers of the social services department were reluctant to expose the children to risk. We had difficult decisions to make and seldom went against an officer's decision, although occasionally we did. I always had serious misgivings about whether we were doing the right thing. In fairness, local authority social services departments get it right almost all of the time, but it is a tragedy when now and again they do not, because that is what hits the headlines.
  I should like to give three examples, from constituency experience, of where the new clause would be relevant and appropriate, and where one parent or relative may have a real sense of injustice if the new clause is not put into effect. The first concerns a case where a child is in care, and where certain access conditions have been arranged, but they have been arranged in the knowledge that the parents are split up—that the marriage has broken down—and one of the parents does not have an adequate home. In this case, I have been approached by the father, who says that his access conditions have not been generous because, when the decision was made, he did not have an adequate home environment that the children could visit occasionally for the weekend. The father is anxious to improve his home to make it better than a bedsitter so that the children could go there. However, if the local authority is not sensitive to that and the father gets better accommodation, he has no guarantee that the limited

  1223
  access given to him on the basis of his bedsitter accommodation will be changed by the local authority to take account of the improved housing conditions.
  12 noon
  I know from my experience that the limited access that may result from housing conditions causes much distress to a separated parent. A separated parent may feel that, even if the housing conditions improve, he may not automatically get better access, which he would have obtained if he had had a proper flat when the decision was made. That is a distressing example. I hope that it does not happen too often.
  The second example concerns other relatives who wish to have access. A grandmother who, I believe, was of Jamaican origin was very distressed that she was not allowed to have access to her grandchild, although the father had access. She felt shut out of a relationship that was traditional to her background and culture, and felt extremely upset that there was no way that she could challenge the decision. The father had access and the mother, who was the grandmother's daughter, was a longterm patient in hospital. The grandmother felt that her traditional family responsibilities could not be exercised. She wanted better opportunities to do so, but that was not possible.
  I mentioned the third group of people—fathers—obliquely in my first example. I am not one who says that fathers alone have a sense of grievance about this, but on occasions fathers have complained bitterly to me that they have had only limited access to children in care following the breakdown of the marriage.
  I cannot help thinking that the new clause would give a better opportunity to those three groups of people—those in housing difficulties, other relatives, and fathers who feel that their wish to have more access and establish a closer relationship with the child in care is frustrated because the local authority is not always sensitive to such pressure. I cannot help thinking that the Minister's arguments against the new clause, while I understand them, do not carry the weight that one would normally expect when a sensible suggestion is made. I do not fully understand why he took such a hard line against a modest but sensible proposal. After all, the courts would still have to consider the matter and could still take all the facts into account. It is not a matter of opening the door to unlimited access by people who might be thought to be not totally desirable by the social services department that has care of the child. It is a matter of the courts being a second line of appeal, as it were, for people who have a sense of grievance and injustice. I hope that the Minister will think again. The new clause is moving in the right direction.
  Question put and negatived.

New Clause 5

  REGULATIONS AS TO ACCOMMODATION AT HOME OF CHILDREN IN CARE
  '(1) After section 22 of the Child Care Act 1980 there shall be inserted—
  "Regulations as to accommodation with parents etc.
  22A.—(1) The Secretary of State may by regulations make provision as to the accommodation under the charge and control of a parent, guardian, relative or friend of children who are in the care of a local authority.
  (2) Without prejudice to the generality of subsection (1) above, regulations under this section may—
  1224

  (a) make provision as to the making by a local authority of a decision to accommodate children under the charge and control of a parent, guardian, relative or friend and, in particular, as to the persons who must be consulted before such a decision is made and the persons to whom notification of any such decision must he given; and

  (b) impose requirements on a local authority as to the supervision of medical examination of children in such accommodaton or their removal from such accommodation in such circumstances as may be specified in the regulations.".

  (2) In section 85 of that Act (regulations and orders) in subsection (4) after the word "21A" there shall be inserted the words "22, 22A".
  (3) In section 43(5) of the Matrimonial Causes Act 1973 (which provides that the exercise by the local authority of their powers under sections 18, 21 and 22 of the Child Care Act 1980 shall be subject to any directions given by the court) for the words "and 22" there shall be substituted the words ", 22 and 22A".'.—[Mr. Whitney.]
  Brought up, and read the First time.
  Mr. Whitney: I beg to move, That the clause be read a Second Time.
  Mr. Deputy Speaker: With this it will be convenient to take the following:
  New clause 7—Parent's application for care and control—
  '.—(1) The parent, guardian or custodian of a child in care under an order as specified in subsection (2) of this section may apply to the Juvenile Court for an order that the child he placed in their care and control.
  (2) Subsection (1) shall apply to children in care under:

  (a) a care order made in the Juvenile Court; or

  (b) a resolution under section 3 of the Child Care Act 1980; or

  (c) an order under section 2(1) of the Matrimonial Proceedings (Magistrates' Courts) Act 1960 or an order under section 10(1) of the Domestic Proceedings and Magistrates' Courts Act 1978; or

  (d) an order under section 2(2)(b) of the Guardianship Act 1973; or

  (e) an order under section 17(1)(b) of the Children Act 1975 or section 26(1)(b) of the Adoption Act 1976; or

  (f) an order under section 34(5) or section 36(2) or (3)(a) of the Children Act 1975.

  (3) This section does not apply to a child in the care of a local authority in consequence of an order made in the High Court.
  (4) Subsections (2) to (8) and (10) to (13) of section 1 (as amended) shall apply to this section as they apply to section 1.
  (5) The parties to an application under this section shall he the applicant, the local authority and the child and such persons, if any, as the court thinks fit having regard to the welfare of the child and the interests of justice.'.
  Amendment No. 1, in page 1, line 5, leave out clause 1
  No. 2, in clause 1, page 2, line 4 leave out from `(2)' to end of line 5.
  No. 3, in page 2, line 7 after 'fit', insert
  'and as the relevant social services department certify as practicable'.
  No. 4, in page 2, line 14 at end insert
  'or the parents or the child.'.
  No. 5, in page 2, line 17 leave out from first 'with' to end of line 20, and insert—
  'The local authority shall have a duty to remove a child where there is a breach of a condition only if the juvenile court so ordered when making the condition. In any other case the local authority should seek the directions of the Juvenile Court.'.
  No. 6, in page 2, line 19, leave out from 'removed' to end of line 20.
  No. 7, in page 2, line 23, leave out
  'and shall give special attention to the safety of the child'.
  No. 8, in page 2, line 26, leave out 'respondents shall be', and insert
  'respondent shall be the child and the court shall have power to join as parties'.
  No. 9, in page 2, line 26, leave out from 'be' to end of line 28 and insert
  'the child and the parents and such other persons (if any) as the court thinks fit having regard for the welfare of the child and in the interests of justice'.
  No. 10, in page 2, line 36, leave out subsection (11).
  No. 11, in page 2, line 42, leave out 'not exceeding seven days'.
  No. 12, in page 2, line 43, leave out 'seven' and insert 'thirty'.
  No. 13, in page 3, line 7, leave out clause 2.
  No. 14, in clause 2, page 3, line 17, leave out from second 'if' to 'and' in line 22, and insert
  'the court is satisfied that—
  (a) the child has been, or another child in the same household has been, subjected to serious physical injury or sexual abuse,'.
  No. 15, in page 3, line 24, leave out 'the relevant local authority' and insert 'any of the parties'.
  No. 16, in page 3, line 26, at end insert—
  `(3) An appeal from any direction of a Juvenile Court made under subsection (1)(ii) above shall lie to a Judge of the High Court Family Division and such appeal shall be by way of a fresh hearing of evidence.'.
  No. 30, in clause 7, page 5, line 29, leave out subsections (1) and (2).
  No. 31, in page 5, line 33, at end insert—
  '(2A) Section [Regulations as to accommodation at home of children in care] above shall come into force on such date as the Secretary of State may by order made by statutory instrument appoint.'.
  Mr. Whitney: I may have to delay the House a little on this group of amendments because it is a substantive change, as my hon. Friend the Member for Westbury (Mr. Walters) will be the first to agree. It is the essence of the debate that we have had not only this morning but in Committee and on Second Reading.
  There is no doubt about the objective that we all share. Child abuse represents an abhorrent challenge to society. Our search is for practical steps to prevent it as far as possible and to protect children. Equally, we all accept that it is an insufficient response, in terms of the welfare of the child, simply to ensure that an abused child is kept safe by never returning him to his parents. If that were an adequate response, the responsibility of child care agencies would be much more straightforward.
  The reality is that in many cases the needs and wishes of the child will best be met by a return to the natural parents or parent and the advantages of restoring and reestablishing those natural relationships will be seen as justifying such a step, even though the possibility of risk to the child cannot be entirely eliminated. So the agencies responsible for child care cannot simply pursue a safety-at-all-costs policy. They have to be prepared—in the interests of the child and in the right circumstances—to make balanced decisions, weighing carefully and professionally all the evidence and opinion available to them, which may necessarily involve some measure of risk. The debate that we shall have about new clause 5 and on the amendments to delete clauses 1 and 2 is essentially
  1226
  about how those decisions can and should best be made in the interests of the children concerned, not whether they should be made at all.
  It will help our debate if I begin by referring to clauses 1 and 2. Those two clauses have taken up most of the time of the House both on Second Reading and in Committee. I know that my hon. Friend the Member for Westbury has regarded them as the central feature of his Bill. The clauses were supported in Committee, but concerns were expressed about whether the role envisaged for the courts was appropriate, about the practical effects on children in care, and about whether it would in practice achieve its primary purpose of protecting children who might be abused if returned home on trial.
  Since the Committee my hon. Friend has been kind enough to have several discussions with me and my right hon. Friend the Secretary of State for Social Services. In those discussions we have been able to go into our reservations about his clauses and also let him know of the results of the wide-ranging consultations we have had since the Committee stage with bodies representing local authority, social work, legal and voluntary child care interests to ascertain their views on the proposals and on the Bill as amended in Committee. I shall not give details of those reservations today or elaborate at length on the comments from interested organisations—for reasons that I hope to make clear a little later. But I must summarise again the main reservations that we have, as I believe it important, when we are all anxious to do what is right in the interests of children, that it should be clear why the Government do not feel able to support a measure which was so clearly intended to benefit children.
  Our reasons, in brief, are these. The first relates to delay. The imposition of a requirement on the local authority to go back to court, in the circumstances specified in the Bill, before returning a child in its care home on trial will inevitably lead to lengthy delays before cases can be heard. That is especially so as the Bill now provides for the court to be able to appoint a guardian ad litem for the child, and the demand for guardians in care proceedings is already leading to delays. Delay in decision making for the children in question can be particularly damaging and have long-term consequences, reducing prospects for successful return home of the child or other settled placement.
  Secondly, we have concerns that the very making of a direction under clause 2 could discourage local authorities from attempting rehabilitation and lead to an undesirable categorisation of children in care. Alternatively, they may seek prematurely to discharge a care order without a prior period home on trial.
  Thirdly, the imposition of conditions by the court which would apply until altered by the court would restrict the local authority's ability to respond flexibly and professionally to the child's and the family's needs and to optimise the use of its resources to help all the children in its care.
  In addition to those practical objections, we have reservations about the principle of court involvement in the decisions. Courts must, of course, make and discharge care orders. They involve the transfer of legal rights between parents and local authorities and are often strongly disputed. Such decisions cannot be left to local authorities to take without there being a possibility of challenge and the case taken to court for a decision. The decision by the local authority to return a child home on

  1227
  trial while subject to a care order is different in character, although not necessarily less important from a child welfare angle, because there is no transfer of legal rights—the local authority remains responsible in law for the child as its legal parent and, unlike most care order proceedings, there is no dispute to be resolved between parents and local authority, so no need for a third party to settle the matter.
  The argument that the court authorised the removal from home and that, therefore, the court is an appropriate forum to authorise the return is a misunderstanding of the rationale of care proceedings. Such decisions are more appropriate for the local authority, as part of its responsibility under the law to safeguard and promote the welfare of the child, than for the courts.
  Following what I have said, there can be no certainty that involving the courts in sanctioning return home on trial will prevent such children from subsequently being abused. We would never know whether the clauses had their desired effects. We would know in how many cases the courts refused to sanction return home, but not what might have happened had they allowed the child to return. However, we can be more certain that the delays and restrictions which the clauses would impose on the good professional management of cases would damage the interests of many children in care, which I know is the opposite of what my hon. Friend wishes to achieve. It is clear from the consultations that we have undertaken since the Committee stage that our reservations about clauses 1 and 2 are widely shared by a broad spectrum of organisations.
  Of course, many organisations advanced as part of their cases the belief that it would be wrong to have further piecemeal legislation adding yet more complexity to what is already recognised as an area of law where the need is for greater consistency and clarity. Many said that it would be especially undesirable to do so at a time when the Government are known to be considering a comprehensive major reform of the law, following the extensive review that we initiated at the end of last year. But there was no evidence from the consultations we have undertaken that the organisations concerned would like provisions on the lines of those in clauses 1 and 2 to be incorporated into the comprehensive legislation that we plan to introduce. Indeed, the reverse is the case. The consensus is that the clauses would not necessarily achieve the objectives the sponsors of the Bill wish, but would be potentially damaging to the interests of many children in care along the lines that I have described.
  In our discussions with my hon. Friend, he acknowledged and took note of the views of the Government and of the bodies that we have consulted. On the understanding that the new clause to provide the Secretary of State with a regulation-making power is added to the Bill, I understand that he is now willing not to oppose the amendments to delete clauses 1 and 2. In a moment, I shall discuss the substance and purpose of the new clause, but first I wish to place on record my sincere appreciation of my hon. Friend's willingness to listen with an open mind to the views that have been put to him and his willingness at this late stage to accede to the argument that an alternative approach should be followed, despite his strong personal commitment to the idea of an independent check through the courts.
  The alternative approach to which I referred starts from the premise that the right way to promote the welfare of
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  abused children is, in broad terms, through improving the performance of the local authorities which are statutorily charged with that task. There can be no satisfactory external substitute for the involvement of experienced staff acting within a well-considered framework of policies directed towards and centred on the welfare of the child.
  We shall soon publish a draft guide for local agencies on working together in dealing with child abuse, and the report of inspection by the social services inspectorate of assessment by social workers of children who have been at risk of abuse and the supervision of social workers handling child abuse cases. That inspection focused on work with children placed home on trial. Both documents in their different ways will, we hope, help local authorities to improve practices and procedures where a child is returned home on trial, in respect of the decision itself and the subsequent arrangements for the care and well-being of the child at home, including health, growth, and development. Both documents reinforce the need for professionals working with the child and family to remain child-centred, and always to have the welfare of the child as their first consideration, as the law requires.
  12.15 pm
  Mr. Lawrence: Were there no regulations, restrictions, guidance or a framework for supervision before the Jasmine Beckford case?
  Mr. Whitney: Of course there were, and there was a great deal of experience, but the experience is developing and lessons are being learnt. We may argue about this, but the Jasmine Beckford case in no way supported the suggestion that magistrates get the answers right and social workers get them wrong. Mistakes can be made in any area. We are anxious to strengthen the professionals working in this area, although neither I nor any member of the Government would suggest that we have found perfection. We must continually strive to co-operate and educate and to ensure that the best practice, which is very good, is spread and becomes the norm. That must be the way forward.
  I hope that my hon. and learned Friend will be reassured if I say that the Government do not believe that there is no place for the further involvement of the law in these matters. My right hon. Friend the Secretary of State for Social Services announced that following extensive consultations on their child care law review the Government intend to introduce a comprehensive Bill on child care law as soon as parliamentary time allows. That Bill is likely to include some changes specifically aimed at increasing the powers of local authorities and the courts to protect children who may be at risk.
  The Government broadly share the views of those who have argued that, pending the introduction of comprehensive legislation, there should be no more piecemeal changes in what is already a complex and confusing legal framework, but the opportunity provided by this Bill gives us scope for making limited changes where they can sensibly be made ahead of a major Bill. The new clause to which I shall now speak falls into that category.
  The new clause would give the Secretary of State power to make regulations in respect of the discharge of the responsibilities by local authorities for children in their care where a return home on trial is contemplated. The lack of such a power to make regulations in this area is clearly anomalous as powers already exist, and are

  1229
  exercised, to regulate arrangements made by local authorities for other placements for children in care—in children's homes or boarded out with foster parents. The regulation power proposed by the clause will cover not only placements at home with parents, but placements with other relatives and friends not covered by the boarding-out regulations. It would apply in respect of all children in care regardless of the reasons for their entry into care.
  Subsection (2)(a) would enable requirements to be set governing the way in which decisions are taken to return a child home on trial. That would enable requirements to be laid down, for example, to ensure that the local authority always obtained the views of the health authority where it had been concerned with the child, and that other interested persons—for example, foster parents and concerned relatives—were formally notified of the intention to return a child home and could have an opportunity to comment before any decision was put into effect. This subsection would be wide enough also to provide for some involvement of local authority members in the decision-making process, should it be thought desirable. I stress that the Government have reached no view about that at this stage.
  Subsection (2)(b) would enable the regulations to cover matters such as the arrangements for the supervision by the authority of the children concerned and for securing regular monitoring of their health as well as their social well-being.
  The detailed content of the regulations would, in the usual way, be the subject of consultation with local authority and other interests before they were made. It would be important to strike the right balance between providing for the desirable degree of legal requirement to support and promote good practice in all cases, and being over-prescriptive in ways which would hamper the local authority's ability to act flexibly and responsibly to the requirements of the individual circumstances. I hope that our consultations will help to get this balance right. However, I am sure that there is a sound prospect here of providing what I described earlier as a valuable statutory underpinning of good professional practice, and of reducing the possibility of standards of decision-making and practice falling below acceptable levels in any individual cases.
  The Government accordingly believe that regulations to govern return home on trial can play a positive and useful role in improving the prospects both of improved child protection and positive work for rehabilitation. In the Government's view, this is the right way ahead, rather than seeking an increased role for the courts in local authority arrangements of individual cases.
  I speak in favour of amendments Nos. 1 and 13, which leave out the existing clauses 1 and 2 respectively, and of amendments Nos. 30 and 31, which provide for the new clause to come into force by order made by statutory instrument. I do not wish to take up the time of the House by discussion of new clause 7, which seems to suffer from the same objections as clauses 1 and 2, or the other amendments bracketed with it which concern the existing clauses 1 and 2, which I hope the House will decide to drop. I commend new clause 5 to the House.
  Mr. Walters: Any hon. Member who has followed the need for legislation is anxious to see the introduction of speedy comprehensive legislation. The Minister referred to it and said that it would come soon. I believe what he says, and hope that it will come very soon. We shall follow the progress with much interest.
  I greatly regret that the Minister's new clause will negate and replace the original clause 1, although the scope of that clause was considerably redefined and restricted in Committee. I still believe, as do many hon. Members from all parts of the House, that the reintroduction of the magistrates court to review in certain limited and specific cases, and only when the magistrates making the original care order had so decreed, the decision taken by a local authority to return a child in care to the home from which it had been removed by court order on grounds of cruelty, neglect and moral danger, would have had a significant and beneficial effect. It would have introduced an experienced body of people, detached from the case under consideration, to review a decision taken by a group of people closely associated and involved, and, on certain occasions, too closely involved, both with the child and all members of its family.
  I remain convinced that such a review by a judicial body detached from the in-house atmosphere of the decision taken by social workers would have been salutary. Moreover, in a small but significant number of cases, it would have provided an important additional safeguard for the child, although I accept that in some other cases, perhaps more numerous, it might have slowed the process of the return of the child.
  In Committee my hon. Friend the Minister and the hon. Member for Peckham (Ms. Harman) were the only two Members present to vote against the clause. However, despite the sympathetic hearing given to me and some of my hon. Friends by the Minister and Secretary of State, we failed in our efforts to persuade his Department.
  I also had to take account of the fact that, although I received widespread popular backing for the measure, the wholehearted support and valuable assistance of the Family Law Bar Association, and, in private, the support of a number of senior judges, the Law Society and several other organisations concerned with child welfare did not accept the strength and validity of our argument about magistrates courts. Perhaps I may say how much the Bill owes to the enormous work and help given by the Family Law Bar Association, particularly by Mr. Robert Johnson, QC and Mr. James Holman.
  There is a certain illogicality in accepting that magistrates should make the original court order which places a child in care, and the need recently announced by the Lord Chancellor for expanding training for magistrates dealing with care orders, but not accepting their competence to deal with the limited number of cases to which I have referred. Perhaps the daughter of the hon. Member for Bow and Poplar (Mr. Mikardo) will agree with that. Logical or not, that was the position that my supporters and I had to face. Therefore, we agreed that it would be sensible in the circumstances to accept the Government's amendments, thus preserving other valuable proposals in the Bill.
  Although more limited and different in character, the proposals in the Government's new clause provide useful additions to the present state of the law which will considerably strengthen the protection of children at risk within the existing parameters.

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  Although the clause introduced by the Government differs substantially from the proposals which I envisaged when drafting the original clause, I am wholly satisfied that a considerable improvement will have been achieved as a result of its introduction. Therefore, I welcome it.
  Mr. Richard Livsey: I speak as a lay person on the Bill, but I wish to make a number of points.
  First, I congratulate the hon. Member for Westbury (Mr. Walters) on the hard and sincere work which he has done on the Bill and on his attitude towards it, which was illustrated by his speech. I can hardly wait for the family courts which the Minister has promised us. They are a major step forward, and I hope that the Minister's deeds will be as good as his words because those courts are the essential missing link.
  I am particularly glad that grandparents and others in the family will come within the Bill's provisions. I believe that the new clause will give force to making provision for accommodation for children. After all, they are our primary concern. But there is also provision for parents, guardians and friends to be involved in proper consultation and supervision.
  12.30 pm
  We are discussing this issue because authorities often inadvertently neglect their responsibilities. I would hesitate to say that we are talking about only a few cases. There are probably more than we know about, and many cases probably exist under the surface and do not come to light. If new clause 5 means improved supervision, and that we can reach some of those cases under the surface, we will have made a substantial step forward.
  The guidelines are being laid down, and the Secretary of State will impose requirements on local authorities to ensure that they follow them. If that too means the more effective supervision of children, I welcome that step and recognise it as an improvement to the Bill.
  Mr. Lawrence: I rise to oppose the new clause and its attendant amendments, and to voice my strong objection to the Government's effective decimation of an eminently sensible, necessary and widely supported Bill, which I have had the privilege of sponsoring. It is widely supported not only in the House but in the country.
  I do not blame my hon. Friend the Member for Westbury (Mr. Walters) for accepting the situation. If he had not done so, the entire Bill would have been lost, and saving something good is better than losing everything good. Those of us who are concerned about child welfare and the need to stop Jasmine Beckford-type cases recurring greatly appreciate the fact that my hon. Friend the Member for Westbury has chosen this subject for his Bill from among many other important subjects for legislation. He has, moreover, pursued the Bill with great skill and determination.
  But I do blame the Government for what is, in effect, a craven surrender to the pressure of the social workers' lobby. As a result, a measure will be rejected that might otherwise have slightly but intelligently extended the rule of law. Both these effects are as unlikely manifestations of the Government of my right hon. Friend the Prime Minister as it is possible to imagine.
  Mr. Whitney: Does my hon. and learned Friend believe that the Law Society has been recruited by what
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  he describes as the social workers' lobby? Can he explain the role of the magistrates in the Jasmine Beckford case? Was he happy with their role then, and does he believe that it justifies his case now?
  Mr. Lawrence: I shall mention the magistrates shortly. However, my hon. Friend the Minister is quite right—I bracket the Law Society with the Government for their craven surrender to the pressures of the social workers' lobby.
  Ms. Harman: In his list of those craven people who have surrendered to the social workers' lobby, does the hon. and learned Gentleman include the Association of County Councils, the Association of Metropolitan Authorities, the Justices Clerks' Society, the Magistrates Association, the Children's Legal Centre, the Law Society, the Association of Directors of Social Services and numerous other organisations? Have they, too, suddenly and most uncharacteristically been led by the nose by social workers?
  Mr. Lawrence: The social welfare workers' organisations are very persuasive. They have considerable influence over local authorities, because they are advised by social services officers. Social services officers have close and necessary liasion on a day-to-day basis with social workers. It should come as no surprise to the hon. Lady that a few people who feel strongly about an issue and who are in close day-to-day contact with those who have to take the wider decisions can influence them. We all know that that happens, and it has clearly happened in this case.
  I object to what the Government are doing for four reasons. First, what they are doing is contrary to the wishes of the majority of our constituents—the very people who sent us to Parliament. They trust the courts but they do not always trust social workers. They admire and value the dedication of social workers, as we all do, but they do not always trust them to operate without adequate supervision and control. They do not trust them to act without proper control because they read about cases such as that of Jasmine Beckford. There are rules and regulations, a framework for action and a structure for adequate supervision and yet, left to the devices of the social workers, these poor babies and children are abused and their lives destroyed.
  That is because the system as it exists is inadequately supervised and controlled. That may be because social workers are under extreme pressure through the size of their caseload—some people are not able to make proper judgments when they are under supreme pressure. Or it may be because they become friendly with, close to, sympathetic to and committed to the families concerned. I do not blame them for that, for anyone would do so in any circumstances. However, it means that the system as it has hitherto operated has been shown to be inadequate, and gravely and tragically inadequate in some instances.
  The people support the idea that there is a need for the court to supervise social workers' actions. That is not because the court left to itself would know best. As the hon. Member for Bow and Poplar (Mr. Mikardo) said, the court would not have the necessary experience, despite all the training programmes, to make decisions on its own. However, the courts would make decisions on the advice of social workers, tested by others who have

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  representations to make, and it would act as an objective filter, a protection or a final test, before potentially harmful and risky decisions were taken.
  I believe that that is what the people understand to be the function of the magistrates court in child welfare cases. I believe that the people wanted a Bill to take account of that. That is why I think that the Government are going contrary to the people's wishes.
  Secondly, what the Government are doing is contrary to the wishes of the House, which on 31 January granted a Second Reading to a Bill which contained the very provision that is now being snuffed out. The very essence of the original Bill was to give the magistrates court which made the care order the power to decide whether the child, the subject of the care order, should be returned to parents whose behaviour has resulted in the state's protection to the child being given in the first place.
  When the Government first showed signs of beginning to crumble at the behest of the care organisations and the social welfare workers' lobby in Committee—and the Law Society, for which I hold no brief, financial or otherwise—my hon. Friend the Member for Westbury offered a compromise—always look for the compromise. My hon. Friend offered a sensible compromise that had the effect that cases would be referred to the magistrates court if the magistrate who made the original care order stipulated that that should happen before the child was allowed home. The good sense of that compromise was that it ensured that in the most worrying cases magistrates could reserve to themselves the right to reconsider the case.
  The Government rejected even that compromise. As a result, they had to suffer two indignities. The first indignity was that of being defeated on a vote by their own supporters, who were reflecting the will of the House on Second Reading. The second indignity was having as their only supporter the hon. Member for Peckham (Ms. Harman)—as bizarre a union between my hon. Friend the Minister and the hon. Lady as it is possible to conceive of in this astonishing place. By overruling the Committee's decision today, my hon. Friend the Under-Secretary of State is clearly going against the wishes of the House.
  My third objection to the Government's emasculation of the Bill is that they are concentrating almost total power, subject only to some relatively small although perhaps important improvements that my hon. Friend is to make, in the hands of the social workers. The Government have done this, despite the fact that in a few but nevertheless important cases social workers have been found wanting. That is why, alone, I believe among Government Back-Benchers, I went into the Lobby in support of new clause 1 because it gave to the courts the power to consider all matters with a little more care and thoroughness.
  If the social worker lobby had accepted its errors and taken full responsibility to purge its lapses by a self-regulating reform of the system, perhaps one could have had more confidence in it. However, in the Jasmine Beckford case, some of the social workers tried to blame what they did on the juvenile court that had made the care order. In his hardly completely objective or unbiased
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  report, Mr. Louis Blom-Cooper said that they were misled by the chairman of the court having said that it was hoped that the child would be returned—
  Mrs. Virginia Bottomley: Will my hon. and learned Friend give way?
  Mr. Lawrence: Perhaps my hon. Friend will allow me to finish this point. If the people that we are about to trust with unfettered power and judgment cannot recognise that a statement from the chairman of a bench was no more than a gesture of long-term hope and optimism, the court having taken the child away from its parents, it cannot fill us with much confidence about the judgment of social workers.
  It is manifestly clear that on that occasion the Willesden juvenile court said that the child must go into care, that the social workers would give the matter their urgent, continuing attention and that one day it was hoped that things would be better and the child would be able to return home. That is not the same as saying that the child must be returned at the earliest possible moment, perhaps to be put at risk, without considering whether the parents were fitted enough to have the child back, since they had been responsible for the damage to the child that resulted in the care order. For social workers, or anybody speaking for them, to say that it was not really their fault because the court had given a strong indication that at the earliest possible moment Jasmine Beckford should be returned to her home was a distortion of any moderate and objective reading of the situation.
  The social worker organisation is wonderful, but it needs to be controlled, like any other organisation that is closely connected with the wrongdoing section of our society. The same applies to a probation officer when he gives evidence in court. However many armed robberies there may have been, or however many serious assaults may have been committed, a very responsible probation officer can usually be found to say, "Poor fellow, he had a bad childhood and he has a bad past. He is trying to put it all behind him, but he lost his temper. The proper sentence is to put him under care, where we can keep an eye on him." We understand why probation officers sometimes come to that conclusion, but it brings home to those of us who are involved in the law the necessity for another body to make an objective judgment over and above the opinion of a witness that is so committed to the individual concerned that their judgment may for the time being be clouded as far as the wider interests of society or the particular interests of the child are concerned. After all, social workers cannot talk to very young children. They cannot say to the baby of one or two years, "Would you like to go back to your parents?" They hear only one side of the story, and it is very difficult to assume that always, in every case, even the best-meaning social worker will not make a misjudgment.
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  Of course social workers do not like to have their empire interfered with—nobody likes that. That is one of the forces of behaviour with which we incessantly come to grips in this place. That is all the more reason why we should be careful before we accord to them the absolute powers as this emasculated Bill now more or less does. Social workers want to keep their power—the question is whether it is wise to let them.
  My final objection to what the Government are doing is that their stated justifications seem to be without much

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  substance. It is said that the social workers are more professional than the lay magistrates in child care. That is true, and if the Bill gave to the courts the power to examine, check and filter before deciding to return the child to the parents' care, with no part played by the social worker, I should not support it. However, we are talking about the court acting on the advice of the social worker and after testing that advice against other people's representation, and the court applying its objective experience and good sense to the problem.
  It was said in a letter to The Times of 19 March 1986 by Mr. Blom-Cooper, who conducted the panel of inquiry into the Jasmine Beckford case:
  "In our view, the experience of Jasmine Beckford's death—and some others—is that magistrates in juvenile courts lack the necessary professionalism to be able to make the difficult judgments which have to balance the risk of future abuse against the need to reunite families."
  If it is not too technical for magistrates to decide whether a child should he taken away in the first place, why is it too technical for magistrates to be able to decide whether the child should be returned to the parents? My hon. Friend the Minister said that that point is a misunderstanding of the mysteries of the child care world and what it is about. That is manifest nonsense—it is gobbledegook to protect empires. There is no substance in the criticisms that magistrates are technically incapable of making the second part of the decision once they are capable of making the first part.
  It is then said that the Bill that was given a Second Reading would mean delays before a child properly returnable to his parents could be allowed so to do. However, if there are delays it will be because it is better to be careful, thorough and safe than to be sorry. It may be that there would be delays, although there are shorter delays in the magistrates courts than in the High Court, and that the magistrates courts delays can be speeded up. A priority could be given to cases of reconsideration of a care order. It is not necessary that such a case should go to the end of every list, and that one should have to wait for two, three or four months before the matter is reconsidered, but it is conceded that there will be delays. If those delays lead to thorough and careful reconsideration they will be well worth having.
  It is said by some that the Bill with its original clauses 1 and 2 is a piecemeal change in the law and therefore bad. I agree that reforming the law in a piecemeal way is not ideal. Even the Minister agreed with that. Some of the Bill's opponents say that it is better to wait for comprehensive reform of the child welfare law than to tinker. If they wait for comprehensive change, they have a long wait coming. I asked the Minister earlier whether he could guarantee that such legislation would be introduced within the lifetime of this Parliament. He could not give that guarantee. Still less can he guarantee that such comprehensive changes will come in the lifetime of the next Parliament, or of the Parliament after that.
  We have been waiting for years for family courts. We have been waiting for years for comprehensive legislation. Since we must wait for years and years for the comprehensive, we must do the piecemeal. We never object to that. Most of the Government's legislation is piecemeal. The argument that it is better not to have the piecemeal but to wait indefinitely for the comprehensive
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  might end in the deaths of more Jasmine Beck fords throughout the country. That is wholly and utterly undesirable.
  The Government's action in effectively killing the substance of the Bill has saddened me because it has been done with little or no justification. I forbear from dividing the House only because that would take up valuable time which my hon. Friend the Member for Davyhulme (Mr. Churchill) might need for his important and widely supported Bill and because I have a feeling that not sufficient hon. Members are here to ensure that the Bill survives if we divide against it.
  I hope that the Government will have second thoughts and that if they do not have second thoughts of their own volition the noble Lords in another place will have second thoughts for them. If they do, a measure that has the support, not only of the House of Commons on Second Reading, but of the people in the country, a sensible, wise and intelligent improvement in the law will be restored and a measure that has the support of the whole House of Commons will go on to the statute book. I hope that the original measure is not yet wholly dead.
  Mr. Mikardo: The hon. and learned Member for Burton (Mr. Lawrence) has a well-deserved reputation as a doughty fighter in the House, in the courts and in other forums. Today he engaged—it was quite a performance—in two separate civil wars. He engaged in a civil war between hon. Members on the Government Benches and in a civil war between various eminent people and various branches of the legal profession. I do not wish to interfere in any of those quarrels, certainly not in the quarrel between the stratospheric lawyers. I am a mere mortal, groping around in the foothills. Who am I to pass judgment upon the legal immortals sitting at the top of Mount Olympus?
  I was puzzled by one part of the hon. and learned Member's speech. He began and ended by telling us what the people of the country want. I wondered what his authority was for saying that. I wondered whether he conducted a referendum and how he took the census. We all tend to judge subjectively from what we hear in our constituencies and at our surgeries.
  I have heard a lot of criticism of social workers in relation to child care cases. However, I have heard many more of my constituents complaining about the behaviour of the courts. In both cases, no doubt, their views were affected by subjective considerations. So I reckon that I do not know what the people want, and that the hon. and learned Gentleman does not know either. It was uncharacteristically pretentious for him to pretend that he does.
  Unlike the hon. and learned Member for Burton, I believe that the new clause improves the Bill. It still has some defects, but it will be better for the inclusion of the clause. If I had any reservations about voting for the Third Reading of the original Bill, I have few, if any, about voting for the amended version.
  I agree with almost everything that the Minister said, but one passage worried me. I am not sure that I heard him aright, because he was galloping along at a fair old pace. He reminded me of a colt running its first race in a five furlong maiden on hard going. However, if I did not misunderstand the Minister, he cast doubt on whether any say in these matters should be given to the elected

