Sitting of 15 May 1986

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

    SHOREHAM PORT AUTHORITY BILL (By Order)
    Orders for Second reading read.
    To be read a Second time upon Thursday 22 May.

    MILFORD HAVEN PORT AUTHORITY BILL (By Order)
    Order read for resuming adjourned debate on Question [18 February], That the Bill be now read a Second time.
    Debate to be resumed Thursday 22 May.

    BRITISH RAILWAYS (STANSTED) BILL (By Order)
    Order read for resuming adjourned debate on Question [24 February], That the Bill be now read a Second time. Debate to be resumed Thursday 22 May.

    HARWICH PARKESTON QUAY BILL (By Order)
    Order read for resuming adjourned debate on Question [28 April], That the Bill be now read a Second time.
    Debate to be resumed Thursday 22 May.

Oral Answers to Questions
  NATIONAL FINANCE

    Interest Rates
    Mr. Andy Stewartasked the Chancellor of the Exchequer if he will make a statement on the current level of interest rates.
    Mr. Ottawayasked the Chancellor of the Exchequer what effect his Budget has had upon the level of interest rates.
    Mr. Hayesasked the Chancellor of the Exchequer if he will make a statement on the present level of interest rates.
    The Chancellor of the Exchequer (Mr. Nigel Lawson): Base rates have been reduced by 2 per cent. since the Budget.
    Mr. Stewart: I thank my right hon. Friend for that continuing good news about the economy, particularly as it benefits the Exchequer, industry and mortgage payers. However, at what level would interest rates be if the Labour party implemented its £24 billion of expenditure?
    Mr. Lawson: If it were to implement the extra £24 billion of public expenditure we would have substantial increases in taxation, possibly a VAT rate of 41 per cent., excessive borrowing, interest rates much higher than they are today, and no doubt before very long we would be in the hands of the IMF.
    Mr. Ottaway: Is my right hon. Friend aware that a survey carried out among business men by the Nottinghamshire chamber of commerce showed that what concerned them most was high interest rates? With, I hope, inflation following West Germany down to zero, resulting in high real interest rates, will he please do whatever possible to bring interest rates down as soon as possible to try to alleviate the fears of those Nottinghamshire business men?
    Mr. Lawson: My hon. Friend is right. It is important that interest rates should be brought down as much and as soon as is prudent. The 2 per cent. reduction in interest rates already since the Budget has been accompanied by a reduction in the mortgage interest rate of 1¾ per cent., which will come into effect on 1 June, which, on its own, is worth some £3·60 a week to the man or family with the average outstanding mortgage.
    Mr. Hayes: Now that Cabinet government has been restored, that we have a balanced ticket and that the winds of change are sweeping through the Treasury, will my right hon. Friend accept that any relaxation of the rules governing the spending of capital receipts by local authorities from council house sales would not significantly affect interest rates?
    Mr. Lawson: No, my hon. Friend is wrong. That could have an effect on interest rates. However, I am glad to see from the earlier part of his question that he appears to be fully content with the present state of affairs.
    Mr. Penhaligon: When, within the strategy currently being pursued, does the Chancellor expect British interest rates to be as much below the international average as they are currently above it?
    Mr. Lawson: The hon. Gentleman is right in saying that our level of interest rates is higher than the general level in major countries overseas. The relationship between interest rates in Britain and overseas is not unconnected with the fact that labour costs per unit of output are rising much faster in Britain than in our major competitors. That is the major weakness in the British economy at present, and it is a job for management to take a better grip of its costs. We shall then be able to see benefits in competitiveness and in interest rates as well.
    Mr. Evans: If interest rates are falling so well and everything in the garden is so wonderful, why does unemployment continue to increase? I cite the announcement this week that 1,000 jobs will be lost at Kodak, that another 1,000 jobs will go at British Caledonian, and, as we heard yesterday, the appalling loss of 3,500 redundancies in the shipbuilding industry.
    Mr. Lawson: The hon. Gentleman should have listened a little more attentively to my answer to the hon. Member for Truro (Mr. Penhaligon) a moment ago. Unemployment is all part of the same problem. Labour costs per unit of output are increasing far too quickly in this country, which prices workers in many of our industries out of jobs, as we are not as competitive as our rivals overseas.
    Mr. Latham: Will my right hon. Friend confirm that the welcome reduction in interest and mortgage rates will at least do something to offset the deplorable increase in domestic and commercial rates imposed by Labour and Liberal councils, including in our county of Leicester?
    Mr. Lawson: My hon. Friend is right about the county of Leicester, which both he and I represent. There is considerable unrest about the level of rates imposed by the Labour-controlled council. The same problem exists in much of the country. I am grateful to my hon. Friend for his remarks about the considerable benefits to the economy as a result of the Budget and the consequent reduction in interest rates.
    Dr. McDonald: By exactly how much will bank interest rates in Britain have to be cut if they are to fall to the same level as real interest rates in America, Japan, France and Germany, our main competitors?
    Mr. Lawson: Although it is difficult to measure precisely or accurately real interest rates, they are slightly higher in this country than in most other major countries. A Labour Government might considerably reduce real interest rates in the same way as always—by letting inflation go through the roof.

    Freeports
    Mr. Colvinasked the Chancellor of the Exchequer when he expects to receive a report from the appointed consultants about reviewing the customs and tax regulations covering freeports; and if he will make a statement.
    The Minister of State, Treasury (Mr. Peter Brooke): The consultants were appointed in July 1984 to undertake a five-year research study to enable an initial evaluation of the freeport experiment. Annual progress reports submitted by the consultants to date include assessments of the problems which have arisen in the operation of freeports.
    Mr. Colvin: That is a long time to have to wait. Is my hon. Friend aware that the experiment is unlikely to prove successful unless he does something to get the Customs and Excise off the backs of the freeports? Some of us believe that the Customs and Excise was determined to ensure that the experiment failed before it even started. The freeports need to be wholly free of VAT. In some instances, the VAT regime inside the freeport is even worse than that outside it, which is hardly a recipe for success.
    Mr. Brooke: I must rebut my hon. Friend's contention about the Customs and Excise. It has not changed any of the rules that were set out at the beginning of the freeports experiment. Freeports remain subject to European Community legislation. On the subject of consultants, there will shortly be an interim report.

    Unemployment (Budget Effects)
    Mr. Kilroy-Silkasked the Chancellor of the Exchequer what is his latest estimate of the effect of the Budget on unemployment; and if he will make a statement.
    The Chief Secretary to the Treasury (Mr. John MacGregor): While it is impossible to isolate the direct effect of the Budget, or indeed of any Budget, on unemployment, the hon. Gentleman will welcome the fact that nearly 1 million additional new jobs have been created since the last election.
    Mr. Kilroy-Silk: Is it not a disgrace that with more than 4 million people unemployed so little attention was given to job creation in the Budget statement? Does that now show the Government's callous and uncaring nature? I can point to hundreds of people in my constituency and on Merseyside who have lost their jobs since the Budget statement. How many people can the Minister point to who have found jobs?
    Mr. MacGregor: The hon. Gentleman knows perfectly well that the figures is not—
    Mr. Kilroy-Silk: How many?
    Mr. MacGregor: I shall answer the hon. Gentleman's questions. The hon. Gentleman knows perfectly well that the figure is not 4 million. The figure could amount to that only if he included the people in employment through various job creation measures. The Budget added considerably to the already very high total of expenditure being incurred on job creation, employment and training measures. When we took office the figure was under £400 million. By the end of these three years it will be £3 billion, which is a clear indication of the priority that we give this subject.
    Mr. Forman: Is not the level of unemployment, both now and in the future, affected at least as much by unit labour costs, as was pointed out by our right hon. Friend earlier? Therefore, would it not be sensible to press ahead as rapidly as possible with schemes to make pay more profit-related, since that might help to redress some of the problem?
    Mr. MacGregor: My hon. Friend is entirely right to draw attention again to the problem of unit labour costs, where the position is, if anything, deteriorating. I hope that employers and employees will take into account that

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    very important part of job creation—the Budget measures which reduced income tax for employees, which in many cases considerably increases their take-home pay.
    My hon. Friend knows that we are engaging in discussions on profit sharing. I hope that that, too, will help to reduce unit 'about costs.
    Mr. Wigley: Does the Minister recall that it was to encourage entrepreneurs to create jobs that the top rate of income tax was reduced from 84 to 60 per cent.? Will he set up a study to investigate whether a single job has been created by that?
    Mr. MacGregor: It is clear that the whole series of tax measures, not just the one referred to by the hon. Gentleman, designed to encourage job creation and small business development have worked. The number of new businesses starting up and expanding has been very creditable under this Government compared with the record in the past, and is a major contributor to jobs.
    Mr. Heathcoat-Amory: Will my right hon. Friend take up with employer organisations his disappointment over the fact that many firms prefer to increase the wages of existing employees by more than the rate of inflation, rather than take on additional staff? Does he agree that, by international standards, our performance in that respect is poor and is making unemployment worse?
    Mr. MacGregor: My hon. Friend is putting the unit labour cost argument in another way. I agree with him that this practice does not help unemployment. It is important that all employers take note of the arguments. I pay tribute to the work of the CBI, which is tryng to get across that message, as we do in everything that we say.
    Mr. Mason: Will the Minister answer the simple question embodied in the original question? What figure can he give for a reduction in the dole queues as a result of the last Budget?
    Mr. MacGregor: The last Budget was not very long ago—[HON. MEMBERS: "Answer."] The right hon. Gentleman must recognise that there have been increases in net new jobs in this country on a scale greater than in the remainder of western Europe put together as a result of the last three Budgets and the policies that we have been pursuing.
    Mr. Nicholls: Does my right hon. Friend agree that the effect on employment cannot be considered in isolation from the basis on which the unemployment figures are calculated? For example, the severely disabled and single-parent families can be included in unemployment figures, as can people over 60, who sign on simply to obtain their national insurance tax credits. Figures that include such people cannot be treated as an accurate reflection of unemployment.
    Mr. MacGregor: It is clear that some people are included in the unemployment figures—and there have been various calculations of the number—who are not actively seeking work.
    Mr. Terry Davis: Will the Chief Secretary confirm that his figure of 1 million new jobs since 1983 includes about 250,000 second jobs—second jobs obtained by people who already have jobs; second jobs that are often part-time jobs? Is it not true that there are still 1 million
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    fewer people in employment today than there were in 1979, even allowing for everything that has happened since 1983?
    As the Minister has referred to the rest of Europe, will he confirm that, under this Government, Britain has not only lost more jobs since 1979 than any other member the Common Market, but has lost more jobs than all the other countries in the Common Market added together?
    Mr. MacGregor: There are some people in the figures—we do not know yet how many, but the number will be small and not on the scale suggested—who have two jobs. We shall eventually discover the number when the surveys have been completed. That does not diminish the fact that there has been a substantial increase in the number of people—the figure is close to the number of net new jobs—who are new to the work force. I do not know why the hon. Gentleman keeps criticising the Government for the number of new jobs that are part-time jobs. Part-time jobs will always have a major contribution to make to the economy. It is interesting to observe that part-time jobs contributed to more than half the increase in the number of jobs under the previous Labour Government.

    Personal Equity Plans
    Mr. Freemanasked the Chancellor of the Exchequer what representations he has received on the proposed establishment of personal equity plans.
    Mr. Lawson: A considerable number, most of which have warmly welcomed the proposal.
    Mr. Freeman: Will my right hon. Friend confirm that since 1979, when the Government came into power, the proportion of the population owning shares has doubled from 7 to 14 per cent.? Will he accept that this has been a substantial achievement? As we are now to have personal equity plans, does my right hon. Friend agree that it would be reasonable to aim for 20 per cent. of the population to own shares, which is close to the percentage in the United States?
    Mr. Lawson: Yes. The most recent survey conducted by National Opinion Poll showed that the proportion of adults directly owning shares has doubled since 1979 along the lines that my hon. Friend suggested. This has arisen largely as a result of two factors. First, there has been a sharp growth in employee share schemes. Secondly, there has been the Government's privatisation programme, especially British Telecom. We are now adding a third leg to what will become a tripod with the introduction of personal equity plans, which, as I said in my earlier answers, have had a warm welcome throughout the community.
    Mr. Wrigglesworth: Does the Chancellor accept that personal equity plans would be even more widely and enthusiastically accepted and welcomed if they gave greater incentives than are at present planned? Does he accept also that the great prize for British industry would be to have an agreement which extended across the political parties on this scheme and on the right hon. Gentleman's profit-sharing scheme, which we very much welcome, which he introduced at the NEDC on Monday? Will he incorporate in the discussions on these matters not only both sides of industry but the other parties?
    Mr. Lawson: I shall always be happy to listen to representations from the hon. Gentleman and from anyone

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    else before the scheme finally comes into full operation on 1 January 1987. I am glad to know that the hon. Gentleman welcomes the tax concessions under the personal equity plan of complete freedom from income tax on dividends and of capital gains tax on disposals, proposals which were never put into play under the previous Labour Government, of whom the hon. Gentleman was such an avid supporter.
    Mr. Skinner: Does the Chancellor of the Exchequer recall that after the findings of the National Opinion Poll were published it was suggested by many, and reported, that the increase in share owners from 7 to 14 per cent. arose because there had been a lot of double counting? Will he confirm that the greatest increase of share ownership that has taken place pro rata is in the Government and the Cabinet itself, with nine members of the Cabinet owning shares and with the Prime Minister and the Secretary of State for Transport leading the way by making money out of the coal strike and privatisation, only to be superseded by the hon. Member for Stockton, South (Mr. Wrigglesworth), who represents Barclays Bank in this place?
    Mr. Lawson: I regret that I was not able to hear much of what the hon. Gentleman said. Modern Cabinets may be rather large, but to suggest that they account for 14 per cent. of the adult population of Great Britain is going a little far.
    Mr. Tim Smith: Is my right hon. Friend aware that the refinements to the scheme, which were announced by the Treasury this week to include unit trusts, are very welcome? Who is to issue the plans if the Financial Services Bill does not become law by 1 January of next year, which seems likely?
    Mr. Lawson: It is important that the Financial Services Bill should become law by 1 January next year, as I am sure my hon. Friend agrees. If that were not so, special arrangements would have to be in force for the interim period.

    Gold Reserves
    Mr. Ron Brownasked the Chancellor of the Exchequer what is the value of the United Kingdom's gold reserves.
    The Economic Secretary to the Treasury (Mr. Ian Stewart): $6·1 billion.
    Mr. Brown: As there seem to be some goodies in the kitty, despite the recession, would this be an opportune time to return Albania's gold to its rightful owners—the Albanian Government? Must we not face that issue?
    Mr. Stewart: I should explain to the hon. Gentleman that the figure for which he asked and the answer which I gave related to the United Kingdom's gold reserves. His question on Albania relates to gold that is held on behalf of the Tripartite Commission for the Restitution of Monetary Gold, in which the United States, the United Kingdom and France are joint participants.
    Mr. John Browne: Does my hon. Friend accept that the question of gold reserves has been brought into stark focus by the enormous increase in the number of financial instruments and the financial pyramiding involved, and by the vast increase in trading volume throughout the world?
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    The question arises as to the implications for the financial community of any failure of settlement. Is it not prudent for the Government to increase their gold reserves at such a time?
    Mr. Stewart: Total reserves have been increasing. In fact, in the past few months there has been a rise on every occasion. We judge the present balance between gold and convertible currency to be about right in present circumstances.

    Public Expenditure
    Mr. Alan Howarthasked the Chancellor of the Exchequer what is his latest projection for public expenditure as a proportion of gross domestic product in 1986–87.
    Mr. MacGregor: The latest estimate of general Government expenditure as a percentage of gross domestic product for 1986–87 is 42½ per cent.
    Mr. Howarth: Does my right hon. Friend agree that we are by no means achieving full value for our existing public expenditure on health and education? Although it is far from certain that a more relaxed approach to public expenditure would produce better public services, we know all too well from experience that it would lead to higher taxes, higher interest rates and higher unemployment. Will my right hon. Friend underline that truth to the alliance parties, which want to spend an extra £10 billion, and to the Liberal party in Warwickshire, which proposed a rate increase of 23·3 per cent. and more? I am happy to say that those Liberals failed to impress the electorate.
    Mr. MacGregor: My hon. Friend was correct in the first part of his question. That is why, in addition to establishing priorities in public expenditure, we are concentrating so much on getting value for money in all the programmes. I am sure my hon. Friend will be pleased to know that, as a result of efforts in obtaining value for money in the Health Service, about £150 million a year extra has been devoted to real front-line care. We must continue with such an approach. My hon. Friend was entirely right in the second part of his question. As we saw under the last Labour Government, those were precisely the consequences, and they would be repeated under the proposals put forward by the Liberals and the SDP.
    Mr. Madden: How much is it costing the Government to sustain record unemployment?
    Mr. MacGregor: The figures for unemployment benefit are in the public expenditure White Paper. If there is ever-increasing public expenditure, it has to be paid for in other ways, which loses real, permanent jobs elsewhere.

    European Monetary System
    Mr. Knoxasked the Chancellor of the Exchequer when he next proposes to have discussions with the European Community Council of Ministers about the European monetary system.
    Mr. Ian Stewart: Aspects of the European monetary system come up for discussion from time to time.
    Mr. Knox: Can my hon. Friend think of more suitable circumstances than those that obtain at present for Britain to join the exchange rate mechanism of the EMS? If not, why do we not join?
    Mr. Stewart: We have always made it clear that we see both advantages and disadvantages in membership of the exchange rate mechanism of the EMS. We keep it under review. We would need to be satisfied that there was a clear balance of advantage before joining.
    Mr. Meadoweroft: What is the right basis on which we should join the EMS?
    Mr. Stewart: The hon. Gentleman makes a fundamental mistake in assuming that membership of the ERM is determined solely on the basis of prevailing rates of exchange between sterling and other currencies. A range of other matters, such as volatility and the technical arrangements of the mechanism itself, must be taken into account.
    Mr. Budgen: When my hon. Friend has an opportunity to speak to my right hon. Friend the Chancellor, will he tell him that it would be a good thing if he told his many friends among the fashionable economic commentators that the Prime Minister's opposition in principle to joining the EMS is neither eccentric nor isolated, and that many hon. Members on both sides of the House would deeply resent the loss of national sovereignty that would occur if we were to join?
    Mr. Stewart: I note what my hon. Friend has said and, if I get an opportunity to see my right hon. Friend the Chancellor, I shall pass on his remarks. My hon. Friend's question and the question raised by my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) illustrate the fact that people can hold different opinions on this matter.
    Mr. Evans: When the Minister next meets his European colleagues to discuss European matters, especially the ecu, will he inform them of the Chancellor's new-found enthusiasm for profit-sharing by employees as part of their wages? Will the hon. Gentleman inform his European colleagues that the Government are prepared to accept the modest Vredeling proposals on employees having the right to information about their companies?
    Mr. Stewart: The hon. Gentleman's question is rather far from the question of the European monetary system. However, I am glad that he has some words of approval for my right hon. Friend's profit-sharing proposals.
    Mr. Dorrell: If, as my hon. Friend said, there are advantages and disadvantages in joining the EMS, what is the critical disadvantage that keeps us out of it, and therefore keeps our currency fluctuating, in preference to a sound, stable currency at a fixed rate against the currencies of our major European partners?
    Mr. Stewart: Two or three months ago I went into these questions at some length in a debate in the House, and I shall gladly do so again outside the Chamber with my hon. Friend. Clearly, in considering the EMS, we must recognise that joining would not be an easy option. My hon. Friend's point about the movement of the exchange rate between sterling and the continental currencies is only part of the picture. It is a mechanism, and a number of its aspects must be taken into account.

    Income Tax
    Mr. Sackvilleasked the Chancellor of the Exchequer what is his latest estimate of the proportion of
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    income tax revenue paid by the 10 per cent. of taxpayers with the highest incomes; and what was the comparable proportion in 1979–80.
    Mr. MacGregor: The proportion is 37½ per cent. in 1986–87, compared with 34 per cent. in 1979–80.
    Mr. Sackville: Is that proportion not further evidence that the sky-high tax rates of the last Government were counter-productive and that our reductions in those rates produced a greater, not a smaller, tax yield, to the benefit not only of high rate taxpayers but taxpayers in general?
    Mr. MacGregor: My hon. Friend is right. It demonstrates what we have always said—that lower taxes provide encouragement and motivation leading to greater earnings and hence to greater achievement. As my hon. Friend has implied, that is in sharp contrast to the Labour party's policies. It is fairly clear that at the moment the Labour party simply cannot add up the figures. Recently, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) made a speech in which he said that people earning more than £30,000 a year would have to pay more tax. Just to get anywhere near the yield that the right hon. Gentleman seeks would mean total confiscation of earning over £30,000 a year. It is hard to say how that encourages motivation or provides greater tax yields.
    Mr. Campbell-Savours: Is it not true that, once again, the right hon. Gentleman misrepresents the figures? [Interruption.] He knows that a Labour Government would increase—[Interruption.] Mr. Speaker—
    Mr. Speaker: Order. Mr. Campbell-Savours.
    Mr. Campbell-Savours: The Minister knows that the next Labour Government will increase capital gains tax and capital transfer tax, and by raising those revenues, in addition to the revenues raised from those who are paid higher levels of salary, we will fund Labour's programme.
    Mr. MacGregor: Because of the—
    Mr. Campbell-Savours: Just stick to the facts.
    Mr. MacGregor: Because of the growth in the economy and growth in capital values, the yield from capital taxes has also gone up under this Government. I will stick to the facts. The facts are that the yield from the capital taxes, which the Labour party says it will increase, will fall far short of financing the programme put forward by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and his party. An additional £1·9 billion would be required—I am giving the facts—and even if, as the right hon. Gentleman said, people earning more than £30,000 had to pay more tax, with the implication that others would not, and even if they all were prepared to go on earning at their present rate, with total confiscation of all earnings above £30,000, it would yield only £1½ billion. Those are the facts, and they show that the policy is nonsense.
    Mr. Fallon: Does my right hon. Friend agree that his target of 25 per cent. income tax may just be a marker to some people, but means a great deal more to millions of low-paid workers? If he cannot convince his colleagues that consolidation is no policy for the poorly paid and disadvantaged, how can we persuade the public?
    Mr. MacGregor: My hon. Friend is right. The purpose of the tax changes in the Budget and of the long-term target of 25 per cent. is meant to be of great benefit and is mainly directed to those on modest incomes.
    Mr. Penhaligon: Is not another interpretation the possibility that those job-destroying pay rises, to which the Chancellor referred, have gone to those who are already the highest paid?
    Mr. MacGregor: No. If unit labour costs as a whole are going up, that cannot mean that they are confined to only a small band of income earners. The truth is that it is happening across the whole field. That is why the tax changes we have introduced in the Budget will, I hope, help to prevent those rises taking place.