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  members of a local authority who serve on the social services committee. If the Minister said that, I disagree with him.
  I said earlier that I have great regard for the overwhelming majority of social workers and directors of social services, but we must not get away from the principle that all local authority officers, like all officers of Government Departments, must be subject to the supervision and control of the elected representatives of the people. Otherwise, we shall slip out of being a democracy and into being a bureacracy.
  Eighteen amendments have been selected for debate with the new clause. My hon. Friend the Member for Barking (Ms. Richardson) and I are responsible for seven of those amendments, but if the first—to delete clause 1—is accepted, the other six will fall, so I shall not waste the time of the House by referring to them, except to say that the fact that it was possible reasonably to table so many amendments to a single clause demonstrates that the drafting of that clause was defective. I join the Minister in saying farewell to it without pangs of regret.
  Mrs. Virginia Bottomley: It is a pleasure to follow the hon. Member for Bow and Poplar (Mr. Mikardo). I have much more sympathy for his judgment on these matters than for his judgment on the views expressed by my hon. Friend the Member for Davyhulme (Mr. Churchill). I should like to feel that the hon. Gentleman's judgments on those two issues are not related.
  I have great sympathy with the arguments of my hon. and learned Friend the Member for Burton (Mr. Lawrence) who put the case for those of us who felt strongly in Committee that clause 1 should remain in the Bill. However, I take issue with what my hon. and learned Friend said about the responsibilities of social workers and the way in which they conducted themselves.
  The British Association of Social Workers was among the first to come forward with a detailed and rigorous code of practice for social workers in child abuse cases. It included not pious words, but ways of managing and enforcing the practice set out in the code.
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  Some of us felt extremely strongly about the court that had had a part to play in the difficult decision to return to his home the child who had already been subjected to injury, abuse or moral danger in his home. We felt that the matter should go back before the court for approval. We did so for a number of reasons. I acknowledge that we failed to convince not only the Government but the many well-meaning voluntary organisations which play a part in influencing public opinion. Perhaps we must take some responsibility for not having worked harder to explain our reasons and thinking behind the steps we took.
  I accept the concern about delays. I agree with my hon. and learned Friend the Member for Burton that, if there is a will, there is a way, and that the problem can be overcome. I am concerned about the cut-off period of seven days. A child can be returned home up until seven days without returning to court. It has been put to me that the increase takes place gradually. A child who has been going home regularly for two, three or four days may decide that he wants to stay for seven days. In that event, the court has to give approval. I recognise that parents have weight in that respect. Approval would have to be
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  obtained from the court if older children at boarding school want to go home during the holidays. I can see the sense in that.
  I find it difficult to understand why the Government were unable to agree to the court setting conditions for the return home. In the review of child care law, great weight was put on the desirability of enhancing a supervision order so that requirements set down by the court can be made in the supervision order. For example, the supervisor should be informed of the child's address, the supervisor should have access to the child, the child should be medically examined, the child should comply with the supervisor's directions to attend at specified places for specified activities, the child should receive medical and psychiatric treatment where necessary, and the child should comply with directions on education.
  That recommendation of the child care law review would allow great intervention of the court in the future treatment of a child. It has been suggested that half a loaf is better than no loaf at all and that, if we can move some way at this stage, perhaps when we come forward with comprehensive proposals there will be greater scope for encouraging the court's intervention.
  There is another area in which I feel the court makes a valuable contribution. Too much is made of the Beckford case in the sense that there were faults on all sides. Of course, the magistrate should never have said, "We hope that you will be reunited," or whatever. That was straightforward bad practice. I am pleased that the Lord Chancellor is setting up a training scheme for juvenile court magistrates. It has been made abundantly clear that the magistrates' advice was unwanted and unuseful.
  One cannot help but say that the social worker involved in the case failed to see the child on her own. One cannot fulfil one's parental obligations as the representative of a local authority if one fails to see the child for whom one is discouraging those responsibilities alone.
  I believe that it would be of value to have an independent hearing prior to the child returning home. I accept that we have to find different ways of achieving that. It would be an independent element hearing all the evidence and information. I shall make a few comments on the way in which that can be achieved.
  Mr. Lawrence: My hon. Friend has put her finger on the real value of a court. The first question that a court would have asked in the Jasmine Beckford case was, "When did you last see the child at the home?" The answer would have been, "I have not seen the child at the home." It is inconceivable that the court would then have allowed Jasmine Beckford to go home to her parents until the matter had been looked into further. My hon. Friend has put her finger on a wonderful example of the value of the judicial process as a test.
  Mrs. Bottomley: If my hon. and learned Friend will bear with me, my understanding is that the child had been seen before she returned home. The incident occurred when the child was at home under the care order. If it were a condition that the child attended a medical examination, that would ensure that the child was seen. A court hearing would have the value of ensuring that there was a thorough reappraisal of the history of the case, the factors concerned and the personalities involved.
  We are being encouraged to move down the line of regulations. I believe that there is a need for an

  1239
  independent element. It is abundantly clear that a case or review conference cannot be chaired by a person with management responsibility for the person implementing the decision. It cannot be chaired by the supervisor of the social worker concerned. A person with direct management responsibility for the key worker would not be able to separate himself from resource issues and many other local variables.
  A person with a supervisory responsibility for the work involved would be subject to exactly the same procedure identified by my hon. and learned Friend the Member for Burton—great emotional identification with the family, which could sometimes cloud his judgment. We have all identified the fact that that emotional identification with and feeling for the family is one of the best tools for helping the family to improve and get over its difficulties. We should not regard it as distinctly unprofessional.
  I am extremely wary about any suggestion that the independent element on the review should be an elected representative of the local authority. I am deeply concerned about recent reports of too much political interference of the most destructive sort in social work practice. We all know about cases in which racial issues have become involved, global aspirations about racial values applied and social workers questioned about particular cases. That is not helpful.
  The only aspect which we are not covering in any way is what the parents make of the events and their responsibilities and whether they feel that they have been given a fair hearing. If I had an overall critcism of the voluntary organisations which have responded to the Bill, it would be that they seem to have little understanding of the perplexity of many parents about the way in which decisions are made behind closed doors by do-gooders who, in the parents' view, have already made up their minds. A court hearing on this vital decision would, first, make the parents realise that all the issues had been considered fully and fairly and, secondly, spell out to the parents their responsibilities and the seriousness of the matter.
  I hope that my hon. Friend the Under-Secretary of State, in bringing forward the regulations, will consider the way in which parents will be formally addressed—whether there is to be a formal meeting in the local authority's offices, whether there is to be a document setting out the details in writing and whether an official will have the job of emphasising the seriousness of the matter. In some senses, such a formal meeting would have the weight of a court hearing with the parents. It would be similar to police cautioning in the juvenile bureau. Some ceremony would be attached to the procedures. I believe that that would be helpful.
  We are being encouraged to follow what one would have to call boarding-in regulations. We shall have to see how they, together with the review of child care law, develop concrete proposals. I regret that the Bill has not been able to move in the direction that we had hoped. I also recognise that that is apparently because we failed to convince a great number of others who are as anxious as ourselves to see that child care practice and provision for abused children should be improved.
  Ms. Richardson: I want to speak only to new clause 7 which is down in my name. As my hon. Friend the Member for Bow and Poplar (Mr. Mikardo) has said, the amendments that we have down will become redundant if,
  1240
  as we expect, clause 1 goes. New clause 7 has a slightly different principle, but the Minister dismissed it in his closing sentence when he said that it was subject to some of the same objections as clause 1. Perhaps it is, but I confess to being a lay person and I do not know whether it is or not.
  New clause 7 was drafted by the Family Rights Group which saw it as an extension of the principle contained in clause 1. The existing clause 1 gives the court the power to decide whether or not a child should be placed at home on trial. It is just and logical that the court should exercise this power following applications from families as well as from local authorities.
  A common problem faced by children in families is that the local authority does not do the work which would enable the child in care to return home. Although children and parents can apply to discharge orders, the courts are understandably reluctant to discharge an order unless a child is already living at home and the process of rehabilition has been shown to work. If a care order is discharged before any rehabilitation work is started, the child will go home without any preparation and there will be little support or supervision.
  The child care law review working party was also aware of this problem, as I am sure the Minister knows. As a result, it recommended that a juvenile court should be able to make orders for phased rehabilitation. We think that new clause 7 is in line with that recommendation. Although I shall not press it, I should like to place it on record that it is intended as a helpful addition to the previous clause 1 of the Bill which, we expect, will now go in favour of the Minister's new clause.
  Mr. Sims: I spoke strongly on Second Reading and in Committee in support of clauses 1 and 2 and I do not propose to repeat what I said on those occasions. In any event, the arguments have been well deployed by my hon. Friend the Member for Westbury (Mr. Walters) and by my hon. and learned Friend the Member for Burton (Mr. Lawrence). It is a pity that the clauses are to be dropped. They would have offered additional protection to the child and to the social worker. That is an aspect that has not been considered.
  It is a pity that a number of the organisations to which my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley) has referred seem to have misunderstood or misinterpreted that which my hon. Friend and his colleagues were trying to do in clauses 1 and 2. Of course, one cannot entirely ignore the strength of the recommendations that they made. I was more impressed by some of their representations than by the case advanced by my hon. Friend the Minister. I am bound to say that his arguments against the clauses did not hold up. I argued against him in Committee and will not repeat my arguments here. He says they introduce the principle of court involvement in these decisions. That is exactly what they do and exactly what we are arguing there should be. Again, I do not need to repeat all the arguments because we have heard them all in this debate. There is perhaps a philosophical difference between us about how cases of this sort should be heard.
  My hon. and learned Friend the Member for Burton spoke of the Bill being decimated. I would go further and say that the heart is being torn from it. I admire and commend the gracious manner in which my hon. Friend the Member for Westbury has taken the way in which the

  1241
  Bill has been treated. The heart having been torn from it, the transplant is modest, but at least it is better than losing the Bill altogether. The proposals that have been made are an improvement on the present situation. While I accept them, I do not do so with great enthusiasm.
  1.15 pm
  Ms. Harman: It is right that clause 1 should be deleted and that new clause 5 should be inserted. That will improve the Bill. None the less, I am unhappy about the situation in which we are discussing new clause 5. The measure is small when one considers the comprehensive framework of child care law. My criticism is that we are discussing it rather than the comprehensive review. However, that is not a criticism of the hon. Member for Westbury (Mr. Walters), by any stretch of the imagination, but it is a criticism of the Government. It is not the fault of the hon. Member for Westbury that he has not introduced legislation giving effect to the child care law review. As a private Member, he is not able to do so. But it is wrong that we should be discussing only the returning home of a child or regulations on accommodation at home of a child in care. We are not allowed to decide on access, revocation or discharge of orders. That has to wait. If the Government had had the political will, they could have brought comprehensive child care legislation before the House, but they simply lack the political will to do so.
  I fear very much that nothing we have heard from the Minister gives us any reason to hope that we shall get a child care law review in the lifetime of this Parliament. That will be a great disappointment to all those who want to see a comprehensive improvement. It will also be a great disappointment to all the organisations and people who have worked so hard to achieve a consensus to enable the Government to bring forward a comprehensive Bill. The piecemeal criticism is not a criticism of the hon. Member for Westbury or his Bill, but it is a criticism of the Government.
  I am also disappointed that we are discussing new clause 5 and the deletion of clause 1 in the context of the old juvenile court system that we now have, not in the context of family courts. If we had a system of family courts, I do not think that there would be objections to greater involvement of the courts in the decision whether to send a child home. But let us look at what the so-called scrutiny of the courts as currently constituted would have meant under clause 1 when considering whether to send a child home.
  First, we know that there would be delays. There already are delays. The Magistrates Association and the Justices Clerks Society are absolutely certain that, without radical changes, an addition to their jurisdiction in that way would cause delay. We heard in Committee and on Second Reading of the real problems that delay can cause. It is not just a technical matter, but concerns the breakdown of relationships during the period when the child is in care.
  There is also a problem of continuity. Extra bits of jurisdiction would be given to the juvenile court in relation to family matters, and there might be a different bench each time one comes before the court. One must also consider the lack of experience of a juvenile court because as the jurisdiction of those courts is currently constituted
  1242
  they cover a whole range of matters. However well-intentioned they are and however great their aptitude, they will not gain the experience that will help them to give sensible scrutiny.
  People have said, "If juvenile courts are experienced enough to decide to take a child into care and to decide on conditions of access, why are they not experienced enough to decide that a child should be returned home to his parents?" But when a child is taken into care or a parent applies to vary the terms on which access was granted, there are two sides to the case, so the magistrates are still operating in an adversarial system and will have brought before them the two sides of the case between which they must decide.
  The trouble with clause 1 is that it deals with cases in which both parties agree. The local authority wants the child to go home, or it would not have applied to the court, and the parents want the child to come home, or it would be pointless for the local authority to bring the matter before the court. The court should consider those cases only if it can exercise an inquisitorial role. If not, all that will happen is that everyone argues on the same side and the court can only rubber-stamp the decision. The hon. and learned Member for Burton asked, "How can social workers make a sensible decision if they have heard only one side of the case?" How can magistrates in a juvenile court make a decision worth all the delay involved if they, too, will hear only one side of the case? They will hear only the local authority and the parents agreeing.
  If we had the system that exists in Scotland and that is proposed under the family court, with a mixture of the adversarial and the inquisitorial approach, and with court welfare officers to go behind the unanimity of the evidence presented to the court, such extra scrutiny would be worth the delay and bureaucracy involved. But otherwise the decision would be a sham which would cause delay, confuse the lines of responsibility and provide no better scrutiny.
  I regret that the new clause was not introduced in Committee. Had it been, we could have amended it so that it made sense. We have a rough idea of what it means from its title, which is
  "Regulations as to accommodation at home of children in care."
  We also have a rough idea of its meaning from the Minister's explanation. But I defy anyone to understand what this means:
  "The Secretary of State may by regulations make provision as to the accommodation under the charge and control of a parent, guardian, relative or friend of children who are in the care of a local authority."
  It is legal gobbledegook. Perhaps "charge and control" and other matters are mentioned in other parts of child care law, but that is no excuse for introducing an extremely complicated and muddled new clause to deal with a simple concept. Efforts should be made to ensure that new measures can be understood in their own right and that we need not call upon the services of, for example, the hon. and learned Member for Burton before we can understand what we are discussing.
  The hon. Member for Westbury and the hon. and learned Member for Burton talked about public support for the Bill. The hon. Member for Westbury said that it had widespread public support. I agree that there is widespread public support for something to be done about the law and that there is widespread anxiety about what has happened recently to children in care. But that does not mean that

  1243
  there is widespread support for the means by which the Bill tries to achieve those aims. We should acknowledge the feeling that the Government should recognise the widespread pressure for a comprehensive child care law Bill and for the introduction of family courts. I agree that that public opinion exists and that the Government should respond to it by doing what they have failed to do so far—they should guarantee to introduce within the lifetime of this Parliament a child care law review and the implementation of family courts. We would like to see both effected together because some changes in child care law cannot be supported properly without changing the forum in which they are discussed.
  The hon. and learned Member for Burton talked about many organisations being led by the nose by the social workers' lobby. That is absolute garbage. The Law Society and social workers have often disagreed. The Law Society and the Legal Action Group have often disagreed. Indeed, I am sure that they disagree more than they agree. The Association of Directors of Social Services finds it easy to disagree with the Association of County Councils, as is its right, and the ACC often disagrees with the Association of Metropolitan Authorities. It is rare to find the Justices Clerks Society and the Magistrates Association agreeing with the children's legal centre.
  The fact remains that all those organisations, representing everyone in the field except for the Family Law Bar Association, reached a concensus that clause 1 was wrong and would do more harm than good. It is ridiculous to suggest that somehow they have been swept up in a tide of emotion. They have all separately considered it from their point of view and reached the same conclusion. The hon. and learned Gentleman should accept that, instead of suggesting that they have all abdicated their responsibility and been led by the nose.
  I think I heard the Minister suggest that the Government would produce a pamphlet on working together on child abuse directed at encouraging agencies to work together to deal with child abuse. Obviously, agencies must cooperate to ensure that a problem which is recognised in one part of the system does not go unrecognised in another part which might lead to a wrong decision. Obviously, there must be co-operation and planning on an inter-agency basis.
  I venture to suggest that health visitors, social workers and teachers in Southwark will probably regard a booklet on working together on child abuse with some degree of cynicism. The ability to work together on a sensible basis requires that one does one's job properly and liaises with other organisations. At present the pressures on the Health Service mean that people leave hospital much sooner than would be the case if they convalesced there. That has increased enormously the pressure on health visitors. The deteriorating housing conditions caused by cuts in capital spending and rate support grant to local authorities, and increasing joblessness, which has increased poverty, has increased pressure on both social workers and health visitors.
  A key element in the inability of social workers to respond properly to increased pressures and demands has related to social services spending. The increase in spending on social services was only 0·5 per cent. in the last financial year. Even the Department of the Environment recognises that, just to stand still, there must be an annual increase of 2·5 per cent.
  1244
  If the ability of health visitors, teachers and social workers to do their job is undermined by a lack of increased spending with which to meet the growing and very real demands on their services, they will not want to be told that the problem can be solved by a booklet on working together on child abuse. Many of them would see that as yet another cynical public relations exercise on the part of a Government, who could really do something about child abuse. For example, they could introduce a comprehensive Bill on child care law or reform the court system by introducing a family court, yet they have singularly failed to do so. They could ensure that the Health Service, housing, and social services have adequate resources. I look forward with interest to the booklet, but I should also like the Government to take some real action. Instead of using the Bill as an important spur to action over an issue about which there is immense public concern, they have used it and the booklet as an excuse for inaction.
  1.30 pm
  Mr. Whitney: The hon. Member for Peckham (Ms. Harman) has taken the opportunity to make her usual plethora of groundless and baseless accusations against the Government and our record of achievement. She has suggested that we do not spend enough on the Health Service. But if a 24 per cent. increase in spending on health is not enough, she must explain what would be enough, and by how much she would be willing to increase taxation. She has also suggested that local authorities do not spend enough. Yet spending is at record levels. Spending on the personal social services is also at a record level.
  Ms. Harman: Will the Minister give way?
  Mr. Whitney: I shall not give way, as the hon. Lady had quite a fair go. She complained that nothing was being done about child care law. However, last October we launched a monumental consultation exercise. We have announced that the proposals will be published as a basis for legislation, and publication will be in the autumn. As the original consultation document was launched in October, we have moved very quickly, and I hope that the hon. Lady will have the grace to accept that.
  Ms. Harman: Does the Minister accept that the amount of money going into housing via the local authority, which is the main housing authority in Southwark, has fallen drastically as a result of the Government's policies? Moreover, does he agree that the amount spent on the Health Service in Southwark, in the shape of Camberwell district authority and the Lewisham and North Southwark district health authority, has also fallen drastically? Does the hon. Gentleman accept that?
  Mr. Whitney rose—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. I hope that we can now return to the subject of children in care.
  Mr. Whitney: I apologise for being led astray by the hon. Member for Peckham, but when she has seen the impact of the Resource Allocation Working Party and the amount of money devoted to the provision of her constituents in Southwark, I hope that she will understand how favoured they are. But it is typical that yet again the hon. Lady thinks that the answer is to take more and more money from the taxpayer. The answer in most of these

  1245
  areas must be to improve performance and procedures, and that is the object of the new clause. I am confident that that aim will be achieved.
  I am grateful for the comments—or at least most of them—of my hon. Friend the Member for Surrey, South-West (Mrs. Bottomley). I recognise that the content of the consultation process should ensure that the procedures that finally emerge in the regulations take account of the issues that she raised. The home-on-trial scheme, for example, is an important step and should be recognised as such. That is an area in which we are determined to continue to improve practice. My hon. Friend the Member for Westbury (Mr. Walters) made a difficult decision when he decided to co-operate with the Government and agree to a very different provision being inserted in the Bill, but I believe that the new clause will be a useful step forward.
  I shall clarify my position on local authority members and whatever role they may play. The hon. Member for Bow and Poplar (Mr. Mikardo) suggested that I spoke rather quickly when I last intervened, and I plead guilty to the charge. I was trying to give other hon. Members the chance to participate in the debate. The subsection that the Government have proposed would be wide enough to provide for some involvement of local authority members in the decision-taking process should this be thought desirable. I hope that that clarification will place me on the side of my hon. Friend the Member for Surrey, South-West. I must stress that the Government have not yet reached a view on the involvement of local authority members.
  Mr. Mikardo: The Minister has used the phrase "should this be thought desirable." Thought by whom to be desirable?
  Mr. Whitney: As I explained in my earlier intervention, the framing of the regulations will be preceded by consultation. I am sure that must be right in this difficult area.
  I do not want to detain the House for long because I believe that all the ground has been covered, much of it on Second Reading. However, I must refer to the speech of my hon. and learned Friend the Member for Burton (Mr. Lawrence), who was rightly described by the hon. Member for Bow and Poplar as a doughty fighter. What we had this morning from my hon. and learned Friend was more in the nature of an intervention by a knight errant or a Don Quixote because he appeared to be tilting at windmills. He has conjured a phantasma out of the air—
  Mr. Lawrence rose—
  Mr. Whitney: —a phantasma that the Government are cowering against an attack by the serried ranks of mobilised social workers. It appears that others are cowering as well as the Government, including the Law Society, the Association of County Councils, the directors of social services, the Association of Metropolitan Authorities, the Justices' Clerks Society and the Magistrates' Association. That is the windmill at which my hon. and learned Friend, Don Quixote from Burton, seems to be tilting.
  Mr. Lawrence: I thought for a moment that my hon. Friend was calling the Government a phantasma. I would reject that description immediately.
  Mr. Whitney: I am most grateful. We are now clear between us where the phantasma is established. I hope that my hon. and learned Friend will accept that he is wrong.
  I must say in somewhat more serious terms to my hon. Friend the Member for Chislehurst (Mr. Sims) that I reject his argument that the associations—I shall not go through the list again—did not understand the original proposals. That is not a very tenable position. It is going a little far to suggest that the Law Society and the Government, no less, should not understand the proposals. I was tempted to take up the argument about magistrates but I shall not do so.
  It should be accepted that we all share certain objectives. My hon. Friend the Member for Chislehurst spoke of a philosophical difference between us, but I do not believe there is. Perhaps the difference between us turns on practicalities in determining how best we can ensure that terrible mistakes are not made. Mistakes will be made from time to time. In the Jasmine Beckford case, terrible mistakes were made by many people, including the magistrates.
  The Government believe that the way forward is to continue to improve the way in which cases are dealt with. I know that my hon. Friend the Member for Surrey, South-West is well aware of that and recognises that that is the way forward. We reject the piecemeal approach when it is in the wrong direction. We do not believe that to go back to the court at this stage in a particular case is the correct way to approach the matter. The airy-fairy dismissive approach, "There may be the odd delay, but does that really matter?" is unjust not only to the particular case that is under consideration but because of the effect that it would have on all child care cases.
  We have ranged widely on a number of occasions over these issues. I hope very much that the House will accept new clause 5.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

New Clause 6

  APPEALS
  '(1) In subsection (12) of section 2 of the Children and Young Persons Act 1969 (right of relevant infant to appeal against order made in care proceedings) after the words "the relevant infant" there shall be inserted the words "or, in a case where a parent or guardian of his was a party to the care proceedings by virtue of an order under section 32A of this Act, the parent or guardian" and for the word "him" there shall be substituted the words "the relevant infant".
  (2) In section 16(8) of that Act (appeals by the supervised person against supervision orders and dismissal of application to discharge such orders) after the words "the supervised person" there shall be inserted the words "or, in a case where a parent or guardian of his was a party to the proceedings on an application under the preceding section by virtue of an order under section 32A of this Act, the parent or guardian".
  (3) After subsection (4) of section 21 of that Act (variation and discharge of care orders) there shall be inserted—
  "(4A) In a case where a parent or guardian is a party to the proceedings on an application under subsection (2) of this section by virtue of an order under section 32A of this Act, the parent or guardian may appeal to the Crown Court against the making of a supervision order or the refusal of the court to discharge the care order.".
  (4) In section 22(4) of that Act (power of High Court, on application of person to whom interim order relates, to discharge order) after the word "relates" there shall be inserted the words ",or, in a case where the order was made in proceedings to which

  1247
  a parent or guardian was a party by virtue of an order under section 32A of this Act, of the parent or guardian,".'.—[Mr. Whitney.]
  Brought up, and read the First time.
  Mr. Whitney: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker: With this, it will be convenient to discuss the following amendments: No. 17, in page 3, line 27, leave out clause 3.
  No 18, in clause 3, page 3, line 38, leave out subsection (2) and insert—
  '(2) The following subsection shall be substituted for section 16(8) of the Children and Young Persons Act 1969—
  "16.—(8) Any party to the proceedings may appeal to a Judge of the High Court Family Division against—

  (a) any order made under the preceding section except an order containing only provisions to which the supervised person consented in pursuance of the preceding section;

  (b) the dismissal of an application under that section to discharge a supervision order".

  (3) The following subsection shall be substituted for section 21(4) of the Children and Young Persons Act 1969—
  "21.—(4) Any party to the proceedings may appeal to a Judge of the High Court Family Division against an order under subsection (1) of this section or a supervision order made in pursuance of subsection (2) of this section or the granting or dismissal of an application under the said subsection (2).".'
  No. 19, in page 3, line 38, leave out 'Section 6' and insert 'sections 6 and 12(5)'.
  No. 20, in page 4, line 6, leave out subsection (4).
  No. 32, in clause 7, page 5, line 34, leave out '3' and insert '[Appeals]'.
  Mr. Whitney: This new clause amends the Children and Young Persons Act 1969 to allow a parent or guardian who was a party to care and related proceedings by virtue of amendments Nos. 22 and 23 to have a right of appeal to the Crown court.
  Subsection (4) also amends the 1969 Act to allow a parent or guardian who was a party to the proceedings in which an interim order was made to apply to the High Court to have that interim order discharged. In this clause the term "guardian" means not legal guardian but refers to the definition in the Children and Young Persons Act 1933 of any person who in the opinion of the court has for the time being the charge of or control of the child.
  In Committee I said that clause 3 presented considerable difficulties. The implications of the clause would bring with it unacceptable resource costs in extra High Court judges and legal aid, but I hoped to bring forward amendments which my hon. Friend would support. I had in mind appeal rights for local authorities and for parents when a separate representation order has been made, in each case to the Crown court as at present. In the event, in agreement with my hon. Friend who had hoped we could at this stage agree to transfer to the High Court, I have limited the increased appeal rights to parents. This will close an unfortunate gap which has emerged in recent cases when the appointment of a guardian ad litem after a separate representation order deprived the parents of the opportunity to appeal on behalf of the child. The House will agree that there is an exceptional case for parents where they are made parties to be able to appeal on their own behalf in such cases. There was a case, quite widely known as the "brittle
  1248
  bones" case, raised in the House by my hon. Friend the Member for Sherwood (Mr. Stewart). In other cases they can still appeal on behalf of the child.
  I am also speaking to amendments Nos. 17, to leave out clause 3, and 32 which covers commencement of the new clause 6. Amendments 18, 19 and 20 would fall if the House accepts amendment No. 17, and I have no further comment on them.
  Ms. Richardson: Is the Minister able to assure me either that my points have been taken into account or that they will be looked at, since he plans to introduce other amendments?
  Mr. Whitney: I understand that they will be unnecessary if amendment No. 17 and new clause 6 is agreed to.
  Mr. Walters: The original clause 3 had two distinct aims: first, to enlarge the category of appellants and, secondly, to transfer the appeal from the Crown court to the family division of the High Court. I greatly regret that, despite the recommendation by the review on child care law, the Government have not found it possible to accept this second and important aim. The involvement of the Crown court in care proceedings is anomalous and widely deplored. While no assurance has been given to me, I very much hope that this will continue only for a short while longer, and that, when we have the promised major review of child care law, it will include an end to appeals to the Crown court.
  1.45 pm
  In the meantime, I am reluctant to be associated with any increase in appeals to the Crown court. As at the moment parents have no appeal, nor can they, unlike the local authority, take advantage or wardship, I am in support of this modest enlargement of the category of appellants proposed by the amendment.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

Clause 1
  PERMISSION FOR THE RETURN OF CERTAIN CHILDREN IN CARE ETC.
  Amendment made: No. 1, in page 1, line 5, leave out clause 1.—[Mr. Whitney.]
Clause 2
  APPLICATION OF SECTION I
  Amendment made: No. 13, in page 3, line 7, leave out clause 2.—[Mr. Whitney.]
Clause 3
  APPEALS IN CARE ETC. CASES
  Amendment made: No. 17, page 3, line 27, leave out clause 3.—[Mr. Whitney.]
Clause 4

  PARTIES TO CARE ETC. PROCEEDINGS
  Amendments made: No. 22, in page 4, line 9, leave out 'Without prejudice to' and insert 'In'.
  No. 23, in page 4, line 10, leave out from '1969' to end of line 2 on page 5 and insert '(conflict of interest between parent and child or young person) after subsection (4) there shall be inserted—
  Applications by grandparents to be parties to proceedings
  "(4A) Where an order is made under this section in respect of a parent or guardian in relation to any proceedings he shall by virtue of the order be made a party to the proceedings."
  (2) After section 32B of that Act there shall be inserted—
  32C.—(1) Where in any such proceedings as are mentioned in section 32A(1) of this Act any grandparent of the child or young person in respect of whom the proceedings are brought makes an application to the court under this section, the court may, in such circumstances as may be specified in rules of court, give leave for the grandparent to be made a party to the proceedings.
  (2) Rules of court shall make provision as to the circumstances in which the court may give leave under subsection (1) above.
  (3) In this section "the court" includes a single justice.".
  (3) For the first sentence of subsection (6A) of section 28 of the Legal Aid Act 1974 (power to order legal aid be given to parent or guardian in respect of whom an order has been made under section 32A of the said Act of 1969) there shall be substituted—
  "Where a court—

  (a) makes an order under section 32A of the Children and Young Persons Act 1969 by virtue of which a parent or guardian is made a party to any proceedings; or

  (b) gives leave for a grandparent to be made party to any proceedings under section 32C of that Act,

  it may order that the parent or guardian or, as the case may be, grandparent shall be given legal aid for the purpose of those proceedings.".'.—[Mr. Whitney.]

Clause 5
  POWER TO TRANSFER CARE ETC.PROCEEDINGS
  Amendment made: No. 25, in page 5, line 3, leave out Clause 5. [Mr. Whitney.]
Clause 6

  RULES OF COURT
  Amendment made: No. 29, in page 5, line 27, at end insert—
  '(2) Without prejudice to the generality of subsection (1) above rules of court may make provision with respect to the procedure in any proceedings to which a parent or guardian becomes a party by virtue of an order under section 32A of the Children and Young Persons Act 1969 or a grandparent becomes a party under section 32C of that Act'.—[Mr. Whitney.]

Clause 7

  COMMENCEMENT
  Amendments made: No. 30, in page 5, line 29, leave out subsections (1) and (2).
  No. 31, in page 5, line 33, at end insert—
  '(2A) Section [Regulations as to accommodation at home of children in care] above shall come into force on such date as the Secretary of State may by order made by statutory instrument appoint.'.
  No. 32, in page 5, line 34, leave out '3' and insert '[Appeals]'.—[Mr. Whitney.]
  Mr. Whitney: I beg to move amendment No. 33, in page 5, line 34, leave out '4 and 5', and insert 'and 4 above shall'
  Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 34.
  Mr. Whitney: These are both technical amendments, which provide for the means by which the clause on appeal should come into force. It is intended that the measure will come in as soon as possible.
  Question put and agreed to.
  Amendment made: No. 34, in page 5, line 35, after `order', insert 'made by statutory instrument'.—[Mr. Whitney.]
  Mr. Whitney: I beg to move amendment No. 35, in page 5, line 37, leave out subsection (4).
  This amendment removes the provision that all sections of the Bill shall come into force within one year of the Bill being passed. I assure the House that there is no lack of intent on the part of the Government. We wish to bring in the provisions of the Bill as soon as possible, but it would be wrong to insist that the Government should do all that is necessary within the inflexible provisions of the clause. We shall continue our best endeavours.
  Mr. Walters: I am grateful for that assurance because I regret the presence of the amendment, which is designed to remove a long-stop provision for the implementation of the Bill. I introduced the long-stop period of one year in Committee after due discussion with officials in the Department as to a reasonable period for implementing these proposals.
  I have referred, as have several other hon. Members, to the deplorable fact that parts of the Children Act 1975 were not implemented until 1985. As I have agreed to accept major compromises, I very much regret that the Government do not accept that what is now enacted should be brought into force as soon as it reasonably can be.
  The proposed amendment can only raise fears about the Government's intentions. I am a little reassured by what the Minister says but I should be grateful to him if he repeated his assurance as clearly as possible. I hope that he can assure us that the Government genuinely intend to implement the relatively modest package, which they have now accepted, as soon as possible.
  Mr. Mikardo: I should have thought that the Minister could have given us something better. I understand that he cannot fix a firm date and that this is only a long stop. The Minister says that the legislation will be implemented as soon as possible. He should be able to give us some idea of when he expects the measure to come into force. Saying that it will be as soon as practicable is like asking, "How long is a piece of string?" The Minister owes it to the hon. Member for Westbury (Mr. Walters) to be a little more specific.
  Ms. Richardson: I understand that the Law Society is a little bothered by the 12-month proposal because it foresees difficulties in putting all the procedures in place. It is not against the proposals, but it envisages problems. It will not be easy to set an absolute time. That is why I tabled a similar amendment. To set a 12-month limit is perhaps too rigid, although we hope that the Bill will be implemented as soon as possible.
  Mr. Whitney: I am glad of the opportunity to enlarge upon my earlier remarks. I was seeking to truncate the

  1251
  debate for other reasons. I take note of the remarks made by my hon. Friend the Member for Westbury (Mr. Walters) and by the hon. Member for Bow and Poplar (Mr. Mikardo).
  The Government certainly intend to bring the measure into effect as soon as practicable, but it would be wrong and would mislead the House if I said that we could accept an inflexible date. To do that would be rare, if not unprecedented. No Administration would accept such a provision. We must make allowance for unforeseen difficulties and changes in circumstances. I note the awful warning from my hon. Friend the Member for Westbury. We have no intention of following that pattern.
  The hon. Member for Barking (Ms. Richardson) referred to the Law Society. Adequate time must be allowed not only for regulations and rules to be drafted, but for consultation in the usual way before the instruments are laid and for local authority and court staff to undertake training, where appropriate. The professions concerned will also need time to assimilate the effects of the reforms and changes in procedure before they come into effect. I assure the House, and in particular my hon. Friend the Member for Westbury, that we shall make every effort to deal with the rules and advice for local authorities as quickly as possible.
  Amendment agreed to.

Clause 8

  TRANSITIONAL PROVISIONS
  Mr. Whitney: I beg to move amendment No. 36, in page 6, line 1, leave out subsections (1) and (2) and insert—
  `No provision of this Act shall have effect in relation to any proceedings which were commenced before the commencement of that provision.'.
  This amendment removes the transitional provisions in clause 8 which applied clause 3—appeals—to any order made in proceedings on or after commencement of the Bill even though the proceeding or hearing might have begun before the Bill came into force, and also applied clause 4—party status—and clause 5—transfer of proceedings—to proceedings which might already have begun. It substitutes a clause that any provision in the Bill should apply only to proceedings beginning after that provision came into force.
  If the provisions of the Bill were to apply to proceedings already in progress when the Bill came into force there could be confusion and problems if, for instance, a grandparent applied to be joined as a party part way through a hearing. The amendment is intended to prevent any such problems arising by limiting the Bill to cases which begin after the date of commencement.
  Amendment agreed to.
  Order for Third Reading read.
  1.55 pm
  Mr. Walters: I beg to move, That the Bill be now read the Third time.
  We have had a long Report stage and I shall not detain the House. Introducing the Bill has been a fascinating experience and it has involved an enormous amount of hard work. I thank my sponsors, from both sides of the House, for their help and support.
  Taking the Bill through the House has been more difficult than I had expected, and I have not achieved as
  1252
  much as I had hoped. I believe that valuable proposals have been lost on the way, but, given the fact that we live in an imperfect world, I am satisfied that useful measures have been introduced and that a worthy piece of legislation will be placed on the statute book.
  1.56 pm
  Mr. Mikardo: I intervene briefly to congratulate the hon. Member for Westbury (Mr. Walters) on having carried the Bill this far and, if I may anticipate events, on getting Third Reading for the Bill, which will be sent off to another place where I am sure that it will be looked at as carefully as it has been here.
  As I said earlier, the hon. Member for Westbury has been shabbily treated by the Government in having his Bill hijacked and turned into a de facto Government Bill, but I hope that his initiative in introducing the Bill has contributed something to hastening Government action on comprehensive legislation.
  I broke a lance earlier with the hon. and learned Member for Burton (Mr. Lawrence), but I agree with him about the imprecise and unsatisfactory nature of the Minister's comments on the timing of the legislation. Under challenge from the hon. and learned Member, the Minister, like a frightened horse, shied away from giving any assurance that legislation would be brought forward in the lifetime of this Parliament.
  People have been appealing for comprehensive family courts legislation for a long time. I do not blame the Minister alone. Many of his predecessors, including some Labour Ministers, are also to blame. It has been a long and sad concatenation of procrastination and it is time that it was brought to an end. If the initiative of the hon. Member for Westbury has exerted a little pressure to that end, on that ground, if on no other, he deserves the thanks of the House.
  1.58 pm
  Mr. Sims: I congratulate my hon. Friend the Member for Westbury (Mr. Walters) on the progress that he has made in circumstances that have proved to be more difficult than he had expected. I share his disappointment that the Bill will not be leaving the House in the form that he and I would wish.
  However, I hope that my hon. Friend will not underestimate what he has achieved. The new provisions on child care are an improvement and will be widely welcomed, and he has also precipitated discussion inside and outside the House on an important issue. I suspect that that would not have happened if my hon. Friend had not introduced his Bill.
  The hon. Member for Bow and Poplar (Mr. Mikardo) said that he hoped to put pressure on the Government in other respects. There is little doubt that that has been done. It is a measure of the success of my hon. Friend the Member for Westbury that the Government's response will be recorded not only in today's Hansard but in yesterday's Hansard. In reply to a question on child care, the Secretary of State for Social Services implied that, because of pressure from my hon. Friend and others, the Government felt that we should know exactly where they stood on the question of child care and family courts The Government's announcement is a recognition of the high profile that my hon. Friend has given to the matter.
  In his reply yesterday, my right hon. Friend the Secretary of State made it clear that proposals on child care

  1253
  would be forthcoming in the autumn. He was less forthcoming about the family court proposals, other than to say that they would be made soon. My right hon. Friend did not challenge the suggestion that the proposals would be introduced in the next week or so. We have heard such promises so often that I shall believe that when I see it. In his reply, the Secretary of State said:
  "Some of those commenting on the review of child care law have said that no changes to child care law should take place in advance of a family court. The Government do not accept this need to be so and continued to see advantage in not delaying desirable improvements in child care law pending possible introduction of a family court."—[0fficial Report, 1 May 1986; Vol. 96, c. 472.]
  We are not asking the Government to delay improvements to child care law; we are asking them to accelerate the introduction of a family court. There is no reason why the two measures should not go ahead. They have been considered for some time. If the family court proposals are introduced shortly, it should be possible to consider them along with a proposed White Paper in the autumn and for the legislation on both to be considered together. One knows the difficulty of achieving co-ordination between Government Departments, but that should not be beyond the wit of man, if the political will is present in the Government.
  I am sorry that the Bill will not leave the House in the form that we had hoped—I hesitate to use the aphorism about half a loaf because I think that we are getting no more than a slice—but the time that we have spent on it has been time well spent.
  2.2 pm
  Mr. Ken Hargreaves: I congratulate my hon. Friend the Member for Westbury (Mr. Walters) on his success in getting the Bill through to Third Reading. It must be a satisfying achievement—one which I shall not experience with my Bill. I congratulate my hon. Friend on the work that he has done.
  2.3 pm
  Ms. Harman: I, too, congratulate the hon. Member for Westbury (Mr. Walters). As soon as I had had an opportunity to study the Bill carefully and to consult those who were involved outside the House, unlike the Parliamentary Under-Secretary of State for Health and Social Security, I made it plain to the hon. Member for Westbury what my attitude and the Opposition's attitude would be. I am not being mealy-mouthed in saying that the hon. Gentleman used the opportunity of coming high in the ballot to focus the attention of the House on the considerable concern about the pressing issue of children in care. Unwittingly, he has carefully exposed the Government for their inaction in not bringing forward child care law legislation and legislation for the implementation of a family court.
  At the outset, I was concerned about clause 1. It was important to draw the problem to the public's attention. Following the Jasmine Beckford inquiry report, and after the heated hysteria generated by some elements of the press had died down, it was important for the matter to be considered fully by the House, and on a wider basis. The hon. Member for Westbury has put the debate on child law back on to an even better keel. That of itself created a better climate in which to discuss the issues and to try to resolve the problems. That is very important.
  1254
  It is worth looking briefly at the background against which children are taken into care. It is important to ensure that children are taken into care only when it is absolutely necessary and that families are broken up only when it is absolutely unavoidable. I should like to consider the background against which the reluctant decision is made by magistrates and social workers alike to take a child into care, and the necessity for that decision.
  It is ironic that, although we rightly and collectively condemn mistreatment of children and are horrified, outraged and angered by parents who mistreat their children, and although we collectively feel a sense of shame at belonging to a society which includes people who abuse and even kill their children, all too often our collective sense of shame does not extend to a collective desire to support families with small children.
  All too often, the spiral of problems which ends in child abuse is tied up with lack of proper public services, with bad housing and with inadequate income. That does not excuse child abuse and it is not the whole story. Despite having low incomes, bad housing and suffering a complex network of problems, many people manage to be caring, loving and good parents. Lack of day nursery places, day care facilities and decent housing and inadequate income can be the straw that breaks the camel's back and the spark that leads to child abuse in vulnerable families.
  We should collectively not only have a sense of outrage but recognise that the children in families where battering takes place are the children not only of that family but of society as a whole. We all have a collective responsibility for them. It is shameful that, compared with the rest of Europe, Britain has the lowest provision of nursery classes and places for children under five. That is typical of the division of attitude between people on the continent and people in Britain. The culture of Europe is much more welcoming to and accepting of children. It recognises that they are part of the community as well as, most importantly, part of their families.
  Research has shown that the children in care are the children of the poor. The Government are responsible because of the increasing number of families hit and blighted by joblessness. The problems will be exacerbated by the Social Security Bill, which will result in more families in poverty and therefore more families vulnerable to having a child taken into care. Judging by the Government's figures in the technical annex to the White Paper on social security, 100,000 low-paid families and 100,000 families in which a family member is unemployed will lose out under the legislation. Those low-paid families and unemployed families will be worse off. About 30,000 low-paid families and 10,000 families in which a member of the family is unemployed will be worse off by £5 a week or more.
  Mr. Deputy Speaker: Order. The hon. Lady seems to be widening the debate in an unacceptable way. She should confine her remarks to the contents of the Bill.
  Ms. Harman: I hope that I have shown the link between poverty and reception of children into care, and between poverty and family breakdown. Perhaps I can leave it there. We offer our congratulations to the hon. Member for Westbury on taking the opportunity to use his place in the private Members' ballot to bring before us an important issue.
  2.10 pm
  Mr. Whitney: Before I come to the points that I want to make, I have to say that it is a pity that throughout these difficult proceedings on a complex and sensitive matter we have been treated in almost every intervention by the hon. Member for Peckham (Ms. Harman) to her standard litany of promoting her party's distorted views on the present situation. If she is interested in the problems of poverty, unemployment, homelessness and deprivation, she should think hard about how those problems would be exacerbated if her party's policies were implemented. The policies advocated by her right hon. Friends would cost an additional £24 billion. How much social deprivation would there be then?
  I should also like to join in congratulating my hon. Friend the Member for Westbury (Mr. Walters) on using his good fortune in the ballot to promote a Bill of such importance about a matter that is of great interest to everyone. Whatever views we have about the practicalities and the steps that would be needed, none of us underestimates the great amount of work that requires to be done to prevent child abuse. It presents a challenge to the whole of society and that is why my Department is active in this whole area. Much of the work is of a practical nature and consists of liaison between the social services inspectorate, local authorities and social services departments. The work is not headline-grabbing but nevertheless a great deal of work is being done. I can assure hon. Members that we shall continue to strive to see that the best practice in Britain, which is exceptionally good, becomes as near as possible universal.
  In addition to the practical aspects, the law has a role to play. The law is not yet right and that is precisely why we launched a consultation exercise last October and we look forward to producing proposals in the autumn which will form the basis for further comprehensive legislation. I recognise the deep disappointment felt by my hon. Friend about the change in the Bill, but I hope he and our hon. Friends will accept that the Bill as it now stands will do a great deal of good and will be of benefit in this difficult area.
  The new regulation-making power about "home on trial" will help to strengthen the existing arrangements for child protection, especially when it is linked to the other steps that we are taking to assist local authorities in their child abuse work, about which I have already spoken.
  The new provision allowing parents to have party status where an order for separate representation of the child is made will, if the Bill becomes law, remedy what many people see as a real injustice to parents. Their present inability to appeal against a child care order is a defect and I am glad that we have the opportunity in this Bill to put it right. The measures we have achieved on the status of grandparents will be greatly appreciated by my hon.
  1256
  Friends. Despite their disappointment about clauses 1 and 2, I hope that my hon. Friend and his sponsors will accept that the great efforts they have put into the Bill have had a worthy outcome.
  As my hon. Friend the Member for Chislehurst (Mr. Sims) said, I acknowledge that the wide national debate that has been generated has been a factor in our rapid digestion of the response to our working party report. There have been 200 detailed responses in this complicated area. Thus my right hon. Friend the Secretary of State was able to make the announcement to the House yesterday about his proposals in the autumn.
  Therefore, I am sure that my hon. Friend the Member for Westbury (Mr. Walters) can look with great satisfaction on what he has achieved. I congratulate him on his Bill.
  2.15 pm
  Mrs. Virginia Bottomley: I should like to add my wholehearted support and congratulations to my hon. Friend the Member for Westbury (Mr. Walters) on moving us a significant and important stage forward in the protection of children at risk.
  I have been provoked to speak in defence of my hon. Friend the Minister by a naive and simplistic remark by the hon. Member for Peckham (Ms. Harman). Since 1979 there have been dramatic increases in resources for health and personal social services. But much more at the heart of the matter is the fact that, to protect children in care, social workers need professional autonomy, not political interference. I urge the hon. Lady to look in her own back yard for political interference in professional work.
  With regard to the Bill, the need to rectify the position of parents and grandparents has been long overdue. I am aware of the interest in that matter of my hon. Friend the Member for Cambridge (Mr. Rhodes James).
  I congratulate my hon. Friend the Minister on the fact that there has been a sincere, thorough and thoughtful examination of improvements in and the promotion of good practice. Guidelines have been issued by his Department. I join him in his remarks about the work of the inspectorate. At some stages, some of us have wondered whether we were going fast enough, and whether the introduction of a court hearing would help to move things forward. That is borne out by the figures. Every child abuse death is a death too many and a tragic waste. The evidence is that the number of children who are seriously injured or killed has been coming down in recent years. I am sure that that has been achieved through concerted action and the maintenance of good practice. We look to the Minister to move on as fast as possible in comprehensive child care law reviews and the development of good practice.
  Question put and agreed to.
  Bill accordingly read the Third time, and passed

  Health Service Joint Consultative Committees (Access to Information) Bill
  As amended (in the Standing Committee), considered.
  2.17 pm
  Mr. Frank Cook: On a point of order, Mr. Deputy Speaker. It is not my wish to delay proceedings in the House unduly, but I must seek your guidance and protection, as a custodian of the procedures of the House and guardian of the rights of Back Benchers, on a matter concerning the denial of access to information that I consider to be essential to the performance of my role as an elected representative.
  I refer specifically to information relating to the report of the Advisory Committee on Irradiated and Novel Foods, which was published on 10 April, and requires the response of the Department by the end of July. I consider that information essential to the formulation of any response. The report itself gives little information and lacks scientific reference. I approached the Library before noon on Thursday 24 April and asked it to provide me with some facts relating to the report. People in the Library set about the business of trying to get that information. After persistent telephone calls each day since then, speaking with the private secretary to the Minister with responsibility for this matter, I find that I am denied that information. This week we have heard justifiable criticism of the lack of information about the possible exposure to radiation of British subjects.
  Mr. Deputy Speaker (Mr. Harold Walker): Order. The hon. Gentleman is unreasonably taking up private Members' time. His statement that the Library has not been supplied with information that he has tried to obtain from the Minister is not a matter for the Chair. The Chair is not responsible for Ministers' replies or non-replies.
  Mr. Cook: Further to that point of order, Mr. Deputy Speaker. I simply wish to say that we complain about the denial of information, yet we are guilty of denying ourselves information. If you do not have the right to rule on this—
  Mr. Deputy Speaker: Order. The hon. Gentleman cannot argue in this way when we have private Members' business before the House. I have ruled that this is not a matter for the Chair.

Clause 2

  ACCESS TO MEETINGS AND DOCUMENTS OF JOINT COMMITTEES
  Mr. Chris Smith: I beg to move amendment No. 1, in page 3, line 5, after 'person', insert
  ', except by way of example for a general case without any identifying name or address included'.
  I shall be brief, because I hope that the Bill will receive its Third Reading during the remaining 10 minutes.
  The amendment would be useful in enabling a joint consultative committee to discuss in public a general point that might refer specifically to individual medical circumstances without disclosing the name and address of
  1258
  the individual. It would ease matters and marginally improve the Bill. It is a small point, but I hope that the Bill's promoter and the Minister will accept it.
  Mr. Robin Squire: The hon. Member for Islington, South and Finsbury (Mr. Smith) will understand if my speech is even shorter than his. I have not had much time to consider the full implications of the amendment, but, speaking only for myself, and subject to the views of my hon. Friend the Minister, the amendment seems to make sense. However, the hon. Gentleman will understand if I say that I would not wish to jeopardise the measure if there proved to be a handicap to absorbing his suggestion.
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Ray Whitney): I am advised that the amendment is unnecessary because the clause specifically refers to information about individuals and is clearly intended to preserve their privacy. I hope that the hon. Member for Islington, South and Finsbury (Mr. Smith) will withdraw the amendment.
  Dr. John Marek: The Opposition would have welcomed the amendment, but, in view of the Minister's assurance that its aims are already contained in the Bill, I shall listen with interest to the comments of my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith).
  Mr. Chris Smith: After that brief but helpful debate, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, Withdrawn.

Clause 3

  ACCESS TO INFORMATION RELATING TO MEMBERS OF JOINT COMMITTEES ETC.
  Mr. Ian Mikardo: I beg to move amendment No. 3, in page 3, line 40, at end insert—
  '(4) On any occasion on which the Secretary of State is made aware that a joint committee has failed to carry any of the provisions of subsections (1), (2) and (3) above he shall forthwith publicly issue a directive to that joint committee requiring it to carry out that provision or those provisions as the case may be.'.
  Clause 3(1) states that a joint committee shall have an obligation to do one thing; subsection (2) states that it shall have an obligation to do something else; and subsection (3) states that a joint committee shall have an obligation to do yet another thing. However, the clause does not say what will happen if a joint committee does not do those things. There is no point in having a clause which places duties on bodies if there is no sanction against the non-fulfilment of those duties.
  Of course, it is not easy to impose sanctions on a joint committee. Fines would simply remove money that it must use for other purposes. The only sanction that I could envisage was to say that if they do not do what they are supposed to do, the Secretary of State must tell them to do it. What is wrong with that?
  Mr. Whitney: The amendment is not only defective but unnecessary. Clause 3 lays clear duties on joint committees and on constituent authorities. If a joint committee or constituent authority neglects to carry out those duties, any member of the public can draw attention to the omission and, in the last resort, although it is hardly

  1259
  likely to come to this, may have recourse to the courts. It is difficult to see what the amendment would achieve that is not already achieved by clause 3.
  Mr. Mikardo: I cannot see it in the Bill, but if there is a remedy through the courts for someone who is aggrieved, of course I accept that the amendment is unnecessary. I shall engrave the Minister's words on tablets of stone to make sure that something happens as a result of them. To give me time to do that, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Order for Third Reading read.
  2.24 pm
  Mr. Squire: I beg to move, That the Bill be now read the Third time.
  My comments will be brief. I pay tribute to my hon. Friend the Member for Peterborough (Dr. Mawhinney) who initiated the process before he was elevated, so to speak, to a higher place on the Government Benches. I thank the community rights project and the Freedom of Information Campaign in general for their assistance. I thank hon. Members on both sides who have supported the Bill and have ensured that it passes to the statute book today. The Bill provides a small increase in access to information, and we should all be grateful for that.
  2.25 pm
  Dr. Marek: I warmly congratulate the hon. Member for Peterborough (Dr. Mawhinney) who originally selected this subject for a Bill, having had the good fortune to be drawn high enough in the ballot. Fortunately for him, he joined the Government, so he could not proceed with the Bill. On behalf of the Opposition, I also congratulate the hon. Member for Hornchurch (Mr. Squire) who has looked after the Bill, and has brought it through Committee and a rather shortened Report stage.
  The Bill will add significantly to information available to the public. Any member of the public will be able to find out the members of the joint committees in his local area and what they are discussing. It is a small piece of legislation, which well deserves to be on the statute book. Once again, I congratulate the hon. Member for Hornchurch on bringing the Bill to Third Reading.
  2.26 pm
  Mr. Whitney: I join in the congratulations to my hon. Friend the Member for Hornchurch (Mr. Squire) and my hon. Friend the Member for Peterborough (Dr. Mawhinney), who is now the Under-Secretary of State for Northern Ireland and who first had the foresight to introduce the Bill. I acknowledge the help received from the hon. Members for Birkenhead (Mr. Field) and for Southwark and Bermondsey (Mr. Hughes).
  The Government certainly support the concept of a greater degree of public awareness of the committees and their functions, and that is one of the essential achievements of the Bill. I hope that it will produce a greater awareness of information and a greater and better degree of all-round performance of the organisations. Therefore, the Government wholeheartedly support the Bill and renew their congratulations to our hon. Friends.
  2.27 pm
  Mr. Mikardo: I, too, in just a moment or two, wish to express my appreciation of the Bill. It makes one more little dent—and we must keep denting away—in the obstinate carapace of secrecy in our public life. There are much wider, more serious areas of secrecy than that which is the subject of the Bill. I do not say that to denigrate the Bill or its sponsors. Indeed, those wider areas could not possibly be tackled in private Members' legislation. The hon. Member for Peterborough (Dr. Mawhinney) was wise to confine his Bill to an area which, while maintaining the important principle of openness in the conduct of public affairs, was sufficiently restricted to ensure that the Bill had a reasonable chance of reaching the statute book, as this one, happily, will do.
  I hope that the Bill will set a precedent, and that all hon. Members who care about open government—one cannot care about democracy without caring about open government—will take a leaf out of the hon. Gentleman's book. If they draw a high place in the ballot next Session, I hope that they will find other similar areas of public life which are at present shrouded in secrecy and about which citizens cannot find out what is going on, and amend them. I am happy to give my full support to the Third Reading.
  Question put and agreed to.
  Bill accordingly read the Third time, and passed.

  Obscene Publications (Protection of Children, etc.) (Amendment) Bill
  Order read for resuming adjourned debate on amendment proposed [25 April] on consideration of the Bill, as amended (in the Standing Committee).
Clause 2

  SPECIAL TEST OF OBSCENITY IN RELATION TO PERSONS UNDER THE AGE OF 18
  Which amendment was: No. 12, in page 3, line 17, to leave out '18' and insert '16' instead thereof.—[Mr. Dubs.]
  Question again proposed, That the amendment be made.
  Mr. Ian Mikardo: When I was rudely interrupted—
  Mrs. Virginia Bottomley: Is my hon. Friend aware that my hon. Friend the Member for Davyhulme (Mr. Churchill) has already agreed to all the amendments?
  Mr. Mikardo: It might have helped if the hon. Member for Davyhulme (Mr. Churchill) had been here to tell us that. But I could not resist giving way to the hon. Lady when she called me her hon. Friend—
  It being half-past Two o'clock, the debate stood adjourned.
  Mr. Deputy Speaker (Mr. Harold Walker): Debate to be resumed what day? No day named.
  Mr. Christopher Murphy: On a point of order, Mr. Deputy Speaker. Before we reach the next item on the Order Paper, the Animal Welfare (Royal Commission) Bill, can you advise me whether its Second Reading can be moved, as the Queen's Consent has not yet been signified?
  Mr. Deputy Speaker: The hon. Gentleman can move the Second Reading, but we had better wait to see whether the Queen's Consent is signified.

Private Members' Bills

  ANIMAL WELFARE (ROYAL COMMISSION) BILL
  Order for Second Reading read.
  Mr. Murphy: I beg to move.
  Mr. Deputy Speaker: Queen's Consent?
  Mr. Murphy: That is a very good question.
  Hon. Members: Object.
  Second Reading deferred till Friday 4 July

  UNBORN CHILDREN (PROTECTION) BILL
  Order for Second Reading read.
  Hon. Members: Object.
  Second Reading deferred till Friday 6 June

  STANDING CHARGES (ABOLITION) BILL
  Order for Second Reading read.
  Mr. Jeremy Corbyn: With permission—
  Hon. Members: Object.
  Mr. Deputy Speaker: Objection taken. Second Reading what day?
  Mr. Corbyn: On a point of order, Mr. Deputy Speaker. I was not objecting to the Bill. I was moving—
  Mr. Deputy Speaker: Order. The objection was recorded from elsewhere in the House.
  Mr. Corbyn: I did not hear it, Mr. Deputy Speaker. Can you say where it came from?
  Mr. Deputy Speaker: The objection was taken from elsewhere in the House. Can the hon. Gentleman, on behalf of the hon. Member in charge of the Bill, name an alternative date?
  Mr. Corbyn: Yes, indeed—Friday 4 July.
  Second Reading deferred till Friday 4 July

  ABOLITION OF CROWN IMMUNITY BILL
  Order for Second Reading read.
  Hon. Members: Object.
  Mr. Deputy Speaker: Bill not printed. Second Reading what day? No day named.

  NOISE ABATEMENT BILL
  Order for Second Reading read.
  Hon. Members: Object.
  Mr. Deputy Speaker: Objection taken. Second Reading what day?
  Mr. Don Dixon: On a point of order, Mr. Deputy Speaker. I have introduced the Bill because I suffer from industrial deafness. The Bill seeks to end abuses, so that people will be able to hear properly. I did not hear the hon. Member who objected. Would it be possible, Mr. Deputy Speaker, for the hon. Member who objected to stand up, so that we can identify that half-baked individual?
  Mr. Deputy Speaker: I distinctly heard an objection made in some part of the House.
  Mr. Dixon: I did not hear it.
  Mr. Deputy Speaker: The hon. Gentleman is surely not that deaf. I also suffer from industrial deafness, but I can hear him.
  Mr. Dixon rose—
  Mr. Deputy Speaker: Order. I am trying to explain the difficulty that the Chair is always in. The procedure followed today is no different from that followed regularly on Fridays since I have been a Member of Parliament. That is a matter—
  Mr. Dixon rose—
  Mr. Deputy Speaker: Order. The hon. Gentleman must contain himself. I was about to point out that the position of the Chair is no different from the position that it is always in when a Question is put that evokes a response. Hon. Members do not rise in their places to say Aye or Noe. If I followed the logic of the hon. Gentleman's argument, the Chair would have to ask hon. Members to stand in their places whenever the Question was put. That has never, to my recollection, been our practice.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. I can take only one point of order at a time. We have merely followed the normal practice today.
  Mr. Corbyn: Further to the point of order raised by my hon. Friend the Member for Jarrow (Mr. Dixon), Mr. Deputy Speaker. I do not doubt that you heard "Object" from somewhere in the Chamber. I am concerned, however, because I cannot see the lips of some hon. Members who are hidden by the Clerks' Table, who appear to sink deeper into the Benches as the afternoon passes.
  Secondly, Mr. Deputy Speaker, would you accept that it would be perfectly possible for someone—a stranger or an intruder—to shout, "Object," and for there to be an echo that would even mislead you, Mr. Deputy Speaker? It would be much better and it would clear up any possible doubt or misunderstanding if the hon. Member who objects—
  Mr. Deputy Speaker: Order. I have the hon. Gentleman's point, which is one that we have heard before. I think that he should have a little more faith in the judgment of the Chair than to think that I might inadvertently pick up as a genuine response an interjection that was made expressly outside the House.
  It would help the Chair enormously if Members who wished to object were clearly to identify themselves by rising in their places, but the Chair has no power to require an hon. Member to do so. It has no more power to require that to happen on an occasion such as this than it has, for example, when there is a mid-week Second Reading, when voices are heard on both sides of the House, those interjections being made usually from a sedentary position. It would be unrealistic for the Chair to expect those hon. Members to rise in their places. The Chair is in a difficulty on such occasions and all that I can do is appeal to the House, as I have done previously, that those hon. Members who wish to take objection should do so loudly and clearly and should not be ashamed to identify themselves.
  Mr. Corbyn rose—
  Mr. Deputy Speaker: Surely there is nothing more to the point of order.
  Mr. Corbyn: I did not wish in any sense to impugn your judgment on this issue, Mr. Deputy Speaker. I am sure that it is correct. However, I think that justice should be seen to be done as well as being heard to be done. I draw your attention to early-day motion 814, Mr. Deputy Speaker, which attempts to protect Mr. Speaker from possible misunderstandings in this respect.
  Mr. Deputy Speaker: I am grateful to the hon. Gentleman for his protection.
  Mr. Ian Mikardo: Would it be helpful, Mr. Deputy Speaker, if you suggested to the Whip on the Government Front Bench that he should get himself a cassette? That would save him a great deal of trouble.
  Mr. Dixon: I was not trying to be funny, Mr. Deputy Speaker, when I intervened earlier, and I did not require any lectures on my hearing. I was explaining that I did not hear the objection. Surely it is only fair that Members who introduce Bills should have the right to hear and see those who object to them.
  Mr. Deputy Speaker: I can only repeat that I heard an objection expressed in the House.
  Second Reading what day?
  Mr. Dixon: Friday 13 July. I might have more luck on that day.
  Mr. Deputy Speaker: Friday 13 June — [Interruption.]—11 July. The hon. Gentleman has a disability which I share with him.
  Second Reading deferred till Friday 11 July.

  RIGHT TO CO-OPERATE BILL
  Order for Second Reading read.
  Hon. Members: Object.
  Second Reading deferred till Friday 4 July.

  MEDICAL ACT 1983 (AMDT) BILL
  Order for Second Reading read.
  Hon. Members: Object.
  Mr. Deputy Speaker: Second Reading what day? On the instruction of the Member in charge of the Bill. Friday 16 May.

  FORESTRY BILL
  Read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  RENEWABLE ENERGY SOURCES(PROMOTION) BILL
  Order for Second Reading read.
  Hon. Members: Object.
  Second Reading deferred till Friday 9 May.

  TOBACCO PRODUCTS (SPORTS SPONSORSHIP) BILL
  Order read for resuming adjourned debate on Second Reading [21 February].
  Hon. Members: Object.
  Debate further adjourned till Friday 6 June.

  BUSINESS OF THE HOUSE
  Motion made and Question put,
  That, at the sitting on Tuesday 6th May, a Motion in the name of the Prime Minister for the Adjournment of the House shall, if not previously concluded, lapse at Seven o'clock.—[Mr. Malone.]
  Hon. Members: Object.

  PRIVILEGES
  Motion made and Question put,
  That Mr. David Steel be discharged from the Committee of Privileges and Mr. A. J. Beith be added to the Committee.—[Mr. Malone.]
  Hon. Members: Object.

  Mogul Foods Ltd.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Malone.]
  2.38 pm
  Mr. Michael Hancock: I have been trying for some months to draw the attention of the House to the case of one of my constituents. It is a case where a £75,000 loan, guaranteed under the small firms loan guarantee scheme, was spirited away from my constituent's bank account on the very day that it was credited to that account and paid over to another firm that promptly went into liquidation, with the result that £75,000 seemingly vanished into thin air, or possibly crossed the Channel to Jersey, with none of it ever being used for the purpose for which it was intended.
  The Secretary of State has told us that, of over 16,000 loans granted under the guarantee scheme, "several thousand" have been lost in one way or another. In my constituent's case it seems likely that the way in which it was lost was by deliberate fraud. If the same applies to most of the other vanished loans, this amounts to a national scandal, of which the House should be made aware and about which the Government should be prepared to take action.
  My constituent, who comes from India, had set up a company, registered under the name of Mogul Foods Ltd., to market canned foods intended especially for immigrants to this country from the Indian sub-continent. Broadly speaking, it was a business to market canned curry. The actual canning was done by contract. There was a surplus of canning capacity in Cornwall, where he was operating, so there was no point in acquiring a canning plant. However, he needed capital to enhance his marketing and distribution capabilities. That was the purpose for which he applied for a loan, and "marketing and distribution" was the official purpose for which the loan was granted.
  The loan of £75,000 was approved by the Department of Trade and Industry, which authorised the National Westminster bank to make the money available. According to the bank statement, the money was credited to Mogul's account with the National Westminster bank at its Eastcheap branch in the City of London on 5 August 1982. On the same day, two cheques—one for £71,000 and the other for £6,032—payable to a firm called Backchurch Storage Ltd., which subsequently went into liquidation, were debited to Mogul's account. The larger cheque was in part payment for the lease of a canning plant and its equipment, most of which had been previously sold by Backchurch to another firm called Clarwill Leasing Company which, like Backchurch, was apparently a subsidiary of another company called Lusty Group.
  The payment to Backchurch was made without the knowledge of my constituent, Mr. Varma, who was at the time—and still is—chairman and majority shareholder of Mogul Foods. The cheques were signed by a Mr. Richard Sale, who was both secretary of Mogul and a director of Backchurch. The bank's authority for making this payment has been questioned. In its own justification, the bank has produced a mandate which purports to bear Mr. Varma's signature authorising the signing of cheques by Mr. Sale and one other of a list of signatories. I say "purports", because Mr. Varma strongly disputes the authenticity of this mandate.

  1267
  That leads me to the rather curious part played by the National Westminster bank in these transactions. I am not accusing the bank of fraud, but it looks as though it made a mistake in honouring the cheques signed by Mr. Sale, in view of the fact that the money was not being used for the purpose for which the loan was granted. Since then it appears to have been very busy covering up and attempting to justify this mistake. In doing so, it has made a number of self-contradictory statements. All that I need say here is that, before this case was drawn to my attention, it had been looked at by the hon. Member for Surrey, North-West (Mr. Grylls) in his capacity as chairman of the Small Business Bureau. In its letter to the hon. Member for Surrey, North-West, the bank's solicitors made three apparently trivial misstatements of fact that could hardly have been the result of carelessness.
  I cannot say what the bank's purpose was. It gave the date on which the loan was credited to Mogul's account as 28 July 1982, and the date when the two cheques totalling £77,032 were debited was the same—28 July 1982. It would only have had to glance at Mogul's bank statement, a copy of which I have here, to see that 5 August was the date of both transactions. The solicitor's letter also stated that the purpose for which the loan had been granted was "manufacture and distribution." The form I have here from the Department of Trade and Industry, dated 7 June 1982, says again, quite unambiguously, that the purpose of the loan facility was
  "capital injection to new business for marketing and distributing curried products."
  In the second letter, Lord Boardman stated that he did not consider that the difference between the two purposes materially altered the bank's position. That was not the attitude of the National Westminster bank manager, who, according to correspondence in my possession, was worried that he had allowed the transaction to go through and went to considerable lengths to manufacture documentary justification after the event.
  Before he approached me, my constitutent, Mr. Varma, had approached the City of London fraud squad, which reported that the Director of Public Prosecutions was unable to prosecute because of lack of evidence. I have recently written to the fraud squad again, asking whether the evidence that I have now is enough for it to proceed. I have clear documentary evidence to show that the equipment of the canning factory which Backchurch sold to Mogul Foods was not its to sell, as it had sold it the year before to the Clarwill Leasing and Discounting Company Ltd., which, like Backchurch, was a subsidiary of the Lusty Group, and which, also like Backchurch, subsequently went into liquidation.
  I have this week had a reply from the police to my letter of 6 March 1986, in which I asked them to examine my evidence, which is not new but which they appear to have overlooked. Officers of the fraud squad have again interviewed Mr. Varma, apparently as a consequence of my letter. Since then he has had a letter from the assistant director of public prosecutions saying that further consideration has been given to the new evidence. The letter ends not by saying that the evidence is insufficient but with the odd statement
  "that the prosecution would not be appropriate".
  My letter from the Commissioner of Police for the City of London strangely uses the same words. Mr. Varma tells
  1268
  me that the police officers told him that both the bank and its solicitors agreed that there had been a fraud, but both refused to assist the police in uncovering it.
  This would not be a matter of national importance and not a matter to deserve the attention of this House if it were an isolated instance of fraud or an isolated instance of a bank's apparent irresponsibility. The fact that so many of these loans have ended by the lending bank having to invoke the guarantee and reclaim the loan from the Department of Trade and Industry strongly suggests that, sadly, the case of my constituent is not unique.
  In correspondence with me and in statements to the House, the Secretary of State has taken the view that once a loan has been approved his responsibility is finished. From then on what happens to the money is a matter for the banks. The banks have taken the view that the actual use of the money is not their concern. Their responsibility remains to their shareholders. If the loan cannot be repaid, they can always reclaim most of it from the Department of Trade and Industry.
  I have no intention of knocking the idea of the small firms guarantee loan scheme. On the contrary, part of my purpose in raising this matter today is to suggest that the Secretary of State should authorise a new loan to Mogul Foods, which has been left, stranded without working capital by what has happened. There is certainly the possibility that the loans granted under the scheme are regarded by certain crooked financiers as easy game, as funds which, with a little bit of ingenuity, can be milked and diverted and perhaps end up in Jersey. A few subsidiaries can be set up, which sell off non-existent assets and then go into liquidation. The Secretary of State should examine the possibility that this is what is happening with a substantial proportion of other loans. We should ensure, where fraud seems likely, that they are properly investigated and the perpetrators prosecuted.
  I draw to the attention of the House that written replies to me show that the sums so far invested in the small loans scheme amount to £150 million. There is a case to be answered. I hope that the House will seriously consider this case so that investigations can be carried out and the problems of Mogul Foods be properly sorted out. I hope that prosecutions will take place and that the way in which the small firms loan guarantee scheme is handled can be properly investigated.
  2.50 pm
  The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier): The hon. Member for Portsmouth, South (Mr. Hancock) has raised a matter of great concern to one of his constituents, Mr. Varma. In 1982 Mogul Foods Ltd. obtained a loan of £75,000 for the development of its business from the National Westminster bank. That loan was facilitated by an 80 per cent. guarantee to the bank from the Department of Trade and Industry under the small firms loan guarantee scheme. In 1983 Mogul Foods Ltd. was unable to meet its obligations to the bank under the loan agreement and the bank accordingly called on the Department to honour its guarantee, which it did.
  As hon. Members will be aware, my Department, the Department of Employment, is now responsible for the administration of the loan guarantee scheme, and it is therefore appropriate for me to reply to the points raised by the hon. Member. For convenience I shall refer to

  1269
  whichever Department was responsible for the administration of the scheme at the time. That is confusing because the sponsorship has moved from the Department of Trade and Industry to my Department. Whoever has been the Minister responsible for small firms has been the sponsoring Minister for the loan guarantee scheme.
  The hon. Gentleman has pursued this matter with vigour and persistence on behalf of his constituent. I recognise that his intentions are commendable. I shall try to give him as detailed a reply as possible. I shall concentrate on those aspects of the case which directly involve the Department. I hope that the House will accept that we have dealt with the case properly and in good faith, within the limits of our powers and the available information.
  Anyone who has read the correspondence arising from the case, which goes back over four years, will understand that the affair has caused a great deal of distress to Mr. Varma and his family. His hopes for his business have been dashed, his personal investment has been lost and a great deal of expense, time and anxiety has been incurred in pursuing the matter.
  On a personal level, one is bound to feel sympathy for someone in Mr. Varma's position. Mr. Varma has made many serious allegations against various persons, some of which the hon. Gentleman referred to today. I emphasise that none of the allegations has been tested in the courts, in civil or criminal proceedings. As a result of the new information that has been drawn to my attention by the hon. Gentleman, that might now happen. It would certainly be interesting. Those against whom allegations have been made do not have the opportunity to put their side of the story and they are not represented here today. The House must bear that in mind.
  Mr. Varma has been repeatedly advised that his grievances can be resolved only in the courts through a prosecution. I understand that Mr. Varma has brought his evidence to the attention of the police. We shall see what transpires as a result of the new evidence. So far, there have been no charges.
  Mr. Hancock: On the accuracy or otherwise of the evidence, I should be interested to know whether the Minister could say whether his Department has attempted to contact the other people involved in the supposed fraud and, if so, what his Department's response was to discussions with the personalities involved.
  Mr. Trippier: I shall endeavour to illustrate our position. The Department's responsibility is to deal with the bank, which was the lender in the first instance. I have no doubt that the bank has tried to contact the other individuals to whom the hon. Gentleman referred, but that is not a matter for my Department. We are interested in whether the loan was within the parameters—which are fairly broad—of the loan guarantee scheme under the existing rules.
  It is not our responsibility to appraise applications when they are first brought to our attention. The hon. Gentleman would not seriously expect it to be. I do not want civil servants or Ministers to do the appraising. We leave that to the banks because they have the discipline and training necessary. That was the understanding when the scheme was introduced and I am content with that.
  1270
  The hon. Gentleman referred to inaccuracies in letters from the National Westminster bank. It is unfortunate that such errors should confuse an already complicated matter, but I find it difficult to believe that the mistakes were deliberate. It is obvious that such mistakes would serve no purpose for the bank and would be easily detected.
  Under the loan guarantee scheme, the Department provided at that time a guarantee of 80 per cent. on loans up to a maximum of £75,000. To ensure that the guaranteed loans were not just a soft option, borrowers were required to pay a premium to the Department of 3 per cent. on the guaranteed proportion of the loan. Guaranteed loans were available for most purposes and for most types of business, with some exceptions. The terms of the scheme have been modified from time to time, but the terms that I have described are those that were particularly relevant at the time.
  Before outlining the facts concerning Mogul Foods, I must emphasise certain aspects of the scheme. From their inception, guaranteed loans have been loans by the banks and not by the Government. It is wrong to suggest that Government money is paid to the borrower. Government money is paid to the bank only if a claim is made on the guarantee. Moreover, there is only a partial guarantee. The bank shares the risk in the event of a default.
  Decisions on the commercial aspects of lending are taken entirely by the banks. They decide whether a loan proposal is commercially viable, taking into account all the circumstances, including, of course, the availability of the guarantee. While the hon. Gentleman was right to say that the precise use made of the money applied for was changed, I told him in a parliamentary answer that the bank was responsible for notifying the Department of any change.
  Mr. Hancock: I draw the Minister's attention to a letter from Lord Boardman, the chairman of National Westminster bank, who wrote:
  "The Bank does not accept that Mr. Varma or Mogul Foods Limited have any grounds for complaint against the Bank."
  Is the Minister saying that the banks have no obligation for the money and nor do the Government? Where is the responsibility for the way in which this public money is used?
  Mr. Trippier: The responsibility is with the individuals who were parties to and signed the original application form. Perhaps that was the cause of Mr. Varma's undoing. When the application was submitted, it was clear that the other people named by the hon. Gentleman were directors of the company.
  Any case that Mr. Varma has is against the other directors. He readily concedes that point in correspondence with me and I also have a copy of the letter that Lord Boardman sent to the hon. Gentleman. I believe that Lord Boardman is absolutely right.
  In preparation for the debate, I had to check whether the bank had notified the Department that there was a change of use for the money being made available. That notification was sent to us and I have it in my file.
  As I said, the Department forms no commercial judgment on the aspects of any project, but merely examines whether the application is eligible under the scheme. There is no doubt that this application was eligible and even the changed purposes fell within the scope.