    Inflation
    Mr. Andrew MacKayasked the Chancellor of the Exchequer if he will make a statement on the current level of inflation.
    Mr. Lawson: Over the 12 months to March 1986 the retail prices index increased by 4·2 per cent. and I expect tomorrow's figure to be substantially better.
    Mr. MacKay: Does my right hon. Friend agree that these exciting prospects could be put in jeopardy if employers in the private sector were to continue to concede irresponsible and inflationary wage settlements, with their consequent effect on unit labour costs, the efficiency of British industry and job prospects?
    Mr. Lawson: My hon. Friend is right to talk about the dangers of excessive increases in unit labour costs. However, the consequences will be felt not so much on inflation as on employment and jobs. That is the problem at present. Another and much greater threat to inflation would be if, by any mischance, any of the Opposition parties were to gain office.
    Mr. Ashton: When the Chancellor set out on his policy to reduce inflation to this level, did he know that it would create unemployment of nearly 4 million?
    Mr. Lawson: It is not inflation that has created unemployment. In fact, the reverse is the case. Rising inflation is bad for jobs. The inflation record of this Government is something of which the whole nation can be proud.
    Mr. Robert B. Jones: Will my right hon. Friend confirm that inflation is not a disease, the cure for which is to forget about it, but a constant pressure in the economy which requires the consistent approaches which we have had until now and which we need in the future?
    Mr. Lawson: My hon. Friend is right. The achievement of the Government in getting inflation down as far as we have—it is going down still further—is something which nobody in this country should take for granted.
    Mr. Winnick: Is it not interesting that despite all the boasting by the Chancellor about inflation rates, the electorate, at every opportunity since the Budget, have decisively rejected policies which they know mean continuing mass unemployment and cuts in housing, education and the Health Service? Is it not also interesting to note that not only are the public not convinced, but that
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    Cabinet colleagues of the Chancellor are not convinced, such as the Leader of the House, who, in a television interview on Sunday, made it perfectly clear that there must be alternative policies to those pursued by the Prime Minister and the Chancellor?
    Mr. Lawson: The Cabinet is united on the importance of getting inflation down, and keeping it down. There is no benefit to this country in inflation going up. Let me say, too, that low inflation is of the greatest importance to those who are seeking jobs.

    Confectionery (Value Added Tax)
    Mr. Gregoryasked the Chancellor of the Exchequer what value added tax revenue he expects to raise through United Kingdom confectionery sales in the current financial year.
    Mr. Brooke: It is estimated that the revenue yield from sales in the United Kingdom of chocolates, sweets and similar confectionary will be about £375 million in 1986–87.
    Mr. Gregory: Ever since confectionery in this country has been subject to purchase tax, and subsequently to VAT at the standard rate, there has been a major shift in people's dietary habits. Three cooked meals a day are no longer the norm. Confectionery is part of the daily habit. How much longer can the Chancellor justify taxing confectionery, as it is part of the normal consumption of United Kingdom nationals?
    Mr. Brooke: I know my hon. Friend's constituency interest in this matter. I applaud his support for the great confectionery manufacturers there, but I cannot hold out hope that the present VAT treatment of confectionery will change. I remind the House that it was the right hon. Member for Leeds, East (Mr. Healey), in his first Budget in 1974, who standard-rated chocolate.
    Sir Kenneth Lewis: Is my hon. Friend aware that I hope very much that he will not increase tax on confectionery in the way in which my right hon. Friend the Chancellor treated the tax on tobacco in the Budget, increasing it by more than the rate of inflation? As a result of that increase there will be a reduction not only in tax receipts from tobacco, but in jobs, as has happened in Northern Ireland, where 900 jobs have been lost. Will my hon. Friend please stop listening to the exaggerated lobby on tobacco smoking, because that is what it is?
    Mr. Speaker: Order. The question is about confectionery.
    Mr. Brooke: As you say, Mr. Speaker, the question is about confectionery, but the tobacco yield remains buoyant.

    Depositary Receipts
    Mr. Weetchasked the Chancellor of the Exchequer what representations he has received about his recent statement on American depositary receipts.
    Mr. Ian Stewart: We have received a number of letters, generally welcoming the changes.
    Mr. Weetch: Is not the Treasury's recent announcement of a reduction in the tax on conversion of depositary receipts from 5 to 1½ per cent. a straight post-Budget tax

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    handout to the City of London? When the Chancellor framed his Budget fixing the rate at 5 per cent., was that not a quid pro quo for tax forgone for a lower rate of stamp duty? What has happened to the Chancellor's calculations now? Is this not yet a further example of a Chancellor fixing policies, and well-placed strategic groups in the City of London weakening his resolve and ultimately destroying it?
    Mr. Stewart: No. It is not any of those things. In the light of representations that we received following the Budget, my right hon. Friend the Chancellor was satisfied that our objectives would be achieved in relation to preserving the revenue from stamp duty with a rate of 1½ per cent. instead of 5 per cent. Under those circumstances, it was a perfectly proper change to make.
    Sir William Clark: Does my hon. Friend agree that depositary receipts are an admirable way of funding, particularly expansion overseas, and that that applies not only to American but to European depositary receipts? In view of the fact that our American colleagues are against the tax, does my hon. Friend think that that will jeopardise the negotiations that are now going on for the abolition of the unitary tax system?
    Mr. Stewart: I am sure that there is no direct connection between those two matters. If British companies wish to raise funds abroad, I have no reason to think that there will not be a satisfactory and active market in ADRs at the rate of 1½ per cent., since they were growing very rapidly indeed in the months before the Budget at the rate of 1 per cent.
    Mr. Blair: Does the Economic Secretary to the Treasury recall that his right hon. Friend the Chancellor of the Exchequer sold this proposal to cut stamp duty and give away £70 million on the basis of this special rate of 5 per cent.? How does he intend to make up the revenue? Why is it that whenever the pensioners knock on the Government's door the Government are hard with them, as they are hard with the sick, the unemployed and the disabled, but are always soft with the City?
    Mr. Stewart: If I had time, Mr. Speaker, and if I were in order, I should like to explain at length the many things that this Government have done to help the disabled. When my right hon. Friend the Chancellor of the Exchequer made his announcement, subsequent to the Budget, about stamp duty changes, he pointed out that they would be revenue-neutral and that therefore there would be no loss of revenue to the Exchequer.

  PRIME MINISTER

    Engagements
    Mr. Sheermanasked the Prime Minister if she will list her official engagements for Thursday 15 May.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today.
    Mr. Sheerman: Given the further relentless rise in the unemployment figures that have been announced today and the depressing long-term trend, together with the announcement yesterday of the loss of 3,500 jobs in the
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    British shipbuilding industry and the announcement today of the loss of 1,000 jobs at British Caledonian, will the Prime Minister now announce that she will reverse the disastrous economic polices that she has pursued for the last seven years, or that she will call a general election so that Labour can create genuine jobs?
    The Prime Minister: No, Sir. I did not notice that Labour did particularly well during the last two by-elections. I am sure the hon. Gentleman noticed that the labour force survey confirmed the overall increase in the number of jobs during the last three years to have been 1 million. I am the first to say that we need more shipbuilding orders, but there are very few of them. However, the hon. Gentleman heard yesterday that my right hon. Friend the Secretary of State for Trade and Industry is to take a number of measures to help unemployment in those regions. An enterprise company is to be set up through British Shipbuilders.
    Sir Edward du Cann: Has my right hon. Friend noted the deep anxiety with which, on both sides of the House, the announcement about the decline in Britain's shipbuilding capacity was greeted yesterday? Will she reexamine the many constructive proposals that have been put forward for the development of policies to encourage the expansion of the British merchant fleet—national, European and international—upon which the health of all the marine industries depends? May I beg her to bear in mind that the decline in the British merchant fleet and in our shipbuilding capacity is the most serious mater from the point of view of both the economy and defence? It could be changed and it should be changed.
    The Prime Minister: My right hon. Friend will be the first to know that the future of British Shipbuilders depends upon success in winning new orders. We are taking a number of measures, particularly with regard to soft credit, to ensure that we can compete on an equal basis with other people. My right hon. Friend will be aware of the tremendous number of surplus ships in the world, amounting to 40 million tonnes, whereas the world capacity is 18 million tonnes. Therefore, the surplus would replace the world capacity.
    Mr. Kinnock: Unemployment stands at 3·3 million. Today's figures show the biggest loss in manufacturing jobs in recent years. In the light of that, and in the light of the case that has just been made, not for the first time, by the right hon. Member for Taunton (Sir E. du Cann), will the Prime Minister now adopt a policy for British shipbuilding of scrap and build, and bring forward public sector orders in order to sustain work and skills in the yards, especially in those areas of very high unemployment? Alternatively, does the Prime Minister intend to stand aside and let British Shipbuilders join the long and growing list of those industries that have become her economic victims?
    The Prime Minister: The right hon. Gentleman will be aware that there are very few shipbuilding orders about in the world and that many other shipbuilding countries have had to close their shipyards. The Swedes have effectively abandoned merchant shipbuilding, the Dutch Government have refused to support their industry to build the sister ship to the large North sea ferry—won by Govan—the Japanese are having to adjust to the shortage of orders, the Germans have cut their capacity by

    849
    half and the French are also cutting capacity. The fact is that there have been so many subsidies for building ships that they have been built and there is surplus tonnage to the tune of 40 million tonnes. There is no point in scrap and build, as there are already too many ships.
    Mr. Kinnock: In Japan the unemployment rate is 2·6 per cent., in Sweden it is 2·8 per cent. and in every country which the right hon. Lady has mentioned the unemployment rate is lower than that of Britain, which is nearly 14 per cent. and much lower than the level of nearly 18 per cent. in the northern region of Britain. Different circumstances require different responses. Why will the Prime Minister not look at the option of scrap and build and the option of bringing forward public sector orders for shipbuilding, so as to sustain, for this maritime nation, a viable merchant shipbuilding industry?
    The Prime Minister: There are still merchant shipbuilding yards, which I hope will continue. We are trying our level best to get more orders, in particular for Sunderland. With regard to what the right hon. Gentleman has said about full employment in those countries, may I point out that those countries have not attempted to shore up older industries, but have vigorously embraced the new technologies, and that is what we must do.
    Mr. Soames: Will my right hon. Friend join me in regretting today's announcement by British Caledonian of nearly 1,000 redundancies, many of whom are my constituents [Interruption]—
    Mr. Speaker: Order. This is an important question concerning a Member's constituency.
    Mr. Soames: In the light of this sad news, will my right hon. Friend have a word with my right hon. Friend the Secretary of State for Transport and ask him to overturn his appalling decision to revoke the licence for the air link between Gatwick and Heathrow?
    The Prime Minister: My right hon. Friend has heard what my hon. Friend has said. I regret that British Caledonian found it necessary to make cuts as a response to lower levels of traffic. Much of the reason for falling traffic has been over-exaggerated fears of terrorism, especially in the United States of America. We are doing everything possible to make them realise that this country has a safer capital than almost any other one in Europe.
    Mr. James Callaghan: The fact that the Prime Minister quotes countries like Sweden and Germany shows that the Government do not yet understand that there is a strategic necessity to maintain a maritime presence in this country. If she is looking for orders, why not bring forward the naval programme, especially for the large number of coastal vessels, oil rig protection vessels, guard ships and others that are required by the Royal Navy to overcome this cyclical deficiency? If the Prime Minister does not do so, nobody will believe that the Government are making the maximum efforts to preserve this strategic industry.
    The Prime Minister: The right hon. Gentleman is aware that there is still merchant shipbuilding capacity in this country. He is also aware, as I have said, that the surplus tonnage of ships is already of the order of 40 million tonnes. There is little point in building more when we have that surplus.
    With regard to naval ships, the right hon. Gentleman will also be aware that we have brought forward one of the
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    AOR fleet to help Swan Hunter, and that last year we ordered four major and three smaller warships. That is for the warship yards, which, as the right hon. Gentleman knows, are quite different from the merchant shipbuilding yards.
    Mr. Portilloasked the Prime Minister if she will list her official engagements for Thursday 15 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Portillo: If my right hon. Friend turns her attention today to the reallocation of resources in the Health Service to help the worst-off areas, will she reflect on the fact that that policy was originally sponsored by the right hon. Member for Plymouth, Devonport (Dr. Owen), who is now the leader of the SDP, that it has been supported by both parties when in office and that, even so, in London, under that policy, 70,000 more patients are now being treated than were treated when the Government came to office?
    The Prime Minister: My hon. Friend is absolutely correct. The policy of reallocating health resources away from London because the population of London was falling and to try to equalise health provision throughout the country was started by the Labour Government and has been continued by this Government. Nevertheless, the number of patients being treated in London has still increased—70,000 more in-patients, 70,000 more day cases and 50,000 more out-patients are treated each year. London continues to have about 20 per cent. of expenditure on the hospital services, for about 15 per cent. of the population, so it is still improving its services.
    Dr. Owen: When the falling competitiveness of British industry can be desribed as appalling and alarming today by the Prime Minister's own Employment Secretary, does it not show the completely broken-backed nature of the Government's industrial strategy and that unemployment will continue to rise until there is an income strategy which affects the private and the public sectors?
    The Prime Minister: The right hon. Gentleman had a strict income strategy the last time he was in government as a Labour Minister. He also had a strict prices strategy to keep prices down. Inflation is now much lower than it ever was then. The strategy collapsed in the winter of discontent. The right hon. Gentleman would be very rash even to consider bringing it back.
    Mr. Peter Bruinvels: Will my right hon. Friend join me in congratulating Leicester city Conservatives and their leader. Councillor Michael Johnson, on gaining two council seats from Labour and a 7·5 per cent. swing to the Conservatives in Leicester, East? Is she aware that it was done by hard work, far too high rates—an 80 per cent. increase—Nelson Mandela park and a twinning arrangement with Nicaragua?
    The Prime Minister: I gladly congratulate my hon. Friend on the excellent results that he achieved in the local government elections.
    Dr. M. S. Millerasked the Prime Minister if she will list her official engagements for Thursday 15 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Dr. Miller: Does the Prime Minister intend totally to ignore the lambasting that she has received from the Office

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    of Health Economics, which shows that the United Kingdom is among the lowest spenders on health of all the developed countries of western Europe? Does she still maintain that the Health Service is safe in her hands? That claim runs entirely counter to the experience of doctors, nurses, Health Service workers and patients. When will she fund the Health Service to cater for the legitimate needs of the population, taking account of the fact that people are living longer and that we live in a technological age?
    The Prime Minister: If the hon. Gentleman considers the figures carefully, he will see that the proportion of public funds spent is not different. The difference occurs because, in many of those countries, people choose to spend far more of their own money on health, on top of state provision. Some of the countries with the top figures spend enormous sums on health privately. Far more is spent on health in Britain than a few years ago. Far more patients are treated—[Interruption.] Of course Opposition Members do not like it, but they will hear it. Far more patients are being treated, which is what matters. Patient services have increased, waiting lists have fallen and the number of staff in the NHS who deal directly with patients has increased—nurses and midwives by 60,000 and doctors and dentists by 10,000. I am grateful for the opportunity to give those excellent figures.
    Mr. Jim Callaghanasked the Prime Minister if she will list her official engagements for Thursday 15 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Callaghan: Is the Prime Minister aware that, despite her declared intention to create a property-owning community, a recent report by the Association of Metropolitan Authorities has produced some disturbing and alarming figures on mortgage arrears? Is she aware that one in 10 families are declared homeless because they cannot pay their mortgages? Is she aware that the number of those in great financial difficulties with their mortgage repayments has increased by 40 per cent. in the past six months? In view of those disturbing figures, what will she do about the problem?
    The Prime Minister: The number of mortgage defaults is extremely small compared with the enormous number of people who take out fresh mortgages every year and the great success of the Government in increasing the number of owner-occupiers. Last year more than 1 million new mortgages were given and 1·3 million new homes were built. Home ownership is up to 62 per cent. from 56 per cent. in 1979.
    Mr. Wilsonasked the Prime Minister if she will list her official engagements for Thursday 15 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Wilson: Does the Prime Minister realise that following last week's huge fallout of radioactivity in Scotland, which was the heaviest in the United Kingdom,
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    there is a tremendous revulsion against nuclear power? Does she know that the Torness AGR reactor is at present being fuelled up to go into commission, but is not yet in action? As there is 80 per cent. surplus capacity in nuclear generating in Scotland, will she take account of those feelings in Scotland on the issue of nuclear power and instruct forthwith that Torness be not commissioned?
    The Prime Minister: No. Many people were pleased to have the Torness reactor built in Scotland, and many people in Scotland have great faith, as we have, in nuclear power as a way of generating electricity. I hope that the hon. Gentleman will have great faith in our most excellent Nuclear Inspectorate, which does a tremendous job. [Interruption.] I see that he says no. That is what he thinks about the Nuclear Inspectorate, but I am sure that that view is not shared by the rest of the House, nor by the majority of people in Scotland.
    Mr. Hayes: On a point of order, Mr. Speaker. My hon. Friend the Member for Crawley (Mr. Soames) made a serious point to my right hon. Friend the Prime Minister about many of his constituents who are being made unemployed today. You may recall that several Opposition Members responded by cheering and laughter—[Interruption.]
    Mr. Speaker: Order. That is not a point of order.
    Mr. Hoyle: On a point of order, Mr. Speaker. I ask you for a ruling to correct an inaccurate statement made yesterday. At Question Time I asked the Minister of State, Department of Trade and Industry whether his right hon. Friend the Secretary of State had met Mr. Robert Stempel of General Motors in New York on 4 May. In reply the Minister said that his right hon. Friend had not met him. The Minister mislead the House with that reply, because he did not say that he had had that meeting. Today l tried to table a question so that the Minister could come to the House and correct that misleading statement, but the Table Office would not allow me to do so. I ask that you allow me to table that question.
    Mr. Speaker: I shall look into the matter. As I understand it, the hon. Gentleman asked the Table Office and was told that there was a question on the Order Paper today and that he should wait until the answer was available before tabling his question.
    Mr. Bell: On a point of order, Mr. Speaker. While not in any way challenging your ruling on the first point of order in relation to unemployment in Crawley, may I ask whether it can also be said that it was an incorrect statement of fact? There was no cheering by the Opposition at unemployment in Crawley, just as there is no cheering by Conservative Members at unemployment in Middlesbrough.
    Mr. Speaker: Cheering at Prime Minister's questions is legitimate, and today it was somewhat louder than it normally is. We have robust debates in this place, but it is incumbent on the House to give a fair hearing to whoever is on his or her feet.

British Shipbuilders (Statement)
Mr. Bob Clay: On a point of order, Mr. Speaker. I refer you to column 716 of yesterday's Official Report, Mr. Speaker, and the reply that the Secretary of State for Trade and Industry made to my hon. Friend the Member for Middlesbrough (Mr. Bell) on the British Shipbuilders statement. My hon. Friend the Member for Middlesbrough said:
"He has mentioned Cuba and China, but he has not said whether, if those orders transpire, the yards that he has mentioned today for closure will stay open. Will he now give the House the commitment that, if those orders transpire between now and the end of the year those yards, including Smith's Dock, will stay open?"
The Secretary of State replied:
"If an adequate number of orders can be found to keep those yards open, that will be highly desirable and something that I would welcome."—[Official Report. 14 May 1986; Vol.97. c. 716.]
He went on to say that he thought that it was highly unlikely. However, he clearly indicated that, if orders were available at a sufficient level, the decision on those yards and on redundancies by other yards that are not closing could be reversed—
Mr. Speaker: Order. As far as I can judge from what the hon. Gentleman is saying, these are not matters for me. I think that they should correctly be put to the Leader of the House at business questions. If the hon. Gentleman will contain himself, I will give him that opportunity.
Mr. Clay: Further to that point of order—
Mr. Speaker: Order. I am not responsible for what Ministers say at the Dispatch Box, nor can I adjudicate upon it. I will give the hon. Gentleman an opportunity to raise that point with the Leader of the House who may well be able to give him the answer that he requires. I cannot.
Mr. Clay: Further to that point of order—

Official Report
Mr. Tony Benn: On a point of order. Mr. Speaker. I rise on a point of order relating to the accuracy of the Official Report. I rang your office this morning to draw attention to it, because it apparently is the case that instructions have been given to the Official Reporters that comments made by Members from a sedentary position are not to be reported. Hon. Members on both sides of the House occasionally make such comments, and sometimes the Minister or the Member thus interrupted makes a reference to the interruption which is then deleted.
I am not asking you to give a ruling today, but it is a very important question, Mr. Speaker. The full flavour of the House is contributed to not only by Members on their feet but by Members from a sedentary position. Also, now that the sound archives are available, anyone listening to the sound archives would hear the sedentary comments but would not find them reported in Hansard. I understand that instructions have been given that sedentary interruptions are not to be reported and, indeed, that certain other phrases that have been used in the House are to be deleted.
As you will know, Mr. Speaker, "Erskine May", on page 237, says that you are responsible, through the Clerk of the House, for the accuracy of the Votes and Proceedings, and through the Editor, whom you appoint, for the Official Report of debates, but that the Editor of Hansard is himself responsible for the preparation of an accurate report. I read from "Erskine May" at page 249:
"The Editor is responsible for producing a verbatim report on proceedings in the House … for the publication in the Official Report."
The point that I make, Mr. Speaker. is that this affects the integrity of the record. No other Member is allowed to have his phrases removed, and if the Speaker were. through the Clerk, to give instructions, it would affect the integrity of the record. I do not expect that you are able to give a ruling today, but I ask you to consider very carefully either whether this should be referred to the Procedure Committee or alternatively whether, as with the Library and computer bureau, there should be a Committee of the House that overlooks the preparation of Hansard where, hitherto, discretion on whether to report or not to report has been left to the Editor then supervising the preparation of the record.
Mr. Speaker, it is a very big question that I raise. I hope that you will not hasten to reply at once, but I believe that this is a matter that affects the records of Parliament and, indeed, the integrity of its report.
Mr. Speaker: It is an important matter and I am able to reply because the right hon. Gentleman kindly gave me notice that he was going to raise this matter.
May I make it plain to the House that there is nothing new in what I said yesterday. The practices followed in compiling the Official Report are of long standing and are as follows. First, sedentary comments are not reported unless they are taken up either by the Member who has the Floor or by the Chair.
Secondly, if the Chair calls for order or the Member on his feet takes up a group of comments, that is normally reported by the word "interruption". I believe that these practices should be closely observed. I am sure that the House would not wish the occupant of the Chair to rise every few minutes to deal with sedentary interruptions.