  1271
  The bank has to decide whether to seek repayment of the debt by means of liquidation, realisation of security or legal action. After any costs have been met, the proceeds of such action are split between the bank and the Department. The Department does not directly pursue the recovery of debts. That would be impracticable.
  I assure the hon. Gentleman that in the three years during which I have been the sponsoring Minister of the scheme, I have never received correspondence such as that I have had with Mr. Varma. The hon. Gentleman said that he thought that such problems might he widespread, but I reject that view. A considerable number of loans have been made under the scheme, totalling £540 million, and claims on the guarantee have been relatively small, at about 20 per cent. That bears a favourable comparison with similar schemes on the continent and in the United States. We have never encountered such an issue previously, but I am satisfied that the bank acted within the rules and regulations of the scheme.
  The scheme is extremely economical. A unit of about 10 people operate within the Department. As I have said, they issue guarantees on loans over the £500 million mark and settle claims of more than £100 million. That is an arbitrary figure, because obviously people who have borrowed money would still make a claim at some future stage. Those 10 people deal also with any complaints which arise, including—I am sure the hon. Member for Portsmouth, South will agree—protracted correspondence from Mr. Varma over a long period.
  It is evident that the Department needs to consider only two issues in any particular case. First, is there a valid guarantee? Secondly, is there a valid claim? The Department will setlle any bona fide claim on a valid guarantee. The circumstances giving rise to a claim are normally quite irrelevant to the Department and it would be impractical to investigate them. Provided the borrower has defaulted on his obligations to the lender, whatever the reason, the lender will have a valid claim under the guarantee. Fraud or theft by the borrower, or by some third party, would not invalidate the claim. The only circumstances in which the Department would hesitate to honour a guarantee would be where it appeared that a claim might not be made in good faith, where, for instance, the bank had been a party to a fraud. Fortunately, that is a hypothetical case which has never arisen.
  I turn again to the case of Mogul Foods Ltd. Fortunately, I can be brief, as the aspects of the case that concern the Department are quite limited. My information is derived from the documents relating to the guaranteed loan and from Mr. Varma's letters to the Department. In March 1982, Mogul Foods Ltd. prepared an application for the guaranteed loan. That was signed by Mr. Varma. The directors of the company were listed as Mr. Varma, Mr. Clive Hollands and Mr. Richard Sale. After processing the application, National Westminster bank forwarded it to the Department on 19 May 1982. The stated purpose of the loan was accurately described by the hon. Gentleman—
  "Capital injection to new business for marketing and distributing curried products".
  The Department checked that the application met the criteria for eligibility and issued a guarantee to the bank on 7 June 1982. Around the end of July, the bank credited Mogul Foods Ltd. with a £75,000 loan. It is not disputed that around the same time substantial payments were made by Mogul Foods Ltd to a company in the Lusty group
  1272
  called Backchurch Storage Ltd. However, Mr. Varma disputes several aspects of those payments. He argues, first, that the payments were not properly authorised by Mogul Foods Ltd. and that the bank was negligent in making the payments from Mogul's account. On this point, I must say that, in a letter to the Department in December 1982, Mr. Varma admitted that his fellow directors had full authority to sign cheques. It follows that the cheques for the disputed payments which were signed by Mr. Richard Sale were properly authorised. It is difficult to see how the bank can be fairly accused of negligence.
  Secondly, Mr. Varma argues that he was unaware of these payments at the time. If true—I am not judge and jury—that is a criticism of his fellow directors. What seems clear is that at some stage Mr. Varma signed a contract on behalf of Mogul under which Mogul agreed to buy a factory and machinery from Backchurch Storage Ltd. Mr. Varma claims that this contract was signed later in the year, although it bears the date 30 July, and that he did not understand its contents. It is not my responsibility to form a view on that claim.
  Thirdly, Mr. Varma argues that the assets acquired by Mogul were of little value and that the money was, in effect, misappropriated by the Lusty group, with which Mr. Sale was connected. Again, I do not sit as judge and jury on this, but I note that Mr. Varma's relationship with the Lusty group went back at least to March 1982 and that he appeared, at that time, to be satisfied with the manufacturing facilities which were part of the disputed contract.
  At some stage after these transactions the bank manager became concerned that the loan facility had been used up so quickly. He sought an explanation from Mr. Sale and was told that the company had decided to purchase the manufacturing facilities rather than to hire them. He considered that this involved a change in the use of the loan and in October 1982 notified the Department of this change. The Department confirmed—I have seen a copy of that letter—that the change of use did not affect the validity of the guarantee. Mogul failed to make repayments on the due dates and, in March 1983, the bank claimed a sum of £51,516 under the terms of the guarantee, which the Department duly paid.
  From these bare bones of the story, I think one point is reasonably clear. The Department and the bank both complied with all relevant rules and procedures of the scheme. There is on the face of it no reason to doubt that both the guarantee and the subsequent claim were entirely valid. For that reason, the Department has always explained that it has no locus to investigate this affair any further.
  So far as I am aware there are no strong grounds for any accusation of negligence against the bank. Mr. Varma does not seem to have raised this suggestion until 1984. That is somewhat interesting in view of the time that had elapsed. Mr. Varma certainly started to make the suggestion in 1984. Certain of his later claims, especially about the authorisation of payments by Mogul, flatly contradict his earlier statements. Although I am not sitting as judge and jury on this matter, I admit that that certainly confused me. If Mr. Varma has any real grounds for that accusation, his means of redress is a civil action for negligence or breach of contract by the bank.
  I am interested also in knowing whether Mr. Varma has sought to take legal action by going to a solicitor and being

  1273
  advised by him whether the case can be brought up—not necessarily under criminal proceedings but under civil proceedings. Mr. Varma certainly does not appear to have pursued that course. To be fair to the hon. Member for Portsmouth, South, new evidence may have come to light which throws a slightly different complexion on the matter. I should be grateful to the hon. Gentleman if he would grant me the privilege of seeing copies of the correspondence in his possession. I shall be happy to look again at the matter.
  I have said repeatedly that I am not in a position to act as judge and jury on the rights and wrongs in what, as everyone would agree, is a complex dispute. Yet it seems to me that, even if the hon. Member for Portsmouth, South had new information, we would not intervene as a
  1274
  Department. It is not a matter that we could pursue through the administration of the loan guarantee scheme. I regret that Mr. Varma's business has failed and that National Westminster bank and the Department, and ultimately the taxpayer, have lost money. I hope that eventually Mr. Varma will be satisfied that he has been fairly treated by the Department and the bank. I am anxious for that to occur. I hope that the hon. Member for Portsmouth, South accepts that my Department has given the matter considerable attention. I look forward to hearing about the new information. I hope that at some stage—sooner rather than later—Mr. Varma will explore through the usual channels the possibility of legal action if he thinks that the case is justified.
  Question put and agreed to.
  Adjourned accordingly at eight minutes past Three o'clock.

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  Electrical Goods (Competition) Toys
  Toys
  Toys
  Libya (Corned Beef)
  Libya (Corned Beef)
  West Germany
  West Germany
TRANSPORT
  Marylebone Station
  Marylebone Station
  Railway Closures
  Railway Closures
  Trunk Roads
  Trunk Roads
  Dounreay
  Dounreay
  Bus Routes (Scotland)
  Bus Routes (Scotland)
  Driving Licences
  Driving Licences
NATIONAL FINANCE
  Value Added Tax
  Value Added Tax
  Income Tax
  Income Tax
  Civil Servants (Ethnic Origin)
  Civil Servants (Ethnic Origin)
EMPLOYMENT
  Fishing Industry
  Fishing Industry
  News International (Wapping)
  News International (Wapping)
  Labour Statistics
  Labour Statistics
  Wages Councils (Leicester)
  Wages Councils (Leicester)
  Job Creation
  Job Creation
SCOTLAND
  Examinations
  Examinations
  School Leavers
  School Leavers
  Scottish Grand Committee
  Scottish Grand Committee
  Roadworks, Caithness
  Roadworks, Caithness
  Planning Appeals
  Planning Appeals
  Transport Infrastructure
  Transport Infrastructure
  Probation Orders
  Probation Orders
  Community Service Orders
  Community Service Orders
  Prisoners (Homeless Discharge Grant)
  Prisoners (Homeless Discharge Grant)
  Parole
  Parole
  Petty Offenders
  Petty Offenders
  Prison Service
  Prison Service
  Prisoners (Statistics)
  Prisoners (Statistics)
HOME DEPARTMENT
  Plastic Bullets
  Plastic Bullets
  Police Vehicles (Accidents)
  Police Vehicles (Accidents)
  Prison Service (Ethnic Origin Survey)
  Prison Service (Ethnic Origin Survey)
  Prisoners
  Prisoners
  Prison Officers
  Prison Officers
  Prisoners (Visits)
  Prisoners (Visits)
  Opium Poppies
  Opium Poppies
  Members' Correspondence
  Members' Correspondence
  Airports
  Airports
  Weapons (Shops Register)
  Weapons (Shops Register)
  Emergency Services Personnel (Uniform)
  Emergency Services Personnel (Uniform)
  Leeds-Bradford Airport
  Leeds-Bradford Airport
  Boys (Remand)
  Boys (Remand)
  Heathrow Airport (Immigration Officers)
  Heathrow Airport (Immigration Officers)

Preamble
The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Hereford.

Royal Assent
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Gaming (Amendment) Act,

Statute Law (Repeals) Act,

Highways (Amendment) Act,

Yorkshire Water Authority Act.

The Homeless: Accommodation Costs
Baroness Jeger: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their present estimate of the cost to local authorities and to the DHSS of bed and breakfast accommodation for the unemployed and for hotel and hostel accommodation for homeless families; and how many flats and houses to rent could be built for this amount of money by local authorities and housing associations.
Lord Skelmersdale: My Lords, I must apologise for the length of this Answer. According to information provided to the Chartered Institute of Public Finance and Accountancy by 350 local authorities in England and Wales, their net expenditure on hostels and bed and breakfast accommodation for households accepted as homeless was some £18·4 million in 1984/85. Provisional annual expenditure for Great Britain on all supplementary benefit payments to people in board and lodging accommodation, including bed and breakfast accomodation, guesthouses and hostels, at December 1984 is some £503 million. It is estimated that some 70 per cent. of this relates to unemployed claimants.
Separate figures are not available on how many of these people were accepted as homeless by local authorities. The average cost of houses and flats built by local authorities and housing associations in 1985 was some £30,000.
Baroness Jeger: My Lords, has the Minister had time to look at a publication by five charities which deal with these problems? They have based their figures on official statistics which suggest that it costs £10,810 a year to keep a couple with two children in this temporary accommodation, whereas a council
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dwelling for the same family, at 10 per cent. interest over 60 years, would cost £4,740. We know that the Government are very bad at estimating the cost in human terms of this policy, but surely such a hard-nosed government, interested in finance, should look at least at the financial implications of this policy.
Why is the present Government's policy to reduce housing provision and to increase board and lodging accommodation, which means that money goes to landlords and there is no asset at the end of the day?
Lord Skelmersdale: My Lords, I have not seen the publication to which the noble Baroness refers. I should point out to her and to the House that it is not government policy to put people in board and lodging accommodation at all. The Government have consistently, through circulars, asked local authorities to use this form of accommodation only as a last resort.
With regard to the costs and the figures for housing in this case, I should point out that the Government have made an extra £200 million available this year. That will go some way to alleviate this problem if the local authorities decide to use it in the way that the House and I should like.
Lord Boyd-Carpenter: My Lords, while my noble friend is acting upon the somewhat unexpected request to him by the noble Baroness to consider the financial implications, will he also consider how much rented accommodation could be provided without cost to public funds if the present oppressive law of landlord and tenant were modified?
Lord Skelmersdale: My Lords, I have no doubt that this is a factor in the equation. But so also is the Audit Commission's recent conclusion that streamlining letting procedures could make over 20,000 extra dwellings available for letting.
Lord Mellish: My Lords, can the Minister explain why some local authorities (which I shall not name) have hundreds of empty flats and yet get involved in this extraordinary and terrifying expenditure? The noble Baroness has a right to ask the Question. But if local authorities have empty flats why do they not spend some money on repairing them and making them habitable, so as to avoid these terrifying costs?
Lord Skelmersdale: My Lords, I agree with the noble Lord. It is an absolute scandal that some local authorities have very high numbers of empty flats and council accommodation generally which could be made available quite speedily. They do not do that on the whole for political reasons. I would say that this is a management problem. If they took the course that the noble Lord advocates at the expense of new builds, they could do it within their financial limits quite happily.
Lord Graham of Edmonton: My Lords—
Lord Harmar-Nicholls: My Lords, may I ask my noble friend—
Lord Graham of Edmonton: Of course you can.
Lord Harmar-Nicholls: My Lords, I am grateful that the noble Lord, Lord Graham, has given me permission to ask a question of my noble friend.
Am I to understand from the way the questions are being put that the bed and breakfast and hotel and hostel accommodation for homeless families has only begun since 1979; or has it been in use by previous governments, who obviously found it the right way to deal with this rather tragic problem?
Lord Skelmersdale: My Lords, my understanding is that this has been a factor in the situation for a number of years, and certainly before 1979.
Lord Graham of Edmonton: My Lords, noting the interest in the empty council properties, will the Minister comment on the fact that the largest number of empty dwellings are owned by the Government; that the next largest number of empty dwellings are in the private rented sector; and that the smallest sector that has properties which are empty and not let is the council sector?
Lord Skelmersdale: My Lords, that may be true, but we are talking about local authority provision. The question addressed to me was about the empty flats and housing units in the local authority areas.
Lord Stallard: My Lords, if it is not the Government's policy to advocate bed and breakfast accommodation, and if they are so concerned about empty properties, why have they consistently refused to allow inner London boroughs, like Camden, to spend money on rehabilitating short life properties? For example, it would cost somewhere in the region of £32,000 to give a four-bedroomed house, which would accommodate a family of seven, a life of five years. It costs the council something in the region of £52,000 or £53,000 to keep that same family in bed and breakfast. Therefore, there is a difference of about £20,000. The Government refuse permission to allow such a house to be rehabilitated. That is part of the answer to the noble Lord, Lord Mellish. What is the Government's reply?
Lord Skelmersdale: My Lords, I do not think that it is part of the answer to the noble Lord, Lord Mellish. From the figures that I gave in my original Answer, the average cost of houses and flats built by local authorities and housing associations in 1985 was some £30,000. Such properties have a very much longer life than the five years to which the noble Lord referred in his supplementary question.

Italian Wine: Consumer Protection
11.13 a.m.
The Earl of Kinnoull: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what safeguards were made to protect the consumer following the recent deaths caused by poisoned Italian wine.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, the public have been warned through a publicity campaign not to drink any Italian wine unless it has been tested. Restaurateurs and grocers have been similarly warned. The wine trade have been testing their stocks and imports are being sampled and tested by port health authorities. No contamination has been discovered in stocks of wine on sale or in distribution.
The Earl of Kinoull: My Lords, I thank my noble friend for that informative Answer. Is my noble friend able to say under what label this deadly wine was sold? Will she say whether or not any of the wine has been imported in bulk to Britain or has been discovered in other countries outside Italy? What tests are applied to imported wine to this country.
Baroness Trumpington: My Lords, a list compiled by the Italian authorities of bottlers whose products have been implicated in Italy was published by MAFF. We have not been supplied by the Italians with a list of individual brand names, no doubt because different bottlers frequently supply the same brand name. In order to identify the wines of those bottlers involved with contamination it is necessary therefore to identify the bottler's name rather than the brand name.
Following numerous tests by the wine trade and enforcement authorities, only one contaminated consignment of wine has been found in the United Kingdom. This was a bulk consignment of Italian vermouth which was tested on arrival and found to contain methanol at a fairly low level.
Lord Molloy: My Lords, on an issue of this magnitude surely the Government or the department responsible should not be concerned with brand names or labels stuck on bottles, but should just say that the whole lot is banned. Firm action should be taken as regards any consignments that arrived in this country before the outbreak came to light in Italy. Simply to look for brand names would seem to ordinary people to be an absurdity. The Government should say that no one here should sell or drink Italian wine until they say so. That is the only safe way to behave.
Baroness Trumpington: My Lords, I have always believed that a little of what you fancy does you good. An Italian decree came into force on 28th March 1986 banning the export of all wines unless accompanied by a certificate of freedom from contamination with methanol above the levels permitted under Italian wine law.
Lord Strabolgi: My Lords, what advice have the Government for British tourists going to Italy?
Baroness Trumpington: My Lords, visitors to Italy are in rather the same position as the Italian population generally. The Italian authorities have taken vigorous action to deal with the recent problem. Nevertheless, visitors would I think be well advised to buy wine from reputable sources only.
Lord Molloy: My Lords, is the noble Baroness aware that those engaged in the off-licence business have been worried and concerned? They know all about the jokes that a little of what you fancy does you good and that it will not do any harm to have a little drop of anti-freeze. But from what they have said and written to me, it is a different matter when those who make the jokes discover that somebody belonging to them has died.
Baroness Trumpington: My Lords, local authority environmental health officers have been kept informed of the situation by the DHSS and are monitoring any retail premises—for instance, small grocers and restaurants—where private importations ma), be on sale.
Lord Marshall of Leeds: My Lords, is my noble friend the Minister as gratified as I am to be able to say that the majority of the whole House have suffered no permanent damage or impairment?
Baroness Trumpington: My Lords, I am delighted.
Lord Ennals: My Lords, I thank the noble Baroness for the very satisfactory answers that she has given. Certainly, so far as I am concerned, I would not accept the advice given by my noble friend Lord Molloy. However, is the noble Baroness absolutely satisfied that the trade in Britain has been widely circulated with the names of the firms and bottlers which have been guilty of what is a very serious crime? Is she able to give an assurance that people who sell the wines all know the danger spots or the danger bottles?
Baroness Trumpington: My Lords, yes.
Lord Kennet: My Lords, will the Government say whether it is the case that a little of what you fancy when it is poisoned does you less harm than a lot? In other words, did those who died from drinking wine containing methanol die because they had drunk a great deal of it, or would it have damaged them anyhow?
Baroness Trumpington: My Lords, the House may be interested to hear that the latest reports are that in Italy at least 23 people have died and more than 50 are seriously ill as a result of drinking contaminated wine. There have been no reports of any illness in the United Kingdom. As regards the health risks, small quantities of methanol, about 0.2 per cent., are present in wines from the natural constituents of grapes. Methanol is highly toxic and it can be lethal if a little as 20 ml is consumed, although more usually the lethal intake is 100 to 250 ml. Sub-lethal doses can cause blindness.
Lord Bruce of Donington: My Lords, do not the circumstances point to the necessity for those who like to consume alcohol in moderate quantities to concentrate for the time being on that produced in the United Kingdom, particularly that which comes from North of the Border?
Baroness Trumpington: My Lords, the question of the noble Lord, Lord Bruce, is a little wide of the
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original Question on the Order Paper. However, I thoroughly approve of his salesmanship.
Lord Chalfont: My Lords, can the noble Baroness tell us exactly how the consumer is supposed to know whether a bottle has been tested or not, as in the case of some Italian wines it might be difficult to do so simply by tasting?
Baroness Trumpington: My Lords, the indications from Italy are that the contamination is likely to have started at the beginning of this year. The first illness in Italy was reported on 2nd March. With regard to the period over which any wines recently brought back from Italy should be regarded as suspect, the answer is any wines brought back since the beginning of this year.
Lord John-Mackie: My Lords, why has the noble Earl concentrated on Italy? Did not all this start in Austria?
Baroness Trumpington: No, my Lords. The Australian problem was different. That was antifreeze. That is less harmful to health, I am assured.
Lord Tordoff: My Lords, without wishing to over correct the noble Baroness, is she not aware that in fact diethelyne glycol is very rarely used in anti-freeze? Ethylene glycol is used in anti-freeze, and that is in fact much more toxic than diethelyne glycol, and probably equally toxic with methanol.
Baroness Trumpington: My Lords, the contaminant is certain Austrian wines—I have now found the place in my notes—was not methyl alcohol but diethelyne glycol, and the health risk associated with the Austrian problem was very much less. Some German and other foreign wines that had been blended with Austrian wines were also contaminated with diethelyne glycol.

Loughton Bus Garage: Closure
11.22 a.m.
Lord Underhill: 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 will make representations to London Regional Transport about the effect on personnel of the closure of Loughton bus garage.
The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness): My Lords, the Government's view is that LRT and its subsidiaries should be left to manage their businesses without political interference.
Lord Underhill: My Lords, does the noble Earl appreciate that, while I expected that Answer, it is extremely disappointing? Does the noble Earl also appreciate that LRT is a nationalised industry set up by legislation initiated by the Government, and that the consequences of the Transport Act and tendering have led to the closure of the Loughton bus garage?

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Does he further appreciate that the men at that garage are extremely annoyed, to put it mildly, at the way they have been treated? It involves transfer from their homes if they wish to keep in the industry; and if they wish to go to one of the other concerns which have taken over the services, it will mean lower country rates. Does the noble Earl also understand that some very good men, who we would have wanted to remain in the bus industry, have left as a result of this? Will he bring pressure on LRT to realise that there are social and human consequences from what is taking place?
The Earl of Caithness: My Lords, we understand that the garage is closing because it lost six out of its seven routes following competitive tendering by LRT and the Essex County Council. What is going to happen to the staff is of course a matter for London Buses Limited. I understand that they have held discussions with staff representatives. We also understand that LBL are offering to move staff to suitable vacancies at other garages, and are offering voluntary severance on terms which are much more favourable than the legal minimum to those who prefer to leave.
Lord Bottomley: My Lords, is the noble Earl aware that those who travel on the buses in that area are already getting a bad service, and that it will be made worse by the closure of the Loughton garage? Is he further aware that, at times, buses which carry disabled children arrive forty minutes or an hour late, causing great disturbance to the children? Things like that really ought to be improved, and will he make representations?
The Earl of Caithness: My Lords, I am grateful for the noble Lord's last point. It is solely because the bus service is so bad that we introduced the Transport Act last year to improve matters.

Geneva Convention: 1977 Protocols
11.24 a.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they can confirm the statement made by Lord Trefgarne in a Written Answer (H.L. Debates, 10th April, col. 407) that they have no record of any reservations made to the 1977 Protocols to the Geneva Convention which relates to nuclear weapons.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, I can confirm that we have no record of any reservations relating to nuclear weapons made to the 1977 protocols additional to the Geneva Conventions of 1949.
Lord Jenkins of Putney: My Lords, in that case (and perhaps for the sake of accuracy noble Lords will permit me, as I think is permitted, to read) how is it that the United Kingdom, at signature of this protocol in 1977, declared that it has signed Protocol I on the basis of ten understandings, the ninth of which was:
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"that the new rules introduced by the Protocol are not intended to have any effect on and do not regulate or prohibit the use of nuclear weapons"?
Is the noble Baroness denying that that exists?—because, if so, I can give her chapter and verse on it and produce the protocol. It is in the Library. Are the Government mistaken, or are they deliberately intending to conceal the facts?
Baroness Young: My Lords, I do not know the particular document to which the noble Lord refers and from which he has quoted. I can only confirm that on signing the protocols in 1977 the United Kingdom made a statement of understanding to the effect that:
"the new rules … are not intended to have any effect on and do not regulate or prohibit the use of nuclear weapons."
Lord Jenkins of Putney: My Lords, that is precisely what I said happened and precisely what the noble Lord, Lord Trefgarne, denied, which the noble Baroness has repeated. Our signature was subject to a reservation that the protocol did not do what it was primarily supposed to do. The fact that this was done by a government previous to the present one does not excuse the present Government attempting the gross act of concealment which has been perpetrated on the British public for all these years.
Baroness Young: My Lords, I am sorry that the noble Lord should make these extraordinary allegations in this way. The United Kingdom statement is in full accord with the intentions of the International Committee of the Red Cross, which stated in their introduction to the draft protocol:
"Atomic, bacteriological, and chemical warfare are subject to international agreements negotiated by Governments, and in submitting these draft additional Protocols the ICRC does not intend to broach these problems."
There is nothing incompatible between the first statement and, I think, the other.
Lord Chalfont: My Lords, are the Government aware that when the noble Lord says that to prohibit the use of nuclear weapons was precisely what the protocol was intended to do he is inaccurate, because there is nowhere in Protocol I or Protocol II of the additional protocols to the Geneva Convention which mentions nuclear weapons at all? Indeed, during the negotiation of these protocols it was repeatedly made clear that nuclear and micro-biological weapons were not meant to be included.
Baroness Young: Yes, my Lords, I thank the noble Lord for that statement that he has made.
Lord Graham of Edmonton: My Lords, would the noble Baroness describe how the signing of these protocols has in any way influenced armament policy among the various signatories? Can she reconcile the use of nuclear weapons with what is said on page 47 of Protocol I, Article 50:
"The civilian population, as such, as well as individual civilians shall not be the object of attack"?
Baroness Young: My Lords, the additional protocols are designed to update the existing laws of armed conflict and to provide improved protection for

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civilians in time of war. Additional Protocol I deals with international conflicts. Additional Protocol II deals with non-international conflicts. Our position is that we are continuing to consult with our NATO partners, and I am not in a position at the present time to state when we would be able to proceed with the additional protocols.
Lord Jenkins of Putney: My Lords, may I have an assurance from the noble Baroness, in view of what she herself has since said, that there will be no further statements from the Government such as that made by the noble Lord, Lord Trefgarne, in his Written Answer in which he said:
"We have no record of any reservation which relates to nuclear weapons"?
The reservation we have discussed refers precisely and particularly to nuclear weapons.
Baroness Young: My Lords, I am not going to confirm that statement. I have just made it myself in answer to the Question that the noble Lord has put down today. I will note of course what he has had to say.
Lord Mellish: My Lords, is the noble Baroness aware that most of us do not understand what Lord Jenkins is talking about? Would she be good enough to put in the Library a copy of the protocol so that some of us who are fairly bright can read it and find out what the heck it is all about?
Baroness Young: I think, my Lords, that the noble Lord will find that it is in the Library; but, if it is not, I shall certainly see that a copy is put there.
Lord Chalfont: My Lords, I apologise for intervening twice in the course of one Question, but would it not be useful as a point of information in the context of this Question and Answer to point out that of the five nuclear powers, two have not signed the protocol; and those three that have signed have not ratified? Furthermore, is it not true that Articles 1 and 3 of the protocol only come into effect when there is a state of war, which is precisely what the nuclear deterrent is supposed to prevent?
Baroness Young: My Lords, that was very well put, if I may say so, by the noble Lord, Lord Chalfont.
Lord Hatch of Lusby: My Lords, it is a perfectly simple question to understand. As I understand it, the noble Lord, Lord Jenkins, is asking why the Government, in the person of the noble Lord, Lord Trefgarne, gave him a Written Answer which the noble Baroness this morning has contradicted by confirming that there was a reservation? Surely this is the issue before the House and it could not be simpler than that.
Baroness Young: My Lords, what I said was that we made a statement of understanding. As I understand it, that is not the same as a reservation.
Lord Jenkins of Putney: My Lords—
Noble Lords: No! Order!
Lord Jenkins of Putney: If your Lordships will forgive me, I must answer this last point.
Baroness Jeger: No, my Lords, you cannot answer it.
Lord Jenkins of Putney: Is the noble Baroness aware that the signature of the United Kingdom was conditional upon what she calls this understanding? The effect of that is precisely the same as a reservation. Therefore if the Government are relying on the difference between the word "understanding" and the word "reservation", they are relying on something which they ought not to rely on because the consequence of that is the kind of confusion from which the noble Lord who sits on my left appears to be suffering.
Baroness Young: My Lords, I have made the Government's position on this matter quite plain. There is no misleading of your Lordships' House or of the public at large. The situation is as I have described it and I hope now that the noble Lord will be satisfied.
Lord Jenkins of Putney: My Lords, I am not at all satisfied.