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Nor do I think that the House would wish a Member to be put on the record when he has not been called by the Chair, either to speak or to intervene in a speech.
Hon. Members: Hear, hear.
Mr. Benn: Further to that point of order, Mr. Speaker. I fully respect what you have said, but I ask you to consider two things. First of all, as I understand it, the discretion has hitherto been left in implementing the rules to the Official Reporters and the Editor for the day. Secondly, yesterday, it so happens, my hon. Friend the Member for Bolsover (Mr. Skinner) made an intervention that was the subject of a reply by the Front Bench Minister who was then speaking. I understand that the instructions were that that was to be removed. I am sorry, Mr. Speaker, that you felt it necessary to give a ruling today, because I urge you to consider the danger of the sound archives recording what actually happened and Hansard recording what the Clerk, on your instructions, told Hansard to report. I beg you to give consideration to this matter, and perhaps allow it to be referred to the Procedure Committee.
Mr. Speaker: The right hon. Member, and any other Member, can refer such matters to the Procedure Committee—that is not a matter for me. I cannot go beyond what I have said. This is a principle of long standing, and I do not think that the House would wish to have it changed. I rather sensed that from the response that I received.
Mr. Andrew Faulds: Further to that point of order, Mr. Speaker. You may recall that some of us occasionally make interventions from a sedentary position—
Mr. Alf Dubs: Never.
Mr. Faulds: Occasionally. I have now been here a long time—more than most hon. Members—[Interruption.] and there are many more years to come. I recall, and I am sure that you will endorse my argument, Sir, that in those earlier days, frequently sedentary interventions were recorded, whether there was a riposte or not, and they very frequently enlivened the debates, often made valuable points, and were very germane to the debate. I am open to correction, but I understand that you were the one who introduced the change—[Interruption.] Well, your predecessor. among his many other mistakes—
Mr. Speaker: Order. That is unworthy of the hon. Gentleman. I have introduced no new principle. I ask the House to consider the implications of every comment from a sedentary position being recorded in Hansard, because after all, what would then be the point of making a speech?
Mr. Faulds: Further to that point of order, Mr. Speaker. If I could finish—
Mr. Benn: Further to that point of order, Mr. Speaker—
Mr. Faulds: If I could finish my point, I shoulc be grateful. I am simply backing the good advice given by my right hon. Friend the Member for Chesterfield (Mr. Benn), that perhaps this matter should be considered further, and we should revert to the earlier practice.
Mr. Julian Amery: Further to the point of order, Mr. Speaker. Loth as I am to come to the support of the right hon. Member for Chesterfield (Mr. Benn), filial piety obliges me to say that when, in 1939, my father said "Speak for England" in Arthur Greenwood's speech, he did so from a sedentary position, and it is recorded.
Mr. Benn: Further to that point of order, Mr. Speaker. The right hon. Member for Brighton, Pavilion (Mr. Amery) has cited a famous example of a comment from a sedentary position, which became a historic phrase, quoted around the world. If I may say so, with great respect, Mr. Speaker, I am not asking that that practice should be changed, but that the practice remain unchanged. I was concerned to hear you say that you are sure that the House would not wish to find the record punctuated by such remarks. If sedentary remarks are undesirable, they should be dealt with as they are, by the discipline that is vested in you, Mr. Speaker, not by deleting them from Hansard.
I beg you to take seriously the points that I am making. We are preparing and publishing records for future generations, who will want to get the flavour of the House as well as the words that have been cleared by the Clerks.
Sir John Biggs-Davison rose
Mr. Robert Atkins: What did your old man say?
Mr. Speaker: Order. This is quite an important matter. I frequently do not hear remarks made from a sedentary position, and I did not hear that one.
Sir John Biggs-Davison: In support of what you have just said, Mr. Speaker, and with reference to what my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) said about the famous appeal by his father to a right hon. Member of the Labour party to speak for England, if you will refer to the official record of that day in 1939 you will not find it. Those words went round the world by virtue of the newspaper press, but because they were uttered from a sedentary position they were not reported in Hansard.
Mr. Speaker: That is perhaps the fact, but let me clear this matter. I think that the whole House would wish me to do that. Sedentary comments that add to the flavour of the debate are one thing. Constant sedentary comments that are designed to interrupt someone who is on his feet do not add to the debate. That was the point that I was trying to make yesterday and not in any way altering the traditional rules, which I have now affirmed.

Business of the House
3.47 pm
Mr. Neil Kinnock: May I ask the Leader of the House to state the business for next week—and the Hansard for 1939?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): Yes, Sir. The business for next week will be as follows:

MONDAY 19 MAY—Progress on remaining stages of the Social Security Bill (1st Allotted Day).

TUESDAY 20 MAY—Completion of remaining stages of the Social Security Bill (2nd Allotted Day).

There will be a debate to approve the first report from the Privileges Committee 1985–86 (House of Commons Paper No. 376).

WEDNESDAY 21 MAY—Until about seven o'clock, Second Reading of the Legal Aid (Scotland) Bill [Lords] followed by a debate on a motion to take note of the situation in the shipbuilding industry.

Motion relatng to the Town and Country Planning (NIREX) Special Development Order.

THURSDAY 22 MAY—Second Reading of the Sex Discrimination Bill [Lords].

FRIDAY 23 MAY—Debates on the motion for the Adjournment.

Mr. Kinnock: First, may I welcome the fact that Ministers responded to demands made by right hon. and learned Friend the Member for Monklands, East (Mr. Smith) and myself yesterday and conceded an emergency debate on the crisis in the merchant shipbuilding industry. Even at this late stage, however, I wonder whether the right hon. Gentleman could arrange a different time for the debate next week so that it takes place earlier in the week and, indeed, earlier in the day. There is great interest in the country generally and great anxiety in the shipbuilding areas about this issue and, therefore, great urgency should be attached to the debate.
Today, another rise in unemployment has been recorded, yet the Government still refuse to come to the House to defend their policies, which have brought about this inexorable rise. I have been asking the right hon. Gentleman for some time to arrange such a debate. Semidetached though he may currently be, I am sure that he has enough of a relationship with the Government to assure us that, in the near future, there could be a debate on unemployment in Government time. I hope that that is the case.
Mr. Gorbachev's views expressed last night add further to the need for a wide-ranging foreign affairs debate, preferably a two-day debate. Will the right hon. Gentleman arrange for such a debate as soon as possible after the House reconvenes on 3 June?
We regret that only three hours is to be given to the Second Reading of the Legal Aid (Scotland) Bill. Could not the right hon. Gentleman postpone the Second Reading of the Sex Discrimination Bill on Thursday so that the Scottish legislation could receive longer consideration on that day in its place?
May I remind the right hon. Gentleman of the need for debates on the arts and conservation policy and urge him to ensure that time is quickly provided?
Will the right hon. Gentleman also ensure that we have a debate upon manning in the Metropolitan police,
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especially in the light of today's news that the increase in officers sought by Sir Kenneth Newman is not to be met, despite the Prime Minister's undertaking at the Conservative party conference last year that
"Should the police need more men, more equipment. they shall have them."
Finally, in view of the disputes this week, will the right hon. Gentleman arrange for a debate in the near future on the resource allocation working party and its operation in the National Health Service? Such a debate is necessary so that Conservative Members who represent London, excluding the right hon. Member for Finchley (Mrs. Thatcher), can give a proper airing to the view that they have expressed in a letter to the Prime Minister that the Government are selling London short in health terms.
Mr. Biffen: May I respond to the points made by the Leader of the Opposition in reverse order?
I am sure that a debate on the allocation of resources in the NHS would command general interest and would also give the Government the opportunity to deploy their formidable case in that area. But at the moment, as the right hon. Gentleman will know, the pressure on the time of the House intensifies as we approach the end of July. However, that is a matter that we can consider.
I shall, of course, refer the points about the Metropolitan police to my right hon. Friend the Secretary of State for the Home Department.
I note the interest in debates on the arts and conservation, and doubtless that can feature in discussions through the usual channels.
I take account of the request that more time should be made available for the Legal Aid (Scotland) Bill, but again that is something that can best be pursued through the usual channels.
I agree that there will be great merit in arranging a debate upon foreign affairs as soon as reasonably practical and convenient after—
Mr. George Foulkes: The right hon. Gentleman says that every time.
Mr. Biffen: Of course I say it every time. It is the best thing that I have to say. The hon. Gentleman will not ultimately be disappointed in this matter.
I note the request for a debate on unemployment. It can be attended to through the usual channels.
I am happy that it was recognised that the Government fully identify the shipbuilding industry as being a matter of major industrial and current political concern. I am grateful that there is recognition of that in the debate that we have arranged. I note it is thought not to be of maximum convenience, but perhaps that is also something that we can look at through the usual channels.
Mr. Terence Higgins: With reference to Tuesday's important debate on the Privileges Select Committee report, has my right hon. Friend seen the inaccurate and misleading letter written to hon. Members by members of the parliamentary Lobby journalists which referred throughout to the leaking of a Select Committee report when in fact it was the leak of a draft chairman's report? As the coverage of this matter in the press has perhaps been less than balanced, will my right hon. Friend urge right hon. and hon. Members to read the full report and the evidence before taking a view on the matter?
Mr. Biffen: I have seen the letter, and, indeed, I suspect, most Members of the House have had that

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advantage. My right hon. Friend makes a pertinent commentary upon it, and it will be to the great advantage of the House if it has a chance to take account of those views.
Mr. David Alton: In view of the decision of the Central Electricity Generating Board not to publish the board of inquiry report into Hinkley Point, and in view of the decision of the nuclear inspectorate not to publish the 20-year inquiry report into the Magnox reactors, will the Leader of the House arrange for the Secretary of State for Energy to make a statement on both of those matters next week?
Mr. Biffen: I note the hon. Gentleman's request. Although we have recently had a wide-ranging debate on that topic, I shall certainly draw his remarks to the attention of my right hon. Friend the Secretary of State for Energy.
Mr. Robert Atkins: Is my right hon. Friend aware that information has recently come to light to suggest that the person who proposed the motion, subsequently taken up by the National Union of Journalists, to send condolences to President Gaddafi of Libya is a gentleman of Iraqi origin who is the head of the Libyan news agency, Jana, in London? He came to this country in 1978 as a political refugee, and was subsequently granted political asylum. Is not the fact that the NUJ paid attention to such an individual a shaming indictment of the activities of its leadership? Is it not about time that it apologised to the British public for its extraordinary antics?
Mr. Biffen: I suspect that very few hon. Members knew about that information, but it represents an interesting commentary on that resolution, and I am sure that there will be interest in the NUJ's reaction to it.
Mr. James Callaghan: May I reinforce the request of my right hon. Friend the Leader of the Opposition that the Government might reconsider the time that they have kindly given for a debate on the shipbuilding industry? Will the Leader of the House bear in mind that the fortunes of the shipping industry and the Royal Navy are bound up in the shipbuilding industry? Will he therefore consider giving a full day's consideration to that most important subject?
Mr. Biffen: I note what the right hon. Gentleman says, and I have no doubt that that, too, will be assessed by the usual channels.
Sir John Biggs-Davison: Is my right hon. Friend aware that I shall not trouble him today about the early-day motion concerning the miscarriage of justice in the Maguire case?
[That this House notes the widespread concern felt in Parliament by eminent scientists, by other responsible observers and by members of the public who have viewed programmes on the matter screened by Channel 4, that Anne Maguire, Patrick Maguire (senior), Vincent Maguire (then aged 17), Patrick Maguire (then aged 14), Sean Smyth, Patrick O'Neill and the late Giuseppe Conlon, sentenced in 1976 to long terms of imprisonment since served, now appear, despite confirmation of their convictions at the time by the Court of Appeal, to have been entirely innocent of the crime with which they were charged; further notes at the conclusion of a debate in the other place on 17th May 1975, the recognition by the
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Parliamentary Under Secretary at the Home Office of the strength of feeling on this twitter in that House and his pledge to draw the attention of the Secretary of State for the Home Department to what had been said: and therefore earnestly urges the Secretary of State for the Home Department in the interests of the highest standards of British justice of which this country needs to feel rightly proud, to move without delay for a review of these convictions, either under the provisions of section 17 of the Criminal Appeal Act 1968, or by such other public process of review as he may deem appropriate to this disturbing case.]
Instead, may I ask my right hon. Friend to recall the regret that he shared with me at the displacement of the Whitsun holiday by the spring holiday? Should not the House set a better example and not sit on a Whit Monday, thereby downgrading the birthday of the Christian Church?
Mr. Biffen: I think that I can just about recognise the outlines of a banana skin in my hon. Friend's final observation. I should like to give further thought to his well-intentioned observation. While reminiscing, I should point out that I did not immediately answer the Leader of the Opposition's question. But, in my judgment, my hon. Friend is absolutely right about how Hansard treated the remarks of Leo Amery.
Mr. Jack Ashley: Is the right hon. Gentleman aware that he did not sound very convincing when he said that he would welcome a debate on the under-funding of the NHS, because he then pleaded shortage of time? Does he realise that a debate would not simply involve London versus the rest? From our experience in north Staffordshire, we know that it simply is not true that other areas prosper while London declines. In north Staffordshire we have had red alerts every week bar one throughout the winter. London has had just one week of red alerts.
Mr. Biffen: Of course I appreciate that any debate on the NHS would be truncated if it referred merely to the health services in the London area. But I would have to accommodate such a debate within the discipline of all the other demands that are made on parliamentary time as we approach a period of peak demand.
Mr. Bob Clay: Will the right hon. Gentleman ask the Secretary of State for Trade and Industry to come to the House at the earliest opportunity to explain something that he said yesterday, during questions on the statement on British Shipbuilders? He said:
"If an adequate number of orders can be found to keep those yards open, that will be highly desirable and something that I would welcome. "—[Official Report, 14 May, 1986; Vol. 97, c. 716.]
Two hours before he said that, British Shipbuilders told the trade unions in Newcastle that, whatever orders were found, those yards would close and that the redundancies announced would go ahead. That has been checked and confirmed again this morning.
Does the Secretary of State know what is going on? Did he knowingly mislead the House? Who is in charge—the Secretary of State or British Shipbuilders, which seems hell-bent on running down the industry whether or not it obtains orders? Will the Secretary of State come to the House, because the matter cannot wait until the debate

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next week? People who are being made redundant and whose yards are threatened with closure want to know what is happening.
Mr. Biffen: The hon. Gentleman made a number of generalised accusations, including one against the good name of my right hon. Friend the Secretary of State for Trade and Industry. I reject any accusation of ill faith against my right hon. Friend.
The hon. Gentleman asked me to refer his remarks to my right hon. Friend, and of course I shall do so.
Sir Anthony Grant: Is it possible at some time to have a debate on constitutional matters during which we could perhaps discuss hung Parliaments and coalition Parliaments, among other things? In particular, the House could take note of the fact that people in Cambridgeshire and elsewhere who have experienced the horrors of a Lib-Lab coalition detested what they saw and decisively rejected it.
Mr. Biffen: The prospect of a convincing Conservative majority after the next election should lift from my hon. Friend all those agonies. Of course, I undertake to consider an interesting constitutional innovation, not least because it would be helpful if the Opposition parties, especially the Liberal and Social Democratic parties, were to be a little more forthcoming about how they would react to the situation outlined by my hon. Friend.
Mr. Robert Kilroy-Silk: Will the Leader of the House try to be a little more sympathetic to and forthcoming about the request of my right hon. Friend the Leader of the Opposition for an early debate on unemployment? Would it not be appropriate, on the day on which record unemployment figures have been announced, for the right hon. Gentleman to say that there will be an early opportunity to discuss the increasing and horrendous levels of unemployment on Merseyside, and in particular the recent redundancies in Kirby in my constituency? Is it not time that my constituents were given some semblance of an idea of what prospects the Government hold out of them ever having permanent, full-time employment?
Mr. Biffen: I think that I responded in a prudent and realistic manner to the Leader of the Opposition, and I would hope that he would feel that it was a reasonable answer.
Mr. Douglas Hogg: Will my right hon. Friend ensure that next Wednesday's debate on the NIREX special development order is at least a three-hour debate? I recognise that he is under no great pressure in that the Labour party is committed to this policy and the Liberal party chief whip has endorsed burial of nuclear waste in surface facilities—but I am not and do not. My constituents and those in related constituencies insist on having our case fully put, and one and a half hours is an insufficient time in which to do so.
Mr. Biffen: I take note of my hon. Friend's remarks. I think that the question of timing might reasonably be considered through the usual channels.
Mr. Willie W. Hamilton: In view of the widespread interest in Scotland in the Legal Aid (Scotland) Bill, will the right hon. Gentleman sympathetically consider
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the request by my right hon. Friend the Leader of the Opposition for further time to discuss that very important matter?
Mr. Biffen: I do not think that I can go beyond the reply that I gave to the Leader of the Opposition, but I have of course, noted the hon. Gentleman's remarks.
Mr. John Wilkinson (Ruislip-Northwood): Will my right hon. Friend bring forward to the earliest possible date the debate on the defence Estimates, because defence spending in real terms is to go down by 6 per cent. and there is also an urgent need for an expanded naval shipbuilding programme for strategic as well as good industrial and social reasons?
Mr. Biffen: I understand my hon. Friend's point. I am sure that he will realise that there is much merit in having the report of the Select Committee available before the debate takes place.
Mr. David Clelland: May I press the right hon. Gentleman once again on the need for an early debate on the funding of the NHS? Is he aware that the Prime Minister, on more than one occasion this week, has implied that the north of England is better off as a result of a reallocation of NHS resources?
Is the right hon. Gentleman aware that, despite that, the Newcastle district health authority has reported that there is no possibility of meeting its budget in either the short or the long term without ward closures? That has resulted in a proposal to close the Fleming memorial hospital, which for almost 100 years has provided highly specialised services for children.
The Prime Minister said that the north is better off. Will she explain that to those who rightly ask how, given that disastrous set of circumstances, the north can possibly be better off? Can there be an early debate so that the matter may be clarified?
Mr. Biffen: I am sure that the hon. Gentleman would not think it an unfair comment if I said that he has just presented a miniature speech rather than a request. However, I notice that it did include a request.
The Government have such a formidable case on the provision of hospital building and health services that we would be happy to have a debate, but its timing must be considered through the usual channels.
Mr. James Hill: At the Venice meeting of the Western European Union the Council of Ministers was reluctant to envisage any progress in the reactivation of WEU. Does my right hon. Friend agree that that should be the subject of debate in the Chamber as the WEU is the second layer to NATO?
Mr. Biffen: I understand my hon. Friend's attachment to the WEU. Indeed, the House has a long and enduring relationship with that body. The best that I can do in the first instance is to refer my hon. Friend's comments to my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs.
Mr. Nigel Spearing: Can the Leader of the House confirm that there will be only a single motion for the debate on the Privileges Committee report on Tuesday? As privilege is widely misunderstood—and not only outside the House—and as the recommendation links the alleged breach of privilege with a specific