European Maritime Transport Policy: ECC Report
11.32 a.m.
Lord Kearton Lord Kearton rose to move, That this House takes note of the Report of the European Communities Committee on European Maritime Transport Policy (9th Report, 1985–86, H.L. 106).
The noble Lord said: My Lords, I am standing in for the noble Viscount, Lord Rochdale, who was chairman of the committee which made this particular inquiry. He has had to go into hospital but the latest news is that he will be out this weekend and is doing very well.
It was a privilege to sit on the committee under the noble Viscount's chairmanship. His knowledge of the shipping industry is profound, and he has been the author of distinguished reports on the shipping industry over the years. He guided the committee and led the committee through the evidence and brought out the best from our witnesses who included Government Ministers.
The inquiry was into the Commission's document Progress towards a common transport policy—Maritime transport. It was the third such document from the Commission. The first, a year or two ago, dealt with inland transport. The second dealt with air travel and the Commission's proposal on air travel was the subject of a previous report by Sub-Committee B of the European Communities Select Committee. In parenthesis one might say that the members of that committee were very pleased to read the judgment from the European Court of Justice. That will serve to bring home some of the points the committee made at the time and will make air transport more liberal and cheaper.
In the proposals on maritime transport, the Commission considers many aspects and puts forward proposals for Community legislation on some of them. The sub-committee's prime task was to look into the proposed legislation; but it cast its net rather wider. The Commission was concerned with the situation in the Community as a whole. In the report the graph on page 10 indicates the decline in absolute terms of the European shipping fleet over the past 10 years, and the relative decline follows the absolute decline. The committee examined this and took evidence from Commissioner Clinton Davis and representatives of European shipowners, shippers and seafarers' unions.
However, the committee made a particular study of the UK position because the relative decline in British shipping was much sharper than for any other European nation. So it saw the British counterparts of the mainland interest, and it also saw representatives of UK shipbuilders, UK ports, the British Maritime League and of government departments. I am sure the noble Viscount, Lord Rochdale, would wish me to say how helpful in particular we found the evidence from the noble Earl, Lord Caithness, who represented the Department of Transport. He showed a complete mastery of his subject and was extremely constructive and frank with all the questions the Committee put to him. In fact, he was carrying out negotiations in Brussels at the same time as the committee's inquiry. I think there was a useful interplay between the Minister and the committee.
Sub-committee B, besides the witnesses that I have already mentioned, took written submissions from a variety of other interested organisations and individuals. The committee is grateful to all who helped in these ways, particularly to its clerk, Mr. Christopherson and its specialist adviser Mr. Shovelton. All those who serve on Select Committees of this House know the great contribution that the clerks and the specialist advisers make to the committee's deliberations. In this case the committee was particularly well served by both the clerk and the specialist adviser. With regard to the United Kingdom, the evidence printed in the full report could be a useful reference book of up to date information on the current state of the United Kingdom shipping, shipbuilding and port industries.
I propose to draw attention only to the main points in our report. Other members of the committee will develop these and other points in the course of the debate. Britain rose to greatness as a maritime nation. It is clear we are no longer a great maritime nation. I remember that last summer I went to the prize day of Broadwood School, near Woking; a school set up many many years ago for the education of the sons of Merchant Navy officers. The school has had many benefactions over the years from shipping companies great and small. It has a magnificent chapel, the result of such donations. Round the walls of that chapel are the plaques and coats of arms of shipping companies of this country that were. One looks at the plaques and the names and realises that the companies have gone. A tiny handful remain.
Since that visit last summer, further reductions have been made in the numbers of great names of British shipping. In fact, some of the recent moves have
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indicated that shipping only survives as a kind of appendage to property companies. But shipping is still of major interest to the United Kingdom. We are an island and we are still a great trading nation reliant on import and export trades with a large proportion of the goods being carried by sea. The United Kingdom is still concerned with the cross-trade carried by our ships between other nations of the world.
British shipping has had its ups and downs. It was relatively healthy in the mid-1970s, but it has declined dramatically over the past 10 years in numbers of ships and in tonnage. Nearly all sectors have been affected; tankers, bulk carriers, traditional cargo liners, passenger ships, tramps, and so on. This is set out in paragraph 34 on page 8. It is not all gloom, however. Although the number of container ships has gone down in the past 10 years, the tonnage has increased; and this is a modern and very important sector. The recent results of Overseas Containers Limited in operations last year were very good. They forecast poorer results this year and we heard in the committee of the great and detailed competition that they have from such major shipping lines as those supported by Taiwan.
The general decline in shipping has been paralleled by a steep fall in the employment of seafarers, or seamen, as I used to call them. This is set out in paragraph 43 on page 19 and the figures are really rather striking. In 1976 there were 39,100 officers and 34,800 ratings on the Merchant Navy register. By the end of 1985 the figures for officers had dropped to 14,300, barely more than one-third of the figure 10 years earlier; and the figures for ratings had dropped to 18,400, just over half the figure of 10 years earlier. In fact, the number of people engaged in our total merchant shipping interests today is smaller than that of a medium-sized industrial or commercial company. There has also been a reduction in the contribution of British shipping—that is to say, ships owned by UK residents—to the balance of payments.
Historically, shipping made a major contribution to the balance of payments. It still makes a contribution, but this contribution is more than offset by the cost of using foreign-flag ships to carry our imports and exports to and from British ports. Some 70 per cent. of our imports and 70 per cent. of our exports are now carried by non-British ships and the proportion is increasing. Figures from the Central Statistics Office showed that the annual debit balance for sea transport services as a whole is now over £1 billion per annum—a very sharp increase indeed in the last few years. While United Kingdom shipping has declined, there has been great growth in the fleets of developing countries and ships flying under flags of convenience and in COMECON fleets.
The result is that while 30 years ago British shipping represented 20 per cent. of the world fleet, today it has dropped to under 4 per cent. That slightly understates the carrying capacity because our residual ships are more sophisticated than the great bulk of ships and we probably carry up to 6 per cent. or 7 per cent. of world trade. But there is still a most dramatic decline, and Britain is now eighth in the world—after Liberia, Panama, Japan, Greece, the United States, Norway and Russia. The two largest fleets by far are those under Liberian and Panamanian flags.
The committee felt considerable concern about the decline in the UK shipping industry and examined the Commission's proposals carefully to see how far they would improve matters. The Commission originally put forward six proposals for legislation. In the course of discussions in Brussels two were shelved. In the jargon of the document, these were II-3 and II-4 which are mentioned in paragraphs 99 and 93 of our report, page 28. One dealt with consultation procedures and the other dealt with the definition of a national shipping line. One of the others, II-5, was designed to validate current operations of shipping conferences by exempting them from the competition rules of the Treaty of Rome. There was in fact a proposal from the Commission, back in 1983, which Sub-Committee B considered, about the application of competition policy to liner shipping.
Your sub-committee then recommended that no action should be taken at the time until it was seen how the new United Nations liner code operated. It has been in operation now for some years and paragraphs 94 to 101 of our report indicate the various items under discussion. One thing that comes out of any inquiry into shipping is the antagonism, it seems, which often exists between shippers and the shipping interests. I am very pleased that during the course of this debate the noble Lord, Lord Layton, will be speaking on behalf of the shippers about developments. The shippers seem to be afraid all the time that they are going to be ripped off by the shipowners controlling the liner trade. They agree that under current conditions it is a shippers' market; they really can make the terms and conditions. But they are afraid that if the situation altered and the shipowners controlled pricing absolutely then they would be disadvantaged.
We were pleased to see—and I am sure that the noble Lord, Lord Layton, will expand on this—that a more reasonable dialogue between the shippers and the shipping interests is now taking place. There are proposals that a shippers' council should be established to match the shipping liner conferences; and this is something to which the Committee gave general support. But we were worried—at least, if I speak for myself, I would say that I was worried—when one of the shippers giving evidence, asked whether he would mind if all our import and export trade was carried by foreign bottoms—Chinese or Russian vessels—indicated in his reply that so long as the price was the lowest available he did not really mind. I would draw to the attention of the House that this extremely balance-sheet orientated bottom-line fixation with regard to national interests is rather peculiar to this country. One does not experience it in other countries to anything like the same degree.
This leaves three draft regulations which the committee considered in detail. Two were aimed at harmful practices of non-EC countries. One of these, Annex II-1 (in paragraph 89), deals with co-ordinated action by the Common Market to counter protectionism by other countries: first, by diplomatic measures and, then, if necessary, through permits, quotas, or charges. We discussed this in paragraph 89, page 28, and again in paragraph 123, page 33. The Common Market feels quite strongly that if it is going to attack protectionism in other countries it should not
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indulge in protectionism itself. The whole thrust of the various regulations suggested are to open up free competition inside the European market but with facilities to deal with unfair competition in countries outside the Common Market.
Annex II-6 is effectively an anti-dumping regulation for liner shipping and provides for a Community levy on third-party shipowners who use unfair pricing practices which damage EC shipowners. From the evidence it became clear that defining unfair pricing practices was going to be very difficult. In many cases competitive lines have quite different salary structures, quite different service structures, and therefore quite different operating costs for their shipping from those of fully-owned British shipping flying under the British flag. To define unfair pricing is a risky operation. The committee had evidence from an agency in London speaking on behalf of the Soviet shipping lines which made out a strong case that the Russians were really very competitive and not price cutters in the sense of having Government subsidies to permit price cutting.
The third regulation—in the jargon, Annex II-2—provides freedom to provide services right across, inside the Common Market. It aims to bring about full freedom for nationals of all member states to engage in shipping operations, as shippers and shipowners, anywhere in the Common Market, both in external trade and in shipping within the Community. This House has considered Community matters for a great many years and we all know that we still have a very imperfect Common Market. This is true of coastal shipping.
Annex II-2 proved the most contentious of the proposals, as some member states restrict access to their shipping coastal trade. The Commission proposed transition periods of up to 10 years for the removal of these restrictions. The United Kingdom, which always leads the way in free-trade practices, has no such restrictions and the committee considers it to be very much in our interests to get the restrictions removed as soon as possible from those Common Market countries which practise them, with only temporary exemptions for regions of the EC with particularly serious problems. Some of those were outlined in the report, such as infrequent services to the Greek islands, and so on.
Adoption of this particular regulation would open new markets to United Kingdom shipping and would strengthen the Community's hand in pressing for a reduction of protectionism in other countries. There is quite severe protectionism in world-wide shipping, and in obtaining answers to questions we arrived at a not conclusive answer but an opinion answer that probably only 50 per cent. of world shipping can be regarded as reasonably free trade.
With the significant change of a much shorter exemption period within the Common Market, various suggestions were made which are touched on in the report. The committee would see the Commissions's proposals as deserving United Kingdom support; that is in Annexes II-1, II-2, II-5 and II-6. But while these moves would do something to help British shipping it would be only pretty minimal. It would be only a first step in seeking a more prosperous United Kingdom shipping industry; and

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the Minister, the noble Earl, Lord Caithness, said as much in his evidence.
The committee therefore suggested a number of other possible measures which the United Kingdom Government should consider affecting shipping, shipbuilding, ports and so on. Details are in our report in paragraphs 1.25, 1.26 and 1.27. For instance, there should be a scheme for scrapping surplus shipping without rebuilding. There should be serious consideration given to tax incentives for shipowners who invest in modern, efficient tonnage. Consideration should also be given to a favourable direct tax regime for seafarers. It is quite clear that British companies have to pay very much more in the way of social overheads for British seafarers than other comparable countries with whom they are in competition. Also, the Government should give urgent consideration to longer periods for the repayment of shipping loans.
Many of my colleagues will be commenting on some of these proposals in the debate, but I should say that we, as a committee, would like to emphasise that the problems of the shipping industry cannot be treated in isolation. Shipping and shipbuilding are closely related industries and United Kingdom merchant shipbuilding has suffered a serious decline in recent years—much more serious, I would suggest, than most people appreciate. The evidence from British Shipbuilders and Harland and Wolff has made this clear. In Mr. Day and Mr. Parker we had two very good witnesses. The annual capacity for British shipbuilding is now down to a value of about half a billion pounds per annum. If our shipping fleet stays at its present level, we have roughly only a quarter of the capacity necessary for orderly replacement of that shipping. Your Lordships will see this set out in questions and answers Nos. 484 to 497 on page 192 of the report.
Shipping must also rely on the services provided by United Kingdom ports, which have their own problems. That information is set out in the report. Also, most European countries regard providing port facilities as being part of the social infrastructure of a particular region and they are not so insistent that the port authorities make a market return on port expenditure.
Another topic is that merchant shipping is vital in times of emergency. This will be touched on again during the debate by others of my colleagues. We have reached a situation of what could be terminal decline of our shipbuilding and shipping interests. In the other place earlier this week there was a debate in which the moneys available to the shipbuilding industry under the shipbuilding loans Bill were increased by about £100 million or so. In that debate it was brought out that new orders for merchant shipping in this country in the past financial year were only 23,000 tonnes as against a target of 200,000 tonnes, and that in a good year we now have less than 1 per cent. of the world's shipbuilding capacity. It is an odd country where one sees a basic major industry for an island nation declining so much and where one sees also that one of the boom industries is prison building. We are building more prisons than anyone else in the world. It seems to me that the priorities need some adjustment.
The committee sees a very strong case for an examination in depth of all the wider issues which our report touched on in a rather preliminary way. Requests have been made in your Lordships' House before for such an inquiry and the committee would strongly endorse that a detailed inquiry is needed. During Mr. Day's evidence, in questions 503–5, he was asked what he considered to be the strategic targets for British shipping. The answer was that he did not know. Apart from reducing losses and existing from day to day, there seem to be no strategic concepts and no strategic idea of where the nation is going in shipping. The wider-ranging study which we advocate was outside the committee's terms of reference, but we feel that it deserves serious consideration by the Government and we hope that the Minister, in replying this morning, will give an encouraging response. I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on European Maritime Transport Policy (9th Report, 1985–86. H.L. 106).—(Lord Kearton).
11.56 a.m.
The Earl of Caithness: My Lords, let me rise straightaway to pay a sincere tribute in which I am sure the whole House will wish to join, to the valuable work of my noble friend Lord Rochdale and his colleagues. I am sure I can speak for the House as a whole in saying how indebted to them we all are for the careful and thorough study they have made and the valuable report they have produced. I am particularly grateful because this has certainly been a tremendous help to me in my job.
I am also delighted to confirm what the noble Lord, Lord Kearton, said—that my noble friend Lord Rochdale is getting better. I am grateful to the noble Lord for the excellent way in which he has introduced a difficult report with such clarity. I am looking forward very much to the speech of my noble friend Lord Strathclyde: it is something that we on these Benches have been awaiting since my noble friend came into the House and we look forward to it with interest.
I am grateful to the House for the opportunity to state Her Majesty's Government's position at the beginning of what I know will be a most stimulating debate. The Government fully share the report's concern—a concern which will doubtless be echoed by many noble Lords today—about the decline of some sectors of the merchant fleet. But, as the report states, we are major cross-traders and the Government (like the Select Committee) are convinced that the best interests of the UK merchant fleet lie in our policies designed to secure the widest and fairest markets in which British shipping can compete.
As your Lordships are aware, the European Commission believes that a non-protectionist policy is in the best interests of the Community's merchant fleets and this is the basis of its communication on a common shipping policy. This is also the view of Her Majesty's Government and we are particularly glad to see that it is also the view of the Select Committee and of the General Council of British Shipping. We are gratified too that the report endorses the general line

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Her Majesty's Government have been taking in the negotiations in Brussels on the four detailed draft regulations which form the basis of the Community's proposed maritime transport policy. This policy is, we believe, but the first stage in a more comprehensive policy and we shall seek to maintain the momentum whenever the opportunity permits.
I hope it will be useful if at this stage I say something about the report's comments on each of these four draft regulations. Considerable progress has been made in negotiations in Brussels and I should like, if I may, to bring your Lordships up to date. Perhaps I may start with the regulation to provide freedom to provide services (Annx II-2). This has proved the most contentious of the Commission's proposals, as the noble Lord, Lord Kearton, said.
The Select Committee supports Her Majesty's Government's view that existing restrictions should be abolished both in the cabotage trades and in trades with third countries, with only temporary exemptions when particular problems justify them. This undoubtedly would have led to much discussion at the proposed Council of Ministers meeting next week and which, sadly, has been cancelled. My right honourable friend the Secretary of State and I looked forward to the opportunity to press this further with our rather more protectionist partners. We have sought to alleviate the very real specific problems faced by countries such as Greece, but regrettably to date we have not succeeded. I hope our European partners have noted the recent judgment of the European Court in relation to air services—a point mentioned by the noble Lord, Lord Kearton— one effect of which is to reaffirm the obligation of the Council under the Treaty of Rome to give effect to the freedom to provide services in the field of transport, including sea transport.
The committee strongly urges that all four of the Commission's draft regulations should be implemented together. We are encouraged by that for it has been the Government's view from the outset and it remains our firm opinion. However, I must advise the House that the time may soon arrive when the other three draft regulations are ready for adoption while the prospects for reaching agreement on this regulation are remote. In that event we shall have to consider the options open to us on the freedom to provide services. We may, for example, have to close our own coastline to our partners if they do not all agree to open theirs to us. It is absurd that we are the only country with a coastline open to all.
Another possibility is we may pursue the option to seek a ruling from the European Court of Justice on the incompatibility of closed cabotage and cargo reservation with the Treaty of Rome. We are encouraged by the recent decision of the court, to which I have already referred, but we hope it will be possible to settle this regulation along with others by negotiations rather than through the court.
I move on to the draft regulation which will enable co-ordinated Community action to be taken to deal with moves by third countries to restrict competitive access to ocean trades—(Annex II-1). The Select Committee supports these proposals and recommends
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their extension to all sectors of shipping, including offshore supply vessels and passenger ships. I am happy to tell your Lordships that in the course of the negotiations the wording of this draft regulation has been extended in just that way.
Your Lordships will be aware that it was agreed to defer detailed consideration on the next two Commission proposals—(Annex II-3 and Annex II-4)—until a later date. So I move on to the next of the Commission's draft regulations, the competition regulation. The report makes some detailed recommendations about loyalty contracts, service contracts and exemptions for shippers' associations. The regulation's provisions on loyalty contracts has now been much simplified, as the committee recommends, and there is nothing in the regulation which will prevent the development of service contracts. However, although we have some sympathy with the committee's point on shippers' associations, it would be inappropriate to deal with them in this regulation which is concerned with the providers of transport. Transport users are dealt with under another regulation, known as Regulation 17, and the Commission has given a general undertaking to grant individual exemptions to shippers' associations under that regulation. I believe that represents a satisfactory outcome.
The Select Committee also supports the last of the draft regulations which provides for the imposition of a Community levy in cases where third country carriers are engaged in unfair pricing practices and thereby doing material damage to Community carriers. It urges that there be a clear and practical definition of what constitutes unfair pricing and that seafarers and their unions, as well as shipowners, should be able to make complaints to the Commission under the regulation. I find it difficult to envisage circumstances in which seafarers would wish to bring such a complaint when the shipowners, whose business was being prejudiced by the unfair practice concerned, did not wish to do so. But we entirely agreed on the importance of an unambiguous and workable definition of unfair pricing practices. We have worked to this end and we believe that the definition which has been negotiated in Brussels is both practical and clear.
The practices are now proposed to be defined as the continuous charging of freight rates lower than the normal rates charged during a period of at least six months, when these lower rates are made possible by non-commercial advantages granted by a state which is not a member of the Community. This regulation has been drafted with the benefit of a great deal of experience within the Community in the field of antidumping of goods. We consider that it will become a useful addition to the Community's armoury of powers for the defence of its merchant shipping interests.
There is one further recommendation from the report to which I should like to refer at this stage. The committee recommended a further wide-ranging examination of the problems of the industry. I hope I have made it clear that the Government share the concern of the committee over the decline of the fleet, but considerable changes are currently taking place

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within the fleet, the public perception of the fleet and the opinions of those involved. A great many interested parties have only recently spent considerable time and effort preparing evidence for my noble friend's committee. I do not believe that it would be right to ask them now to resubmit their work on a slightly different basis in view of the rapidly changing circumstances.
In addition, the Select Committee on Defence in another place gave notice in its report on the use of merchant shipping for defence purposes of its continuing interest in this subject and invited the Government to submit further written evidence. I believe therefore that it would lead to a great deal of duplication of effort if a new committee were to be set up now.
The work undertaken by the committee naturally ranged quite wide and it would be remiss of me not to give a more detailed view on the decline of the fleet.
Shipping, like any other business, is having to adjust to changed world circumstances and is now so international that it is heavily influenced by the world economic situation. There is nothing unique about shipping. It is a method of transport of goods from one port to another. The number of ships that can trade commercially is therefore dependent on the world shipborne trade. Therefore a ship is worth solely what it can earn. That is the rub. For too long investors in shipping, backed on occasions by governments, have taken an overoptimistic view of the growth in trade and earnings from shipping. They have looked on ships as capital assets that will automatically rise in value and thus will be good investments. Nonetheless, if we look back to the period from post-war times to the mid-1960s we see, despite fairly level gross tonnage figures, a slow steady decline in the numbers of the UK registered fleet. The UK being a traditionally maritime trading country with a large fleet, it was inevitable that this fleet would be one of the first to suffer from other countries' natural ambitions to have a merchant fleet.
Then came overoptimistic estimates of world trade, massive lending by the banks backed by substantial subsidies worldwide, including investment grants in this country, to build ships. The late 1960s and early 1970s were a period of unsustainable growth in tonnage with the UK registered fleet reaching its peak in 1975, and yet the decline in numbers continued. Then followed the rapid decline in tonnage, and if one looked at the major Western European fleets one will see a similar pattern. The world fleet rapidly became overtonnaged but still emerging, particularly in the East, were new fleets supported by countries with massive shipbuilding programmes, in some cases state-aided to compound the problem.
The overall world fleet is still vastly in excess of economic requirements and there are ships still laid up in the Gulf of Corinth, the Norwegian fiords and even in this country which have made but one or two and in some cases no commercial trips. Some companies found Western European costs too high in this highly cut-throat market and some of our major companies in the most vulnerable sectors, in particular tankers and dry bulk, were forced either to reduce their costs or sell their ships, thus preventing major disasters and collapses such as we have seen in countries overseas
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and surely must continue to witness. It is clear that inappropriate government aid to shipbuilding—and this country's previous governments are regrettably as much to blame as any—exacerbated the situation.
It is an unhappy story and reminds me of the old saying "Oh what a tangled web arises, when a government subsidises." But when looking at the decline of the UK registered fleet, figures for the total fleet can be misleading and I must stress the necessity of looking at the seven sectors of that fleet individually to see the true position. Two-thirds of the UK registered fleet's expansion in tonnage from 1970–75 was in tankers. It is not surprising therefore that more than half of the fleet's contraction since 1975 has been in the same sector.
The bulk trade has suffered badly partly through an excessive worldwide building programme and partly through the world recession in trade. Containerisation has had a powerful effect on the conventional liner business and it is not surprising when one considers that one container ship takes the place of 10 traditional ships. Let me take as an example one successful British company. It has 21 container ships in operation which last year moved over 6.5 million tonnes of goods. That company estimated it would need 220 conventional ships to do the same job. If it had owned those 220 ships, then the company would no longer be in existence and the UK would not hold an important sector of world trade. The container trade faces a difficult time ahead as do the passenger liners, short sea and offshore sectors of our fleet. Nevertheless due to good management we have companies in these sectors that are efficient, profitable and competitive.
I have been discussing the UK registered fleet for that is what the graph on page 10 of the committee's report displays. That graph was mentioned by the noble Lord, Lord Kearton. But can I take this opportunity to correct a current misapprehension, particularly noticeable in some recent statements outside this House, that this is an accurate measure of the British fleet. The UK registry is an open registry which means a UK company or a company in a dependent territory can join it and sail its ship under the UK flag. A substantial part of the present tonnage on the UK registry is ultimately beneficially owned abroad—in other words, flagged in. Many of the ships flagged on to the UK registry during the boom period, and which have subsequently left it, were also beneficially-owned ships abroad. Similarly, a significant tonnage of British beneficially-owned ships are flagged out on other open registries, including dependent territory registries. This is the eighth sector of the fleet, available in times of tension and war and must be included in any overall look at the British fleet.
These are difficult times for all those in shipping. Just look at the headlines in todays Lloyd's list: "Exodus from West German merchant fleet forecast", "Scrapping of dry bulkers is set for another record year" and, more disturbing perhaps, "Evergreen pricing power alarms container markets". Her Majesty's Government's are very aware of their responsibilities to the merchant fleet. We believe the right way forward is that proposed by the committee and the Commission and the four regulations are but a first step forward. But our efforts and support are

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wider and rightly so. Agreement was reached but on Wednesday between the United States and the Consultative Shipping Group—for which we provide the chairman—which consists of the European maritime nations plus Japan. This agreement is aimed at combating protectionism and at promoting competition, particularly in liner shipping; and it is directly relevant to the proposed co-ordinated action and competition regulations. This is but another step forward and we will continue to press forward on this and other fronts as well.
My Lords, our aim is to have a viable merchant fleet trading in an open and competitive environment and I trust that the House will support the Motion to take note of the report of my noble friend's committee.
12.13 p.m.
Lord Underhill: My Lords, may I make four introductory comments. First, I share in the good wishes that have been extended to the noble Viscount, Lord Rochdale, who we are very sorry to know is ill. He has done such an excellent job in dealing with shipping matters in your Lordships' House and undoubtedly must be responsible to a very great extent for this very excellent and clear and concise report.
In addition, I am grateful to the noble Lord, Lord Kearton, for the clear way in which he has set out the main points of the report. With the noble Earl, we are looking forward to the maiden speech of the noble Lord, Lord Strathclyde.
May I make a fourth point. I seemed to sense a slight change of attitude towards shipping problems and solutions in the speech of the noble Earl. It seemed as if the Government were moving a little way towards recognising that protectionism by itself is not the way out.
Once again, I have found it very useful to have a chance to look at two other documents in addition to the report. One is the General Council of British Shipping Review of 1985; the other is the report by the International Transport Workers' Federation entitled Towards a Common Maritime Policy. For brevity, if I have to refer to the two organisations I will call them the general council and the ITF.
The ITF document dealt at some length and in one special chapter with the problems of the different sectors of the shipping trade to which the noble Earl, Lord Caithness, referred. Some of the comments he made are worthy of consideration, but others do not alter the seriousness of the problem facing the British shipping industry emphasised so strongly in the report and by Lord Kearton in his speech. The report stresses the decline in Community shipping as a whole as well as the serious decline in British shipping. Paragraph 11 sets out five major causes which the Commission identified as reasons for the fall in Community shipping. In paragraph 12 the Commission's summing-up contains these words:
"the prolonged recession in world trade, a loss of comparative advantage and the growth of protectionist practices adopted by other countries".
That summing-up by the committee overlooks what the Commission itself is reported to have said, in paragraph 11:
"that technological innovations … greater specialization … and higher quality services…[have] stimulated registering ships under a non-Community flag"—
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I repeat, I quote the Commission's view and what it said in paragraph 11—
"which allows Community firms to retain economic control of the ships while avoiding what they see as the competitive disadvantages of operating under Community flags".
I will return to this question of flags of convenience later.
I note one very important point that was made in the oral evidence by Mr. Stanley Clinton Davis, a member of the Commission who came before the committee. In paragraph 356 the Commissioner stated that the basic structure of the Commission's essential document and the data on which it was based were largely gathered in 1983, even perhaps in 1982, up to 1984; and that they were dealing with a rapidly changing perspective. It may be that the Commission's regulations themselves, in view of those comments by the Commissioner, are based on somewhat out-dated material.
I am informed—and may be the noble Earl in his reply can deal with this—that there is a new factor which has come into being within the last couple of years. That is round-the-world shipping. I understand that this is carried out by two substantial shipping concerns in Taiwan and United States with enormous container ships that go round the world picking up and unloading anywhere and using feeder services to them. This is bringing pressure, I am informed, on freight rates. There is no reference to this in the Commission document. This may add emphasis to the point of Mr. Stanley Clinton Davis, that some of the data are a little out of date. I understand that it is difficult to gel any transparency as to the finance of these operations or to ascertain who actually owns these very huge container ships.
The noble Lord, Lord Kearton, has emphasised the figures for the decline of the UK shipping fleet and the fleets of the Community. I want only to emphasise one point he made, and this is in paragraph 38. Thirty years ago the United Kingdom had 20 per cent. of the world fleet. Ten years ago the figure had fallen to 10 per cent. At the end of 1984 the UK registered fleet was only 3·7 per cent. of the total world tonnage. The ITF report sets out the significant changes that have taken place in the various fleets of the world. They stated that between 1975 and 1984 the total world merchant fleet grew by 21 per cent, that OECD fleets overall were down by 7 per cent. and that European Community fleets were down by 10 per cent. But there were substantial growths in the following fleets: flags of convenience, up 26 per cent., COMECON fleets, up 42 per cent., Far East fleets, up 312 per cent; and fleets in the rest of the world, up 132 per cent. I know that percentages can mean many things, but if one analyses the situation it shows that there are substantial growths in other fleets and a decline in our fleet as well as in the European fleets.
Part 5 of the report sets out the committee's own view of the decline in the Community fleet as a whole, and, in particular, of the UK merchant fleet. The noble Lord, Lord Kearton, stressed—and this is very important—the point made by the committee in paragraph 42 about the annual debit balance of the sea transport services as a whole being now £1,000 million. That is a figure which is seldom mentioned. The General Council's documents emphasises that

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only 25 per cent. of UK imports and 17 per cent. of exports are carried in UK ships.
I noted that the noble Lord, Lord Kearton, referred to the position of the shippers. I was surprised to see in paragraph 44 that witnesses from the users of ships, the British Shippers' Council and the European Shippers' Council.
"were not unduly worried about these trends."
Is this what market forces and profit really mean? If any noble Lord who is to speak in the debate has any connection with shipping users, I hope that he will explain what is meant by those words.
Paragraph 53 observes:
"Union witnesses argued that free trade in shipping had failed the developing nations and had been rejected by socialist countries. They noted that the United Kingdom, the strongest advocate of a non-protectionist policy had experienced the greatest decline in its fleet of all Member States"
of the Community. The unions argued:
"that practically every nation except the United Kingdom practices some form of discrimination or assistance to its fleets."
Your Lordships' committee agreed with the Commission that, so far as possible, the Community should pursue a non-protectionist policy, and so did the General Council. But I note the following in paragraph 51:
"However the industry sees the need for pragmatism, because Community shipowners would suffer greatly if they were the last free-traders in a protectionist world'."
That is something which the unions, in particular, have been trying to impress upon the Government and the shipping industry for some considerable time. In fact, in paragraph 54 your Lordships' committee said that they,
"have no doubt that a pragmatic approach is necessary."
So we find that the unions, the industry, the Government and the committee seem to agree to a fair extent with draft regulations 1 and 6 that:
"Where other countries discriminate against Community ships, the Community should be ready to take retaliatory measures."
The committee emphasise in paragraph 89:
"Member States should stand together in combating acts of discrimination".
I am certain that most noble Lords will agree with that statement.
In our last debate, which took place in, I think, November 1983, I stressed the unions' view that something should be done about the cabotage trade, and I am pleased it has been emphasised in the speeches of both the noble Lord, Lord Kearton, and the noble Earl, Lord Caithness, that some of our competitors, and also our friends in the Community, practise reserving domestic shipping to their own nationals. This subject is raised in draft regulation 2 on freedom to provide services. The report emphasises the differences that there are in the policies followed by Community countries and the fact that no less than six member states of the Community reserve coastal trade for their own shipping, whereas the United Kingdom opens up its coastal trade to all comers.
I absolutely agree with the view of the committee which is stated in paragraph 114, and which was stressed by the noble Lord, Lord Kearton, that this is quite inequitable. The committee complain bitterly that the Commission's proposal of abolition after a
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transitional period of 10 years is "far too long". The noble Earl said what might be done if there were no general acceptance of the position. The unions have suggested a way out, which is that national flag vessels should operate in domestic trade and Community flag vessels should carry intra-Community trade. I hope that we shall get to a position where cabotage shipping will be open to all Community states, rather than have to accept the proposal of the unions, which is a last step, if we cannot secure agreement from all the states in the Community.
So I return to the question of flags of convenience, and paragraph 41 states:
"The losses experienced by European shipowners, including United Kingdom companies, have led to an increase in the registration of ships under 'flags of convenience' where they can be operated at much less cost."
I ask your Lordships to note that. Paragraph 64 refers to shipowner witnesses saying that flagging out is to reduce manning costs. Paragraph 66 states that union witnesses who went before the committee,
"expressed strong criticisms of the system of flags of convenience".
I hope I am wrong, but subsequent paragraphs in the Select Committee's report seem to accept the practice, and that it is desirable for certain shipping to go to flags of convenience in order to reduce costs.
Paragraph 70 states that,
"the shipowner often has to flag out or sell out";
and the last sentence in paragraph 70 can, in my view, have only one meaning. It reads:
"However the long-term remedy for flagging out must largely lie in the hands of those who have created the conditions which render it costly to operate under the national flag."
That is an argument for undercutting standards and for undercutting wages, and it is one which is completely unacceptable.
The ITF report to which I have referred states:
"The Commission should recognise that while COMECON shipping may well become a real threat, flag of convenience shipping has gone beyond being a threat and has been responsible for many of the problems currently facing Community fleets".
The General Council seems to accept the use of flags of convenience for the reason I have stated and that the industry must be free to use ships in this way. But we must never forget that flagging out usually means less stringent conditions for seafarers. Some flagging out is not just to reduce wages, but is also to enable shipowners to avoid social security costs such as pensions and national insurance. I should like to ask whether the Government support those arguments, or whether they really believe that something should be done in the light of the Commission's proposed regulations to tackle that problem.
Consideration of unfair practices should surely include the position of shipowners who do not observe and adhere to ILO or IMO standards. Surely that is unfair pricing as well as unfair price rates and could make for substandard ships. I am a little disappointed that in its excellent report the committee makes little reference to practical steps that have been put forward by the unions and to the co-operation that the unions have already given to help manning costs and to improve productivity and also on training. The figures that were given for the number of seafarers show how far the unions have gone in assisting with the reduction of manning costs and with productivity.

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In its 1983–84 report your Lordships' committee said that it saw no reason why Commission regulations should not include social factors, such as hours, general conditions and manning. I wish that that had been repeated in this report because it would deal with part of the question of flags of convenience. I am very pleased to note the recommendation in paragraph 124. I believe the noble Earl agreed with this statement that the ability of shipowners to complain to the Commission about unfair pricing practice should also be extended to seafarers or their unions. The question of dumping and inferior wage rates should be taken into consideration with this recommendation.
In conclusion, I should like to deal with the vital question of surplus capacity, not only in the United Kingdom but throughout the world. It would be fatal to adopt a policy of selling off our surplus capacity because undoubtedly those vessels would go to flag of convenience states and make the position of our own trade and Community trade even worse. That is why I hope consideration will be given, as was emphasised by the noble Lord, Lord Kearton, in his opening remarks, to a scrapping policy, to getting rid of substandard ships and to the linking of the whole question with shipbuilding. That seems to be a sensible policy.
I was interested to note the emphasis of the noble Lord, Lord Kearton, on the recommendation of the committee that the shipping industry should not be treated in isolation and that apart from defence considerations, which are important, it should be considered along with shipbuilding and the services provided by the ports. I strongly support the committee's recommendation in paragraph 128 that there is a strong case for examining together all the major problems of the shipping industry and of its suppliers and users. I was going to make some reference to ports but time does not allow it.
By and large, it seems that the committee's views on the four regulations which it regards as priorities have moved a fair way towards the views of the unions, views which I and others on these Benches have stressed in previous debates. The ITF stresses that protectionism should not be enforced wholesale, but that practical intervention should be undertaken as appropriate. The Government have not previously accepted that view. Although the Government dislike intervention, I hope they will take the view that it is vital in the shipping industry. Unless they do so, our shipping industry and that of the Community will decline further and further.
I welcome the committee's comment that we should have action on a Community basis. We ought to try diplomatic pressures and we ought to go in for bilateral and international agreements in order to cope with a problem affecting one of our most important industries.
12.34 p.m.
Lord Kennet: My Lords, we join in thanking the noble Viscount, Lord Rochdale, and his committee for an excellent report and we send our best wishes to him for a quick recovery. We thank the noble Lord, Lord Kearton, for presenting the report so ably today.
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Fifteen years ago when it became apparent that the shipping and general maritime decline of this country was on a real disaster curve, those of us who were concerned felt rather like a great American, Dean Acheson: we felt that we were sitting on the end of the jetty trying to move the country with a paddle. I think things are looking up now. It seems to me that the knowledge that a disaster is imminent—has indeed half happened—is now widespread and that the Government are girding their loins and both Houses of Parliament are debating the matter constructively and frequently. Two recent landmarks in this new position have been the two very welcome reports. We have had one today and one only a few weeks ago about marine science and technology. But there is still much to do, and most of it has to be done by the Government. That is what governments are for. This is what I shall concentrate on today.
In the debate in the House of Commons on 11th March on this Community proposal which we are considering today the Secretary of State for Transport, Mr. Ridley, had some useful and realistic things to say, especially about cabotage and about the NATO take-up for defence. But he had one startlingly unuseful and unrealistic thing to say which I shall quote. I believe I am in order to do so. He said:
"many honourable Members … referred at length to shipbuilding".
This was in a debate on shipping.
"I do not think we should discuss that matter now. If we are to help the United Kingdom shipping industry we must consider its problems in isolation and not tie, it to, say, the supply of ships".
Mr. Milian interrupted.
"Why should we look at the shipping industry in isolation? Every honourable Member who has spoken today has said that it should be looked at in the context of a general maritime policy, the trouble is that we have been looking at it in isolation".
Mr. Ridley answered:
"I do not agree. It is right that the sources of purchase of transport equipment, whether for aeroplanes, ships, buses, trains or cars, should be considered separately from the environment in which those transport industries operate".—[Official Report, Commons, 11/3/86; col. 852.]
What has been the effect of this narrow and ossified view over the years? Elsewhere, in another part of the wood (by which I mean Whitehall) another Minister is providing finance at this moment for British Shipbuilders to build ferries, despite the fact that the Channel tunnel is coming along, and to build offshore supply vessels, despite the present unemployment in the British offshore supply fleet. Is there a plan for the number of non-British supply vessels in our part of the North Sea to be brought into line with the number of British supply vessels in non-British oil fields? If we can get some sort of trade-off or balance there, new orders for these vessels may be justified.
Let us listen now to the voice of the other part of the wood, as I put it. Mr. Peter Morrison, speaking for the Department of Trade and Industry in the House of Commons this week, reminded us (as did the noble Lord, Lord Kearton, in a very different tone of voice just now), of the existence of a target in 1985–86 of 200,000 gross tonnes of new orders for British Shipbuilders, and of the fact that they secured only 23,000 tonnes. We are used to shipbuilding targets, but what was the scrapping target? There cannot now reasonably be a building target without alongside it a

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much larger scrapping target. Mr. Morrison did not mention that aspect. We need a scrapping target and indirect incentives to scrap, because it is only by pushing crate-owners, as we might call them, over the border into loss that we can make safe, modern shipowning and shipping profitable.
Meanwhile, the noble Earl the Minister who is to reply today is dealing with the subject of shipping, and good luck to him in doing that. The Secretary of State declared recently, in the shipping debate in the House of Commons from which I have just quoted, that irrelevancies such as shipbuilding should not be introduced because shipbuilding is dealt with by another department that is interested in the building of ships and not in the requirement for ships.
There are in almost every category of vessel between one-and-a-half and twice as many ships as are needed. Operating ships, except for the worst ships, is done at a loss, so that it is safe to say now that the capital value of proper ships is their value as scrap. The Department of Transport knows that, but I question whether the Department of Trade and Industry knows it yet.
It seems that even the Prime Minister may not yet know it. She is promising yet more credit to British shipyards. If the Member of Parliament who accompanied her on a recent visit to the North-East is to be relied upon, she is guaranteeing that British shipyards will not be undercut by any country in the world, except possibly Japan, when it comes to credit. Thoughtless subsidies to the shipbuilding industry are part of the problem; they are no part of a solution.
Where should we look? I agree with all noble Lords who have spoken so far—and this is also heavily implicit in the report—that we should look at taxes and duties on those who subsidise against us. There is a lot to be said for the discipline of the market. Let us work on making the international market disciplined and fair. If shippers use subsidised ships to carry their goods into or out of Europe, then let them reimburse the European taxpayer the subsidy in question.
If the shipper uses a substandard ship, then let that ship be required to carry appropriately higher insurance, if it is to enter European ports. That is a rather easy measure to decree. If a ship is to change hands, then let its classification society crawl over it with properly high standards and every modern aid. The point is that the number of ships worldwide and in virtually every category must be reduced.
Mr. Morrison pointed out in the House of Commons, in what tone of voice I do not know, that today's order book for ships is one-fifth of what it was in 1974. There are two sides to that observation. It is because of the order book that existed in 1974, for 133 million tonnes, that our shipping industry has the problems that we know today. It is a question of elasticity: build too much and you are stuck with too much, and then you don't get enough ships to build.
Europe is the world's major shipping area; 27 per cent. of the world's sea trade leaves from or comes to our ports. That is where our right to try to deal with the world crisis in shipping and in shipbuilding, and in freight forwarding, comes from. If we Europeans get our act together then we can get those essential (in the
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strict sense of the word) industries out of the appalling state of affairs in which they are and into some kind of leaner profitability.
To do that, two things are needed. First, the Government really ought to enable themselves to examine the complex issues comprehensively and not sliver by sliver, as they do now. That is a matter for the Prime Minister. Secondly, the Government should recognise that international problems cannot be solved by one country alone, that we are a member of the European Community for very good reasons indeed, and that this is one of the areas where common European action is essential. It is already clear that the whole thrust of this debate is in that direction, and the whole thrust of the report now before us is in that direction, too.
To sum up, it seems to me that the following propositions are probably true, or are as reasonably true as one can hope to get in a short debate. There is a worldwide surplus of shipping. It is due to the sloppy money, the sloppy lending, of the late 1960s and early 1970s still being around. In that, it is akin to the world debt crisis. Because of it, all shipowning and shipbuilding countries suffer. This country suffers worst because of the dogmatic insistence of our Government in recent years on leaving everything to a market. But there is no market. At best, there is only a market that is manipulated to different degrees, in different parts of it, by sovereign states. The long and the short of it is that others dump shipping on us.
So what should we do? It would be a mistake to counter-dump by endless credit and subsidy. It would be cheaper and more legal, to take counter-measures against those who dump against us.
In conclusion, I draw to the attention of the Government, although I am sure that they are aware of this already, a conference that was held in London recently under the snappy title of Worldfleets. A document was produced at the end of that conference that was very short—perhaps it was too snappy and too short—but it had the advantage that it was firing in all directions. It was firing at everybody who needed to be fired at—there is no tunnel vision in that document—and for that reason I commend it.
Lastly, I quote a comment of the British Maritime League on the Community proposal that is before us, and our own report on that proposal:
"The Common Maritime Transport Policy fails to take into account or to co-ordinate all the other maritime interests beyond shipping, such as shipbuilding, manufacturing industry, research and development, trade and commerce, education and training, people".
It continues:
"There is quite clearly a need for a Lords Select Committee to look at the much wider issues of the whole maritime field, as proposed last July by various noble Lords. Now that the Rochdale Committee has finished its work, the wider Committee needs to be formed and tackle the whole field".
I should like last of all to make a quite personal appeal or invitation to the noble Earl to say today that he will lend his support, as an influential Member of this House, to the voices raised last July, when the matter was first discussed, about appointing that wider committee on general maritime policy. We have now two excellent reports on two particular fields falling within the general sphere of maritime policy. That is

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no reason not to undertake a wider study; it is simply something that will make it easier. The wider study would not have to duplicate that work, because that is in the bag. But there is even more left to be done.
12.48 p.m.
Lord Strathclyde: My Lords, as this is the first occasion upon which I have had the privilege of addressing your Lordships' House, I crave your indulgence and would like to thank noble Lords who have wished me success earlier in this debate.
I feel that it would be appropriate to begin by paying tribute to my father, Tam Galbraith, whom some of your Lordships knew in another place, who tragically died some years ago—as he looked forward, possibly, to one day having an active life in your Lordships' House; and who, but for the hand of fate, would have been standing here in my place today. I should like to mention also my grandfather, whom I succeed. He continually inspired me and infected me with the excitement, successes and indeed the defeats that all go to make up the very nature of your Lordships' House.
It is with them in mind as an example of political integrity and public service that I make this, my maiden speech. It is particularly fitting that it should be on a subject that was very close to them both. My grandfather especially, who served in the Navy in two world wars, was always reflecting on the decline of British shipping; emphasising that first and foremost the United Kingdom is a very small island which needs a large, efficient and stable shipping industry to survive.
Some years ago this decline would have been seen as a purely British problem, but this is no longer the case and it should not be seen, as the report points out, purely in this light because geographically, economically and politically we are linked to Europe and it is to the EC that we must turn for a coherent common European shipping policy. The major challenge to the worldwide shipping industry is the very fact that while there is over-capacity of tonnage there are also insufficient cargoes to be carried around. One solution continually put forward is that of protectionism, from nations acting either individually or as a part of the Community. But protectionist policies have never been an answer since they create retaliation, lack of co-operation and, above all, eventually lead to economic stagnation. Protectionism is the great seducer of older, traditional industries and, I believe, should be spurned.
There is, however, a problem in all this since the alternative to protectionism is free trade; but the essence of free trade is also fair trade and they must go hand in hand. In the international world of shipping it is not good enough for those of us who truly believe in fair trade to expect those European countries, including Britain, who do not subsidise their shipping industries to compete effectively with shipping lines from other countries whose governments either overtly or covertly subsidise their shipping in one form or another. Indeed, most EC member states themselves are not entirely innocent in these matters and the greatest pressure should be brought to bear to create a truly free inter-Community shipping policy.
Therefore, given that protectionism can never really be beneficial in the long-term to British, Community
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or worldwide shipping industries, and hoping that the Community can eventually create a free internal market, it is important, as the noble Lord, Lord Underhill, made plain, that those countries which continue to discriminate unfairly against all Community fleets should be restrained in various ways from doing so. However, this can only be done when the Community itself is seen to be clean of both internal protectionist policies and false national subsidies.
Community-wide subsidies are another thing altogether and could perhaps play a valuable part in readjusting some of the discrepancies that already exist between individual member states of the EC and between the Community as a whole and the rest of the world. These points are neatly laid out in paragraph 114 of the Committee's report and the European Commission proposal, Annex II-2. It is those measures that I most heartily support.
Although I cannot say that I have either a great specialised or detailed knowledge of the shipping industries, as many noble Lords speaking today have, I have seen for myself the results that can be achieved with sensible investment through Community policies in respect of port facilities. As a candidate in the European elections in 1984, I had the pleasure of being invited to visit the Associated British Ports dock at Garston, in Liverpool, on the Mersey. There I saw real European co-operation in an area of low investment and high unemployment. European regional aid was being used constructively to invest in new coal-carrying conveyor belts. They created a clean and efficient method of transportation from dock to ship. It is a small example, I know, but I believe it to be indicative of a way forward to ease ourselves out of purely nationalistic solutions to what is a worldwide problem.
Finally, since I do not want to overshoot my welcome on this first day in your Lordships' House, I should like to conclude by thanking the committee for producing a report which has given me an opportunity of saying a few words; and as one of the younger Members of your Lordships' House I should like particularly to congratulate the members of the committee for making their report so clear, concise and comprehensive. I very much welcome that.
I trust, therefore, that the Government, who are pro-European and pro-free trade, will continue to use their political will to push for these proposals in Brussels; and by way of doing so will make Europe more relevant to the people of this country in an area such as transport where it is so important that we are successful.
12.57 p.m.
Lord Moran: My Lords, I am delighted that it falls to me to be the first to congratulate the noble Lord, Lord Strathclyde, on an admirable maiden speech and to welcome him as a Member of your Lordships' House. Some of your Lordships will, I am sure, remember his distinguished father and his grandfather. He himself has, I believe, the advantage of having received a university education on both sides of the Channel. He is clearly a mid-Channel man. I hope we shall hear him frequently in your Lordships' House.

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I should like to pay a particular tribute to the chairman of our sub-committee, the noble Viscount, Lord Rochdale; and I am sorry that he is not here today. All of us wish him a rapid recovery. I thank our excellent clerk, Mr. Christophersen, and our specialist advisers, who were enormously helpful.
I am glad to have taken part in a very interesting study, but a sombre and worrying one. Ninety-five per cent. of Community trade with third countries is carried by sea, yet we learnt that there has been a rapid and steep decline in European shipping—by 20 per cent. in the past six years—and in this country a headlong decline in shipping, shipbuilding and the number of trained seamen. The details given in paragraph 34 of our report are disturbing.
We seem as a country curiously unfussed about the decline of some of our major industries. I remember when I was serving in an embassy abroad and came hack to be sent on an industrial tour. I was sent to visit the BSA motor-cycle factory in Birmingham. Not too long after that, I found that we ceased to have a motorcycle industry at all. To take another example, I seem to be one of the few people who continues to drive a British car. Many people seem to see nothing illogical in buying a Toyota or a Mercedes and at the same time lamenting the decline of the British steel industry.
The stark facts given in our report point to a similar fate overtaking British shipping—and quite soon—unless something fairly drastic is done. For example, we were told that as a nation we were losing some 5,000 qualified seafarers a year. I think we ought not to put up with the continuance of such a state of affairs, first, for reasons of defence. The nature of emergencies is always difficult to foresee. We ought to have available a reasonable number of ships of different types and of trained seamen. As I understand it, the Government say that there is no need to worry. But as one who served in the navy during the war and escorted convoys coming in through the Western approaches, I think—and I am not alone—that they are too complacent and that in particular they underestimate the difficulties of bringing hack and crewing flagged out but British-owned ships in an emergency.
Secondly, it does not seem to me to be acceptable that, dependent on the sea as we continue to be, we should have to rely on others—indeed, on our competitors—to bring us the great bulk of our imports and to take away our exports. It does not seem to me to be conceivable—and here, like the noble Lord, Lord Underhill, I part company with some of the shippers—that we should surrender our economic independence in this way. I should like to add that, in my view, as an island and an oceanic power we ought to take the sea more seriously than we appear to do at present. This was a point made by a number of noble Lords in the debate last month on marine science and technology. I think that there is a clear need for a ministry of the sea or some other body that can pull all the threads together and give civil maritime matters the priority that they ought to have.
So what ought to be done? On a European level our sub-committee thought that the Commission's proposals were broadly right but that they ought to be pursued in some areas with a greater sense of urgency.
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All our witnesses agreed—and this was a point that was very eloquently made by the noble Lord, Lord Strathclyde—that in this field protection does not work, as has been shown by the experience of the United States; that we ought to work for greater freedom of trade in shipping, if necessary taking a tough line with others who try to exclude us; and that within Europe we should aim for the removal of all discrimination within a short period, which should be shorter than the Commission suggest.
The problem seems particularly vital for the United Kingdom. The Government seem to us to have taken a sensible line on the Commission's proposals, and, as my noble friend Lord Kearton has said, we heard some very helpful evidence from the noble Earl, Lord Caithness. I hope that the Government will continue to take a firm line and not give way to the protectionists in Europe. But I think that the Government ought to give urgent thought to measures aimed at arresting and reversing the decline in British shipping and shipbuilding, for example, by some steps such as perhaps reintroducing the 100 per cent. free depreciation allowances, the abolition of which seems to have been an error. There ought to be tax incentives for shipowners, a considered policy of promoting the modernisation of the British merchant fleet, and easier terms for shipbuilding loans. We ought also to consider what may happen to the cross-Channel ferries and their crews if the Channel tunnel is built.
The Committee spent a lot of time on the problem of flagging out. Clearly it is not possible to blame European and British shipowners for flagging out ships when, as we record in our report, by doing so they can, on an average cargo ship of 10,000 to 15,000 tonnes, save some £350,000 a year or about £1,000 a day, and still employ a first-class crew and use ships of a high standard.
What seems to have happened is that British management and unions have, as in the newspaper industry, come to arrangements—for example, on national manning scales, leave, pensions, sickness, study pay and training—which though no doubt excellent in themselves take little account of the competition or of economic realities. We give our seamen long holidays and fly crews to and from places such as Australia. When I was a sailor—admittedly in wartime—I was given only a few days leave when my ship came briefly into port for something like a boiler clean. We seem now to have reached the point where some seamen work for only four months of the year. Moreover, our ships in Europe are, we were told, overmanned compared with world standards and the wages we pay have to include a heavy burden of tax and social payments.
Flags of convenience may suggest substandard and unsafe ships, but that is not necessarily the case, and such unsafe ships can and should be picked up and stopped by port state control, which should be increased and strengthened. However, if we are to have flagging back in, which we should all like to see, we must have a very substantial reduction in crew costs. We must ensure that it is no longer so much cheaper to sail under a foreign flag. If we just sit hack and do nothing there will be no British flagships in which to sail.

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I suggest therefore that the Government should call together the shipowners and the unions and see whether some new arrangements can be worked out, with all three parties making a contribution, so as to make crew costs in the United Kingdom much more competitive and enable ships to be flagged back in. I shall be glad to know what the Minister thinks of that idea.
Shipbuilding was not the committee's primary concern but we felt that we could not ignore it. We all know about the appalling world surplus of ships. We need to consider arrangements to encourage scrapping ships and funding the construction of advanced ships. Having sailed as an ordinary seaman in HMS "Belfast", which was built by Harland and Wolff and is now in the Pool of London, I have a particular interest in this matter.
I have one incidental thought. During our deliberations we learned that 15 years ago South Korea decided to enter the shipbuilding market for the first time. They built three of the world's largest shipyards, hired experts and began quoting 10 per cent. below anyone else. Now South Korea is the world leader in shipbuilding. All that was achieved in 15 years. In this country we seem nowadays to do little but wring our hands over decline and contraction in one industry after another. Can we not—and should we not—take one or two fields and ourselves aim to beat the world in 15 years as the Koreans have done? I believe that we could do it if we put our minds to it. Does not your Lordships' House contain a number of men with unique experience of running great industries? They could point the way to what we might do. Can we not set up a group to go into this matter? I leave the thought with the Government and with your Lordships.
1.7 p.m.
The Earl of Ineheape: My Lords, I should like to add my congratulations to my noble friend Lord Strathclyde on his excellent maiden speech. I knew his father and his grandfather very well, both in Scotland and in Westminster, and the noble Lord seems set to follow their fine careers.
The report of the Select Committee has come at a very opportune time for many of us who have had a long connection with the shipping industry and who are becoming increasingly anxious that no action seems to have been taken over the problems of the European shipping industry, including the British shipping industry. I am very sorry that owing to illness my noble friend Lord Rochdale is not able to be present today but I should like to support the Motion that the noble Lord, Lord Kearton, has at short notice moved so ably in his stead. I must also declare an interest, as president of the P & O company.
The shipping industry welcomes the general thrust of this report. It is a thoughtful analysis of the Commission's proposals for a Community shipping policy. But it goes further than that. It is also a useful study of the problems that beset European shipping, including the British shipping industry. The committee agrees with the Commission of the European Communities that the EC should follow a
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non-protectionist policy, both internally and externally. It states that, where other countries discriminate against Community ships, the Community should be prepared to retaliate. At the same time it rejects internal protectionism, both national cabotage and a French proposal to reserve intra-Community trade. I strongly support that view, and I was pleased to hear the noble Earl, Lord Caithness, confirm that this is still the Government's policy.
The alternative is described as "the management of trade in an orderly way". This is management of international trade by governments. Without doubt it would increase costs for our customers, and without doubt it would eliminate entrepreneurial opportunities for British shipowners. The competitive path is a hard one to follow, but the alternative is a museum-piece shipping industry which is old-fashioned, expensive and of little practical use to the community that it should be serving.
However, though I reject government control, government help is vital. The ring must be kept clear so that the competition is fair and free. So I welcome the committee's support for the proposed regulations in Annex II-1 and Annex II-6 of the Commission's paper. The first will provide for joint action by the Twelve against other countries' protectionist measures. It is vitally important that the world's largest trading bloc should punch its weight in trade battles. This regulation should channel that weight behind shipping.
Regulation II-6 will give a weapon against subsidised and state-controlled competition. No market economy shipping line can compete against a state. This anti-dumping type of measure will give Community shipping lines the same help that is available to Community manufacturing companies.
I have already commended the committee's rejection of internal Community protectionism. It is absurd that, 13 years after the UK entered the Community, a British ship cannot take a cargo from Genoa to Trieste, or Dunkirk to Marseilles, or provide a cruise out of and back to Piraeus. The damage is not just the cargoes or passengers lost. It is the habit of French shippers always thinking French, or of Italians only using Italian ships even for non-cabotage cargoes. It is the inefficiency of having to operate Mediterranean cruise ships from two different base ports. It is high time that these anomolies were removed. Like the Committee, I strongly support the British Government's attempts to obtain the elimination of national cabotage, without the transitional periods proposed by the Commission in Annex II-2 to their paper.
A subject that the committee has dealt with at considerable length is the use of "flags of convenience"—about which several noble Lords have spoken already. Let me say right away that I accept that a British flag, a British crewed ship, must be the best solution for Britain provided that it can operate economically. A British built ship would be even better, subject to the same proviso. It was sad that British shipbuilders were not even able to quote when P & O ordered the new cruise ship. "Royal Princess", two years ago.

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But if a British crew, or even the British flag, are not competitive, the owner has to take some action or the ship has to be sold. For a century P & O has found that many ships in many trades are only competitive with foreign ratings. It is far better for earnings to be remitted to the UK, for some people to be employed in shore offices, on board as senior officers, or for London's financial, insurance and broking services to be used, than for there to be no British involvement at all in that ship.
I am glad that the committee recognised this, albeit perhaps rather reluctantly. They also accept that the Community's policy should benefit all EC shipping, regardless of flag. Above all, I welcome their recognition that flags of convenience and substandard ships are not synonymous. Of particular interest is the committee's proposals for making the red ensign less of a flag of inconvenience.
This is not the time for a spending spree or for speculative building. But new ships will always be needed. If the Merchant Navy is to survive and prosper, its ships must be first class. They have to be renewed from time to time to take advantage of technological changes and to seize commercial opportunities.
Last year, six new ferries were ordered for UK registration by three different ferry operators. Some were small, and one was very large—so far, so good. But the rest of our order book was frighteningly low—precisely six general cargo vessels with a total tonnage of 15,000 dwt. I suggest that this almost complete lack of orders for cargo ships demonstrates a realistic reaction to to-day's poor return from any investment in UK shipping. If the Government think 15,000 dwt a satisfactory investment in British shipping, so be it. The industry does not. It will go on as long and as often as is necessary pointing out the disastrous consequences not only for a wide range of maritime industries but also for the economy itself.
As the committee has recognised there will be fewer ships available in an emergency, and fewer seafarers. There will be a smaller contribution to the balance of payments—and already North Sea oil revenues are nose-diving. More and more we, as an island trading nation, will be entrusting the keys to our trade and our prosperity into the hands of our competitors.
I too welcome the reference to a favourable direct tax regime for seafarers. Seafarers' tax and national insurance are two of the social costs which make it less attractive to operate a ship under the UK flag. If the Government mean business about supporting the UK shipping industry—and I hope that they do—here is another area where they can act now to make the red ensign perhaps a little more convenient than it is today.
But a more detailed examination of the problems of the shipping industry, its suppliers and users, and the national interest is certainly needed. The shipping industry fully supports the committee's proposal that such a study should be carried out.
I commend to your Lordship's the report of this committee.
1.17 p.m.
Lord Shackleton: My Lords, I too should like to congratulate the noble Lord, Lord Strathclyde. His father, and indeed his grandfather, were well known to many of us, particularly in another place. There is a strong nautical and naval tradition in his family and it came out in a very elegant speech which was strictly according to the rules but had that touch of additional knowledge which your Lordships' House so appreciates.
I want to deal with one aspect of the report to which not much attention is given. I congratulate the committee, and particularly the noble Lord, Lord Kearton, on his presentation on what was a complex subject.
I suppose that I should declare an interest as an Elder Brother of Trinity House—although I may say that I do not get any payment but I do get some lunches now and again. My noble friend Lord Wilson is also an Elder Brother. He once said to me that salt water ran in his veins. However, I should not wish your Lordships to think that this ancient and highly efficient institution depended on either the noble Lord, Lord Wilson, or myself. Among the fulltime Elder Brothers, they probably had a more proficient and expert body of maritime people than could be found anywhere else in Britain. They are ex-captains of Merchant Navy ships. They are picked men. There are one or two Royal Navy ships. They have been providing safe lights around this kingdom for many years. Indeed, this title goes back to the time of Henry VIII.
My concern is with an area in which the Government could act. I do not expect the noble Lord to accept the recommendations either in the report of the Select Committee or to draw the conclusions of his own department's report on the subject of the inequality of the position of ports. I know that this Government are exceedingly reluctant to spend money on anything, but I do not believe that a Labour Government would necessarily do anything either because they have not done so in the past.
It is perhaps a pity that Trinity House was not enabled to give evidence to the committee. In paragraph 117 in relation to the representation of the British Port Association—it is not only the ports which are aflected, but the shipping lines also—the report states:
"The Committee consider that the Government should examine these complaints"
as to the disadvantages they claimed to be suffering relative to ports in other Member States—
"and if satisfied that there are in fact serious disadvantages should consider what action should be taken to improve the situation".
Turning to the Department of Transport's report on the comparison of costs between British ports and Continental ports, when we look also at the report of the Select Committee we find some quite striking differences in costs, whether it is the cost of pilotage or lights—with which Trinity House are particularly concerned—or other factors.
In the opinion of the department, the factors which accounted for the difference in costs—the superiority in costs, or the lower costs of European ports—were state funding and operating efficiency. An example is given on page 37 of that report where it says:

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"If Antwerp charges had reflected the full costs of its operations, including the cost of services provided in that year by the state and financial charges appropriate to the amount of state support on capital account received over all years, they would have needed to be 67 per cent. higher than they actually were to break even. The results speak for themselves".
The determination of the British to stick to free markets and no protection is one of our noblest and most splendid articles of faith. We continue to stick to it regardless. It is no good the Minister in his admirable speech quoting a nice little jingle about subsidising, when we see the disadvantages under which we operate.
Again, according to the department's report, the actual cost of the lights represents about one-seventh of the extra costs involved which fall on the British ports. However, the Light Dues Fund is not only for Trinity House but also for the Northern Lighthouse Board in Scotland, and the Commissioners of Irish Lights. Perhaps I may indulge in a bit of propaganda on behalf of Trinity House; and again the figures are available. The expenditure is not proportionate to the amount of revenue which they receive from these charges. The last thing that I would wish to do is to disturb the relationship between the Northern Lighthouse Board and Irish Lights by suggesting that there should be a single authority. That would be totally unacceptable to some noble Lords on all sides of the House. Nonetheless, if we are seeking efficiency, we should consider the matter.
The number of lighthouses and the number of lightships has been severely cut and that has added extra costs. It is always very sad to lose the splendid service of the lighthouse-keepers, some of whom are also rather good ornithologists in their isolated lighthouses which are situated on cliffs, and so on. However, there is a limit. There is not much scope for further economies. The new hoard which was set up on the Government's initiative is working very efficiently and I think that Trinity House recognise that. They were a little sceptical at the beginning, following the McLelland Report. I take the opportunity to say that, having handled many such reports both in industry and government, that report was one of the worst reports that I have ever read. Nonetheless, some good came out of it—for example, the arrangements for the Lighthouse Board. It has yielded good results. We must be careful in the pursuit of economy and in the pursuit of a competitive situation in Europe, not to lower standards any more.
There is only one other matter that I should like to raise. In other countries the lights are paid for in the greater part by the state. In some cases a small element falls on the local port. We do not do that in this country. We expect to collect the money. It is an additional cost which has some detrimental effect on shipping. Certainly some of our shipping companies become almost too excited about what they have to pay. The noble Earl, Lord Inchcape, who seems to have now left the Chamber, did not refer to that matter.
I should like to say a quick word about pilotage. There have been complications, but now that the Letch Report has been abandoned, there is undoubtedly scope for a more efficient organisation of the pilotage authority. Indeed, some efficiencies have
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been achieved. The pilotage authorities are divided between Trinity House and sometimes local authorities. Certainly in my old constituency of Preston it came under the council. However, they are basically under the port authorities. There is a case for rationalisation and better use.
I urge that before the Government embark on legislation, as envisaged in their Green Paper, they should see whether the existing authorities—now that they are freed from the constraints of the Letch Report—could achieve what they wish more efficiently. Needless to say, I am prejudiced and I am sure that my noble friend Lord Wilson would agree that it would be far better if Trinity House did the lot; but I am not uging that now! This is an area where there is the prospect of economies, and generally the Government need to recognise—and they have said this in their report—that British ports are labouring under a disadvantage. Some have great advantages but much depends on their geography and other factors. Some of the British ports are very low, but there are special circumstances. It is a particular if a minor part of the very considerable problems which noble Lords have demonstrated in their speeches. It may not be the most major problem, but I certainly hope that the Government will take the report seriously, as the noble Earl, Lord Caithness, indicated that they would.
Generally, the Government have had quite a good record in listening to the reports of House of Lords' Select Committees. It is a measure of the quality of these committees, particularly the European Committee, that they bring lustre to this country in Europe.
1.27 p.m.
Lord Hayter: My Lords, I speak as the first 100 per cent. layman on the committee whose report we are debating today. I hope in 10 minutes to guide you through its 351 pages from the layman's point of view. First, as far as European committees in general are concerned, it was a mystery to me until just recently to discover what happens when we prepare such reports in this House. The terms of reference of the Lords Select Committee on the European committees are:
"to consider Community proposals, whether in draft or otherwise".
The Commons terms of reference are treated as the criterion even in this House. It is a matter for each House to decide whether it wishes to examine any particular proposal and to debate it. The task of advising the House on the importance of a proposal has been delegated to a Select Committee.
The Government have given an undertaking—and this was the point which surprised me—which in the House of Commons has been embodied in a resolution, that Ministers will not give agreement in the Council of Ministers to any proposal recommended for further consideration by the House before the House has given it that consideration, except in special circumstances.
The resolution in the House of Commons embodying this undertaking says:
"That, in the opinion of this House, no Minister of the Crown should give agreement in the Council of Ministers to any proposal for European Legislation which has been recommended by the

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Select Committee on European Legislation, etc., for consideration by the House before the House has given it that consideration, unless

a. that Committee has indicated that agreement need not be withheld, or

b. the Minister concerned decides that for special reasons agreement should not be withheld".

So we come to this debate today. Of all the witnesses who gave evidence to the committee, to my mind the most expert of all was the noble Minister himself—the noble Earl, Lord Caithness. It seemed to me a little odd that we should be trying to advise him on something about which he certainly knew much more than I did. I recommend to those people who want to wade through this report that they should read in particular pages 36 and 248, where the noble Earl, Lord Caithness, gave evidence.
There are three points about this report. First, again as a layman, I was impressed by the conflicting views of shipowners, shipbuilders, export shippers, import shippers, trade unions—I think there are three, if not four—port authorities, and you will see in the index in this report the vast number of people who gave evidence. I am not so naive as to try to make out that this is unique. There are conflicts in almost every industry. But in this particular one it seemed so obvious that it was vital to get cohesion here.
What a contrast to the united states of the Soviet Republics. There is no nonsense there. If you turn to page 300 you will see their report. May I quote two short sentences:
"It should be noted that all Soviet ships sail under their own flag: not one is 'flagged out' ".
Secondly:
"A Soviet seaman is well paid, unlike his British counterpart".
There is one point: that there seem to be a lot of conflicting views among the experts who came to see us.
My second point is that it was a surprise to me, and perhaps to others here, that the shipping industry has its own language. I remember in the committee I asked that a glossary should be provided, and it was. Then to my delight I see that it has been printed here in the report. You come across such curious words—"cabotage", which sounds like something French Canadian. Perhaps it was originally. Then there are the initials of all the organisations that came before us. Take a word like "conference", or another word, "consortia"; it does not mean what you think it means; it really means a closed shop. Another phrase, "loyalty agreement", does not mean what you think it means; it is monopoly control. One has to look at the glossary rather carefully.
My third point, which has been touched on by noble Lords who have already spoken, is that for everybody else on the committee, experts and laymen alike, the most interesting part of their brief was,
"to make reports on other questions to which the Committee consider that the special attention of the House should be drawn".
Coming back to defence, the noble Earl the Minister said:
"At the moment we can man sufficient ships to meet the defence needs as agreed with the Ministry of Defence".
You will find this on page 256. In saying that it was agreed that the Minister was confirming what the Prime Minister had said a few days before.
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Who am I to contradict the Prime Minister, let alone the noble Lord the Minister? But I do not believe it. In any case, will a Prime Minister be able to say the same thing in five, 10, or 15 years from now? I think the unanimous view of each of the members of the committee is that it would not be possible to do so. The trouble with politicians is that they think only five years ahead, for reasons on which I need not elaborate. Once they look beyond that, they are in danger of becoming statesmen, and that is the last thing they want to be.
Therefore, what do I expect the Government to do? I hope they will look ahead. I hope they will see that ships are built in the future with one eye on defence. I hope they will review the flags of convenience which, from our state's point of view, are obviously flags of inconvenience; particularly because of the crews involved in those ships, who may be of a variety of nationalities, which it might be difficult to get hold of in time of war.
I hope the Government will see where the faults lie, and correct them; will consider why there are these flags of convenience; will see that our seafarers are properly paid and, as has been already said, intelligently taxed. We need to co-ordinate our maritime transport with our inland transport, a point which has been referred to, but it is much more important than I have the time or ability to elaborate on. We need to set up a Merchant Navy reserve—perhaps the most important point of all.
It has been said by critics of the Government that they know the cost of everything and the value of nothing. If you feel that there is anything in this point about the defence of this country you will realise that it concerns the lifeblood of this country. Just as in the domestic way in your own homes if somebody is ill and has to face up to an operation, you do not look at the family budget; you get on with it—that is true of defence so far as this country is concerned.
If we have a Chancellor of the Exchequer who admittedly is much more interested in service industries than in manufacturing industries, again the point can easily be made how dependent we are on a Merchant Navy to bring the things that we know better than he does we have to have in this country in order to live in a reasonable state of affluence.
The message of this report can be summed up quite simply: history shows us that we are part of a united states of Europe, and geography emphasises that we are an island, and we therefore depend on ships and the men that go down to the sea in them. We ignore these two simple facts at our peril.
1.36 p.m.
Lord Layton: My Lords, may I say that I, too, welcome this report, and particularly would agree with what we have already heard about the support that the Government are giving to the concepts and to the pressure being applied to the Commission to get its regulations through in their various forms. While I would support a great deal of what has been said about the shipping industry and the shipbuilding industry, I ought at this stage to mention that I am somewhat heavily interested in a separate part of the business

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that has come up very importantly in this; namely, the shippers' side of the business.
Perhaps I should confess that I am President of the Court of the British Shippers' Council, which is very much concerned with a great deal of the detail and the wording of these regulations. But before I go on to the detail there, mention was made by my good friend Lord Hayter of the service sector and the importance of shipping in that sector. I would add that from the shippers' point of view the major sector is quite clearly industry, and the goods available for export and the need for imports.
Perhaps to put this into perspective, while the service sector in this country is far larger than the manufacturing sector, when it comes to our overseas trade the export of goods in 1985 was £78 billion, and the export of services was £25 billion. We also recognise that a large part of those export services was in fact servicing the carriage of the goods, and if the goods are not there to carry then that service sector will die down even more.
I come back to an important factor, which is the state of our economy, as very well shown in the report from the Select Committee on Overseas Trade last year. We are going to need to expand our export business. We are going to need to expand our export services, and it is regrettable that the shipping balance has already gone against us. It is hoped that if we take the actions which are put forward in this report and which are proposed in Brussels, we may make some steps towards reversing that trend. But in fact, in regard to the shippers themselves, I should like to tackle some of the points which are of major interest to them.
The matters of real practical concern to shippers among the wide span of topics covered by the committee are inevitably those which contribute to the continuing development of healthy, competitive and open shipping markets, both within the Community and in trade with third countries. Furthermore, the rules and regulations proposed look as though they will contribute towards the elimination of some of the barriers and some of the discriminations which are practised.
In an overall sense the Commission's package of proposals represents a non-protectionist policy—and this has been emphasised by several speakers—and is said to be in the best interests of both the Community shipping industry and the EC shippers, the end users. I welcome the sub-committee's endorsement of this basic principle, and I believe that the bulk of shippers will, too. In fact, it formed one of the cornerstones of the policy statement of the European Shippers' Council in October 1985 on Community maritime policy, and there can be no doubt that the maintenance of a multilateral and market orientated Community shipping policy rather than the inward-looking policy of protectionism is the right way forward for shipowners, shippers and seafarers.
Three of the four regulations that have been mentioned by my noble friend Lord Caithness are of particular concern to British shippers. The regulation dealing with freedom to provide services which will provide a more competitive maritime market by abolishing existing restrictions on the provision of
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shipping services within the Community is well supported by the committee and, as we now understand, by the Government. This support and the committee's rejection of long transitional periods is absolutely right in helping exporters and shippers, and needs to be brought in as soon as possible. Unfortunately, this regulation has proved to be the most contentious of the Commission's proposals, and I believe there is no agreement yet in Brussels.
However, dealing with the application of EC competition rules to shippers calls for much greater concern. This concern can be divided into a number of specific areas. Loyalty agreements have been mentioned. This question of loyalty agreements between shippers and shipping conferences has been a highly controversial and vicious long-running battle for many years. Fortunately, today we have reached more or less a state of understanding, and shippers and shipowners have largely resolved their differences, which is a great change, but they wish to see a more general and simplified form of words incorporated in the regulation. It is, therefore, pleasing to note that the committee recommends the maximum possible simplification of these provisions and also that the committee suggests the inclusion of references to service contracts in the regulations. This move over to service contracts was largely due to the steps taken to get agreement in terms of treatment of loyalty.
Shippers have long been concerned that one of the fundamental effects of this regulation is to strengthen the position of liner conferences while providing little to protect the position of the small shipper and no means by which such shippers can improve their position. Signs that the Commission and member states are looking positively and favourably at the development of shippers' associations as a negotiating counter to the liner conferences were therefore welcome. However, in order to function legally and effectively such associations require the same type of block exemption from the competition rules of the treaty as is proposed for the liner conferences. The regulations contain no such provision, and it is understood that there is a legal barrier to its inclusion. If this is indeed the case, steps should be taken to deal with the matter, perhaps by the drafting of an additional regulation. The alternative, which is currently believed to be the way, is for individual exemption, but this is under a cumbersome procedure and is impractical and inappropriate for the small shipper.
British shippers welcome the committee's endorsement of the British Shippers' Council's argument for comparable treatment for shippers' associations and hope that the United Kingdom Government will consider it appropriate to take a positive lead in Europe in this important area, by pressing for the provision of a concurrent regulation or, as an absolute minimum, the provision of clear and positive guidelines setting out the basis on which exemption would be granted under the individual application procedure.
The regulation dealing with unfair pricing has always been of concern to shippers, who see such a regulation as a means of introducing protectionism into the Community's maritime policy, in contrast to the stated aim of rejecting such a policy. Shippers are