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penalty, would it not be better for the House to take the alleged breach of privilege and the proposed penalty as separate questions?
Mr. Biffen: The motion has already been tabled and has appeared on the Order Paper for, I think, at least two days. Any other arrangements must be within the gift of the Chair.
Mr. David Harris: My question also relates to next Tuesday's debate on privilege. Given the importance of this matter both to journalists who work in this place and to hon. Members, can my right hon. Friend assure us that the debate will be taken at a reasonable time—perhaps 10 o'clock, and no later—and that there will be plenty of time to deal with matter?
Mr. Biffen: My hon. Friend makes a fair point. I think that the business that I have announced gives a clear indication of when we expect the debate to get under way. I take this opportunity to say that I hope that the length of the dabate will be broadly similar to that when The Economist issue was debated.
Mr. Jeremy Corbyn: Has the Leader of the House had an opportunity to study early-day motion No. 851 concerning the nuclear threat to Salisbury Plain occasioned by cruise missiles touring around Salisbury Plain last weekend?
[That this House notes that over the weekend period of 7th to 12th May a large convoy of military vehicles accompanied a cruise missile launcher around Salisbury Plain; regrets the danger to local people of this convoy; is appalled that roads around Tilshead were closed to prevent the public seeing the missiles; further regrets that a United States Army vehicle carrying messages to the convoy crashed in the churchyard fence at Tilshead Parish Church but congratulates those who were able to write peace signs on its side windows; and finally recognises that cruise missiles are not wanted in the United Kingdom.]
Does the right hon. Gentleman think that, in view of the denial of civil liberties to the people of that area through road closures, police presence and harassment and the sheer inefficiency of clogging roads with military vehicles for several days, the Secretary of State for Defence should come to the House and explain what the danger is to people in that area and the rest of the country rom those missiles touring around? Should not the Secretary of State also tell the House what he proposes to do to protect the people of that area from the massive police presence that seems to occasion American missiles every time they are let loose on our roads?
Mr. Biffen: I do not accept the hon. Gentleman's strictures on either the armed forces or the police. I shall, of course, draw the attention of my right hon. Friend the Secretary of State for Defence to the anxieties that the hon. Gentleman has expressed.
Mr. Michael Latham: Does my right hon. Friend realise that the Building Societies Bill completed its Committee stage at the end of February, yet we still await its Report stage? As this is an important and, indeed, growing part of the Government's housing policy, will my right hon. Friend please bring the Bill forward for Report as quickly as possible?
Mr. Biffen: I take note of what my hon. Friend has said. I know only too well the significance of the Bill for
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the building industry generally. As my hon. Friend can see, it does not feature in the business for next week, but I hope that it will not be too long delayed.
Mr. Ian Wrigglesworth: Will the Leader of the House give us an assurance that the debate on shipbuilding next week will be wide-ranging? Is he aware that the closure of Smith's Dock on Teesside, adding to the already record levels of unemployment in Cleveland, has been a devastating blow to the entire community? Will he provide an opportunity for Ministers from the Department of the Environment, the Department of Employment and other Departments who should be involved in the solutions to these problems to respond to the issues raised in the debate?
Mr. Biffen: I shall ensure that the hon. Gentleman's remarks are borne in mind by those who will draft the motion. The Ministers who will take part in the debate will be so drawn as to enable the debate to be dealt with in the broadest sense.
Sir Kenneth Lewis: May I support my hon. Friend the Member for Grantham (Mr. Hogg) in asking for increased time for the debate on nuclear waste that is to take place on Wednesday? Many Members have an interest in the matter and many will wish to contribute to the debate. After the Minister has spoken. there will not be much time left for Back Benchers. I believe that the debate should be given added mileage.
Mr. Douglas Hogg: Well done.
Mr. Biffen: I understand the point that has been made by my hon. Friend the Member for Stamford and Spalding (Sir K. Lewis), and elaborated on from a sedentary position by my hon. Friend the Member for Grantham (Mr. Hogg). Were it not for these remarks, "Speak for England" would have to rely on the Press Gallery.
Mr. Frank Cook: The Leader of the House will know that some weeks ago the Government published a report on irradiated food and its suitability or otherwise for the populace. He should know that representations have to be submitted by the end of July, and he should know also that the Minister responsible for these matters has refused to give me information which I consider it essential to have in my possession for any representations that I may make in response to the report. Will he tell me how, through the procedures of the House, I can get information which I consider to be essential?
Mr. Biffen: In the first instance, the hon. Gentleman might like to ventilate the matter in an Adjournment debate. The Minister would then be able to deal fully with the issues concerned in public view, as it were.
Mr. Hugh Dykes: Will my right hon. Friend the Leader of the House consider again the importance of having an economic debate, if not next week, then perhaps after the recess, not least because it would relate to some of the implications of his remarks which were made last Sunday on television, and because when we consider our position among OECD countries the alarming reality is hitting us more and more that we are the least investing country among the large and advanced economies, so called? Our rate of asset reinvestment is about one fifth of that which Japan is achieving, and its GNP is already much greater than ours. This is becoming a serious matter, not least for the unemployed.
Mr. Biffen: Today's unemployment figures clearly add to the general interest in economic affairs. I think that my hon. Friend will agree that the House has fairly frequent opportunities of debating economic matters, but I shall bear his request in mind. He will have heard that there are many other requests for debates against which his request will have to be taken.
Mr. Greville Janner: Will the Leader of the House reconsider his reply to me last week and his refusal to arrange for a debate, statement or inquiry into the murders and disappearance of British servicemen after their interrogation by German Army Group E—Kurt Waldheim being in charge of the interrogation—especially in the light of documentary evidence that is now available of British soldiers being sent for special treatment according to the Fuhrer's order—in other words, for their elimination? Surely this is a matter which the Government cannot turn aside by saying that it has nothing to do with them.
Mr. Biffen: The hon. and learned Gentleman has written to me on these matters and I have replied to him today.
Mr. Peter Bruinvels: Is my right hon. Friend the Leader of the House aware of an apparent flaw in the Surrogacy Arrangements Act 1985 whereby ladies entering into surrogacy arrangement contracts are being paid to keep a diary, such arrangements being contrary to the spirit of the Act? May we have an opportunity to debate that and the lack of provision currently for religious education in our schools? Many schools are offering peace studies rather than true religious education.
Mr. Biffen: I am sure that the issue raised by my hon. Friend would make the subject of a lively and constructive debate. I must ask him, however, to observe the demands for debates on a wide range of topics which have been made this afternoon. It would be misleading if I said that one could be arranged at an early date.
Mr. Allan Roberts: Is the Leader of the House aware that two and three quarter hours to discuss the special development order for the NIREX disposal site is entirely inadequate? Conservative Members who support the nuclear industry but do not want it in their back yard will wish to speak. Secondly, it will take two and three quarter hours for the alliance to explain how it agrees with the Labour party when it is in favour of an independent nuclear deterrent, which means that it is necessary to produce plutonium, which in turn makes it necessary to have reprocessing. The alliance is in favour of getting rid of Sellafield, but it would have to keep it to produce plutonium for the independent nuclear deterrent. Why was the alliance established, and why did members of the SDP leave the Labour party? Are they all unilateralists now?
Mr. Biffen: If all those matters really are the consequence of a special development order of the Department of the Environment, I understand why there is a request for more time. As I have said, the matter can be considered through the usual channels.
Mr. David Madel: Has my right hon. Friend noticed that wage negotiations in the electricity supply industry have broken down, with a threatened overtime ban on 25 May? As it is essential for
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the well-being of the nation that there is industrial peace in the electricity supply industry, will the Government arrange for a statement to be made next week to explain how they hope to help the management and unions out of their present difficulties?
Mr. Biffen: I do not think that anyone in the House will underestimate the serious implications of industrial action in the electricity supply industry. I am sure that everyone will wish the House to act in the most constructive way possible to secure an early resolution of the dispute. I shall refer my hon. Friend's remarks to my right hon. Friend the Secretary of State on when it might be appropriate to make a statement.
Mr. Leo Abse: May I again draw the attention of the Leader of the House to the early-day motion standing in my name, which has been signed by 101 Members, relating to family courts?
[That this House welcomes the establishment of the Family Courts Campaign to promote the early implementation of family courts, following the support for family courts recently expressed by the Law Society, the Association of County Councils, the Association of Directors of Social Services and many other bodies; welcomes the recommendations of the report of the Matrimonial Causes Procedure Committee, particularly those relating to the establishment of conciliation in matrimonial proceedings; notes with concern that the report of the Law Commission on Family Law, Illegitimacy, has yet to be implemented: further notes that the joint study set up in July 1984 by the Lord Chancellor and the Secretary of State for the Home Department to reexamine the idea of a unified family court, and study the resources implications in terms of finance, manpower and accommodation is due to be published shortly; regrets that this study has been so long delayed; and urges the Lord Chancellor and the Secretary of State for the Home Department to come forward with proposals for legislation at the earliest opportunity, following the publication of their report and their subsequent consultation on the most appropriate model for implementation.]
Bearing in mind the legitimate anxiety expressed yesterday by HRH Princess Margaret and the widespread belief—I do not know why the right hon. Gentleman is smiling—that there is a need for a genuine family court if we are to deal with the problems of child abuse and child neglect, will he provide an opportunity for a debate during which we shall be able to discuss the arid and legalistic report that was issued this week—as arid and legalistic as is The Times editorial this morning—and reflect public opinion, thereby showing the wide gap on this issue between the legalistic bureaucrats in the Lord Chancellor's Department and the Treasury and the House?
Mr. Biffen: The smile that crossed my face was one of appreciation and admiration of the skill with which the hon. Gentleman develops his argument and his case, which from now onwards will have "By Royal Appointment" stamped well and truly upon it. I shall consider his request for a debate, but he will know the difficulties that face me. I appreciate that the issue which he has raised has a real House of Commons interest.
Mr. Harry Greenway: Will my right hon. Friend make arrangements for an early debate on the most important Audit Commission report on education,

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which calls for the closure of 1,000 comprehensive schools over the next few years and the consequent redundancy of 5,000 teachers per year in addition to natural wastage, as well as making the valuable suggestion that there should he better payment of extra good teachers? This is a crucial report for the country generally and for the education service especially. I should be grateful if my right hon. Friend would arrange an early and wide-ranging debate upon it.
Mr. Biffen: I cannot in all conscience promise that there is the prospect of an early and wide-ranging debate on the report. I shall draw the remarks of my hon. Friend to the attention of my right hon. Friend the Secretary of State for Education and Science. I know that there will be genuine public interest in any proposal which involves such massive school closures.
Mrs. Renée Short: May I reinforce the argument of my hon. and, in view of his recent activity perhaps I should say learned, Friend the Member for Torfaen (Mr. Abse) about the need to debate a family court structure? I remind the Leader of the House that the Select Committee, in its report on the care of children, made a strong recommendation in recommendation 36 that this issue could he examined. In view of the time that has been taken by the Lord Chancellor, does not the right hon. Gentleman think that it is high time to debate the issue in the House so that hon. Members can give guidance to the Government on what they feel should be introduced?
Mr. Biffen: I understand the point that the hon. Lady has made. She brought to the argument the authority of the Chairman of the appropriate departmental Select Committee. I do not think that I can go beyond what I said earlier.
Mr. Michael Brown: I reinforce the request that has been made by other hon. Members. I am grateful to my right hon. Friend the Leader of the House who said that he will consider the matter through the usual channels. If he uses the usual channels for that purpose—bearing in mind that, during the recent debate on nuclear policy the Labour party and the Liberal party clearly acknowledged that they would go along with the special development order—he might receive the wrong answer. How will he use the usual channels for the request? Hon. Members are involved at a constituency level.
Mr. Biffen: I note charitably what my hon. Friend has said. but I think that he should be a little cautious before trying to elevate himself into a usual channel—it is not that great a life.
Mr. David Penhaligon: Is the Leader of the House aware that yesterday the Minister of State, Department of Trade and Industry informed Cornish Members that a final decision on at least one tin mine would be made in the first week of June? Does that mean that we cannot have a debate in the House before the final decision is made? Although we understand why we are having a debate next week about shipbuilding, will the Leader of the House explain to those who live in Cornwall why not one moment has been found in the past six months to discuss the tin industry?
Mr. Biffen: The matter has been considered by a departmental Select Committee. Its report and the
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Government's reactions to it ought to be a precondition for a debate. I take account of what the hon. Gentleman has said. I realise only too well that the matter is of immense significance in the Duchy.
Mr. Edward Leigh: My right hon. Friend may recall a debate some weeks ago initiated by my hon. Friend the Member for Grantham (Mr. Hogg) on the Nuclear Industry Radioactive Waste Executive order. Because of a brilliant but somewhat lengthy speech by my right hon. Friend the Member for Castle Point (Sir B. Braille), I was unable to speak. As I and some of my hon. Friends intend to vote against the order, it is vital that we are given an opportunity to speak. Therefore, I earnestly request the Leader of the House to allow a three or four-hour debate.
Mr. Biffen: I will convey to my right hon. Friend the Patronage Secretary the fact that my hon. Friend intends to vote against the Government. I will also take account of the fact that he seeks an extended time for the debate.
Mr. Allen McKay: Does the Leader of the House consider that, in view of the obvious unease and disquiet about the problems that have occurred in the nuclear industry, it is time that we had a debate on the coal mining industry before we run into the 1960s danger of wasting millions of pounds investment? As the Government wish to turn the coal mining industry into a market situation, and as we are waving goodbye to the old chairman and welcoming the new chairman, does the Leader of the House agree that this is an appropriate time to state the House's position on an overall energy policy based on what we know is a safe fuel—coal?
Mr. Biffen: I said earlier that the hon. Gentleman made a persuasive case for the coal industry even though his remarks were, by necessity, somewhat brief. I cannot promise the prospect of an early debate on the coal industry, for reasons that have been apparent this afternoon. Many demands are being made on Government time. That does not in any sense diminish the importance of the point that the hon. Gentleman has made. I will see that it is conveyed to my right hon. Friend the Secretary of State for Energy.
Mr. Richard Hickmet: I refer to the request for a debate on NIREX and the special development order. The issue involved has caused great concern to the three or four parties that are affected. More than 120·000 people have signed a petition in Humberside, principally in south Humberside. I understand that the petition will be presented to the House of Commons on Wednesday. County councils, borough councils and district councils have had numerous public meetings which were attended by all my local hon. Friends who have spoken this afternoon. I strenuously urge my right hon. Friend to allow the debate to take place over three or four hours. The arguments against the NIREX proposals will be advanced only by Conservative Members. My right hon. Friend knows that they will not be advanced by the Opposition, because the hon. Member for Copeland (Dr. Cunningham) has already given his view that a shallow—based disposal facility is satisfactory. Unless a three-hour debate is granted, the issues will not be satisfactorily canvassed by those hon. Members who are affected.
Mr. Biffen: I have said that the matter can be consiered further through the usual channels. I assure my hon. Friend that I shall make certain that his views are considered.
Mr. Tam Dalyell: I ask the Leader of the House a question of which I gave him notice for a considered reply. In view of Roger Todd's well-researched article on the sinking of the Sheffield in the Daily Mirror, has the time come for discussion of the major minority report of the Select Committee on Foreign Affairs on the events of 1 and 2 May 1982?
Mr. Biffen: I am grateful to the hon. Gentleman who, with characteristic courtesy, informed me that he would raise the question. I will consider further the possibility of a debate on the Select Committee's report. It can be discussed through the usual channels.
Mr. John Browne: Does my right hon. Friend accept that, on remarriage, a war widow loses for ever her entitlement to a war widow's pension, and that on the death of any subsequent husband she cannot claim it with effect from that day? Is it not time that we had a debate on the subject of war widow's pensions so that we can discuss not only the level but the mechanics of entitlement that make the payment fairer, because at the moment widows are discouraged from remarrying?
Mr. Biffen: I agree entirely with what my hon. Friend has said. He has been a most effective campaigner for war widows. He is more likely to bring the matter to the Floor of the House through the technique of an Adjournment debate than a general debate because, quite frankly, I do not think that there is time available.
Mr. Doug Hoyle: Does the right hon. Gentleman recall that on 27 March I drew his attention to early-day motions 204 and 217?
[That this House notes with concern that speech therapists, members of a highly-skilled caring profession, discharging a wide range of responsibilities, are underpaid in comparison with other National Health Service professionals doing work of equal value; notes also that speech therapy is traditionally a female profession; and calls upon Her Majesty's Government to provide sufficient funds to enable speech therapists' salary levels to be increased so that speech therapists receive equal pay for work of equal value.]
[That this House expresses its appreciation of the valuable work performed by speech therapists; and, in expressing its concern that decreasing comparative salary levels will dissuade the ablest of individuals from entering this profession, calls upon Her Majesty's Government to ensure that speech therapists are remunerated at a level equal to that of other graduate specialists within the National Health Service.]
The motions were signed by 119 and 87 hon. Members, respectively, on both sides of the House. At that time I told the right hon. Gentleman that there was a demand for a statement to be made by his right hon. Friend the Secretary of State for Social Services. The Leader of the House, in his usual courteous and balanced way, said that he would draw the attention of his right hon. Friend to the demand. What has been the result of his representations?
Mr. Biffen: I think that I must have notice of that question.
Mr. Richard Holt: I reinforce the views of my hon. Friend the Member for Ealing, North (Mr.
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Greenway) in his request for a debate on education. Yesterday, Smith's Dock in Langbaurgh was closed and, for the second time in three years, an axe is hanging over schools in my constituency. It was reported today that a further 1,000 schools are liable to close in future. That cannot help young people in my constituency who saw their jobs disappearing yesterday and are seeing their schools disappearing today.
Mr. Biffen: My hon. Friend rightly alerts the House to what will be a general anxiety about a report which contains massive school closure proposals. However, they are just proposals from an advisory body. More generally, I refer him to the answer I gave earlier to my hon. Friend the Member for Ealing, North (Mr. Greenway).
Mr. John Ryman: Last week I asked the Leader of the House a question about regional aid and the Government's policy, especially on the north-east region. The Leader of the House gave a reply which, unwittingly, was slightly helpful. Given the niggardly amount that the Government gave the north-east by way of regional aid, will he take whatever steps are necessary to ensure that the distribution of regional aid is efficient and quick?
Is the right hon. Gentleman aware that a company in my constituency, Laceintel Ltd, has applied for regional aid which is desperately required to pay for industrial machinery and has to be paid by the end of next week? Unless the application is considered and granted by the end of next week, 55 jobs will be in jeopardy. Will the right hon. Gentleman have a word with the Secretary of State for Trade and Industry about the matter and see whether he can expedite the consideration of the application?
Mr. Biffen: I shall certainly refer the problems outlined by the hon. Gentleman to my right hon. Friend the Secretary of State for Trade and Industry.
Mr. Ray Powell: Is the right hon. Gentleman aware of early-day motion 845 in the name of my right hon. and hon. Friends?
[That this House regards with astonishment the refusal of the Secretary of State for Wales to meet Ogwr Borough Council about the critical job losses it has suffered, and about the need to restore development area status, the case for which was fuelled by the crisis created by the Ford announcement; regards this grave discourtesy to a major Welsh council as breaking the traditional availability of the Welsh Office Ministers to Members of Parliament and to the councils; and warns the Secretary of State that though he has slammed the Welsh Office doors in the face of the people of Wales he cannot hide indefinitely behind those doors from the wrath of the very people whose interests he should represent and champion.]
It concerns the refusal of the Secretary of State for Wales to meet Ogwr borough council to discuss the downgrading of development area status. If the right hon. Gentleman is not prepared to allow a debate next week on this vital issue, will he raise the matter in Cabinet to highlight the arrogance that is rubbing off the Prime Minister on to the Secretary of State for Wales? The Secretary of State will not meet the borough council. On Tuesday afternoon, 50 Ogwr borough councillors attended the House of Commons for the purpose of meeting the Prime Minister, the Secretary of State, or any other Tory Member of Parliament, yet not one of those invited turned up.
Mr. Biffen: I totally reject the hon. Gentleman's personal imputations against the character and behaviour of my right hon. Friends the Prime Minister and the Secretary of State for Wales. I do not believe that my right hon. Friend the Secretary of State has acted in this matter with any discourtesy. I cannot accept the hon. Gentleman's strictures.
Mr. Tony Lloyd: The right hon. Gentleman will be aware, even if he does not share the concern of many people, of the failure of the Department of the Environment and the Scottish Office to publish adequate information on radiation levels during the Chernobyl incident. Is he aware that my hon. Friend the Member for Fife, Central (Mr. Hamilton) asked in a written question about maximum radiation levels which was answered in yesterday's Hansard? In that written answer, the Department of the Environment failed to do more than give details of average levels of radiation. Of course, those details are totally useless. Do the Government intend withholding information, or will the right hon. Gentleman ensure that Members of Parliament have access to such information?
Mr. Biffen: My right hon. Friends the Secretary of State for the Environment and the Secretary of State for Scotland have acted with great sensitivity and responsibility in this matter. I do not accept that there has been any sort of radiation information cover up. Of course, I shall refer the hon. Gentleman's anxieties to them.
Mr. Robert Parry: Has the Leader of the House seen early-day motion 844, which is supported by hon. Members on both sides of the House about the Charity Shield 1986?
[That this House, appreciating the excellent crowd behaviour, the true sportsmanship and the high standard of entertainment by the Everton and Liverpool football teams at the 1986 Cup Final, calls upon the Minister for Sport to ask the Football Association to allow Everton to participate in the 1986 Charity Shield; notes that Everton were runners-up in the First Division championship and the Challenge Cup and were participants in the 1984 and 1985 Charity Shield with similar excellent crowd behaviour, and rejects the suggestion that a foreign team should replace Everton in this traditional English charity event.]
We are delighted that Everton football club, and not a foreign team, will participate in the matches. Has the right hon. Gentleman seen early-day motion 840, which was tabled by, among others, my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), which concerns the excellent behaviour of the Liverpool and Everton football clubs at the 1986 Football Association cup final?
[That this House congratulates Liverpool Football Club's team under Kenny Dalglish's managership, in winning the 1986 Football Association Cup Final; further congratulates Everton Football Club's team, under Howard Kendall's managership, for their great football and fine team spirit; believes that both teams and their supporters are a real credit to football in the United Kingdom and to the people of the City of Liverpool and Merseyside in particular; notes that the behaviour of the Liverpool and Everton football supporters at Wembley deserve praise from the police, proving that football crowds can be good-humoured and well-behaved and that they need not involve themselves in any form of violence;
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and concludes that the way in which almost half a million of the people of Liverpool turned out, Liverpool, Everton and non-club supporters alike, to greet the two dubs on their return to Liverpool, is proof beyond doubt that, despite all the problems of the Merseyside area, the spirit of the people remains good and that they deserve the support of the whole country.]
Will the right hon. Gentleman ask the Minister with responsibility for sport to make representations to the FA to support the re-entry of English teams in European competitions in the 1987–88 season?
Mr. Biffen: Because we all like to get on this bandwagon, I should like to say that I congratulate Merseyside on a good year for football, whatever else has happened.
Mr. Dave Nellist: What about Shrewsbury?
Mr. Biffen: I have not congratulated Shrewsbury. I am showing a shrewd sense of realism. If one lives in Oswestry, one is as likely to look north-west as south-east. I shall, of course. take up the hon. Gentleman's other point with my hon. Friend the Minister with responsibility for sport.
Mr. D. N. Campbell-Savours: Is it not true that someone on the Select Committee on the Environment has lied and, and in doing so, has dropped a journalist in the cart?
Mr. Biffen: I think that that is a point to be made in Tuesday evening's debate.
Mr. Martin J. O'Neill: Does the right hon. Gentleman remember that, two weeks ago, I asked him to put in the Library a copy of the contract for the Trident submarine or to hold a debate on the issue? I in no way doubt the strenuousness of the right hon. Gentleman's efforts to fulfil either or both of those requests, but does not his inability to achieve this show the type of difficulties that the Daily Mirror has had to face in obtaining information about the sinking of the Sheffield? Should not a Defence Minister make a public statement in the House about the serious allegations in today's Daily Mirror about the deaths of 20 service men. if only to comfort the parents and families of those poor men?
Mr. Biffen: The hon. Gentleman has taken up the point raised by the hon. Member for Linlithgow (Mr. Dalyell), although the hon. Gentleman seeks a statement. I shall, of course, refer his request to my right hon. Friend the Secretary of State for Defence.
Mr. Stuart Bell: In a comment which appears now to have been a long time ago, the Leader of the House upheld yesterday's remarks to me by the Secretary of State for Trade and Industry—notably that, if orders from China and Cuba were consummated. Smith's Dock on Teesside and other shipyards would remain open. That is very good news for my constituents who live in Middlesbrough. The information that we are negotiating with Cuba for an order for four vessels is most welcome. Will the right hon. Gentleman draw the attention of the Secretary of State for Trade and Industry to those facts? Will they be included in the debate next week?
Mr. Biffen: I take note of the hon. Gentleman's points. I shall certainly convey his remarks to my right hon. Friend.

Prime Minister's Question Time
4.35 pm
Mr. John Stokes (Halesowne and Stourbridge): On a point of order, Mr. Speaker. Earlier this afternoon you made some remarks about the conduct of the House during Prime Minister's Question Time. If I heard you correctly, you said—I am merely paraphrasing—that a certain amount of noise was inevitable in view of our customs and traditions, and that cheering was in order. I think that those remarks will have been heard with dismay by the many hundreds of thousands of those who listen to "Today in Parliament" or "Yesterday in Parliament", who think that already there is far too much noise during Prime Minister's Questions.
Not only foreigners, but English people, cannot understand it when, before the Prime Minister has time to reply to an Opposition question, there is so much shouting on the Opposition Benches that she has to repeat herself two or three times and shout. That happens in no other country or kingdom. Although I am all in favour of rumbustiousness here, surely what happens during Prime Minister's Question Time has gone too far and should be reined in.
Mr. Speaker: As the hon. Member has raised this point, I point out that I was making a distinction between cheering and jeering.
Mr. Neil Kinnock: Further to that point of order, Mr. Speaker. I realise that piety and self-righteousness are not among the attributes of the hon. Member for Halesowen and Stourbridge (Mr. Stokes). He appeared in his last contribution to stray, giving the impression that this side of the House is guilty of conduct that is inclined or intended to drown the contributions of the Prime Minister or of any other hon. Member. If the hon. Government were prepared to acknowledge—I note that he is listening—that this is a general fault, frequently repeated by the Conservative Benches, perhaps we could raise the standards of conduct by Government example.
Mr. Speaker: I subscribe to those views. Prime Minister's answers should generally be heard in greater silence. The point I was trying to make was that the "Hear, hears"—which are, I understand, the true interpretation of "Hear him", or perhaps even "Hear her"—have been traditional in the House for many centuries.

Special Development Order
4.37 pm
Mr. Douglas Hogg: On a point of order, Mr. Speaker. I seek your guidance on your powers under Standing Order No. 4. As you will know, from what my right hon. Friend the Leader of the House said, next Wednesday we are to have a debate on the NIREX special development order. You may feel that there is a cosy agreement between the two Front Benches to limit the debate to one and a half hours. This may be because the Labour party, too, supports the policy of disposing of low-level nuclear waste in a shallow burial facility. It is the policy of the Liberal Chief Whip as well.
A number of constituencies are affected, and Fulbeck in my constituency is included. Our constituents would never forgive the House if their case was not fully argued. Under Standing Order No. 4, the debate on a prayer of this type ends automatically at 11.30 pm. As I understand it, Mr. Speaker, you have a residual discretion under the provisions of the Standing Order, if you hold that this is an important matter which has not been adequately discussed, to adjourn the debate for further argument. If the representatives of the affected constituencies—
Mr. Richard Hickmet: And those of neighbouring constituencies.
Mr. Hogg:—and the representatives of neighbouring constituencies—they will be the only ones putting the argument—are not called, will you consider sympathetically an invitation to invoke your residual power to adjourn the debate?
Mr. Speaker: That is a hypothetical question. Of course I shall do that; I always do.
Mr. Michael Brown: Further to that point of order, Mr. Speaker. I am sure you will have noticed the number of requests made to the Leader of the House. It is reasonable to assume that all those hon. Members might seek to catch your eye during that debate. During a one and a half-hour debate, it is reasonable to assume that not all those who this afternoon have made the case for a longer debate will be called, and they will very
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much welcome you using your power under the Standing Order referred to by my hon. Friend the Member for Grantham (Mr. Hogg). I urge you to recognise that the debate on Wednesday is the only opportunity that we have to draw to the attention of the House the total and unanimous opposition of large numbers of people in four communities in the United Kingdom.
Mr. Neil Kinnock: Further to that point of order, Mr. Speaker. I was under the impression earlier today that we were to have a three-hour debate on that prayer. I do not know from where I gathered that view. I had to be corrected by my hon. Friend the Chief Whip of the Parliamentary Labour party. If it would assist in any way, may I say that I and my right hon. and hon. Friends are disposed to agree to the prolongation of that debate, as this issue is of considerable importance to both sides of the House. I hope that even without invoking your intervention the Government will reconsider their business. I am sure that a three-hour debate would bring widespread satisfaction.
Mr. Edward Leigh: Further to that point of order, Mr. Speaker. This is an important matter and you are about to give an important ruling. You might at this stage say that you will adjourn the debate, because there are no Members of the Liberal party in the Chamber. They clearly do not care at all about the matter that we are to debate.
Mr. Speaker: That is also a hypothetical question. It may be of some comfort to the hon. Gentleman to know that during the debate I shall certainly bear in mind those who were not called in previous debates.

Spring Adjournment (Debates)
Mr. Speaker: I remind hon. Members that on the motion for the Adjournment of the House on Friday 23 May up to eight hon. Members may raise with Ministers subjects of their own choice. Applications should reach my office by 10 pm on Monday next. A ballot will be held on Tuesday morning and the result will be made known as soon as possible thereafter.
Orders of the Day
  Wages Bill
  As amended (in the Standing Committee), further considered.
  Wages Bill
    New Clause 1

      YOUNG PEOPLE
      'Employers of workers under the age of 21 who undertake the same work as adults who are protected by Wages Councils Orders made under Part II of the Act shall pay such workers at least 70 per cent. of the minimum rate laid down in the Order and shall charge no more for accommodation than is allowable for adult workers.'.—[Ms. Clare Short.]
      Brought up, and read the First time.
      4.42 pm
      Ms. Clare Short: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Harold Walker): With this it will be convenient to take the following: New clause2—Disabled workers—
      'The provisions of Part II of this Act shall not apply to registered disabled workers.'.
      Amendment No. 54, in clause 12, page 12, line 4, at beginning insert—
      'With the exception of the special protection provided for registered disabled workers.'.
      Amendment No. 58, in clause 12, page 12, line 23, leave out subsection (3).
      Amendment No. 81, in clause 13, page 12, line 35, at end insert—
      '(aa) the welfare of mentally or physically disabled workers in relation to whom the Wages Council concerned would cease to operate'.
      Ms. Short: Today we move on to part II of the Wages Bill. Yesterday we made it clear that part I would lead to many workers, innocent of any offence, facing fines and deductions from their pay and having no adequate remedy to deal with that. It will also force many workers who are currently paid in cash and wish to continue to be paid in that way to move, without negotiation or consultation, to cashless pay. All of that is bad enough. We now move to part II of the Bill, which is much worse.
      It is designed to cut the wages of some of Britain's poorest workers. There are about 3 million of them, and all of them will suffer. They are the workers protected by wages councils—special machinery established long ago and supported by all political parties to ensure that some of the poorest workers do not see ever-worsening rates of pay as worse and worse employers move into industry and undermine the pay that decent employers wish to give.
      The Government are determined to change the little protection that those workers have. They say that it is necessary to cut the pay of the poorest workers in order to create more jobs. That is not true. If we all took a cut in pay there would be more unemployment and further deflation of the economy. Of course, part of the current problem is that the economy is too deflated already. It is obvious, on all international comparisons, that Britain's wages are very low.
      The Government argue that we would compete better internationally if our wages dropped even further, so their argument is that we must compete with some of the poorest
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      countries in the world paying incredibly low rates. That points us towards a real sweat-shop economy instead of towards the virtuous cycle that we should adopt of high investment, high skill training and high wages.
      If the Government believe that thesis—we do not accept that wage cuts will create more jobs—why do they not ask those who can afford it best to accept wage cuts? Since the Government came to power the 20 per cent. of best paid workers have increased their incomes considerably. They have experienced considerable tax cuts which, accompanied by an increase in earnings have, led to an enormous increase in their standard of living. The lowest paid 20 per cent. of workers have, since 1979, seen a net drop in their standard of living. The increase in their pay has been less than the rate of inflation, and they are poorer now than they were in 1979.
      The Government tell us that the rich need more incentives in order to work harder and in order that our economy should be more efficient. They have the cheek to tell us that the poorest workers should be paid less in order to help to deal with the problem of unemployment. That is outrageous. It is pure dogma and there is no evidence for their case. It is an attack on the poorest workers.
      New clause 1 deals with the attack on the young. Five hundred thousand of the 3 million poorest workers are young workers, one in five of all young workers in Britain. The Government propose that in future there will be no protection for young workers. One would think that the opposite would be the case. One would think that in any decent country there would be care and concern to ensure that the young, who lack experience and might be more easily exploited, are protected when they first go to work so that they can start their adult working life within decent structures and with decent working conditions.
      The International Labour Organisation was deeply shocked by Britain's move. We had to resile from the treaty so that the Government could introduce this legislation. The ILO told us:
      "Almost all countries in the world now operate a minimum wage system and none to our knowledge excludes young workers."
      Therefore, all the developed countries of the world and many Third-world countries manage to have a minimum wage system to protect their young workers. Henceforth, Britain does not intend to do so.
      A myth has been put about simply by the constant repetition of the falsehood that high youth unemployment in Britain is due to high youth wages. That does not stand up to scrutiny. The movement of youth wages over a long period of time does not show that there is any connection between movement in youth wages and movement in youth unemployment. In fact, since 1979 youth unemployment has doubled and youth wages have dropped considerably. Of course, the Government are not content with that and wish to see even further drops in the pay of our young people.
      What are the princely sums that the Government consider too high? The sums allocated to young workers under existing wage orders are £40 to £50 per week. I do not know whether Conservative Members understand that after tax and national insurance and after bus fares and meals have been paid for, the young people are left with very little more than they would receive on supplementary benefit. They are working for very little simply because they wish to work.

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      In Committee we witnessed crocodile tears about the Tory party's concern for the young unemployed. Conservative Members told us how deeply worried they were and how the only answer for our young people was that their wages should be cut so that more of them might get jobs. It is true that our young people are desperate. It is true, for example, that the suicide rate for young people is rising faster than for any other age group. It was proved, I believe, by research studies at Leicester university a couple of years ago that there is a link between youth unemployment and the suicide rate among our young people. There is no doubt that they are desperate and that they are suffering. The Government intend to exploit that desperation to lever their wages down even further.
      Mr. John Maples: In Committee, the hon. Lady consistently misrepresented that argument. Surely the purpose is not to push down young people's wages; it is to attempt to create more jobs for young people by not setting artificially high minimum wage levels. It is entirely different.
      Ms. Short: The argument is exactly the same. The words that are used are different. The hon. Gentleman says that if youth wages go down, there will be more jobs. That means that young people who are in work now on low wages will get lower wages. There is no evidence that there will be more jobs for young people. Inevitably, the poor low-paid young worker will be even poorer and even lower paid. At the moment wages councils set rates for them. The Government say that those rates are too high and want lower rates to be set. That is the purpose of the part of the Bill that we are contesting in the new clause.
      The Government have been at this for a long time. They have tried all sorts of measures to lever down youth wages. The first was the deliberate adoption of policies to increase unemployment and make workers, including young people, settle for lower wages. The most blatant was the young workers scheme, which gave a massive subsidy to encourage employers to cut youth wages—£15 a week if they paid less than £40, under the scheme's initial form. We learned from that that a high proportion of the jobs that were subsidised would have existed anyway. So the whole expensive scheme was not generating new jobs.
      Of the jobs that were generated—about 10 or 20 per cent. at most of the jobs that were subsidised—the vast majority were previously adult jobs. An adult was thrown out of work so that a young subsidised worker could be taken on. In so far as the Government's proposal creates a marginal increase in jobs for young people, it is at the expense of adult workers. The mothers will be thrown out. There is an overwhelming number of women workers in low-paid employment. They will be thrown out of work so that young people can be taken on at disgracefully low rates of pay. They in turn will be thrown out when they reach 21 so that some other desperate young person can be taken on for an unacceptably low rate of pay.
      New clause 2 refers to disabled people. There are many disabled young workers. Under the Wages Councils Act 1979 scheme, disabled workers had to be paid the legally required rates unless there was an application for an exemption, arguing that there was some reason why a disabled worker could not work as efficiently as another. All wages councils were careful to ensure that disabled workers were not exploited. Only about 80 licences per year were granted to enable employers to pay less than the
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      legal minimum rate. In sweeping away the protection for all workers under 21, the Government are sweeping away protection for disabled young workers and saying that it is a free market and that employers can exploit young disabled people as much as they like and pay them whatever they like. It is a free rein for the market. It is outrageous and sickening.
      The Government pretend that they are making the change because they care for the young and want to help them to work. It is not true. If it were, there would be a change in economic policy. Without that, we shall not acccept any argument from the Tory Benches that pretends for one minute that they have any concern for the unemployed. The truth is that, all over the developed world, when unemployment rises, youth unemployment rises more rapidly because young workers are marginal and lack skills and experience. When employers are not recruiting, it is the young whom they will not recruit first. The way in which to reduce youth unemployment is to lower the general level of unemployment. In every developed country, when unemployment falls, youth unemployment falls rapidly. The only way in which young workers will get back into jobs is through a change of economic policy which generates jobs for all young people.
      Mr. Geoff Lawler: I thought that by now the hon. Lady would have accepted the economic realities of life. If what she says were so, why, in Germany, where there are more realistic wage levels for young people, is youth unemployment about the same proportion as general unemployment, whereas in this country it is about twice as high?
      Ms. Short: I am afraid that the hon. Gentleman is not well informed about Germany. Rising unemployment hit Germany later than it hit this country. The application of monetarism came to it later. When unemployment rose, youth unemployment rose too. The pattern is the same throughout the EEC: a study of some years ago documents it.
      Mr. Dave Nellist: May I add to my hon. Friend's explanation? The Tories put forward the fallacy that young people's wages as a proportion of adult rates are less in Germany than in this country. That fallacy is clouded by the fact that the hourly manufacturing earnings of workers in Germany are at least 40 per cent. higher than in this country. The reason why unemployment rose at a slower pace in Germany is that in the late 1970s and early 1980s the Government expelled over 1 million gastarbeiter back to countries such as Spain and Turkey. Is that the Tories' solution—to expel 1 million of the immigrant workers in this country to reduce unemployment?
      Ms. Short: I am sure that hon. Members are listening to my hon. Friend's points.
      The Government's policy is immoral. It is immoral to attack the poorest and to seek to generate greater inequality. The Government have achieved a massive increase in inequality since 1979. The Bill is intended to take it further and make poor workers even poorer. II is based on an economic fiction. The Labour party is absolutely opposed to everything that the Government are seeking to do in part II. We are committed to reversing it.

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      The way things are going, we expect to do it quite soon. We in the Labour party will introduce a national minimum wage with appropriate rates for young people.
      The Tory party should be deeply ashamed of itself in seeking to attack the living standards of the poor, the young, young black workers, women workers and disabled workers. That is what they are doing in part II. New clause 1 is an attempt to reverse some of that damage.
      The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): We intend to have a reasonably short debate, but this is an important issue which goes to the root of the Bill. My hon. Friend the Under-Secretary will reply to the debate and concentrate on the new clause and amendments concerned with disabled workers.
      The hon. Member for Birmingham, Ladywood (Ms. Short) has just made her case on behalf of the Labour party, but, as my hon. Friend the Member for Lewisham, West (Mr. Maples) said, she puts the case for and against the Bill in a curious way. The Government have made it clear throughout that our objective in introducing the Bill is to increase employment opportunities, particularly for young people. Although the hon. Lady speaks with considerable passion, I cannot believe that she really thinks that we are motivated by a curious desire to drive down wages for its own sake or to extend the rate of poverty. The language that she uses always implies that.
      More worrying than the eccentricity of approach that that betrays is the fact that the hon. Lady seems to be going back to a position where she almost completely denies any link between rates of pay and employment prospects. She brushes aside remarks about comparative rates of pay for young people and employment—
      Mr. Nellist indicated assent.
      Mr. Clarke: I see the hon. Member for Coventry, South-East (Mr. Nellist) nodding vigorous assent. I shall come back to that matter in a moment. I wonder where the new realism of the Labour party has gone. We are back into a new higher wage campaign regardless of the impact on employment in general, and particularly that of young people.
      New clause 1 goes in totally the opposite direction to our proposal to enable young and inexperienced workers to take a wage that is more likely to induce the employer to offer them their first step into the labour market. The new clause suggests that we should retain an arbitrarily fixed rate of pay for young people who are regarded as undertaking the same work as adults. It does not explain how on earth we shall determine whether the young person is doing the same work as an adult, but, from remarks made yesterday, it appears that we shall have something along the lines of equal value for equal work being determined by tribunals.
      The new clause suggests that a definite relationship between young people's earnings and those of adult workers should be fixed by the wages councils, which is not so at the moment. It says that at least 70 per cent. of the adult rate should be paid to 16 and 17-year-olds. That is driving up the relationship between young people's and adult wages, compared with the present position. No fixed minimum for young people is provided for in the existing legislation. The existing wages orders lay down an average
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      of about 65 per cent. of the adult wage for 16-year-olds. The Labour party's new clause would immediately increase the pay of those who have come straight out of school and bring it nearer to the pay of experienced adult workers. The hon. Member for Ladywood speaks with great sincerity and passion, but she is fervently arguing for a change which would deny job opportunities to very many young people.
      5 pm
      Mr. Michael J. Martin: The Paymaster General must know that a three-year apprenticeship for young people is recognised by certain industries. If somebody leaves school at 16 and completes a three-year apprenticeship. he could be doing the work of a skilled worker before he reached the age of 21. Is the Paymaster General saying that the employer will pass on to the customer the saving that he makes by employing a young worker or will he put it into his own pocket? That would be exploitation.
      Mr. Clarke: There is nothing to prevent employers in any industry from moving a young employee on to the full adult wage as soon as that employee is making as full a contribution as an adult worker. Apprenticeships lead people on to fully qualified craft rates, but that does not apply to wages council industries. Apprenticeships do not need to be backed by law. We are dealing with a provision that would make it obligatory for a 16-year-old to be paid 70 per cent. of the adult wage. Given the choice, all employers would prefer to employ an experienced adult worker rather than a young worker. The Labour party's policy would make it illegal to offer somebody a lower wage while he was training and acquiring a skill. We believe that as soon as he is able to do all that an adult worker can do, he should receive the adult worker's wage.
      Ms. Clare Short: A number of different formulations are included in this series of amendments. The Labour party is seeking to maintain protection for young people. The Labour party suggests that we should stay with the 1979 Act and give each wages council the right to pay young people whatever rate it thinks fit. The Paymaster General will be aware that a number of wages councils are unhappy about his proposals, particularly about the movement of the age of majority from 18 to 21. Therefore, he should not concentrate on the provisions of new clause 1. The Opposition would settle for a return to the 1979 Act.
      Mr. Clarke: I am relieved to hear that the hon. Lady is showing a little flexibility. However, I do not believe that she is protecting young people. She is telling young people who work in these industries that they will all get higher pay, but she will deny job opportunities to many of them. That is not protection.
      The new clause is part of the initiative against low pay which the hon. Member for Kingston upon Hull, East (Mr. Prescott) mentioned yesterday, and it is closely attached to part II. Yesterday the Labour party may have called it a campaign against low pay, but I prefer to call in the Labour party's new campaign for higher pay, particularly higher pay for the young, the inexperienced, and the unskilled.
      Mr. John Prescott rose—
      Mr. Clarke: I shall give way to the hon. Gentleman in a moment.
      I have in front of me a copy of the hon. Gentleman's news release, in which he explained that he was setting out the Labour party's new approach. According to his definition, no fewer than 8 million people receive poverty wages. That is one third of the entire work force. His policy would raise the pay of those 8 million people—a third of the entire work force—and it would depend upon a combination of measures. In particular, it would depend upon the level of the statutory minimum wage. The hon. Gentleman yesterday, and the hon. Member for Ladywood today, made it quite clear that the Labour party is committed to that policy. If we are to raise the wages of a third of the work force, at some stage the hon. Lady ought to tell us what level of pay increase she proposes, and what impact this campaign for higher pay for 8 million people will have on the rest of the work force. I refer to adult workers, male workers and workers with skills.
      Yesterday the hon. Member for Kingston upon Hull, East was at pains to assure those workers that they, too, would share in this bonanza. He said that the Labour party's policy would not hold anybody back. A national minimum wage would provide a floor below which no worker would be allowed to fall and that, as unions would still be able to negotiate above that floor, there would be no danger of it becoming a ceiling for pay settlements. No mention was made yesterday of productivity, performance or output.
      The Labour party's campaign is designed to inform people that a third of the labour force will receive higher pay. If that is associated with the hon. Gentleman's remarks about changes to trade union legislation, it means that it will be rather easier for those who want to maintain their differentials to take industrial action. The strike weapon will be strengthened to ensure that they are able to maintain those differentials.
      This drive for generally higher pay throughout the economy, particularly at the bottom end of the scale. has come at a time when employment in this country is increasing at a faster rate than ever before. Since the spring of 1983, nearly 1 million new jobs have been created. The most worrying threat to the creation of new jobs is higher unit labour costs in this country compared with those in other countries. I have the comparisons in front of me. The latest quarterly figures that are available for 1985 show that in Canada wages and salaries per unit of output in manufacturing increased by 1 per cent., in the Federal Republic of Germany by 2 per cent. and in the United Kingdom by 6 per cent., whereas in Japan they did not rise at all. If one takes the whole-year figures for 1984, our unit wage costs in manufacturing increased by 4 per cent., whereas they declined by 2 per cent. in Canada, by 1 per cent. in the United States, by 4 per cent. in Japan and by 1 per cent. in the Federal Republic of Germany.
      Mr. Nellist: Will the Minister give way on that matter?
      Mr. Clarke: The Labour party is campaigning for a general surge in wage costs at a time when our unit wage costs in manufacturing are rising at a faster rate than those of our competitors, when the living standards of those who are in work in this country are higher than ever before and when domestic inflation is falling rapidly.
      Mr. Nellist: Will the Minister give way?
      Mr. Clarke: This policy will not protect the low-paid, the young, or anybody else. If the Labour party embarked upon this policy, it would drive up unemployment.
      Mr. Nellist: Is the Paymaster General not aware that there are two halves to a fraction? If industrial manufacturing output has declined, the equation will naturally be higher. If he looks at his answers to me during the last few days relating to the hourly earnings of workers in manufacturing industry in Britain. Italy, France and Germany, he will find that the pay of workers in those countries has risen faster than in this country and that it has been based upon higher investment.
      Mr. Clarke: If there is one thing that is more likely than anything else to cause a fall in manufacturing output in this country. it is to allow our unit wage costs to rise in comparison with those of our competitors. If the hon. Gentleman wishes to ignore our competitive position. he is encouraging a decline in our manufacturing industry.
      Mr. Maples: On my right hon. and learned Friend's point about the Labour party's proposals for massive pay increases, I should point out that this experiment was put into effect in 1974. Under a Labour Government there was a massive rise in wages, but there was no rise in production. The Labour Government then found that they had to deal with the problems that they had created by introducing a statutory pay policy.
      Mr. Clarke: I agree with my hon. Friend. There was a similar experiment in France a few years ago.
      Mr. Prescott rose—
      Mr. Clarke: I apologise to the hon. Member for Kingston upon Hull, East. I promised to give way to him, and I shall do so now, but before he rises I shall ask him whether the right hon. Member for Birmingham, Sparkbrook, (Mr. Hattersley) was consulted about this campaign yesterday, and whether his right hon. Friend the Leader of the Opposition is involved in this new policy of driving up wage costs in British industry? How does all this fit in with the current attempts to make Labour appear to be a credible alternative Government? It seems to me that the Labour party is not to be trusted either on pay policy or on the trade union front. We are back to policies being advocated that will have a completely destructive effect upon employment in this country.
      Mr. Prescott: It may come as a shock to the Paymaster General to learn that these Benches are the Opposition and not the Government. We are debating the Government's Bill. We have heard much rhetoric from the Minister about the number of strikes, but more days have been lost through strikes under this Government than in the five years of Labour Government. The Minister knows that, because he gave that information in a parliamentary reply.
      We are discussing 8 million people who are under the poverty wage level, and that is the reality. A Council of Europe convention determines that low pay is two thirds of an industrial wage. I am surprised that the Minister is not aware of that, because we were at the Council of Europe at the same time. That convention determines the poverty level. Yesterday we said that the number of people paid poverty wages had doubled since the Government came to power in 1979. We argued that there was a need for legislation, and the new clause is concerned with that need.