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concerned that implementation of this regulation may give rise to increases in rates quoted by independent lines and a reduction in competition, with little practical evidence to justify such steps. We are therefore disappointed that the committee generally approved the principle inherent in the regulation.
That deals, as far as shippers are concerned, with some of the detail, but in terms of general policy we feel that enormous steps forward have been made in the last few months. We therefore support very much the efforts put forward in the committee and already instanced by my noble friend Lord Caithness as the policy of the Government in pursuing this package effectively. We are also well aware that there are still very substantial differences in relation to port charges, which my noble friend Lord Shackleton mentioned, and the costs, and the way costs of ports are carried, in effect produce a disastrously heavier charge on goods shipped out of British ports.
As your Lordships may probably recall, I was very much concerned with developing an effective Channel link. The link I should liked to have had was an open road across the Channel, but that would unfortunately, unless something substantial was done about these charges and the way they differentiate against the British carrier, in fact have improved the volume of traffic that could have gone across in containers for shipment out of places such as Antwerp and Rotterdam. I believe that the Government, with our help and with the help of the various associations, can find a way to nullify this differential which exists. In the light of the policy proposed in the committee's report and the attitude of the Government to these proposals, I hope we shall find a way to solve these remaining problems.
Lord Shackleton: My Lords, before the noble Lord sits down, may I say that it still will be possible to ship in competition and not go through the ports, through the more efficient Channel Tunnel, of which I have been a supporter for many years.
1.48 p.m.
Lord Greenway: My Lords, I welcome this extremely well thought-out report presented so nobly on behalf of Lord Rochdale by Lord Kearton. All credit to the committee, which has done a thorough job.
I also welcome the Minister's comments on it. As my noble friend, Lord Hayter, has said, the Minister knows possibly as much as any of us about this matter these days. He is only too well aware of the problems. I hope that in him we have a Minister who will really see that something is done to help our maritime industries.
I think we all can accept the decline. It has been sharper in this country, admittedly, than in some of the other Continental countries. It has been brought about, as we have heard this afternoon, by a number of factors; the replacement of the traditional cargo liner by the modern large container ship. It was brought about partly by the oil boom before the oil price increases, when people fell over themselves to buy large tankers and the world ended up with too
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many ships. This is still the problem today. We are faced with too many ships in the world.
It is a mistake to offer additional finance for building new ships. We need tighter control on ship finance, especially for what I call these single ship companies. Shipping these days has become a morass of small companies which are very difficult to keep tabs on. This is one way in which we could tighten up on the situation. Incentives could be given to the efficient large companies which have proved their worth—and there are still, I am happy to say, one or two of those around.
The Minister mentioned earlier that as a result of these incentives people rushed into ships and bought them as appreciating assets. I think that I detected a chuckle from one or two noble Lords as he mentioned that. Certainly, some of those shipowners perhaps have a very nice ship lying at a buoy somewhere in the world; but it is available for purchase now at only its scrap value. For that reason, anyone wishing to go into shipping can pick up a very efficient secondhand ship at rock-bottom prices. He can go into any market he likes with lower rates than the existing shippers. He stays in the trade for a year or maybe 18 months and then goes bust.
This has a very bad effect on the trade in general. However, there are some signs of encouragement over this problem. A recent report from the UNCTAD Secretariat on ship financing for developing countries urges caution and the need for proper commercial aspects before committing oneself to buying a new ship. I think this is very encouraging, because a lot of flak has been thrown at UNCTAD in the past and it shows that they are looking at the problems in a reflective way.
I do not think that I need to say too much about flagging out because that has already been well covered. I think that it was the noble Earl, Lord Inchcape, who said that there is a misconception that all flagged-out shipping is of a substandard nature. Many of these ships are in fact as modern, if not more modern, than the ships in our own merchant fleet. The operator of sub-standard ships has a harder time of it these days. It is not so easy. We have the very effective IMO controls in force at various ports and I am happy to say that the underwriters are now beginning to crack down much more heavily on this type of tonnage. I believe that ships over a certain age automatically take a 50 per cent. increase in premium.
Scrapping is proceeding, I would say, at a fairly healthy rate at the moment. I happen to see quite frequently lists of ships which are passing through the scrap yards. It is accelerating, I would say, and certainly a lot of that older tonnage which is no longer commercially viable—the old cargo liner, the large tankers, which have passed away rather like the dinosaurs—is going to the scrap yards in ever increasing numbers. We have also seen some fairly spectacular crashes in the last year or couple of years. I can mention the Sanko company in Japan, which owned 200 ships and the Swedish Salem company, which had, I think, 90 ships. These crashes are also, in a way, helping the situation. As it always has in the past, I think that shipping, which is a very cyclical industry, will level itself out. I think it will find its own

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level and that we shall see both our own and the world's fleets becoming much leaner and much more efficient and the old dead wood will have been cut away.
I agree wholeheartedly with the report that Europe must get its own house in order. I think that the cabotage problem must be sorted out as soon as possible, although I have a slight reservation, in that the Commission's report on inland transport, which came out two years before the shipping report, is still not producing any tremendous advantages and we still see lorries sitting at borders in the EC, sometimes for days, waiting to get across. I think that it is not going to be easy to sort out the cabotage problem but I am sure that the noble Earl, the Minister, will be giving it his full attention.
On competition, the noble Lord, Lord Kearton, mentioned Russian competition. This is something that crops up regularly in the press from time to time. Personally, I think that it is exaggerated. I think that the Soviets on the whole act fairly correctly when it comes to shipping, although they have admittedly, built up a fairly large fleet in a comparatively short length of time. But, as with many other countries, a lot of their ships are now not competitive commercially. They fall into the old cargo-liner bracket and, as of only last year, they are going to the scrapyards fairly frequently in the Soviet Union. They are also hampered in a way by their rather rigid five-year plan for shipbuilding, but I would say that the new ships coming from the Soviet Union are, in the main, specialist ships which are very much tied up with opening their own sea routes in the very far north: specialist ice-breaking ships and offshore supply vessels, and so on.
Also, the Soviet merchant fleet suffers from quite a number of failings which do not generally get publicised. I have here in my hand a report on the Soviet merchant fleet which was made to the Soviet Ministry of Merchant Marine. It mentions one or two areas of failings. In particular, the specialist ships which I have just mentioned were often used to carry cargoes which did not require their particular technical facilities. I believe that the Soviets have plenty of problems of their own and I am not certain that this system of checking up on Soviet ships is going to produce any great result. I think it is probably too early for the Minister to give any indication of whether anything has been learned yet, but I am sure that in time he will be able to provide those figures.
Passing to the off-shore supply business—and here I see that the noble Lord, Lord Geddes is to follow me, so I will mention this only in passing because it is his particular field—there is no doubt that we have a problem with Norway over this particular type of shipping. The Norwegian Government help their own fleet with training costs in all sorts of ways. They pay, I think, 50 per cent. of the cost of overseas travel and they cover the cost of laying up the ships when they have to be laid up. That is a substantial amount of money. It can be from £50,000 to £70,000.
Shipbuilding has been brought in although it was not really part and parcel of what the committee had to report upon. I will say no more about shipbuilding than this. I was speaking to a ship-owner the other day
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who wanted a new vessel. He had received the lowest quote from a shipyard in Korea. For reasons partly patriotic, I think, and partly financial, he declined that offer because its was going to cost him of the order of £100,000 to have the ship delivered to this country and he was also going to have to spend quite a lot on air fares for his technical staff to go out and inspect the ship while it was being built. He accordingly declined the offer. Three days later a reply came back from Korea saying that he could have free delivery—and they included 12 free air tickets.
I suggest that our shipyards cannot compete with this sort of competition. Where we go from there I should not like to say. I think it important that we keep a shipbuilding capacity for emergency needs in a time of crisis but it is a very difficult problem to sort out at the moment. I might add in passing that the quote from Korea on this particular ship was half a million pounds less than the quote from the English shipyards.
Manning has been mentioned. I think the proposal for tax allowances to cover the social security and pension of seamen is a new idea. It is one that we have not heard too much of before. I personally welcome it. We had a plea, possibly from my noble friend, about a merchant navy reserve. This is an interesting proposal and one that I think the Government could look into. If we are to do anything in that field, I feel that it would be better possibly to concentrate on the engineering side, because, thinking back to the last war and the naval reserve, great use was made of yachtsmen. Today, we have many more yachtsmen around who are frequently at sea. I think that in times of emergency they could probably be trained up fairly quickly to run a ship from the deck point of view; but of course the engineering side is probably the most pressing problem if we were to think of doing anything along those lines.
It is now obvious to all that there is a growing awareness of the problems facing us with the decline of our maritime industry. Pressure groups have sprung up: they have been mentioned. There is the Maritime League and, more recently, the British Maritime Charitable Foundation. The noble Viscount, Lord Leathers, who is chairman of the Founders' Council of the latter body, said recently:
"In the past the sea has shaped our island traditions. The future will depend on how well we shape up to the challenge of the sea".
I think that challenge has got to apply right across the board and not just to shipping. It has to apply to our maritime technology industry, as the noble Lord, Lord Kennet, indicated, and I think it is something that at some stage we have to take a much closer look at.
The noble Earl the Minister said he felt that, as we have had two reports fairly recently—and indeed it is quite something for your Lordships' House to have major debates on maritime affairs on almost alternate Fridays—that was encouraging in itself. The Rochdale report went only as far as it could and it said there was a lot more ground to be covered. I believe it is important that this ground should be covered. I think that, as has been indicated, it is up to the Government to see that it is covered. "Co-ordination" is the word that is needed. That came out in our debate on maritime technology the other day. A lot of people are involved in this industry and they need guidance from above. I think the Government must provide it.

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All is not bleak, as indeed we have heard from one or two noble Lords, although our merchant marine has sadly declined. This is one of the peculiarities of the present situation. In the past when things have been difficult in the shipping industry, ships have been laid up and once conditions have got better those ships have been brought back again into service. Today, those ships have left the British register and therefore we can no longer rely on them being brought back when we need them. Shining examples have been mentioned, such as Overseas Containers and perhaps I may mention the Atlantic Container Line on the North Atlantic and the Maersk Line in Denmark. They show that people can still do well in the shipping business and it is companies such as these which will be seen to be spearheading what I should like to see as the new, modern, efficient, thrusting, British merchant marine.
2.3 p.m.
Lord Geddes: My Lords, I most warmly endorse the well-deserved congratulations already given to my noble friend Lord Strathclyde on his quite excellent maiden speech. How appropriate it was that, bearing the august surname that he does, he should have made his opening comments on maritime affairs.
In the tradition of your Lordships' House, I declare an interest: not only that I was and continue to be a member of the sub-committee whose report we are debating but also that I have close connections with the United Kingdom shipowning industry. We sadly miss my noble friend Lord Rochdale, and I strongly endorse all the comments that have been made by other noble Lords in wishing him the speediest of recoveries. He was and still is a quite outstanding chairman of sub-committee B. If I may make a personal remark, it has been a rare privilege to sit, so to speak, at his feet. The noble Lord, Lord Kearton, is most warmly to be congratulated on stepping into my noble friend's shoes so ably and at such short notice. I should also like most warmly to welcome back, if that is the right word, the noble Baroness, Lady Llewelyn-Davies, who has given us such valuable guidance in sub-committee B.
I want to start at the end, by referring to paragraphs 105 and 111 of the report. The shipping industry in the European Community, and particularly in the United Kingdom, is certainly on its knees. Indeed, I would go so far as to say that it is close to being flat on its back. I generally endorse, not only because I was a member of the sub-committee, the pursuit of a non-protectionist shipping policy. But, my Lords, the commission document to which the report refers, No. 5635/85, scratches barely skin deep. As is stated in paragraph 105, implementation of the four regulations (1, 2, 5 and 6) must only be a first step, and more is needed. Even more do I support paragraph 111 on the need for a far wider and deeper study into the shipping industry than was possible by our sub-committee in examining the Commission's communication. In this respect, and only in this respect, I think, do I diverge from the remarks already made by my noble friend the Minister.
There are so many contiguous problem areas that it is really impossible to cover them all. Indeed, as the
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noble Lord, Lord Kearton, said in his opening remarks, many of them have been and, following my own remarks, will be addressed by other noble Lords. Some of them refer purely to the United Kingdom and others are European in general. A few may begin to be solved by the Commission communication.
The biggest problem by far, if one has to single out one problem only, is that of unprofitability. I contend that from that comes the marked decline in European, and particularly United Kingdom, tonnages, which in turn impinges on defence issues, both the non-availability of ships themselves and, even more particularly, the crews for those ships. Also from that unprofitability stems in part the decline of the shipbuilding industry. My noble friend Lord Bauer, who had the grave misfortune to try to instil into me the rudiments of economics some 25 years ago, did at least succeed in getting me to grasp the essentials of the law of supply and demand. The supply of ships has exceeded, and still greatly exceeds, the demand. Freight rates, which in this context are the equivalent of gross earnings, have dropped dramatically and drastically.
As reported in paragraph 40 of our report, gross earnings have in general remained absolutely static over the past 10 years whereas the United Kingdom retail price index—not perhaps the best measure to choose, but we could not find another more appropriate—has increased by 154 per cent. From a national view—I make no apologies for repeating comments made by other noble Lords—the overall United Kingdom balance of payments figures for sea transport services has been in deficit since 1981. The annual debit balance, as we have heard, is now in excess of £1 billion per annum.
The employment of United Kingdom seafarers and our shipbuilding capacity have halved over the decade 1976–85. To illustrate the overall point I am trying to make—I am most grateful to the noble Lord, Lord Greenway, for having led me into his—I should like to look at offshore support vessels. As I shall refer to that phrase on a number of occasions I hope that your Lordships will bear with me if I call it merely OSV. I shall take as an example four relatively small unsophisticated OSVs built recently on Humberside at a total cost of about £12 million. They are all very well built, and they are all now in service. They are British owned, managed and crewed and they fly the Red Ensign. Each—I repeat, each—vessel is currently losing more than £1,000 a day. They are employed in the North Sea. They are extremely lucky to cover even their direct operating costs let alone finance charges and depreciation. The owner of such a four-ship fleet is therefore losing about £1.5 million a year having invested £12 million in the United Kingdom.
Believe me, there are many instances of losses far greater by United Kingdom owners in this area. No organisation can continue to bleed at that rate and survive. Since the report that we are discussing was completed, matters have rapidly become even worse. The plummeting oil price and the understandable drastic cut in expenditure by the oil majors, particularly in offshore exploration, have literally decimated the OSV industry. For example, Shell has cancelled all further work on the Gannet and Kittiwake fields, estimated at £2 billion. Burmah has withdrawn

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completely from all offshore exploration. BP has already announced reductions in its budgeted expenditure of £200 million, and yesterday at its annual general meeting Sir Peter Walters stated directly that North Sea oilfield development would dry up unless taxes on company production profits were cut.
I apologise for the fact that I shall now give a few statistics, but I hope that they make the point. There is presently a total of 302 OSVs in the North Sea. The United Kingdom and Norwegian sectors absorb 240 of them—almost exactly 80 per cent. In more detail, the United Kingdom sector has 164, of which 109 are British flagged, 21 other European countries, 32 Norwegian and two American. On the other hand, the Norwegian sector has a total of 76 vessels, of which 75 are Norwegian and one, working only on the spot market, is British. That is where Annexes II-1 and II-2 of the Commission communication need to come into effect now to restrict the United Kingdom sector of the North Sea, if not to British vessels alone then to genuine European Community flagged vessels. The one Norwegian witness who appeared before our sub-committee (qustions 420–24) was singularly unconvincing in that context.
The United Kingdom OSV industry also suffers severely from the consequences of others benefiting from shipbuilding finance softer than standard OECD terms. The OSV sector desperately needs government support for restructuring existing loans on United Kingdom built and owned and British flagged vessels, including a moratorium on capital repayments. In that context I strongly support paragraph 110 of the report. I also support, and just as strongly, paragraph 106—European Community scrapping but not a scrap and build scheme—and paragraphs 107 and 108—the restoration of pre-1984 allowances and a favourable direct tax concession to seafarers. Believe me, my Lords, it is not a question of jam tomorrow. When tomorrow comes there will be precious little bread on which to spread that jam.
I have said nothing so far on two other vital subjects—flags of convenience and defence. Both topics have been mentioned many times already today, and I am sure they will be mentioned again. The problem with flags of convenience has not so far significantly impinged on the OSV sector for obvious local geographical reasons. Nor has it impinged that much on the sophisticated end of the deep sea sector where crew costs are smaller relatively than with the less sophisticated tankers or bulk carriers.
A number of your Lordships will have read Mr. Jim Levi's article in last Sunday's Observer which the editor sub-headed
"On Thursday"
—which was 24th April—
"P & O's Sir Jeffrey Sterling rose to the challenge thrown down by a Lords' Committee report on the demise of British merchant shipping."
I suggest that Mr. Levi, like many others, missed a key point in the Sub-Committee's report, being the last sentence of pargraph 36 which reads:
"The only exception to the general decline has been in container ships."
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Indeed, the remainder of that quotation has already been given by the noble Lord, Lord Underhill.
It appears that the point about P & O's bid to control 100 per cent. of OCL is that they are aiming to expand in the one sector of the shipping industry which is in itself expanding and where remaining under British flag is not financially too disadvantageous.
Perhaps here I could comment on a remark that I think I heard the noble Lord, Lord Underhill, make: that the report stated that flags of convenience were not desirable. I hope I do not misquote him. The point at issue is that in our consideration we found them necessary rather than desirable in that shipowners had little alternative but to stay with flags of convenience until the situation could be rectified.
I am sure that all EC shipowners would greatly prefer their ships to fly their national flag rather than that of a convenience country. Indeed, this was proved some years ago when Greece radically changed her maritime fiscal policy with the result that Greek owners brought their ships (which were previously under flags of convenience) back under the Greek flag. The effect is amply illustrated in the graph on page 10 of the report. In five years, Greece's tonnage virtually doubled. I strongly support the report's paragraph 73, but particularly draw your Lordships' attention to paragraph 70 which reads, in part:
"In the present state of world shipping markets the shipowner often has to flag out".
Again, I shall not take up the time of your Lordships in quoting the whole paragraph; it has already been quoted.
On defence I have certain first-hand knowledge of ships taken up from trade or, in the words of the First Sea Lord, those that got STUFF. I do hope that the Hansard shorthand writers will spell that correctly! I must be blunt and say that I think my right honourable friend the Prime Minister was very poorly, if not misleadingly, briefed when she stated—as reported in paragraph 77 of the report:
"the merchant fleet remains capable of meeting all the needs of the armed forces".
From my own knowledge and experience, I would need to see hard evidence supporting such a statement before I even began to be convinced.
It would appear that such a statement takes no account of the non-military need for shipping, not least in feeding this country; nor indeed does it take any account of the attrition that would happen in the time of an emergency or in time of war. It is no good the Treasury saying that market forces alone must prevail when in the maritime world at least this country stands virtually alone by that rule. It is, I suggest, no good the Treasury saying, "We can't afford to assist the British shipowner". This country cannot afford not so to assist, unless it really wants this sceptred isle effectively to say farewell to its shipping fleet, its previous positive maritime balance of payments, its own defence support capability and its reserve of qualified British seafarers who maintain all the previous three.
We face a very, very stark choice. I suggest that we face it now. This country is still—just—a significant

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maritime nation. We do still just have the manpower and the skills, afloat and ashore, to remain so. This EC policy communication is a start, but only a very modest start, in pulling Europe's maritime interests together. But we need to go a lot farther, a lot faster, particularly in this country. In my noble friend Lord Caithness we have, I suggest, quite the most conscientious, hard-working and able Minister of Shipping—if I may use that term—that certainly I can ever remember. I have not a shadow of doubt that he will fight our corner, fight it hard, but he needs all the support that he can get.
I urge your Lordships today not only to take an approving note of this report, but also to send a very strong message to government that, in the national interest, the UK shipping industry, and particularly the offshore supply vessel sector, needs help, needs it badly, and needs it now.
2.21 p.m.
Lord Greenhill of Harrow: My Lords I should like to thank the noble Lord, Lord Kearton, for introducing this report so effectively at such short notice. I should also like to join with others in paying tribute to the noble Viscount, Lord Rochdale, who chaired our sub-committee, adding his great experience and authority to our discussions. I should also like to join with those who have praised the noble Lord, Lord Strathclyde, on his maiden speech. He rightly referred to his father with admiration. I share that. It was a very sad trick of fate that deprived our House of his talent and the contribution he could make. But it is quite clear that in the noble Lord, Lord Strathclyde, we have acquired an asset who will be of lasting value to our future deliberations.
At this stage of the debate it is very difficult to make new points, but I should like to be allowed, if I may, to express some personal opinions. The Commission's communication which the sub-committee examined is a useful document which aims inter alia to reduce the conflict in the shipping industry between Community countries and, more importantly, proposes how the collective strength of the Community's shipping industry can be employed if necessary against our rivals in an increasingly competitive world. One of the reasons that we joined the Community was to increase our commercial bargaining power, and the shipping industry in Europe is one where we have a certain amount of clout. The Commission's communication is a first step, but it must be doubted whether it can halt the decline of the Community's industry and it is highly unlikely, in my opinion, that the Commission can take further steps as fast as the situation demands.
In my view, the main importance of the sub-committee's work is the fact that it brings home to all of us just how serious is the situation in which the British industry finds itself. Though it is hard for a layman to interpret all the statistics, there can be no doubt that the British industry has sharply declined, is still declining, and is declining faster than its fellow members of the Community. Of course not all British shipping is in bad shape. Certain sectors are doing well and may do better after some of the current changes of ownership.
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To refer to another industry, the fact that Jaguar is prosperous does not mean that the whole of the British motor industry is going strong. So it is with shipping and certain sectors are all right. But, taking an overall view, the situation must give great concern. The decline must be checked and reversed not only for commercial reasons but also for the security of these islands, and I am glad that the noble Lord, Lord Geddes, referred rather critically to Mr. Jim Levi's article in the Observer last Sunday.
Some industries can be dispensed with. They are nowadays called sunset industries. They may be overtaken by new inventions, new processes and so on. Indeed, that is what happened to passenger shipping. But I cannot envisage a time when this country can dispense with its own merchant fleet under its own control. It is to me unthinkable that we should accept the present decline and passively regard a situation in which we cannot maintain a traditionally important place.
Witnesses from the Ministry of Transport showed that their department is perfectly well aware of the problems but they did not give me the impression—possibly wrongly—that they are able to take essential measures in certain areas. For example, the practice of flagging out must be reversed. I listened very carefully to what the noble Lord, Lord Underhill, said, and I agree with much of it. We constantly heard witnesses saying, "The choice is between flagging out or selling out". I wonder whether that is really so.
Yesterday I heard the chairman of BP at his annual general meeting very lucidly explain the company's problems and the heavy losses that it incurred. His future arrangements involve putting the company's ships on the Bermuda registry where they will fly the British flag and remain within British control. But he also made another point, a point referred to by the noble Lords, Lord Hayter and Lord Greenway. He said that, mindful of the interests of the seafarers, BP is investigating the possiblility of creating what would in effect be a British seaman's territorial reserve. As he mentioned the idea it sounded to me very imaginative, and I am sure that we shall hear more of it. I hope that this can be copied by other owners.
Has this question of flagging out really been considered by the Government and others concerned against the exceptional and indeed unique importance of this industry? There are signs that the seamen's unions and the owners are more ready than they once were to look constructively at these problems. Cannot the Treasury and the Inland Revenue be more innovative even though it may necessitate giving privileged treatment to seafarers of all grades? The number of people involved is not unmanageably large. Though I realise that awkward precedents would be created, the situation is in my view exceptional.
The central problem is the overall size of the merchant fleet, taking account of both our commercial and our defence requirements. The Government have repeatedly said that our fleet is large enough to meet our defence needs. It would be interesting but probably not possible to discuss publicly the various assumptions on which those studies are made. One can only hope that an appropriate (by which I mean a large) margin of safety is ensured. I was much involved

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in those matters during the last war and I know just how complex and technical they are.
Has proper allowance been made for the new circumstances of today? I refer to the difficulties of chartering in the international world; the employment of foreign crews; the transport of military equipment that is of a size and weight unknown in the last war; the future sources of oil in an emergency; and the return in the near future or the fairly near future of the Middle East as the main supplier of Western oil. Those are very important matters and I should like to feel that the examination of them has been made on a truly realistic basis, taking into account the new developments that have taken place.
During the work of the committee, the question was raised as to whether the existing Whitehall machinery for the discussion of shipping and of shipbuilding is adequate, involving as it does several departments. It is very hard for an outsider to judge. I may be prejudiced but I believe that Whitehall behaves better and more efficiently than many people think. I should like to associate myself with those who have praised the impression that the Ministry of Transport and its Minister, the noble Earl, gave when they presented evidence before our committee. That does not mean that new machinery is not desirable and wanted. I do not myself believe that a new Select Committee of this House is the way to solve those problems. What is wanted is an effort by the Government to appreciate the importance of those problems and to go to work on them.
All that, in my view, adds up to the need to allay public anxiety by the knowledge that the Government will give a new and higher priority to those matters in the future. If the work of the committee contributed to such a decision, it will have been time well spent.
2.32 p.m.
Viscount Bledisloe: My Lords, I start by joining all other members of the committee who have spoken in expressing both our gratitude to the noble Viscount, Lord Rochdale, for chairing the committee so ably, and best wishes for his speedy recovery.
I have two specific points and one general point to make. Before doing so, I shall make one observation on the speech of the noble Lord, Lord Layton. Many of your Lordships have stressed the way in which the evidence given by the shippers and the shipowners differed. That is not entirely surprising because they are the two opposite sides of this particular commercial equation. However, the noble Lord, Lord Layton, said that he was against the regulation concerning unfair pricing. Unfair pricing is no more than a form of dumping in the shipping field.
I do not know what goods it is that the noble Lord ships, but I am certain that if in the manufacture of those goods the noble Lord was met by unfair competition from other countries in dumping, he would be screaming loudly. It ill-behoves someone who would scream if dumped against themselves to deny shipowners the right to protect themselves against dumping in their field.
The first specific point with which I wished to deal was flags of convenience, but they have been very fully discussed so far. I merely stress that one is not here
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dealing with substandard ships. One is dealing with eminently well-run and well-manned ships that have moved away from this flag to avoid the fiscal and labour disadvantages that they inevitably suffer if they retain it.
How much does it matter if people do flag out? It bruises our pride and our patriotism, and I suspect that it affects our revenue. But whether or not it really matters depends, in my view, on its effect upon our defence. I share the view expressed by many speakers, and initially iterated in our committee by the trade unions, that there would be very grave difficulty in bringing back into this country for use in times of emergency—and it does not necessarily have to be a full-scale war—ships that have been flagged out. I venture to suspect that where the Government have said that there are sufficient ships, taking into account those that are flagged-out, they are looking merely at the legality which entitles them to requisition ships which have been flagged-out and not the practicality of whether they could get the crews on the ships to bring them back to this country and then to operate them in times of war.
Assuming that flagging-out does matter, I stress what the committee says; namely, that the remedy lies in the hands of those who created the conditions which cause flagging-out. Those conditions are primarily the restrictive manning requirements and also the fiscal disadvantages. Therefore, if flagging-out is to be remedied, the people to remedy it are the unions and the Government. With great respect to the noble Lord, Lord Underhill, so far as our evidence goes, it is not a case of undercutting. As we heard it, when ships are flagged-out they frequently continue to be manned by the same people, earning the same amount of money. What are saved are the unnecessarily high numbers which restrictive union agreements require and the financial disadvantages of having to pay excessive on-costs, and so on. If those people do disapprove of flags of convenience the remedy lies in their hands; that is, to remove the convenience of the other flags by creating equal convenience for those ships operating under our own flag.
The second specific matter which I deal with is that of port charges and local costs such as light dues. This has been dealt with somewhat less in the debate, although the noble Lord, Lord Shackleton, spoke at some length about it. This is a matter that is more between ourselves and other European countries than the countries in the rest of the world. The basic problem stems from a difference in philosophy. In this country ports, lights, and so on, appear to be treated as business undertakings which must pay for themselves. In other countries in the European Community, or in many of them, the provision of ports and lights seems to be treated as part of the environmental function generally. There can be no right or wrong between those two different philosophies—they are different ways of approaching the matter.
What is doubtful, and unresolved in the evidence before us, is what is the effect of this disadvantage of extra port charges, light dues, and so on that are payable in this country. Certainly it appears that whether or not there is to be a general inquiry, that matter merits some investigation; although I sincerely hope that no investigation of that kind will imperil the

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excellent lunches that the noble Lord, Lord Shackleton, apparently enjoys at the moment! My personal view is that these matters must be a factor—not the factor—in the disadvantage to British shipping. If you can get an equal service in two places, but in one place you do not have to pay for your ports or pay only a quarter for them, it must be a factor which influences your decision. Therefore, I urge the Government to look into this; but I stress that if they find that these matters really are a factor in disadvantaging British shipping and, perhaps, also British shippers, it will be no good then saying, "Well, everyone else must change into step with us." Here is one of those cases where the Government must be prepared to abandon their philosophy and move to the way in which the matter appears to be dealt with in almost every other European country.
Finally, I come to a general point which concerns the basic position of shipping and indeed shipbuilding and repairing in this country. There is no doubt that this industry is in decline, though, as the noble Earl the Minister revealed, there may be debate as to the degree and extent of the decline. Further, I think it is plain that though the Commission's proposals may help in arresting the decline, they will not cure it.
How much does it matter? That is the basic question that the Government have to decide. Is the survival of the British shipping industry such a special case that it justifies special treatment, or is it something which can be left to be resolved by ordinary commercial forces? Do we say, "Well, if shipping in this country can be provided better and more cheaply by foreigners, then let them do so"? In one sense there is no logical argument against that stance. One cannot expect a commercial man to buy more expensive services or less efficient services just because they happen to be provided by his own countrymen. I do not share the view expressed by the noble Lord, Lord Moran, that it is illogical to buy a foreign car and yet deplore the decline in the British car industry. One buys that which will do the job best for oneself. One deplores the fact—and I am not criticising the car industry—that this country can no longer provide that item competitively as compared with another country. In a very real sense there is no reason why the Government should not say, "Well, all right, if British shippers cannot provide a service which is commercially and competitively acceptable to those who wish to buy it, and if others can provide it, then let them do so".
The Government have to decide whether they take what one might call that normal attitude or whether they feel that shipping is so important that special measures must be taken to avoid such a decline—and the report indicates what those special measures could be. I genuinely do not claim either to know the answer or even to argue what that answer should be. However, I suspect that the argument lies in the defence factor because if it were not for the defence factor, then for my part I see no particular reason why British shipping should be singled out for more favourable treatment than other British industries. If the defence factor is a vital point, as I suspect it is, then as the noble Lord, Lord Geddes, has said, the Government will have to take swift and definite action to arrest this decline. Otherwise they will probably find that the material
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that is needed in times of emergency will not be available.
2.43 p.m.
The Earl of Caithness: My Lords, with the leave of the House perhaps I may be permitted to respond to some of the points put to the Government during the course of the debate. We have certainly had a useful debate and a thorough one, ranging rather more widely than simply covering the Select Committee's report. I am sure that my noble friend Lord Rochdale and his colleagues feel very pleased that they have stimulated so much interest in the House; and indeed to stimulate a speech of such excellent quality from my noble friend Lord Strathclyde is something on its own. I too should like to offer him congratulations.
I should like to cover further points raised in the report of the Select Committee and also try to answer the many points that have been raised today. First, I shall turn to the matter which has caused concern to many of your Lordships; that is, the increasing tendency of Community shipowners and in particular British shipowners to register their ships under the flags of countries outside the Community. I must make clear from the outset that we do not welcome such a development, but on the other hand shipowners have to be left to make their own commercial decisions.
In any case, we have no powers nor would we wish to have powers to stop any company moving the place of registration of its ships. What we consider is important is that where possible such ships would continue to remain in UK beneficial ownership. By flagging out the shipowner is in a position to avoid some of the high overheads associated with remaining on Community flags and thus enable him to continue to compete in the world market. If a British owner feels that it is in his commercial interest to flag out I have to say that our preference would be for him to flag out to one of our dependent territories because in this way the ships will remain more readily available to us for defence purposes. To prevent him flagging out is to put our head in the sand and I remain of the opinion that to be able to flag out, although not desirable, is better than to sell out.
That brings me back to the general philosophy in dealing with the Community shipping policy which I set out in my first statement, which is that we should do everything possible to maximise the opportunities for British owners, either under the UK flag or under other flags if this is necessary, by opening up the internal shipping market of the Community and by doing everything possible to keep open our shipping markets world-wide. The four European Community draft regulations would go a long way towards achieving those aims. I was very pleased to note how many of your Lordships commented that when an owner flags out to a flag of convenience it does not necessarily mean any lowering of standards of the ships involved. Indeed, it may mean an increase in standards due to port state control. Britain is proud to be in the lead in this matter and the UK is, or can be, also classed as a flag of convenience.
There has been debate about the advantages and disadvantages of protectionism. I should like to repeat

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that the Government firmly support the European Commission in their advocacy of non-protectionist policies. It seems to us that this is the only way that we can achieve the aims I have mentioned. We can therefore fully agree with the basic principles which underlie the European Commission's communication. Those are endorsed wholeheartedly in the report and are set out very clearly in paragraph 14.
The committee also states that the Community must be prepared to defend itself against those countries which discriminate against Community ships. We have had power to take such action when discrimination is against this nation. We have had that power since 1974 and the French have had it since 1983. We have used it once; and we have used it in conjunction with the French in the very recent past, and with some other European countries, on the policy to which the noble Lord, Lord Greenway, referred; that is, monitoring Soviet shipping.
The answer must lie with the Community. We consider that the four regulations will go a long way towards tackling these problems. They deal with co-ordinated action against discriminating countries as well as with the problem of unfair pricing practices and they spell out very clearly the tools that will be available to the Community and its member states in dealing with these questions. However, these proposals are only the first steps in the development of a Community shipping policy and we expect the Commission to come forward with further proposals in the future.
References have also been made to the committee's recommendation that a scheme for scrapping surplus shipping should be investigated on a Community basis rather than on a solely UK basis which must surely be impractical I believe it was the noble Lords, Lord Kearton and Lord Underhill, in particular who mentioned this, though I know that it was raised by other noble Lords. The scope for such a scheme has been raised quite a lot. When it was last considered by the European Community in 1979 most member states had considerable reservations as to whether such a scheme would be practicable and agreement could not be reached. There is no sign that views have changed.
Moreover, I remind your Lordships that there was a "scrap 2 tons/build 1 ton" scheme in the United Kingdom from 1935 to 1937 with low-interest loans available, but there were major doubts about its effectiveness. The only noticeable effect of the scheme was to depress UK scrap prices while it was in operation. Nor was it felt that the UK shipbuilding industry got the kind of boost from new building orders that might have been expected. Scrapping incentives must be considered, but they may not be the best answer to overtonnaging. With the large number of ships laid up, a scrapping incentive would first affect ships least likely to enter the market, and probably already earmarked for scrap. This would have little—if any—impact on freight rates.
The noble Lord, Lord Underhill, mentioned the growth in world tonnage. One must not forget that at present 9 per cent. of the world fleet is laid up. A large proportion of that would have to be scrapped first to have any effect on freight rates. In considering this
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question we must also bear in mind that scrapping incentives might be so attractive as to create an artificial market for new building which would outweigh the advantages of the removal of older tonnage.
Let me now turn to the questions of tax incentives for shipowners to invest in modern, efficient tonnage, and a favourable direct tax regime for seafarers in recognition of the importance of the shipping industry. Again, this matter was raised by the noble Lord, Lord Underhill, the noble Lord, Lord Moran, and others. The business tax reform package, which Her Majesty's Government set in train in 1984, has already been structured in ways which will work specifically in favour of the shipping industry, most importantly perhaps through the continued availablility of free depreciation in terms of writing down allowances for both new and secondhand ships. Therefore, it is totally wrong to say that we are doing nothing, as the noble Lord, Lord Underhill, implied at one stage. Mainstream corporation tax rates are now lower and ships can still be written off over a shorter period in the United Kingdom than under the regimes of many of our competitors. This year we have also extended the business expansion scheme to companies engaged in ship chartering. This should provide new opportunities for sound investment, particularly in the coastal, short-sea and offshore trades. It will not be "sloppy money" to which the noble Lord, Lord Kennet, referred and which the Government of which the noble Lord was a member was guilty of distributing.
As regards a special tax regime for seafarers, which was mentioned by my noble friend Lord Inchcape and the noble Lords, Lord Hayter, Lord Greenway and Lord Greenhill of Harrow, Her Majesty's Government's policy is to move towards a simpler and fairer personal taxation system for all, without the complications of special reliefs for special groups of workers. Special reliefs serve only to hinder progress towards that objective. We believe that the promotion of a competitive shipping industry must surely provide the best means of securing employment for seafarers in the long run.
I should like to turn now to the problems of the UK offshore support vessel industry about which the Government are particularly conscious. I was grateful for the remarks of my noble friend Lord Geddes. In an effort to help this vitally and strategically important industry, the Department of Energy's Offshore Supplies Office has jointly commissioned with the British Offshore Support Vessels' Association a study of the state of the industry. In particular, it is considering whether the development of new technology would improve the industry's prospects and profitability. The conclusions of the study should soon be known, and the Offshore Supplies Office hopes that they will form the basis for the future success of the offshore support vessel industry in the North Sea.
In the meantime, the Offshore Supplies Office has pressed the United Kingdom's Offshore Operators' Association to tell its members that the Offshore Supplies Office wishes to designate the UK offshore support vessel industry as an area of special interest. The OSO has discussed the serious problems of the industry with the UK Offshore Operators'