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      This is only an intervention and I cannot take up all the time of the debate but I wish to comment on the Minister's statement that too much money is paid to youngsters and to deal with the 70 per cent. wage level referred to in new clause 1. Is the Minister aware that in hairdressing, 70 per cent. of the adult wage rate would be about £44? Is £44 too much to pay youngsters in 1986?
      Mr. Clarke: One interpretation of the Council of Europe's convention produces the figure of 8 million to which the hon. Gentleman referred and to which his policies, set out yesterday, are most especially directed. The figure of 70 per cent. of the wage level, which the Labour party would restore to young people, would produce a comparatively low figure as a legal minimum in some industries. However, in Germany, the proportion of young people's incomes to that of adults is much lower. When people take their first job they have little to offer but enthusiasm and the hope of acquiring skill and experience. They must expect to receive lower pay in relation to adults and in comparison to what they will receive when they have acquired their skills.
      The hon. Member for Kingston upon Hull, East objects to our debating his policies, but, with respect, we are discussing the subject matter of the debate, which is the new clause put forward by the Labour party. The Labour party advocates that we should have a statutory minimum wage level for young people. It is plainly part of the policy—the fair pay policy—which was set out by the hon. Gentleman and by the hon. Member for Ladywood to drive up the pay costs of British industry on a substantial scale. In our opinion, that would sacrifice many jobs.
      Our policy is quite straightforward. The earnings taken out of industry by any workers have to be based on the value that the worker can put into that industry. The success of the worker helps his company to succeed in the market place, including the world market place. Higher wages are a desirable objective for most people, but they must come from better performance. Our latest proposal is a concept of profit sharing. This would encourage industry and those working in a particular industry, and thus the rewards are more closely linked to the success or otherwise of the enterprise.
      The young person who is trying to take his or her first step in the labour market certainly needs to be protected, and I agree entirely with such protection. In my view, they need to be protected against the risk of hen priced out of a job. That is a risk which they would run if the wages councils provision, as advocated in the new clause, was adopted, or a national minimum wage, as canvassed by the hon. Member for Kingston upon Hull, East, was adopted.
      I ask the House to reject new clause 1 and accept the link between pay and employment. If the Labour party rejects that link, it will be folly in the extreme. The hon. Member for Ladywood tries to refute any link between present employment and pay by citing the figures which she always cites. She argues that since 1979 there has been an increase in youth unemployment. These figures take in the full winds of the recession since 1979, but youth unemployment has not risen by as much as it has in other sections of the population. The fall in earnings of young people vis-à-vis adults has taken place only since about 1982. Ever since young people have followed the policies encouraged by the Government and taken a lower
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      proportion of the adult wage, the percentage of young people unemployed has decreased. The position of young people has improved.
      5.15 pm
      Between April 1982 and April 1985 the average annual increase of earnings for the under-18s has been 5·7 per cent., while for those aged 18 and over it has been 8 per cent. The number of unemployed under-18s as a proportion of the total unemployed has fallen. In January 1983 it was 6·9 per cent., in January 1984 it was 6·4 per cent., in January 1985 it was 5·9 per cent. and in January 1986 it was 5·5 per cent. I am pleased that the overall unemployment rate for under-18s has fallen.
      Mr. Nellist: It is called YTS.
      Mr. Clarke: In this period when the earnings of youngsters have gone up more slowly than have earnings for adults, the unemployment rates for under-18s has fallen. In January 1983 the figure was 25·2 per cent. in January 1984 it was 21·3 per cent., in January 1985 it was 20 per cent. and in January 1986 it was 19·1 per cent.
      The hon. Member for Ladywood bitterly attacked the young workers scheme, but that has created, on any analysis, 120,000 additional jobs for young people, even allowing for displacement, which of course would in part modify the result. The number of unemployed under-20s has fallen by 63,000 since 1983. That is over 10 per cent. of the total. Youth unemployment is decreasing. The level has come down with the help of the youth training scheme, the young workers scheme and the new workers scheme.
      There has been a growing realisation in industry that young people's wages must bear a sensible relationship to adult wages if people are to be given their first job.—[Interruption.] The very mention of youth training always causes excitement. The hon. Member for Kingston upon Hull, East and his colleagues must face the experience of the past four years, when unemployment among young people has been falling steadily. They have responded to that by mounting a virulent campaign which is a combination of a weakening commitment to YTS and driving up pay costs. That would drive up youth unemployment. I believe that their campaign is thoroughly misconceived and irresponsible. The irresponsibility is wrapped up in the guise of a low-wage campaign. The Labour party cannot be trusted in this area. The claim that the Labour party has a sensible economic policy is incredible when its employment team is let loose advocating this type of inflationary and anti-job nonsense.
      Mr. Nellist: I arrived in this Chamber almost three years ago as one of the youngest Members elected at the election of 1983. I am the youngest Member to be returned to Parliament by the city of Coventry since Coventry has had Members of Parliament. Therefore, it is natural that, over the years, I have spent much of that time defending young workers against the ravages of the Government and their pathological hatred for young people.
      I have had special responsibility to champion the hopes and aspirations of millions of young workers in the face of mass youth unemployment. The three months I have spent on the Bill have not changed or disavowed my opinions in one respect. There was an unreal atmosphere about the speech of the Paymaster General. I might hope that it was his last speech, but that would be too much to hope for. In Committee there were many platitudes about

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      how the measures were designed to support and provide jobs for young people. Frankly, nobody outside the Chamber and very few inside it believe that. The Bill is designed to continue the trend of driving down the wages of young people so that the profits of those who financially backed the Tory party at the last general election are suitably enhanced.
      What is the real world, away from those platitudes? The real world should interest the hon. Member for Langbaurgh (Mr. Holt), in whose constituency I was brought up. Its careers office has a little story in this morning's Daily Star under the headline:
      "I gotta job! Joy for girl in 5,000"
      It reads:
      "Lucky Karen Sanderson has beaten 5,000 other desperate youngsters to get the only job going in the dole capital of mainland Britain.
      The Cleveland careers service had only one unfilled vacancy to satisfy 5,278 registered unemployed."
      No fewer than 55,000 people are unemployed, and 36 per cent. of them are under 25. The principal careers officer said:
      "The day the young girl came in for a job we had only one available. Today we have only eight jobs available for all those thousands of youngsters needing work. We have another 4,000 young people on youth training schemes. But they will be looking for real jobs in a year or two. We know that 65 per cent. of folk coming off YTS projects can't find real jobs."
      That is the real world that the Chamber must deal with if it is to have any relevance to the hundreds of thousands of young people who remain unemployed under the present Prime Minister and the Government.
      Matters are equally grim in my city of Coventry, where 5,000 more youngsters will leave school this summer. I telephoned our careers office today. We are better off than Cleveland: we have 76 vacancies. That still leaves 4,924 young people without a job. We already have more than 5,000 unemployed young people competing for the same jobs. Among them are young people leaving special schools. They might be mentioned in the debate on new clause 2.
      We had a brilliant year in Coventry last year. Of the 189 physically and mentally handicapped youngsters who left special schools, seven found work. Two of them went to sheltered work. That was better than the previous year, when only two found work. What hope will the handicapped youngsters of Coventry have when another 190 leave this summer? It might be suggested that, if the seven who got jobs took a wage cut, there might be an extra one or two jobs for those who leave school this summer. That is economic and political rubbish.
      One ward in my constituency has an official male unemployment level of 44·2 per cent. In reality, it is well above 50 per cent. That is the situation in Coventry. There is no future for young people in our city, the midlands or the country as a whole, short of getting a genuine Socialist Labour Government prepared to plan the economy rationally and to guarantee young people jobs.
      Under this Prime Minister, half a million young people have never had a job since they left school. Ten years ago, 61 per cent. of 16-year-olds had a job. Only 18 per cent. have a job now. The studies, the projections and the computer models that were wheeled before us in Committee to support abolishing young people's right to a minimum wage could only come up with a prediction that between two and 160 jobs could be created in
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      Coventry, South-East, or between eight and 600 jobs could be created for the whole of Coventry if all the 500,000 young people took a pay cut. So what?
      In the month before Christmas, a factory in Coventry—General Electric Company—the chairman of which is the Tory Member of Parliament for Waveney (Mr. Prior), declared 1,000 redundancies, the bulk of them in my constituency. One half of the Tory party is chucking people out of work while the pious hopes of the other half urge young people to take wage cuts to try to create jobs.
      No other country has done what the Paymaster General is asking us to do—to denounce the International Labour Organisation convention No. 26 and deny young people the right to a legal minimum wage. His justification is that they should take lower wages to create more jobs—that we should "price young people into jobs'. Will that happen? Nye Bevan used to ask, "Why look in the crystal ball when you can read the book?"
      Sir J. Hoskins talked about the real aim of the youth training scheme when he was in the Prime Minister's private office. It is on the record. It was to increase the differential between youth and adult wages. That has happened. When the youth opportunities programme allowance was introduced in 1978, youngsters were on £19·50 a week. The YTS equivalent today is £7·30. If it had increased with the retail price index, youngsters would now be on £38 a week, and if the allowance had increased in line with average earnings, they would be on £44 a week. In other words, school leavers have taken a £17 a week pay cut in the past eight years while youth unemployment has trebled.
      There is no evidence to support the argument that cutting wages creates jobs. The Minister might assert that there is a link. If there is, why is the highest unemployment not in Sweden and the lowest unemployment not in India? Half a million young people will get pay cuts unless new clause 1 is accepted. That means one in five young people in a job or one in three school leavers in their first job. The average wages of these people is about £50 a week—in hairdressing it is just above £30 a week for a first-year apprentice.
      I notice—this is a bit of a constitutional oddity—that the Prince of Wales' consent is needed before the Bill will get Royal Assent. I do not suppose that he has ever had to live on £40 a week. There is a huge disparity between the very rich and the half million young workers in service industries such as hotels, restaurants, catering, clothing and hairdressing. The Government's hypocrisy is revealed by the fact that one day in July they said that young people must price themselves into a job and the next the Prime Minister talked of the need for recruitment, retention, motivation and morale among the 2,000 judges, generals and top civil servants who needed a 40 per cent. increase in their salaries, taking the Cabinet Secretary's salary up by £500 a week.
      We cannot take the Bill entirely in isolation. It is part of a process to create a conveyor belt of school leavers, leaving school, doing two years on YTS for artificially depressed training allowances—cheap labour rates—and doing another three years before they reach the maturity accorded to them by the Government at 21, when they will get an adult rate of pay. To ensure compliance, the Department of Health and Social Security has issued circular CS/INF/YTS/7/85, paragraph 18 of which instructs careers officers to inform the DHSS if a youngster refuses to go on a youth training scheme, whereupon they

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      will get a six-week cut in benefit. At least it was six weeks until about 10 days ago when the Secretary of State said that it would be a 13-weeks penalisation.
      Next week—perhaps next Monday night—the Secretary of State will introduce a £5·80 cut in the supplementary benefit level for the under-18s. Just to tidy it all up, if youngsters object, or try to organise themselves into a trade union to enhance wages and conditions, they can be dismissed without recourse to an industrial tribunal if they have not worked two years full time or five years part time. That demonstrates the Government's pathological hatred of youth.
      The Bill does not tackle the real causes of unemployment. The real cause is the refusal of those who own wealth to invest. That is why production is lower than it was in 1973. Investment has fallen, output has fallen, and we now import more factory-made goods than we export. It is the first time that the workshop of the world has done that for more than 300 years. That is why the gaps between us and other countries which the Minister likes to quote—Germany, America and Japan—have opened.
      Mr. Martin Flannery: Will my hon. Friend give way?
      Mr. Nellist: I cannot. I apologise, but the signals are coming and I might be strangled by the Whips if I do not finish soon.
      There has been a refusal to invest, so where will the profit come from—by driving down the wages of young people. There is enough money in the country to give everybody a decent wage. If we brought back some of the £70 billion that has gone abroad during the past six years, there would be enough to pay decent wages.
      We want to offer a real job to young people. We are not advocating their donning smocks and showing American tourists around the Tower of London, which is what the Tory Government are turning us to in the 1980s. The wages councils were set up 75 years ago. We are trying to give young people a little protection, but I shall vote for the new clause in the Division. The new clause will have more bite if other policies of the Labour party and the Trades Union Congress, such as a national minimum wage of two-thirds average earnings, are implemented.
      I shall put that into figures for the Paymaster General. It would require a wage of £120 a week for adult workers. If 70 per cent. of that was offered to young workers, they would be lifted out of the poverty trap. Half a million youngsters would then have a decent rate of pay and 8 million adults would look forward to the future, and be able to afford a holiday, a television, to run a car and other things which are necessities in Britain today.
      On 31 May thousands of workers, principally women, will demonstrate, rally and march in Manchester under the banner of the North-West Region Labour Women's Council, demanding a national minimum wage and a mass recruitment campaign to trade unions and the Labour party of young workers who are affected by this provision. I hope that a repeat of such campaigns will signal the death knell of the Tory Government and the low-wage, cheap-labour economy, on which their big business backers depend for their luxury life styles.
      It ill behoves the Paymaster General who is on almost £1,000 a week to tell 500,000 hairdressers and other young
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      people who work in hotels, shops. restaurants, catering and clothing establishments that £40 a week is too much for them in Maggie's Britain. I hope that the new clause is passed overwhelmingly tonight.
      5.30 pm
      Mr. Martin: I wish to speak to new clause 2 and amendment No. 81, both of which are in my name.
      The Government propose to take young people out of the protection of the wages councils, but I urge them to reconsider their decision with regard to the physically and mentally handicapped. From my experience as a trade union officer and a councillor serving on the social work committee of the old Glasgow corporation, I know that young people, especially mentally handicapped young people, can be exploited. Some people will say that only a minority of employers will stoop so low, but if it were not for the minority of bad individuals in every respect. the House would not require legislation to protect the community.
      I remember having to go to the Inverclyde local authority in Greenock because there was a complaint that some workers were not receiving a proper bonus. I discovered that the complaint was unjustified. The personnel officer had set one section aside for disabled and mentally handicapped workers and ensured that for 52 weeks of the year young people in that gardening section received a guaranteed bonus. During the summer that meant that able-bodied workers received a bigger bonus, which is how the complaint arose.
      From conversations with the workers and the personnel officer, I discovered that he was doing a remarkable job. He did not require legislation, but he protected those young workers because he saw a need to do so. One worker could not read, so the personnel officer instructed the head gardener to draw up a plan of colours so that that worker would know the type of flowers to lay in a flower bed. He instructed a charge hand not to allow another worker to operate a motorised lawn mower because he knew that from time to time that worker had epileptic fits. Another worker turned up for work on holidays because he did not understand what holidays were. The personnel officer took it upon himself to phone that young man's parents to tell them that he should not turn up for work on the Queen's birthday and other public holidays. The personnel officer ensured that those workers were well protected, without any prompting.
      On the other hand, there is the Social Work (Scotland) Act 1968, and I know that social workers are prepared to keep an eye on mentally handicapped workers who were in their care before they reached the age of maturity, which in Scotland is 16. I know of cases in the Strathclyde region where some of those workers are 50 and still receive help from the social work department. Social workers help those people mainly because from time to time cases are reported to them of workers who are being exploited, and who work long hours and are not paid proper wages for hard, heavy work in kitchens, hotels, and, sometimes, circuses. They are respectable people who do not understand their rights.
      I could talk all night about the problems that arise with those workers. Surely, if we allow people to work, we should ensure that those who need protection are protected through legislation. We are failing in our duty if people in that category are exploited.
      Mr. Richard Holt: I am a little confused. The hon. Gentleman is arguing one case, but the amendment seems to imply another. It seeks to remove all disabled workers from part II. At least under part II there is a minimum provision. but the amendment seeks to remove it.
      Mr. Martin: I am aware that time is short. I have explained my aims to the Minister, and if he feels that my new clause is defective he can, nevertheless, take my point on board. That is often the case with new clauses and amendments, but hon. Members are entitled to speak to them so that they can explain what they want, and if the Government can support the change it is up to them to ensure that the wording does not have the wrong effect.
      The Minister may argue that if we introduce or tighten up legislation it will deter employers from exploiting mentally and physically handicapped people. There must be a balance between ensuring that we find as many young people a job as possible and ensuring that they are not exploited by unscrupulous employers. It should be remembered that employers do not always know what their workers' rights are, let alone that employees know their rights. Legislation should be available to help them when complaints are made.
      Mr. Lawler: In stating that I have the honour to be president of the British Youth Council and chairman of the all-party youth affairs group—I stress that I do not speak in that capacity today—I hope that I can prove that I do not have a pathological hatred for young people. On the contrary, one thing that I have in common with the hon. Member for Coventry, South-East (Mr. Nellist) is that we are not so far out of that sector of our lives as are some hon. Members. Indeed, I suffer from the delusion sometimes that I am still in it.
      One thing that regular contact with young people has taught me is that they have a far more realistic view of their worth and of economic realities than does the Labour party. One needs only to consider the high percentage of those who have expressed satisfaction with the youth training scheme and the opinion polls that have been conducted among young people to see the proof that they are willing to undertake work at sensible and realistic allowances. The Labour party's dogmatic approach will deny them the opportunity to undertake such work.
      As my right hon. and learned Friend the Paymaster General said, the Opposition must think we believe that there is some political mileage in being vindictive against young people by driving down wages. No political party would seek to attack the living standards of young people. We are seeking to do the opposite. There is no lower standard of living for a young person than the dole or supplementary benefit. The proposed legislation seeks to improve young people's living standards by giving them jobs. That is the most significant step that they could take.
      As my right hon. and learned Friend said, the effect of the new clause would be to increase the wages of 16 and 17-year-olds in industries covered by the wages councils. In the clothing industry it would mean an employer paying £49·49 insted of £46·06. In the retail food sector it would mean an employer paying £56 instead of £50·38. That would mean fewer jobs and a further falling behind in competitiveness at a time when all our major competitors pay a far lower proportion of wages to young people than we do. They pay 20 to 30 per cent. of adult wages, rather than our 60 to 70 per cent.
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      The new clause would also lessen the opportunities for training and cut the opportunities for young people to advance themselves. If companies must pay so much for young people, they will not spend more to train them. We must ensure that young people are recruited at sensible allowances, so that companies will invest time and money in them and enable then to make a more effective contribution to their employers.
      The new clause would block young people's advancement. It is better that young people get on the first rung of the ladder. There is no career on the dole or any benefits structure that they can climb. The only way in which they can advance themselves is by getting their first job, and this legislation opens the door to employment opportunities.
      The savings that employers could make by employing young people at more realistic wages could be used in two ways: first, to increase training; and, secondly, to pay more to skilled workers. I agree with the hon. Member for Birmingham, Ladywood (Ms. Short) that skilled workers in Britain are paid less than those in competitor countries. In Germany workers are paid. more because a much higher percentage of them have vocational qualifications and therefore contribute more to their companies and deserve higher wages.
      The new clause would hit those who are least qualified and who find it hardest to get jobs. The Labour party is deserting what it has always claimed as its traditional ground and is aiming at the middle-class vote. However, the Conservative party has not forgotten the most disadvantaged and the least fortunate and is giving them an equal chance to prove themselves.
      Half a million young people covered by the wages councils are affected by the Bill. Another 500,000 unemployed young people aged under 20 will also be affected because the legislation will give them greater opportunities of employment. Setting a rigid limit such as the clause proposes will not help those in work in the long run, and will harm the chances of those whom we are seeking to help, those who do not have jobs.
      Mr. David Penhaligon: I commend the speech made by the hon. Member for Glasgow, Springburn (Mr. Martin). I do not know whether his amendment is in order, but he was arguing a case which deserves some specific and detailed reaction. Whatever the broad merits of this part of the Bill, we would not wish the chronically disabled and mentally retarded to be placed in an abominable position, with not even their intelligence to protect them. The hon. Gentleman advanced a strong argument, and I hope that the Minister will respond to it.
      The Government have got the legislation wrong. I do not agree with many of the speeches that have been made by Labour Members, but the abolition of all wage controls for those aged under 21 is unjustified. I represent an area of endemic unemployment, with the lowest wage structure in Britain. I know what happens to wages in industries not covered by wages councils when wage protection is removed. It is not uncommon in areas such as mine for qualified 19 or 20-year-olds, some with four or five C)-levels, to be earning £50 to £55 a week. That is what happens when wage protection is removed. Other parts of the country are more fortunate, but that is the logical outcome of the Government's proposals.

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      5.45 pm
      However, there is a minute amount of truth in the Government's broad thrust, which says in essence that to pay the adult rate to an 18-year-old in industries covered by wages councils must militate against the employment of other young people. That is true. It might not be popular with young people, and it might not gain any votes to tell them, but I have no doubt that to pay the full adult rate to an 18-year-old, especially in a low-wage area such as mine, militates against their employment prospects. That occurs especially where an employer has an alternative choice of people aged 25 to 30 with skills, some experience and the other qualities acquired with age. They will compete against youngsters.
      Many Conservative Members have not faced the problem. I criticise them because they have extrapolated to infinity from the specific, although I recognise it to be a genuine problem. The evidence suggests only a couple of steps, as opposed to the journey from here to the unknown.
      The Government should have redefined the adult rate—I call it the experienced rate—to the age of 21. In an odd way, they have done that. They should have maintained some protection for people within those areas, having renegotiated the steps up to the age of 21. In the reply to the debate—it must have been considered because I have argued it in the House several times—the Minister must say why the Government rejected that solution. I have heard no substantial argument to convince me that that would not have been the rational and sensible outcome of the legislation.
      Mr. Holt: Is the hon. Gentleman aware that part of the problem lay in previous Governments reducing from 21 to 18 the age at which full national insurance and other contributions were made? A person is an adult either at 18 or at 21. We are now introducing hybridity, which will cause further confusion.
      Mr. Penhaligon: I hear what the hon. Gentleman says. I am trying to reflect on the conventions in some of our European partners. In some countries it is not unknown for the adult or experienced rate not to be paid until the age of 23 or 24. In Japan, in some industries, the top or skilled rate is not paid until people are approaching their 30s. I do not accept the argument that as soon as someone if given the franchise, which is rightly given at 18, that automatically coincides with the day on which he has all the skills, experience and other qualities accumulated while earning a living. I should be pleased if the Minister would reflect on that.
      The hon. Member for Birmingham, Ladywood (Ms. Short), who opened the debate on the new clause, made a statement which may be right, but which was different from what I originally understood. I am not enthusiastic about the fact that the Government have withdrawn from the International Labour Organisation. I checked with the Library some months ago and was told that, although the Bill removes some minimum wage protection for those under the age of 21, it would still be possible to pass the Bill and to remain inside the ILO convention. That was asserted to me by the Library. and I should like a reply from the Minister. Will it be possible to stay in the ILO with the minimum wage protection which the Bill still gives to some, albeit only those over the age of 21?
      I raise this issue because I was worried by the advice that I was given. If the Government could have stayed in,
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      why did they withdraw? I fear that they withdrew, not because of the Bill, but because it will give them the power at some time in the future to introduce in Parliament an order to abolish all wages council restrictions from A to Z which would be debated for about one and a half hours.
      Mr. Prescott: That is in the Bill.
      Mr. Penhaligon: If that is so, I live and learn.
      I am aware that under the Bill as drafted it will be possible for the Government to put before Parliament a proposal to abolish overnight all wages control and wages councils. I am asking whether the Government have withdrawn from the ILO because the possibility of doing that appeals to them, or because the changes provided for in the Bill forced them to withdraw from the ILO. I fear that it is the former, which makes the Government's proposals even less acceptable.
      My questions therefore are, first, why can the Government not step up the age to 21. and, secondly. did they have to withdraw from the ILO because of the Bill?
      The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier): This has been an interesting and pretty long debate and I have somewhat limited time in which to reply. I wish first to reply to the point raised by the hon. Member for Glasgow, Springburn (Mr. Martin), who was supported to some extent by the hon. Member for Truro (Mr. Penhaligon).
      Ms. Clare Short: I raised the matter also.
      Mr. Trippier: Indeed, yes. I appreciate that credit must be shared by Opposition Members, although in fairness I am dealing with what has been said by the hon. Member whose name is appended to the amendment.
      It has been quite a problem for all members of the Committee to wrestle with this. The hon. Member for Springburn is aware that there is power under present legislation to award certain permits to disabled people who would not normally be employed by employers on an individual basis, taking each case on its merits in the instance of those people disabled by any form of handicap. mental or physical.
      We have gone through a period of consultation in the Department with lobbies representing handicapped people. Since the hon. Gentleman raised the point at the last sitting of the Committee, as did my hon. Friend the Member for Bolton, North-East (Mr. Thurnham), I have had long discussions with the right hon. Member for Stoke-on-Trent, South (Mr. Ashley), whose name also is appended to the amendment, and with Brian Rix. the director-general of Mencap. On balance—rather like the TUC, only on balance—they do not think that there should be incorporated on the face of the Bill the legislation that is currently in force by way of a new clause. I say that because I wish to assure the hon. Member for Springburn that I have taken this point seriously both in Committee and today. I am anxious to continue to meet the lobby representing handicapped people to see how we can assist.
      In the discussions with Brian Rix, I was interested to know that his members are pleased with the scheme run by the Manpower Services Commission that is known as the sheltered placement scheme. They are anxious to see the Department of Employment develop and strengthen that scheme, which they think has been a success.
      I was interested in the comments of the hon. Member for Birmingham, Ladywood (Ms. Short) in opening the

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      debate. As I understand it, she says that this legislation is designed to cut the wages of the country's poorest workers. It is to that that we so strongly object—the fact that the Opposition are wittingly trying to mislead the public, because they talk constantly as if we are scrapping wages councils. Nothing could be further from the truth. We took notice of the consultation exercise, for which we were responsible. As my hon. Friend the Member for Bradford, North (Mr. Lawler) said, we passionately believe that by discriminating in favour of the under-21s we will allow them to take that important first step on the employment ladder. The hon. Member for Ladywood and her hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) peddle the propaganda, and always have done, that we are scrapping the lot. We are not.
      My right hon. and learned Friend the Paymaster General and Minister for Employment referred to the new realism that is creeping in. There is no way in which this Government would do anything to harm the young people whom we are anxious to see in employment. That realism is creeping into the TUC. It has not yet hit the Labour party. The document to which I referred in Committee—I sent a copy to the hon. Member for Ladywoodand which was written by senior trade unionists and members of the TUC, said:
      "There can be no doubt that a general rise in the level of money incomes which significantly outstripped the rate of growth would be incompatible with achieving our objective of a high wage, high productivity, low unit cost economy, and that means that we can't have it unless we earn it."
      That is the point that we have consistently made.
      I say again that it is nonsense and ridiculous for the hon. Member for Coventry, South-East (Mr. Nellist) to suggest that Conservative Members have a pathological hatred of youth. That was a stupid statement. I suggest that it shows yet again that the Labour party is out of touch with reality.
      Mr. Prescott: After listening to the debate, I am not sure whether this is a case of a pathological hatred of youth or the economic illiteracy of those Conservative Members who spoke.
      The statement from which the Minister has just quoted and to which the Paymaster General gave a great deal of attention is about productivity, earnings and wages. It is the level of investment in those areas that is crucial. If he looks at the OECD's figures, he will find that Britain is better only than Portugal in its level of investment manufacturing out of the 24 countries, and this is below the level of 1979. The Minister needs to consider what brings about jobs and determines wages, but he has not done so in this case.
      The Paymaster General talks about the salaries of young people. Apparently £45 is far too much. I wonder what he did about the banisters' recent claim for an increase in income. I wonder what advice the Paymaster General has given to the new top salaries review that the Government are holding back at present regarding the income recommendations—this, presumably, to be presented to the House after the Bill has been dealt with. From an examination of the Cabinet minutes on these matters, it will be observed that the right hon. Member for Waveney (Mr. Prior) rejected this course of action. He would have been ashamed to hear the debate today.
      Let us make it clear that we are denouncing our international obligations. We are the only country out of 94 countries to denounce our international obligations. The Labour party will restore those international
      896
      obligations. We will bring back the fair wages clause and a form of wages councils that guarantee rates. We are against the sweat-shop industries that are becoming a common feature after seven years of this Government. From all the evidence that we have seen of the young workers' scheme with its reduction of wages, no extra jobs have been created.
      As to the removal of the fair wages clause, hon. Members should talk to the Barking hospital cleaners. The number of people employed was reduced and the employees worked a lot harder, but they got less pay and fewer holidays. That is what this is about, driving down the wages of the low paid. It is also a question of job substitution; it is skivvy-scheme YTS that will take the place of the adult worker in wages council industries.
      In 12 months' time, we will see the results of the policy. Then Labour's policy of a fair wages strategy that we outlined yesterday will be relevant, and will return a Labour Government. Therefore, we will vote for the clause in the belief that it will give a right and just return to young people.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 168, Noes 254.

      Division No. 181]

      [6 pm

      AYES

      Adams, Allen (Paisley N)

      Eastham, Ken

      Alton, David

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

      Archer, Rt Hon Peter

      Evans, John (St. Helens N)

      Ashley, Rt Hon Jack

      Faulds, Andrew

      Ashton, Joe

      Field, Frank (Birkenhead)

      Atkinson, N. (Tottenham)

      Fisher, Mark

      Bagier, Gordon A. T.

      Flannery, Martin

      Banks, Tony (Newham NW)

      Forrester, John

      Barnett, Guy

      Foster, Derek

      Barron, Kevin

      Foulkes, George

      Beckett, Mrs Margaret

      Fraser, J. (Norwood)

      Bell, Stuart

      Freud, Clement

      Benn, Rt Hon Tony

      George, Bruce

      Bermingham, Gerald

      Godman, Dr Norman

      Bidwell, Sydney

      Gould, Bryan

      Blair, Anthony

      Hamilton, James (M'well N)

      Boothroyd, Miss Betty

      Hamilton, W. W. (Fife Central)

      Boyes, Roland

      Hardy, Peter

      Bray, Dr Jeremy

      Harrison, Rt Hon Walter

      Brown, Gordon (D'f'mline E)

      Hattersley, Rt Hon Roy

      Brown, Hugh D. (Provan)

      Haynes, Frank

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

      Healey, Rt Hon Denis

      Buchan, Norman

      Heffer, Eric S.

      Caborn, Richard

      Hogg, N. (C'nauld & Kilsyth)

      Callaghan, Rt Hon J.

      Holland, Stuart (Vauxhall)

      Callaghan, Jim (Heyw'd & M)

      Home Robertson, John

      Campbell-Savours, Dale

      Hoyle, Douglas

      Carter-Jones, Lewis

      Hughes, Dr Mark (Durham)

      Clark, Dr David (S Shields)

      Hughes, Robert (Aberdeen N)

      Clarke, Thomas

      Hughes, Roy (Newport East)

      Clay, Robert

      Hughes, Sean (Knowsley S)

      Clelland, David Gordon

      Janner, Hon Greville

      Clwyd, Mrs Ann

      John, Brynmor

      Cohen, Harry

      Kaufman, Rt Hon Gerald

      Cook, Frank (Stockton North)

      Kennedy, Charles

      Cook, Robin F. (Livingston)

      Kilroy-Silk, Robert

      Corbyn, Jeremy

      Kinnock, Rt Hon Neil

      Cox, Thomas (Tooting)

      Kirkwood, Archy

      Craigen, J. M.

      Lambie, David

      Cunningham, Dr John

      Lamond, James

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

      Leadbitter, Ted

      Deakins, Eric

      Leighton, Ronald

      Dobson, Frank

      Lewis, Terence (Worsley)

      Dormand, Jack

      Litherland, Robert

      Douglas, Dick

      Lloyd, Tony (Stretford)

      Dubs, Alfred

      Lofthouse, Geoffrey

      Duffy, A. E. P.

      McDonald, Dr Oonagh

      Dunwoody, Hon Mrs G.

      McKay, Allen (Penistone)

      Eadie, Alex

      McKelvey, William

      897

      McTaggart, Robert

      Robertson, George

      Madden, Max

      Rogers, Allan

      Marek, Dr John

      Rooker, J. W.

      Marshall, David (Shettleston)

      Ross, Ernest (Dundee W)

      Martin, Michael

      Rowlands, Ted

      Mason, Rt Hon Roy

      Ryman, John

      Maxton, John

      Sedgemore, Brian

      Maynard, Miss Joan

      Shore, Rt Hon Peter

      Meacher, Michael

      Short, Ms Clare (Ladywood)

      Meadowcroft, Michael

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

      Michie, William

      Silkin, Rt Hon J.

      Mikardo, Ian

      Skinner, Dennis

      Miller, Dr M. S. (E Kilbride)

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

      Morris, Rt Hon A. (W'shawe)

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

      Morris, Rt Hon J. (Aberavon)

      Snape, Peter

      Nellist, David

      Spearing, Nigel

      Oakes, Rt Hon Gordon

      Steel, Rt Hon David

      O'Brien, William

      Stewart, Rt Hon D, (W Isles)

      O'Neill, Martin

      Strang, Gavin

      Orme, Rt Hon Stanley

      Straw, Jack

      Park, George

      Thomas, Dafydd (Merioneth)

      Parry, Robert

      Thorne, Stan (Preston)

      Patchett, Terry

      Tinn, James

      Pavitt, Laurie

      Torney, Tom

      Pendry, Tom

      Wareing, Robert

      Penhaligon, David

      Weetch, Ken

      Pike, Peter

      Welsh, Michael

      Powell, Raymond (Ogmore)

      Wigley, Dafydd

      Prescott, John

      Williams, Rt Hon A.

      Radice, Giles

      Wilson, Gordon

      Randall, Stuart

      Winnick, David

      Raynsford, Nick

      Wrigglesworth, Ian

      Redmond, Martin

      Young, David (Bolton SE)

      Rees, Rt Hon M. (Leeds S)

      Richardson, Ms Jo

      Tellers for the Ayes:

      Roberts, Allan (Bootle)

      Mr. Don Dixon and

      Roberts, Ernest (Hackney N)

      Mr. Lawrence Cunliffe.

      NOES

      Aitken, Jonathan

      Burt, Alistair

      Alexander, Richard

      Butler, Rt Hon Sir Adam

      Amery, Rt Hon Julian

      Butterfill, John

      Amess, David

      Carlisle, John (Luton N)

      Arnold, Tom

      Carlisle, Kenneth (Lincoln)

      Ashby, David

      Carttiss, Michael

      Aspinwall, Jack

      Chalker, Mrs Lynda

      Atkins, Rt Hon Sir H.

      Chapman, Sydney

      Atkins, Robert (South Ribble)

      Chope, Christopher

      Atkinson, David (B'm'th E)

      Clark, Dr Michael (Rochford)

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

      Clark, Sir W. (Croydon S)

      Baker, Nicholas (Dorset N)

      Clarke, Rt Hon K. (Rushcliffe)

      Baldry, Tony

      Clegg, Sir Walter

      Banks, Robert (Harrogate)

      Cockeram, Eric

      Batiste, Spencer

      Colvin, Michael

      Bellingham, Henry

      Coombs, Simon

      Bendall, Vivian

      Cope, John

      Bennett, Rt Hon Sir Frederic

      Couchman, James

      Benyon, William

      Cranborne, Viscount

      Best, Keith

      Critchley, Julian

      Bevan, David Gilroy

      Crouch, David

      Biffen, Rt Hon John

      Currie, Mrs Edwina

      Biggs-Davison, Sir John

      Dickens, Geoffrey

      Blackburn, John

      Dorrell, Stephen

      Body, Sir Richard

      Dover, Den

      Bonsor, Sir Nicholas

      du Cann, Rt Hon Sir Edward

      Boscawen, Hon Robert

      Durant, Tony

      Bottomley, Mrs Virginia

      Dykes, Hugh

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

      Eggar, Tim

      Bowden, Gerald (Dulwich)

      Evennett, David

      Brandon-Bravo, Martin

      Eyre, Sir Reginald

      Bright, Graham

      Fallon, Michael

      Brinton, Tim

      Farr, Sir John

      Brooke, Hon Peter

      Favell, Anthony

      Brown, M. (Brigg & Cl'thpes)

      Finsberg, Sir Geoffrey

      Browne, John

      Fookes, Miss Janet

      Bruinvels, Peter

      Forman, Nigel

      Bryan, Sir Paul

      Forth, Eric

      Buck, Sir Antony

      Fox, Marcus

      Budgen, Nick

      Freeman, Roger

      Bulmer, Esmond

      Fry, Peter

      898

      Gale, Roger

      Malins, Humfrey

      Galley, Roy

      Maples, John

      Gardiner, George (Reigate)

      Marland, Paul

      Gardner, Sir Edward (Fylde)

      Marlow, Antony

      Garel-Jones, Tristan

      Mates, Michael

      Glyn, Dr Alan

      Mather, Carol

      Goodhart, Sir Philip

      Mayhew, Sir Patrick

      Goodlad, Alastair

      Mellor, David

      Gorst, John

      Merchant, Piers

      Gow, Ian

      Meyer, Sir Anthony

      Grant, Sir Anthony

      Miller, Hal (B'grove)

      Greenway, Harry

      Mills, Iain (Meriden)

      Gregory, Conal

      Mitchell, David (Hants NW)

      Griffiths, Sir Eldon

      Moate, Roger

      Griffiths, Peter (Portsm'th N)

      Montgomery, Sir Fergus

      Ground, Patrick

      Moynihan, Hon C.

      Grylls, Michael

      Mudd, David

      Gummer, Rt Hon John S

      Murphy, Christopher

      Hampson, Dr Keith

      Neale, Gerrard

      Hanley, Jeremy

      Nelson, Anthony

      Hannam, John

      Neubert, Michael

      Hargreaves, Kenneth

      Newton, Tony

      Harris, David

      Nicholls, Patrick

      Haselhurst, Alan

      Norris, Steven

      Hawkins, C, (High Peak)

      Onslow, Cranley

      Hawkins, Sir Paul (N'folk SW)

      Oppenheim, Phillip

      Hawksley, Warren

      Osborn, Sir John

      Hayes, J.

      Ottaway, Richard

      Hayhoe, Rt Hon Barney

      Page, Sir John (Harrow W)

      Hayward, Robert

      Page, Richard (Herts SW)

      Heathcoat-Amory, David

      Patten, J. (Oxf W & Abgdn)

      Heddle, John

      Pattie, Geoffrey

      Hickmet, Richard

      Pawsey, James

      Hicks, Robert

      Peacock, Mrs Elizabeth

      Hill, James

      Percival, Rt Hon Sir Ian

      Hind, Kenneth

      Porter, Barry

      Hogg, Hon Douglas (Gr'th'm)

      Portillo, Michael

      Holland, Sir Philip (Gedling)

      Powell, William (Corby)

      Holt, Richard

      Powley, John

      Hordern, Sir Peter

      Price, Sir David

      Howard, Michael

      Proctor, K. Harvey

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

      Raffan, Keith

      Howell, Rt Hon D. (G'ldford)

      Rathbone, Tim

      Howell, Ralph (Norfolk, N)

      Renton, Tim

      Hubbard-Miles, Peter

      Rhodes James, Robert

      Hunt, David (Wirral W)

      Ridley, Rt Hon Nicholas

      Hunter, Andrew

      Robinson, Mark (N'port W)

      Irving, Charles

      Roe, Mrs Marion

      Jessel, Toby

      Rossi, Sir Hugh

      Johnson Smith, Sir Geoffrey

      Rost, Peter

      Jones, Gwilym (Cardiff N)

      Sainsbury, Hon Timothy

      Jones, Robert (Herts W)

      Sayeed, Jonathan

      Kershaw, Sir Anthony

      Shaw, Giles (Pudsey)

      Key, Robert

      Shaw, Sir Michael (Scarb')

      Knight, Greg (Derby N)

      Shepherd, Colin (Hereford)

      Knight, Dame Jill (Edgbaston)

      Skeet, Sir Trevor

      Knowles, Michael

      Smith, Sir Dudley (Warwick)

      Knox, David

      Soames, Hon Nicholas

      Lamont, Norman

      Spencer, Derek

      Latham, Michael

      Squire, Robin

      Lawler, Geoffrey

      Stanbrook, Ivor

      Lawrence, Ivan

      Steen, Anthony

      Lee, John (Pendle)

      Stevens, Lewis (Nuneaton)

      Leigh, Edward (Gainsbor'gh)

      Stewart, Andrew (Sherwood)

      Lennox-Boyd, Hon Mark

      Stokes, John

      Lewis, Sir Kenneth (Stamf'd)

      Stradling Thomas, Sir John

      Lightbown, David

      Sumberg, David

      Lilley, Peter

      Taylor, Teddy (S'end E)

      Lloyd, Ian (Havant)

      Tebbit, Rt Hon Norman

      Lloyd, Peter (Fareham)

      Temple-Morris, Peter

      Lord, Michael

      Thomas, Rt Hon Peter

      Lyell, Nicholas

      Thompson, Donald (Calder V)

      McCrindle, Robert

      Thompson, Patrick (N'ich N)

      MacGregor, Rt Hon John

      Thornton, Malcolm

      MacKay, Andrew (Berkshire)

      Trippier, David

      Maclean, David John

      Wakeham, Rt Hon John

      McLoughlin, Patrick

      Walker, Rt Hon P. (W'cester)

      McNair-Wilson, M. (N'bury)

      Waller, Gary

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

      Walters, Dennis

      Major, John

      Ward, John

      899

      Wardle, C. (Bexhill)

      Winterton, Nicholas

      Watts, John

      Wolfson, Mark

      Wells, Bowen (Hertford)

      Wood, Timothy

      Wheeler, John

      Yeo, Tim

      Whitfield, John

      Wiggin, Jerry

      Tellers for the Noes:

      Wilkinson, John

      Mr. Archie Hamilton and

      Winterton, Mrs Ann

      Mr. Francis Maude.

      Question accordingly negatived.