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Association, and the association has agreed to look urgently at the proposals put forward by OSO for ways to assist the industry within the existing full and fair opportunity policy framework. Furthermore, I am pleased to advise the House—and in particular my noble friend Lord Geddes—that I shall be meeting a delegation of Norwegian parliamentarians on Tuesday next week to discuss this among other shipping matters. I am fortified in my resolve to talk to them by my noble friend's comments.
I now turn to the question of the adequacy of the Merchant Fleet to fulfil its wartime role. That is a matter of concern to us all. Concern was expressed in the Select Committee's report that the declining fleet is no longer adequate for this, and the same concern was mentioned by all of your Lordships today. It was suggested that the Merchant Navy is short of the types and numbers of vessels required and that there is a need to quantify minimum demand and supply requirements for support of Her Majesty's forces and for civil use in war.
The Ministry of Defence and my department monitor the need for support of Her Majesty's forces against ships on the UK register. We believe that we can today meet those requirements, and forecasts prepared for the department by consultants show that for defence needs generally adequate numbers of suitable ships should be available until 1992. Where there are difficulties—and we believe that there might possibly be some difficulties in selective areas in the future—the Ministry of Defence and my officials are working on schemes whereby other sectors of the fleet which are in surplus to our forecast defence requirements can be adapted to fill those specially selected roles.
Our studies also show that in the early stages of war there would be sufficient British shipping to meet civil supply requirements related to restricted war-time commodity demands. My right honourable friend the Prime Minister was absolutely right, therefore, in the comments she made in another place. But it would be totally impractical to expect the United Kingdom flag to meet the full demands of civil supply. We could not meet that requirement in the Second World War, and the convoys, so nobly escorted by the noble Lord, Lord Moran, contained non-UK registered ships as well. The answer therefore is the NATO plan to pool its oceangoing shipping, and plans are in hand for that. The adequacy of shipping for this purpose should therefore be considered in alliance rather than in national terms. The potential resources of NATO, on which we have a right to draw, would be substantial—perhaps some 50 per cent. of the deadweight tonnage of the free world.
Finally, the committee raised the question of the availability of manpower reserves to crew requisitioned ships in times of emergency. My department, together with the Ministry of Defence and the General Council of British Shipping, are currently examining the supply, availability and training of seafarers. The basic assumption is that crewing of a ship used for defence or civil supply could generally follow the arrangements before its requisition or charter.
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Apart from the crews currently employed on British vessels, other manpower reserves exist for the UK which could be used to man extra ships acquired in times of emergency. Seafarers on leave, those who had fairly recently left the sea, and those on foreign ships could effectively double the cadre of officers, while for ratings shorter training periods and increased training facilities would help to combat shortages.
The noble Lord, Lord Shackleton, brought to our attention the recent report my department produced on liner freight rates and the competition between ports, and the subsidies that some other ports receive. There is growing concern that state aids to ports are distorting competition between carriers as well as ports. However, there is a lack of hard evidence on this point, and we welcome the Commission's decision to review the state aids offered in the different Community countries.
We are also urging the case for greater transparency in ports' published accounts. In the interim we have sought and obtained the Commission's assurance that the treaty state aids provision will be enforced.
Lord Shackleton: My Lords, the noble Earl said there was no evidence. Could he not read his own report? It is all there.
The Earl of Caithness: My Lords, I did not say there was no evidence. I said that there was a lack of hard evidence.
Lord Shackleton: My Lords, if the noble Earl reads the report he will find the hard evidence in it.
The Earl of Caithness: My Lords, I have read the report more than once, but I shall be happy to look at it again and discuss it with the noble Lord at any time. The noble Lord, Lord Shackleton, and the noble Viscount, Lord Bledisloe, mentioned lights, and particularly the role of Trinity House, the Northern Lights Board and the Commission for Irish Lights. We are at the moment progressing with two new studies: one on the future use of lights, particularly bearing in mind the new satellite communications systems that will be available in the next three or four years, and the other on whether the existing distribution of light dues is a fair one. We are making progress on both those fronts.
The noble Lord asked whether the national government, the taxpayer, should be responsible for these light dues. The total light dues bill, if I remember rightly, is about £60 million per annum. That is all raised from shipping coming to this island. But it must be remembered that in this case it is paid by all shipping, not only United Kingdom registered flag shipping. It must follow that as the United Kingdom's registered flag proportion of the world's fleet declines, so their proportion to the contribution to light dues also declines.
The noble Lord, Lord Shackleton, also mentioned pilotage and the Letch Agreement. He will know full well that the Letch Agreement is but part of the costs of pilotage, and the purpose of the Green Paper and, we hope, legislation before too long, will be to sort out many of the restrictive practices of pilotage that have

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occurred since 1913, which saw the last really significant Act in this matter.
The noble Lords, Lord Moran, Lord Kennet and Lord Greenhill of Harrow, raised the question of the adequacy of the machinery of government in the formulation of maritime policies. There are and always will be subjects within separate departments that could be transferred from one to another. One can shuffle the bureaucratic pack at any time, but I believe that the present arrangements are satisfactory. However, I get worried when your Lordships very kindly say that my department seems to be on top of things. At this stage I think we ought to have a very serious look just to make sure that we are on top and we do not get complacent in any way. I should like to pay tribute to my department in particular for the work that they have done in Brussels and the speed with which we have been able to negotiate three out of the four regulations.
My right honourable friend the Secretary of State has the lead role in co-ordinating United Kingdom maritime policy, while Ministers in other departments have the primary role in some specific maritime fields. In the wood described by the noble Lord, Lord Kennet, there might have been brambles, briars and other obstacles blocking his way through the paths of Whitehall but, on maritime policy issues which cross departmental boundaries, my right honourable friend and myself take good care to ensure that other departments are consulted and that all other interests are taken into account.
The valuable study by my noble friend Lord Rochdale and his colleagues has provided the opportunity for this useful debate today. The report and the debate have necessarily ranged wider than the European Commission's communication of March 1985 and the maritime transport proposals attached to it. Perhaps I may sum up in general terms, as a summing up has to be in general terms, the problems facing our fleet today. We want our own fleet but so do other countries. There is a demand for a strong shipbuilding industry in the United Kingdom. Freight rates are horribly low and need to rise to make the shipping sector economic. Those problems might be solved relatively easily on their own, but overlying that is the framework of a massive surplus of world tonnage in all types of shipping and that makes the problem vastly more difficult to solve. I have noted and I am pleased by your Lordships' constructive attitudes today. These and the constructive attitudes of all are most welcome. My door is always open to those who wish to come to discuss constructively the problems facing us.
Let me conclude by quoting from a press article:
"The year will long be remembered as a year of almost universal depression reaching every avenue of trade".
Then it goes on:
"Shipbuilding has suffered terribly and the firms that can show a satisfactory balance sheet for the year are few indeed; freights have been ruinously low and owners have felt the hard times even more severely than the builders. In every direction the weak have gone to the wall. But all this was what was anticipated—what was foreseen by men of commercial foresight and acumen".
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My Lords, does that article have a familiar ring to it? The year in question is 1885 and the extract was taken from The Shipping World of January 1886.
More recently, some men of commercial foresight and acumen in this country saw the difficulties that shipping was to face a century later, as soon as governments started to subsidise and offer large investment grants. Over the last 10 years, there has been an increasing number saying that the right way forward is a European policy, a non-protectionist policy with full and fair competition. It is Her Majesty's Government's firm belief that the four draft regulations annexed to the Commission's communication form the basis for a sound common shipping policy both within the Community and in relation to third countries. Further, they provide the best chance of the sort of competitive environment in which the British shipping industry and that of our friends and competitors can at last begin to prosper.
On Question, Motion agreed to.
3.6 p.m.
Lord Kearton: My Lords, the afternoon wears on and I shall be brief. I first add my own congratulations to those of my noble colleagues to the noble Lord, Lord Strathclyde, for his very interesting, eloquent and constructive maiden speech. If I may say so, it was very beautifully delivered. I had the privilege of knowing his grandfather. In fact it was his grandfather who told me that a "strath" was Scots for "valley". I did not know that before. I may say to the noble Lord, Lord Campbell of Croy, that I am ignorant in these matters; but that was the case. I am sure that the first Lord Strathclyde would have been very proud of his grandson had he heard his contribution here today. We all very much hope to hear more from him in the days to come.
I should like to thank all noble Lords who have taken part in the debate. There has been a remarkable unanimity of opinion, it seems to me. We very much missed the noble Viscount, Lord Rochdale. I hope that when he reads Hansard he will feel that his labours in chairing Sub-Committee B have borne some fruit in the reception that has been given to the report today.
I started my own opening remarks by paying a tribute to the noble Earl, Lord Caithness, and many people have echoed that tribute. I should like to congratulate him on his summing up and on his reply to the debate—not that I thought his answers were entirely satisfactory. In fact, in some respects I thought that he was playing a very straight bat to some difficult bowling and that he did not stand a very good chance of making a long innings in that particular style. I think that again I would say, as I am sure would all members of the committee, that Lord Caithness's heart is very much in the right place. We all felt that he had a real grasp of the situation, a real grasp of the needs; and we wish all power to his elbow in conveying what I think is a very strong and generally-shared opinion of the House of Lords on the recommendation of the committee.
I take note that the sub-committee numbered 13 members, who arrived at a unanimous view; I take note that the sub-committee itself reported to the Select Committee, which I think has nearly 30

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members who approved the report—and again there were no dissenting voices. So I hope that the noble Earl, Lord Caithness, will convey to the Government the strength of the Select Committee's feeling and the sub-committee's feeling over the matters under discussion today.
The noble Earl's comments on defence struck me as very much, "Make do and mend; and we hope it will be all right on the night". That does not seem to me to be a very strong basis for a satisfactory defence attitude. In my orginal opening remarks I said that I hoped that the House would be taking note of our report and I am sure the noble Viscount, Lord Rochdale, will be very pleased that it has done so so effectively this morning and this afternoon.

Gallium Arsenide
3.9 p.m.
Lord Birdwood Lord Birdwood rose to ask Her Majesty's Government what plans they have formulated for the development of gallium arsenide as a United Kingdom resource.
The noble Lord said: My Lords, I want to sell you a product. It is incredibly difficult to make. It is very expensive. For it to work properly we have had to learn how to manipulate materials to extraordinary degrees of purity and to tolerances which mean that a few misplaced molecules can render them ineffective. This product is a man-made substance called gallium arsenide. Grossly oversimplifying, in electronic designs gallium arsenide goes on where silicon leaves off.
"So what?", we may ask. If we get a satisfactory answer to my Question this afternoon (and I am sceptical that we shall) we can peer into the industrial future of this country with just a little more confidence. If we do not get a satisfactory answer, then we can wave goodbye to a huge sector of technical competence. We may as well abandon any kind of global aspirations in key areas of tomorrow's electronics. We will always be dependent on others in areas that affect our national security, our ability to make or measure or even communicate.
Fifteen years ago in this House I accused our political masters of letting this country's machine tool capability dwindle to trifling levels. The House was reassured then that, on the contrary, things had never been healthier in this important industrial sector. So much for those reassurances from the Government of the day. And it is going to happen again. I accuse successive governments and, frankly, any government of an approach to technical industry compounded of apathy, laziness, ignorance and complacency. Need I remind your Lordships that our main exports to Japan are scrap iron and industrial bricks?
I put my Question this afternoon on gallium arsenide for two reasons. The first is because I really want to know the answer. I want to know what the thinking has been about this product at this time and what is the strategy for its future in this country. Secondly, gallium arsenide is a perfect symbol of the things we do wrong. It is absolutely typical of our national delusion that research by itself makes money.
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It is absolutely typical of the fragility and mutual distrust in any so-called collaboration between Whitehall and industrial interests.
First, perhaps I might give a very short summary of the stuff itself. Compared to silicon, as an electronic device raw material it has extraordinary advantages. Elections travel inside it five or six times faster than in silicon. This multiplies up to computing speeds perhaps 10 times as fast; and in electronics speed really is hard currency. It emits light—something that silicon cannot do. It absorbs sunlight more efficiently, making possible better solar cells. It has a much higher tolerance to radiation, making it the only choice for future space devices. It is tolerant of high temperatures, reducing cooling systems' weight. It uses less power than silicon. It can combine the processing of both light and electronic data on a single chip.
Lastly, every phase of its manufacture is created. This means that we can design into gallium arsenide devices characteristics and qualities to a degree impossible in any materials that have gone before. These aspects are not new. There is even an old joke about gallium arsenide. It is referred to as the electronic chip whose time has come. It always was and always will be the electronic chip whose time has come. But the truth is that the future of gallium arsenide has arrived now. It will never replace silicon. It is too difficult to make, and hence too expensive—over 20 times more expensive. But a whole new technology of complementary silicon-gallium design philosophy makes obsolete everything but the most pedestrian applications of chip technology.
This is not the first time this subject has been aired in Parliament. In March of last year in another place the honourable Member for Yeovil initiated a debate on gallium arsenide which was answered by the Minister, who outlined certain responses and initiatives which were being contemplated. In the last 12 months one crucial report has been completed, usually referred to as the Coupland Working Group report, prepared by the Advanced Devices and Materials Committee, and entitled A UK Strategy for Gallium Arsenide. That commendably clear document makes a number of technical comparisons between gallium arsenide and silicon and focuses on the central issue which must hang over any development strategy; the key problem in the application of the technology lies in predicting which, if any, of the fundamental factors in its favour is sufficiently significant to generate a business return commensurate with the investment required. I am sure that your Lordships will have spotted that that quotation was virtually verbatim.
The Coupland Report refers to a study commissioned by the Department of Trade and Industry from McIntosh International. I have a summary of the latest thinking from that source prepared for a workshop on the material held in Paris a week ago.
One of the problems associated with contemplating any technology which is at the threshold of explosive growth is some kind of prediction of the size of the explosion. However, even the most prudent evaluations of the market value of gallium arsenide

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integrated chips breaks through a world demand well over 1 billion dollars in 1990. At the top end of the research evaluations for predicted markets, we have figures of something approaching 7 billion dollars in 1992 and an optimistic 30 per cent. penetration of gallium arsenide into a total chip market of 70 billion dollars in 1995.
I could go on virtually interminably cataloguing those and other huge financial numbers. It would serve no purpose other than to underline the fact that we are talking about global levels of investment and return. Are those initiatives, some by companies, some by governments and some by venture investments, all being taken for the fun of it? Are the final objectives high risk, low yield, profitless adventures to exploit a laboratory phenomenon? No, of course they are not.
The massive expenditure on the development of gallium arsenide into a realistic production material has been authorised by people in other countries who know exactly what they are doing; people who recognise that, given courage, dedication and the appropriate political will, capability in gallium arsenide is not only an essential strategic move but presents opportunities to develop and hold markets that span the world.
This is the point at which I must refer to the Alvey programme, which so many Members of your Lordships' House have welcomed and rightly regard as possibly the most important collaborative plan in advanced technology to emerge in this country for a decade.
As is the nature of powerful government programmes, the predilections of the designers of those programmes deeply influence the actions and thinking of the participants. The Alvey programme is dedicated to developing silicon chip-based technology. If we were to hold our own in silicon technology, there was some hefty catching up to do and Alvey gives us the tools to do it, but was the logic of Alvey as impregnable as it seemed? I, for one, would not be party to any destruction of Alvey and the general warmth with which industry regards that initiative is undiminished, but there is no doubt that the existence of the programme has slowed down and, in come cases, halted movement forward in gallium arsenide technology.
I feel sure that this afternoon my noble friend will be able to spell out how important modifications to the Alvey program me will breathe fresh thinking into industrial and government attitudes towards the development of a production version of gallium arsenide in the United Kingdom.
To get a device into production, a number of technologies have to be available, compatible and managed. One can imagine it as a chain or path with a sequence of identifiable links or stopping places. One would think that any one of those links could be isolated, delegated to elsewhere and put back into the production chain on its merits. That is true of, say, a car, where the engine can be sourced from elsewhere when the car designers have specified its size and performance.
I must get over this afternoon the point that matters in micro-electronics are profoundly different. The party which controls the design and making of the
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gallium arsenide content of the device hauls in the value-added steps which lie on both sides of the production sequence. It is as if the man who made the engine for the car had to make all the transmission components and had to control the oil companies that made the petrol.
This is really a key point to comprehend. It means that letting a small amount go elsewhere seems, on the face of it, a small sacrifice compared to the full commercial benefits from the development to production sequence. This just blinds ourself to the truth. A senior strategist in one of the country's largest electronics companies said to me a matter of days ago that some equipment makers are concerned about their continued existence unless this is openly recognised.
If this Question achieves nothing else, I want it to hammer home the different magnitudes of expenditure in nourishing a technology from seedling stage. Again, your Lordships are aware of typical industrial ratios. In electronics, we must think in terms of £100 spent to arrive at a product in the market place for every £1 spent in proving a usable hypothesis. Again, these ratios are irreducible because there can be no other end point for any effort but to address a world market.
I was ungraceful a moment ago in the words I used about governments. I take them back. We need the goodwill of government now and in the years to come. To be fair, there probably never has been a time when more creative thinking has gone into collaborative missions and ideas than does so today. The department's role in these initiatives is laudable. In this country especially we have a situation of breathless pause while certain large companies eye each other and Whitehall to see who will jump first. It is understandable. Nobody wants to plunge heavily bearing a lone risk in this untried area. The companies in what one could call the "user club", who will be customers of gallium arsenide, are invariably going to be companies who can be producers. The dilemma for the company is whether to let somebody else take the risk, spend the money, and then find oneself as the user at the mercy of a supplier who is also your competitor.
In the Coupland Report the options for action were clear. Option one was to form a completely new commercial company to address the future of gallium arsenide as a national resource. The Coupland Report compilers have actually gone for a co-operative gradualism with substantial European involvement. Speaking for myself, I believe that this option of a new company was, and is, the best way forward. It demonstrates what one could call a championship, in its proper sense, for gallium arsenide which could be shared by Whitehall and industry alike. I believe it would be welcomed by the Ministry of Defence, whose needs for this material will soon be pressing. It would give some hope of participation in SDI on the device side where we now have none. I believe it will be financially viable from a remarkably early stage.
My noble friend will certainly have seen the message from the electronic components EDC secretariat, pointing out some of the efforts by industry. These are remarkable. Throughout the 'eighties—and I am talking about all aspects of electronics investments—

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firms have invested at the rate of £50 million a year, year on year. They ask for a stable and supportive framework. No more moratoriums, please. I will be more than interested in my noble friend's comments also on MISP in the context of this Question, or indeed the electronics industry as a whole. From recent statements at ministerial level, we know that the idea of hybrid creations is almost acceptable where Whitehall goodwill and funding are recognised as a creative commercial force.
This is the Friday before a bank holiday, but I make no apology for raising a subject which seems wilfully obscure. Obscure it may be; important it certainly is. Without a coherent view of this oddly named man-made crystal, we put even further at risk what standing we have in the frontier technologies of the developed world. I beg leave to ask the Question standing in my name.
3.25 p.m.
Lord Lloyd of Kilgerran: My Lords, I am sure that noble Lords will wish me to thank the noble Lord, Lord Birdwood, for raising this subject and for his interesting speech indicating the characteristics of gallium arsenide and its potential importance to the development of UK industry and of course to UK defence. Gallium arsenide has been known for a number of years and I have come across it in the last few years in my capacity as honorary secretary of the Parliamentary Information Technology Committee, which is affectionately known as Pitcom. I am aware of the reports to which he has referred and also of the suggestions he has made, but on a sunny Friday afternoon before the bank holiday I will resist the temptation of amplifying what the noble Lord has said—
Noble Lords: Hear, hear!
Lord Lloyd of Kilgerran: I am glad to have the support of the Labour Front Bench on that ground at least.
At least I can say this. Gallium arsenide is a vital element in fast computer development. I am sure that many noble Lords will be aware of the initiative taken by a number of firms in using gallium arsenide in the course of their research. Your Lordships will of course know of the vast investment made by the Plessey Company in projects, many of them secret, associated with defence sales as well as in industry using the characteristics of gallium arsenide. Therefore, when we know that firms like Plessey have made such an investment in gallium arsenide, what the noble Lord is asking the Government to do is to tell your Lordships what plans they have formulated for its developments as a United Kingdom resource. The phrase "United Kingdom resource" is full of potential for future success or failure, and I would emphasise the phrase at this stage.
I do that for one main reason. The noble Lord, Lord Birdwood, made no mention of what is happening in a USA context or of what is happening in a EC context. In the course of professional activities, I am fully aware that American interests somehow try to dominate what happens in the United Kingdom and
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in the EC. They use those powers of extra-territorial rights, about which they are so pleased, and anti-trust arrangements, although anti-trust arrangements have become very much diluted in the last three years under the Reagan Government.
There has been no mention so far—and I should like to hear what the Government have to say—as to whether they have plans in a EC context. I wonder whether the research work on gallium arsenide could, for instance, come within the well-known Esprit project which your Lordships discussed a few weeks ago. One characteristic of the Esprit project which appeals to me is that about a dozen companies in Europe have got together to help in certain research projects without any problems arising from patent rights, intellectual property rights, competition rights and so on. I apologise for the fact that it is only a few minutes ago that I indicated to the noble Lord that I would be asking questions about developments in a EC context and I do not expect that he will be giving an answer during the course of this debate.
It may be that the Government have ideas of developing research on gallium arsenide in the context of the Eureka EC project and, if he is going to suggest that, perhaps the Minister would endeavour to indicate how far it is possible for British firms to protect their rights in future developments in that area.
I do not propose to take up any more of your Lordships' time. I am not as sceptical as the noble Lord, Lord Birdwood, about the reply of the Government on this important matter. I shall not pursue the interesting channels that the noble Lord tempted me to enter. The Government are fully aware of the great importance of the development of gallium arsenide. To use the happy phrase of the noble Lord, Lord Birdwood, we are now discussing a substance which is "at the threshold of explosive growth" and it has to be nourished for the benefit of British resources.
3.31 p.m.
Lord Williams of Elvel: My Lords, I too shall not detain your Lordships very long. I must express the gratitude of the Opposition to the noble Lord, Lord Birdwood, for raising this Question because it is a question of the technology of the future and also a question of what government could or should be doing to support the development of technology. At the outset, I must say that we on this side of the House take fully the point made by the noble Lord, Lord Birdwood, that you cannot be the man in the middle of this technology. You have to have the full range; otherwise you will be dominated by the man who stands in the middle and you will be in an inferior position compared with your competitors.
I must also at the outset put in a commercial plug for the University of Wales Institute of Science and Technology to which I am very grateful for the information it has given me on gallium arsenide. I would never pretend to be an expert on the subject. The University of Wales Institute of Science and Technology ran a course in April, as I am sure the noble Lord, Lord Birdwood, will know, on gallium arsenide for devices in integrated circuits, and it is I think in the forefront of trying to encourage research into this important material and its applications.

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As the noble Lord, Lord Birdwood, pointed out, the department has an internal working report, the Coupland Report, from which he quoted. The report came out with a certain number of options. One important point made by the Coupland Report which I hope the Government have taken fully on board—this was confirmed by the intervention of the noble Lord, Lord Lloyd of Kilgerran—is that the technology of gallium arsenide will be at the heart of all future electronic systems. I quote directly from the report:
"That this will happen is not in doubt. What is in doubt is the timing and rate of change".
It is this uncertainty that lies behind the wide range of market forecasts.
The noble Lord, Lord Lloyd of Kilgerran, asked about the EC context and questioned whether we were in danger of falling behind major competitors in the field. The noble Lord, Lord Birdwood, drew our attention to the fact that we are in a state of pause at the moment—nobody quite being certain who was to do what. I note that the noble Lord, Lord Birdwood, came back to the option of a joint venture company that was mentioned and, as the noble Lord said, rejected by the Coupland Report. It is on that point that I should like to spend one or two minutes.
We hear a lot in this House about the enterprise culture. Here we have a number of very distinguished enterprises which participated in the Coupland Report—I do not want to read out the names of the distinguished people from distinguished companies who sat on that body—and it appears that the net result is that they come back to the Government, as the noble Lord, Lord Birdwood, comes back to the Government, and say, "The investment in this new technology is so risky but the returns are potentially so great that no corporate finance director in his senses would invest the full amount in order to make these substantial returns, so we have come back to the Government to do it for us". The enterprise culture is, as I understood it, designed to ensure that that type of investment will be secured by the private sector and that there will be no need for the Government to intervene in those enterprises; it is for the private sector to determine what is the best allocation for funds on a short-run and on a long-run basis.
I believe that the noble Lord, Lord Birdwood, has absolutely exploded that particular hypothesis. I hope that the noble Lord, Lord Brabazon of Tara, will not come back to the theory that it should be for the enterprise culture to determine whether or not this country has a position in gallium arsenide in the future. But if the Government are to be called upon to intervene—and I believe that they should intervene and that they should take a leading role—then I ask myself and I ask your Lordships: what will be the return to the Government on the investment that they are to make?
I hear a lot, and I read a lot in the Coupland Report, about how the Government must collaborate with private industry in ensuring that all these desirable things happen; that we have a production version of gallium arsenide; that other countries are overtaking us; that the Japanese are doing this; and that, as the
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noble Lord, Lord Lloyd of Kilgerran, said, the Americans are doing that.
If the Government are to be asked to intervene, then it seems to me that it should be possible to say on behalf of the Government, "All right—let us form a joint venture company, but let it be a joint venture company in which, if the Government are going to put up risk money from the taxpayers, then the Government will have equity participation." That does not seem to me to be wholly illogical. I noticed the noble Lord, Lord Birdwood, nodding, and I rather gathered that perhaps that is something he would consider appropriate in the context of his plans.
It seems to me intolerable that while private companies are quite happy to spend money on short term projects where they can see the return, where there is a vast market opening up in front of us as a country, and where the Government are rightly involved, that government investment should be considered simply as a method of propping up private research until such time as the returns are visible on the horizon for a corporate finance director, and then private companies will make the investment.
Lord Lloyd of Kilgerran: My Lords, I am grateful to the noble Lord, Lord Williams, for giving way. Is he not rather exaggerating the position? There are certain firms such as Plessey who, without government help, are making a great deal of investment in this very field.
Lord Williams of Elvel: My Lords, I am grateful to the noble Lord for his intervention. Indeed, there are companies that are making an investment; but the message of the Coupland Report and of the noble Lord, Lord Birdwood, is crystal clear. I doubt whether your Lordships can get away from it. That investment is a drop in the ocean compared with what is really required to realise this market, which may be of the order of 1 billion dollars a year or may be of the order of 7 billion dollars a year. That is a matter to be determined in the future. The investment actually being made is really no more than a small drop compared to what is required.
I ask the noble Lord, Lord Brabazon, to tell the House what plans the Government have, in the context of developing gallium arsenide as a national resource, to make sure that if the Government are to put any taxpayers' funds into supporting that project—which we in the Opposition would wholly support—the taxpayer will get a proper return on the funds that he puts up. We recognise that that is risk capital. We recognise that the taxpayer may have to write off his capital if it does not work. Nevertheless, if it does work then we ought to see exactly how much money the taxpayer will get in return.
I will not detain your Lordships on, as the noble Lord, Lord Lloyd said, a sunny afternoon—
Lord Lloyd of Kilgerran: I said before a bank holiday, my Lords.
Lord Williams of Elvel: My Lords, I have one more point on which I should like the noble Lord, Lord Brabazon, to comment, and that is the expenditure recommended in the Coupland Report. On page 20 of

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the report, there are summarised the funds required in order to get a project of a collaborative nature, if I may put it that way, off the ground. One is talking about a total of £25 million of Government money. Does the Minister feel that that is sufficient, and does he feel that it is in the right proportion? Before the Minister sits down, I hope that if the noble Lord, Lord Birdwood, is not satisfied with his answer, then he might wish to come back on that question.
It seems to me that that is a very thin programme for what we are talking about. I should like to see the Government come out very firmly and say, "Yes, this is a technology which we recognise is risky. This is a technology where the market is as yet undetermined. This is a technology in which we are to a certain extent tending to fall behind our competitors; and this is a technology in which it is vitally important to have the production version rather than simply to encourage research". I should like the Government to firmly and fairly say that.
In addition, I should like the Government to say, "Not only do we believe that, but we believe that private industry is not in a position to provide these things and that we, the Government, will step in and help private industry; but on the basis that there will be a proper return to whatever investment the taxpayer makes".
3.41 p.m.
Lord Brabazon of Tara: My Lords, I should like to thank my noble friend Lord Birdwood for asking the Question that has allowed us to hold this short debate on the Government's plans for the development of gallium arsenide. He addressed mainly three points: the importance of the technology, the lack of a widespread appreciation of its importance, and the high cost of bringing the technology to the stage of profitable manufacture. The points are well taken.
The Government welcome this debate, as they welcomed one held in another place on 11th March last year, because it allows us to shed light on what to many is a very esoteric subject. But new technologies often appear that way, more so in a field such as electronics than for areas such as, for instance, surface coatings which might produce palpable results like the non-stick saucepan. It is inevitable that new technologies take time to get into the textbooks and to be absorbed by a new generation of students.
I shall not repeat the characteristics of gallium arsenide, which my noble friend described so well, merely confine myself to repeating that the importance of gallium arsenide in advanced applications is widely accepted. But the uncertainties surrounding the course of development of the technology and, consequently, the precise market sectors in which it will feature have led to the situation where companies find it difficult to justify the risk of funding the level of R & D necessary to stand a chance of being successful on world markets. This has forced governments throughout the world to play a prominent role in stimulating the technology.
The main centre of present activity is the US where there is heavy military domination. Currently there are 50 to 60 companies in the field, many with defence interests and some in the more speculative digital
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integrated circuits field apparently positioning themselves for non-defence markets. Support by the US Department of Defense for gallium arsenide has now overtaken that for silicon and we understand that a 360 million dollar programme is being launched. The Japanese are also very active, concentrating more on optoelectronics and digital devices for computing and communications in the civil markets.
Within Europe, France, Germany and the UK are evenly matched, each with 100 to 150 scientists engaged in gallium arsenide research, with programmes comparable in size but differing in composition. Europe is certainly not out of touch with its competitors in the US and Japan but, while each of the European countries has performed well in part, progress has not been uniformally good. Resources could be used more effectively.
The UK has a high reputation for microwave and optoelectronic devices. Our major companies are Plessey (microwave, optoelectronic and analogue), STC (optoelectronic and digital) and more recently a growing GEC activity. We also have ICI Wafer Technology and MCP Electronics as materials makers. The main stimulus from the UK Government over the years has been from the Ministry of Defence and the Science and Engineering Research Council. The Department of Trade and Industry has supported projects in the gallium arsenide field through its microelectronics and optoelectronics programmes for a number of years. However, as the technology has developed it decided to ask for advice from the companies and academics on its electronic devices and materials committee on what its future policy should be. The result was the Coupland Report, to which my noble friend referred. It was named after the technical director of STC Components who chaired the working group. The report is available in the Library.
The report's major findings were that collaborative research on manufacturing processes and devices should be undertaken but, in view of the uncertainties in the market and in the technology, commitments should be limited to a three-year span. Demonstrator projects to provide market-pull were desirable and, since full production facilities would not be needed for about 10 years, pilot manufacturing lines should be set up. A flexible approach to targets would be essential.
The industry's reaction to the report has been very favourable. Representatives of device makers, materials suppliers and likely major users of gallium arsenide devices have reached broad agreement on a strategy and a series of projects to achieve it. They agreed the following objectives: first, to provide manufacturing facilities in gallium arsenide integrated circuits to meet the needs of UK users; second, to set up demonstrator projects to encourage early exploitation; third, to undertake directed research on manufacturing processes and devices; fourth, to secure maximum collaboration between organisations in the UK in order to avoid unnecessary duplication; fifth, to make full use of university work and the Ministry of Defence's programme; and, lastly, to pursue actively European collaboration.
The programme has been costed at approximately £60 million over three years. Such investment would be over and above existing planned investment by the industry. The industry stipulated a financial

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contribution of 50 per cent. from government to compensate for the high risks associated with the additional expenditure and to compensate for loss of independence and exclusive rights of exploitation.
I am pleased to tell the noble Lord, Lord Lloyd of Kilgerran, that discussions have also taken place between the British, French and German industries with officials present. The three countries are separately considering new initiatives in gallium arsenide and the time is opportune to consider European collaboration, perhaps under the Eureka programme. The scope for a joint programme where the national interests overlap wil be discussed during the summer and we hope that there will be a positive agreement at a second meeting of industrialists in September. I note the remarks of the noble Lord, Lord Lloyd of Kilgerran, about British firms' patent rights and I shall certainly draw them to the attention of those who are to take part in these meetings.
The Government strongly endorse the strategy proposed by the UK industry, including its readiness to join in discussions on a European programme. The Government are willing to provide financial support to individual projects from UK companies that fall within the strategy, including those on a European basis. The details of government support are under discussion with companies at the moment. I cannot go any further in reply to the noble Lord, Lord Williams of Elvel, as to the exact amount of money involved at this stage.
My noble friend Lord Birdwood referred to the importance of exploitation. The strategy I have described covers this but recognised that in its early stage of development the emphasis must be placed on R & D and pilot production. However, I can assure my noble friend that the importance of exploitation will not be forgotten.
My noble friend referred to the Alvey programme, and I think that the noble Lord, Lord Lloyd of Kilgerran, also mentioned it. With the limited resources available and the overwhelming size of the silicon market, we believe that the Alvey programme was justified in concentrating on the development of silicon technology. The United Kingdom momentum in gallium arsenide has not been lost and will be boosted by the industry's strategy.
The Government's record of support for microelectronics is a good one. With Alvey, the microelectronics industry support programme and other measures, such additional work in industry has been stimulated. The Government have said that they are prepared to support gallium arsenide projects also, as I have repeated this afternoon. To conclude, this debate has provided a welcome opportunity to bring to the attention of noble Lords the importance of gallium arsenide and to allow the Government to make a statement about their willingness to support industry's efforts in this area.
The noble Lord, Lord Williams of Elvel, asked me how the taxpayer will be rewarded for the investment that we shall probably put into this programme. I think that in general terms it is a matter of pump-priming. If this is successful, then the companies involved will end up paying back a great deal more in tax, I hope, than we put into the resource in the first place. However, I think that the noble Lord's question
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is an interesting one, if not somewhat wider than that on the Order Paper this afternoon. However, I take note of his views.
I should like once more to thank my noble friend for asking his Question. I hope that I have been able to give him some encouragement, or at least rather more encouragement than the noble Lord thought he was going to receive at the beginning of this afternoon.
House adjourned at nine minutes before four o'clock.

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