    New Clause 3

      CLOTHING INDUSTRY
      'The Clothing Manufacturing, Retail Bespoke Tailoring, Cap and Millinery and the Made-Up Textiles Wages Councils shall he excluded from the provisions of Part II of the Bill except that the provisions of Clause 22 shall apply.'.—[Mr. Merlyn Rees.]
      Brought up, and read the First time.
      Mr. Merlyn Rees: I beg to move, That the clause be read a Second time.
      I spoke on Second Reading but not in Committee about my interest in clothing and textiles—
      Mr. Holt: On a point of order, Mr. Deputy Speaker. You appear to have called new clause 3, without mentioning the other amendments to be taken with it. Are we simply discussing new clause 3?
      Mr. Deputy Speaker (Mr. Ernest Armstrong): I accept the hon. Gentleman's point. With new clause 3 it will be convenient also to discuss the following: New clause 7—Hotel and catering industry—
      'The hotel and catering trades shall be exempted from Part II of the Act and wages councils in these sectors shall retain existing powers.'.
      New clause 8—Retailing and distribution—s
      'The retailing and distribution trades shall be exempted from the provisions of Part II of the Act and wages councils in these sectors shall retain existing powers.'.
      Amendment No. 55, in clause 12, page 12, line 4, at beginning insert—
      'With the exception of the powers conferred on the clothing manufacturing, retail bespoke tailoring, cap and millinery and the made-up textiles wages councils.'.
      Amendment No. 56, in clause 12, page 12, line 4, at beginning insert—
      'With the exception of the powers conferred on wages councils setting conditions in the hotel and catering trades.'.
      Amendment No. 57, in clause 12, page 12, line 4, at beginning insert—
      'With the exception of power conferred on wages councils setting conditions for the retailing and distribution trades.'.
      Mr. Rees: My interest in clothing and textiles is not new. For nearly 25 years I have represented an area of South Leeds where clothing was a major industry. The Burtons empire used to have a manufacturing base in Leeds, but that has now gone. Leeds also had the Fifty Shilling Tailors. I am sure that some hon. Members bought their first suits from such firms.
      Clothing was a major industry in my area, and my prime motive in moving the new clause, is to alert the Government to the problems faced by Leeds and other textile towns nearby in the north, in the east midlands and in Leicester.
      Some months ago I was prompted, in view of the problems facing the clothing and textile industry in relation to the wages councils, to table an early-day motion. It was signed by 186 people. That is not an
      900
      insignificant number. I stress its main points to the Minister. I believe that it expresses the wider issues which have a bearing on the precise problems about wages councils in the Bill. The motion states:
      "That this House, noting the widespread concern within the clothing industry at the Government's Wages Council proposals which would severely affect vulnerable workers, including many employees of small companies, ethnic minority workers, homeworkers and young workers generally"—
      the motion led me to make a point which the Pay master General took up on Second Reading when I made a brief intervention—
      "further noting the recent report on the industry by the Department of Applied Economics at Cambridge University, which suggested that rather than destroying jobs, wage increases between 1950 and 1980 actually expanded clothing employment, and noting the contribution of the Clothing Manufacturing Wages Council (Great Britain),"—
      I notice that we are not dealing with Northern Ireland now—
      "the Clothing Manufacturing Wages Councils (Northern Ireland) and the other clothing wages councils to good industrial relations in the industry which is helping to provide conditions under which the advanced sector of the industry can invest so that the United Kingdom clothing industry remains internationally competitive, accordingly calls on the Government to abandon its present proposals to reduce the scope and powers of the clothing wages councils."
      That early-day motion did not get anywhere. As well as representing Leeds, South—which is a clothing industry area—I also now represent Morley, which is a textile town. At least, it was a textile town, but it is no longer. Textiles have almost disappeared from it during the past 25 or 30 years and that is not simply the Government's fault. My right hon. Friend the Member for Wakefield (Mr. Harrison), who is present today, also represents a town in west Yorkshire which contains a clothing and textile industry.
      New clause 3 deals with
      "Retail Bespoke Tailoring, Cap and Millinery and the Made-Up Textiles Wages Councils."
      6.15 pm
      All these councils are in the same general boat although there are differences of approach between them, a point that I have discovered after examining them and after receiving advice from various sources. I shall concentrate now on clothing and textiles.
      I shall first clarify clause 22. New clause 3 provides that clause 22 will remain in the Bill. I would like the Minister to clarify certain points about clause 22 even though that clause was dealt with in Committee. In fact, I believe that clause 22 was not dealt with adequately in Committee. There was no discussion on that clause in Committee and it was agreed to without a Division because it makes a director, manager, secretary or similar officer of a limited company, or a person purporting to act in such a capacity, liable for offences under part II of the Bill if that person consented to the offence or connived in it, or if the offence was due to that person's neglect. The similar provision in the Wages Councils Act 1979—and we are dealing with the 1979 Act now, not the Truck Act 1831—is limited to liability or a failure to return accurately completed questionnaires issued by the wages inspectorate.
      Clause 22, as I read it, would give the inspectorate added powers to pursue fly-by-night employers. The clothing industry and its associated industries are not short of fly-by-night employers. I could give examples of the failure of the inspectorate to recover money that they assess is due to clothing workers.

      901
      A report by the factory inspectorate, which the Minister will have access to, on 300 clothing factories published in February 1985 observed:
      "There is a higher turnover of employers in the clothing industry than in any other."
      I could develop that point. However, we need to have clause 22 in the Bill. It gives extended powers to the inspectorate. However, I wonder whether the powers will be extended. My hon. Friends argued in Committee that the inspectorate now will have extended powers. The Minister did not reply to that argument. Do I understand that, because no reply was made, clause 22 does give extended powers to the inspectorate? I hope that the Minister will clarify that when he replies. From the Committee record, I believe that there are extended powers because the Minister would have contradicted that if it was not true.
      Mr. Trippier: If I understand the right hon. Gentleman correctly, he is referring to section 24(6) and (7) of the 1979 legislation. If that is correct, the wording is virtually identical. If not, if he will clarify the matter I shall carry out the necessary research and try to reply to his point in some detail later.
      Mr. Rees: It is section 24(6) and (7) of the Wages Councils Act 1979. When the Bill was in Committee, the clause was approved without debate, but when Labour Members referred generally to the extended powers they were not told that they had it wrong and that there are not extended powers. Is that what the Minister is saying?
      Mr. Trippier: Yes, but I shall check that.
      Mr. Rees: I thank the Minister very much. That is the first point and it shows the worth of a Report stage.
      When I spoke during the Second Reading debate there was some badinage, as happens on legislation of this kind, about a report commissioned by the National Union of Tailors and Garment Workers. That was once a powerful union in Leeds, but it is not so powerful any more because there are not nearly as many people in the clothing industry in Leeds. However, it is an efficient union.
      On Second Reading I referred to the fact that the research carried out by the department of applied economics at Cambridge showed that when pay goes up as a result of the activities of the wages council, job opportunities are expanded. That may seem extremely strange, particularly in the light of what the Paymaster General said just now. He seems to believe in an over-simplistic scenario on the effect of pay increases. He seems to think that if pay goes up, fewer people will be employed. There may be cases where that happens. That must be the case under certain conditions, but that cannot be the complete story.
      The department of Employment's research paper, instituted by the Minister and replied to by the Department of applied economics, concluded that the clothing industry had fallen because of the increase in minimum rates. That was refuted not only by the unions but by the employers.
      The independent examination by the department of applied economics in October 1985 countered that argument. The Paymaster General called the report in aid so I feel disposed to develop this argument because it underlines what is implicit in the Bill. The report said that the wrong figures were used in the study. Clothing and
      902
      footwear figures were used instead of those for clothing. For females the Department's figures for minimum rates were incorrect. For males April minimum rates and October earnings were used instead of figures for rates and earnings in the same month. Foreign competition—we know about that in Leeds—was measured by the ratio of clothing retail prices to clothing wholesale prices. The clothing wholesale prices index was also used to calculate real minimum rates.
      The Department assumed that there were always more workers willing to work in the industry for the wages available than employers wanted. That is implicit in what the Paymaster General said today. I do not find that so in my constituency. The Department assumed that employers did not substitute cheaper female labour for male employment. The Department's analysis was inadequate.
      To summarise, the view of the department of applied economics was that available statistics show that the industry was short of labour for most of the period, and that the only way to get more labour into the industry was to have higher wages. Secondly, it found that the obvious explanation for the loss of jobs is foreign competition in the form of cheap imports. That is certainly the case in Leeds. I can give the Minister chapter and verse. A firm such as Maenson, formerly May and Sons of the 1860s and 1870s, eventually bought by the GUS empire, was shut down in Leeds when the pound went the wrong way and led to increased foreign competition. Given that background we want the wages councils to be excluded from the provisions of part II in the way that I describe in the new clause.
      A problem in the industry arises from the high proportion of young people. Therefore, I want to deal with them. Let us not run away with the idea that young people in the clothing industry are waiting to go to the polytechnic or to Oxford university, or wherever, to read modern greats. The labour market is not a wide market that is equal; it is a series of different markets for different sorts of people.
      The majority of young people entering the clothing industry undergo a fairly short period of training. As I understood the Paymaster General earlier, he was talking as though there was five years of intensive training with certificates at the end. From my experience over the past 25 years and the advice that I have been given, training is short. Then people go straight on to incentive schemes. Many of the young people are just as productive and, by the very nature of nimble fingers, more so than workers with long experience in the industry. As incentive workers, they are paid according to output, not age. If they are less productive, they automatically earn less. The Government's proposals would deem young workers not fully productive for five years. Anyone with a knowledge of the clothing industry will know that that is not the case. There is no evidence to support the Government's assertion that the extremely low rates which apply to young workers have restricted the recruitment of young trainees.
      Let me deal now with the wider issue of incentive workers and holiday entitlement. The two most serious immediate consequences of part II—this is how I am advised it will affect my area, and, no doubt, other areas where people are involved in the clothing industry—will be the loss of the statutory right to holidays and the loss of the statutory right of incentive workers to be paid the minimum as a fallback rate. The holidays are of particular

      903
      importance to women workers who often do two jobs, one at home and one at work. Contractual rights to holidays are of great importance in the socio-economic scene.
      If one goes by television, the modern novel and the way people write today, one would think that all that Mr. Winston Churchill did in 1908 for sweated workers and people working at home was a thing of the past, but it is not. It is important that the Government realise that the world does not end at the Watford gap. There is still an industrial north. It is not the industrial north that it was, but the Government will keep bringing forward legislation that assumes that everywhere is like Guildford and Dorking, but it is not. There is a different part of the country.
      The Government do not understand that some of the old methods and ways of industry still exist. Those of us who represent seats in the north, who live in London during the week and go home at the weekend, realise more than most the two worlds in which we live. The Government, led by the Prime Minister, tend to look at the world as if there had been profound changes and the economic ethos of the north has disappeared. Incentive workers could legally earn less than the minimum rate, which is less than £7 a week. That is why the new clause is justified.
      6.30 pm
      I have not dealt with other wages councils, but it goes without saying that these problems apply to them too. No doubt my hon. Friends will mention them. I assume that we are wasting our time moving new clauses if the aim is to win. But perhaps our words will have some effect on the Minister and his Department. He should look at unfair competition and at the decline in the clothing industry, not only in the past 35 to 40 years, but in the past 10 years. The figures of employment are falling all the time. The industry has great problems. We shall not see again the totals that the clothing industry once had. In some ways, I am glad, because the industry was not perfect. It did not supply the right working conditions. Changes are taking place, but training and higher wages are still needed. The Government have made the mistake of changing the wages council for the clothing industry and others.
      Long before I went to live in Leeds, and when I was serving in the RAF during the war, the phrase "gone for a Burton" was used. It meant that someone had had it. I often wondered where it came from. Some people say it, meaning that they have gone for a Burton ale. But I looked up that phrase again today and it is suggested that when aircrew or others trained in Blackpool and were learning morse code, they had to go to a nearby former Burtons shop to do their test. If they failed, they were flunked, and so they had "gone for a Burton".
      In Leeds, Burtons has gone for a Burton. It does not produce a thing. Unless the Government help the clothing industry, it will all go for a Burton. The Bill shows a singular lack of understanding of the clothing industry's problems, and I commend the new clause to the House.
      Mr. Roger Freeman: I listened with great interest to the speech of the right hon. Member for Morley and Leeds, South (Mr. Rees), as he clearly has great experience and important constituency interests. My constituency of Kettering is in Northamptonshire, in the midlands. There are perhaps 250 or 300 textile employees concentrated in three large firms. I appreciate that the
      904
      conditions there are probably very different from those in some of the towns and cities that Labour Members may describe.
      I have not received any representations about the Bill from the major employers in my constituency, who are in footwear manufacture and the making of leather handbags. However, I have received representations from the clothing industry. I have tried to understand the reason for that difference. Incidentally, I pay tribute to Mrs. Davies, the vice-chairman of the National Union of Tailors and Garment Workers, who has patiently lobbied me for the past six or 12 months. Indeed, she was one of those who yesterday presented a petition in Downing street. For many months, I listened with care and attention to the arguments that she made, not about conditions in my constituency but in the wider national context.
      The central fear of some of the industry's employees is that wages for those under the age of 21 will be cut, with the resources being transferred to the owners of companies, and distributed in profits and dividends. They fear that young people will be exploited. Judging by the conversations that I have had in my constituency, I do not believe that to be so, although my constituency may not be typical.
      I believe that fear to be misplaced for two reasons. First, profitability in the industry is generally low. We well understand the arguments used in favour of toughening the multi-fibre arrangement and helping to introduce sensible measures of protection for the industry. The Minister has a constituency with substantial footwear interests. Before he became a Minister, he was one of the officers of the all-party Back-Bench footwear committee. He understands the unfair conditions facing the footwear industry, which also face the clothing and textile industries. Employers will not deliberately cut the wages of those working in the industry in order to increase distributed profits, because the profits are simply not there.
      Secondly, I have taken the trouble to talk to employers about the effect of reducing national insurance contributions. The evidence is that, with lower employment costs, particularly for those aged under 21, employers are prepared to take on extra labour. Perhaps not many are involved, but that evidence still exists I assume that the hon. Member for Truro (Mr. Penhatigon) spoke for the alliance. I entirely agreed with what he said. He generally supported the argument that, with greater flexibility of wage rates for those aged under 21, On balance, employment prospects would be enhanced. Given last year's Budget, that must be borne out by the evidence.
      I agree with the right hon. Member for Morley and Leeds, South about the inspectorate. He got things exactly right, and I hope that the Minister will reply to that point. It is important that the inspectorate should have not only sufficient numbers, but the organisation and determination to make sure that the law is properly enforced.
      However, I generally welcome the Bill. I do not agree with the fears expressed by those who support the new clause, and I am prepared to support the Bill as it is.
      Mr. Ian Mikardo: You have grouped together, Mr. Deputy Speaker, a new clause that deals with what might broadly be called the needle trades, a new clause that deals with the hotel and catering trades, and a new clause that deals with the retail and distribution

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      trades. It is entirely logical to group them together, as they have much in common. For example, the workers in all three industries are the most vulnerable workers, and those who will suffer most from the Bill's provisions.
      Those workers will suffer most partly because they are relatively defenceless. In all three industries there are some large establishments and employers and I shall come to that point later. But all three industries also have many workplaces that employ very few people. Sometimes they employ virtually no one, as the work is done by homeworkers. As few people are employed, they are very difficult to unionise. Moreover, as my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) pointed out, those working in the industry are often on the move. In all three trades, the turnover of labour is much faster than in, say, the engineering industry. Thus, the workers are not unionised. They are vulnerable and low paid, and work in small establishments that are rarely visited by an inspector, so the employer can get away with almost anything. I shall not weary the House with instances, but many of those quoted in Committee involved serious abuse of workers.
      I smiled to myself when I heard the speech of the Paymaster General, which was based on the assumption that there is a free bargain between employers and workers in a country with 4 million unemployed. Of course there is not a free bargain. The Government say that there can be recourse to an industrial tribunal, but that does not mean much, because in the sweatshops in east London an employer can break the law because he knows that a worker will not go to a tribunal in case he is sacked.
      Anyway, not all workers have that recourse. The so-called safeguards about which Ministers keep talking do not exist; hence the vulnerability of those three industries.
      I want to say a word about each of the three industries to ensure that they are properly covered. My right hon. Friend the Member for Morley and Leeds, South spoke about great factories like Burtons. There were a few of those in east London—Simpsons, Polikoffs, and so on. However, the overwhelming majority of the needle trade in London is in small sweatshops run in exactly the same way and often in exactly the same premises as at the turn of the century. My father worked in them before this century began. There are the same sweatshop conditions now as at the beginning of the century; history is repeating itself. There is no protection for the workers.
      My right hon. Friend asked why we did not have a great discussion in Committee about clause 22 to determine whether it provided extended powers for the inspectorate. It does not matter tuppence whether the clause does or does not give extended powers to the inspectorate because the inspectorate is vanishing and is almost out of existence. It is hideously understaffed, hideously overworked and hideously inadequate. Some establishments in my constituency have been in operation for 12 years but have not had an inspector across the front door. That is how frequently the inspector visits. Yet, simultaneous with the passage of the Bill, the Government are cutting the number of inspectors. In future, inspection will be much less frequent and much more perfunctory—and it is pretty perfunctory now in many cases.
      Inspectors investigate whether proper wage rates are being paid by looking at the wages book. They assume that workers receive the amounts written in the wages book.
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      I can tell the House, from first-hand experience, that that assumption is not universally valid. I suppose that it is valid in the majority of cases, but not in all. In the sort of cases that I have been describing, the only way to find out what Joe or Suzy Bloggs is being paid is to ask them. Sometimes the answer is very different from what is written in the wages book.
      My next concern is about the welfare and catering trades. I accept that there are still one-man or two-man cafés, but during the past 10 or 20 years there has been a huge concentration with the establishment of hotel chains—one has swallowed up another and then a third and a fourth. There has also been the growth of huge fast food chains—the Wimpys, McDonalds, Kentuckys, Pizza Huts and so on. Those chains are hugely profitable: the employers are making enormous profits. Because of the enormous profits, shares in some of the public companies have appreciated hugely during the past few years, and virtually all of them on sweated rates of pay. The huge profits and huge capital gains made by shareholders have been achieved by workers being paid the absolute minimum.
      The Government do not mind that happening because many of those companies donate some of their profits to Conservative party funds—
      Mr. Trippier: No.
      6.45 pm
      Mr. Mikardo: Oh yes. If the Minister doubts that, I am prepared to send him a list of companies. If he challenges me, I will get my list and quote it at length later. That might prevent the Minister from making any more speeches, because it is a very long list.
      In the retail distribution industry there has been considerable concentration with the growth of supermarkets and other specialised chains such as the carpet and DIY chains. There is constant pressure not only to hold down wages, but to lower them. In an earlier debate the Paymaster General spoke about a drive to increase wages. He could not have been talking about this Bill because its purpose is to decrease wages.
      In all the three groups I have mentioned there are vulnerable workers who will be abused even more than they are now. Although the three groups appear to be different each from the other, there is a common case for all of them, which is why it was sensible to group them. It is an overwhelming case for the exclusion of each of the three industries from the Bill. I shall therefore support the new clause in the Lobby.
      Mr. Holt: Part II of the Bill is the part on which I should support the Government much more fully than I did on part I, but I hesitate to do so because I think that, as with part I, they do not have it quite right. The Government have not abolished all wages councils, and they should either have done so or left them alone. To tinker with them is the worst of all worlds.
      If the Government had read the evidence given to the Institute of Personnel Management when it surveyed all sectors of industry and commerce on that issue, they swould have seen very few friends for wages councils. They are not liked by either side—employer or employee. Indeed, the evidence shows that seven or eight years ago the TUC was in favour of their abolition, and we can understand why. The industries with the lowest

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      paid workers are those that come within the wages councils; by definition, wages councils tend to depress wage rates. There are no wages councils for many of our major industries, and if there were none at all the natural process of market forces would operate. However, we have now an unnatural aspect of market forces introduced by wages councils on a set of criteria that are in themselves often meaningless.
      The members of wages councils make decisions without having the responsibility of carrying them out. They do not have to find the money to pay the wages that they set, and they can deliberately opt for a low wage settlement to avoid the hassle that accompanies protracted negotiations. Neither side of industry is done any favours by having wages councils.
      The hon. Member for Bow and Poplar (Mr. Mikardo) observed that there is not strong trade unionism in the wages councils sector. That was part of the TUC argument. If the wages council umbrella were removed, the opportunity and the impetus of the unorganised to become members of trade unions and to be organised would be greater. One of the major reasons why workers in the wages council sector do not join trade unions is that they take the view that they are covered by the councils and that the wages set by these arbitrary bodies is, by and large, what they will receive. By definition, the councils keep workers at the lower end of the pay scale and do not provide a free opportunity for both sides of industry properly to negotiate for a set of wages, terms and conditions similar to that which exists in other industries.
      Mr. Tony Banks: The hon. Gentleman is wrong in two respects. First, previous TUC opposition to wages councils was formulated at a time when we did not have 4·5 million unemployed. Secondly, workers in the areas and industries covered by wages councils have employers who would sack them if they joined a trade union. That is why there have been so many disputes. The employers say, "If you join a trade union, you will go out of the door. There are plenty more people to take your job if you want to go."
      Mr. Holt: I understand the hon. Gentleman's first argument as it is one that appears in the report produced by those who subscribe to the Institute of Personnel Management. It is said in that report that the attitudes of the various sides of industry depend very much on the moment when wages councils are discussed.
      Are wages councils now what was intended by the late Sir Winston Churchill in 1908? Are conditions now exactly what they were then? I submit that conditions are very different in one strategic sense. In 1908, there was no television and no mass media of the sort that we have now. There were not the communications that are available to us. The underlying theme of 1908 no longer applies. I cannot understand why the Labour party is arguing so vociferously in favour of wages councils when they have not improved the conditions of the workers whom they cover and have covered over the years when comparisons are made with other industries. That is why I think that the Government are making a mistake even to have the minimum clause that is now to be found in the Bill.
      We know that the majority of those who are members of wages councils--we went through this in fine detail in Committee—have never worked in industry or
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      commerce. Three quarters of them have come from academic or legal backgrounds, yet they have been appointed to make wages council decisions and orders. The members of the councils have not come up through the trade union movement.
      Mr. Tom Torney: I have a list of members of the retail food trades wages council, and it is clear that the hon. Gentleman does not understand how wages councils are formulated. Their membership is not restricted to university professors or academics. Trade union officials and trade union members sit on wages councils, as do representatives of employers. They try to thrash out a settlement. I appreciate that there are appointed members, and the side that can draw the support of the appointed members wins the day. The order of the retail food trades wages council is a much better one than that which existed before I came to the House 16 years ago, and that has been achieved by trade union representation.
      Mr. Holt: I accept that the hon. Gentleman has strong feelings on this issue. However, one of the arguments set out in the consultative document is that the councils have the very tendency which he demonstrated, which is that of the pendulum effect. They swing one way one year and the other way the next. It might be correct and proper if they were to swing one way for several years. As there is a balance on the councils, the members of them are always looking over their shoulders to ensure that they are not criticised by anyone. At the same time, they are not devoting their attention to the industries for which they are responsible. Instead, they are considering the actions and orders of other councils. In effect, they are equating within a narrow band. If there were no wages councils and if rates of pay were not set artificially for the industries that they now cover, without consideration being given to whether companies can pay more or less, the workers could be better off.
      The Government's argument is that the changes that are set out in the Bill will increase the number of employees. They argued a couple of years ago that by changing the qualifying period for a case to be taken to an industrial tribunal they would similarly increase the number in employment. I have not seen the evidence of that yet in my constituency. The Government were warned, but they did not listen.
      Mr. Deputy Speaker: Order. The hon. Gentleman is being very general in his comments. He should relate his remarks more to the amendments and the new clause.
      Mr. Holt: I had referred to wages councils throughout, Mr. Deputy Speaker, until the last passage before you intervened.
      Unlike the hon. Member for Bow and Popular, I am sorry that the amendments have been grouped together. If they had remained separate, we could have had three separate debates and could have argued the merits and demerits of the individual industries. One of the bad features of national legislation is that it always brings everything down to a common level. The amendment, will do nothing for the workers in the industries to which they relate other than to maintain the status quo in a weakened form.
      I am sorry that the Government have not abolished the wages councils. If their abolition proved to be

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      unsuccessful, they could be brought back at a later date. Until they are abolished and we go through a period when they do not exist, we shall not know whether we would be better without them. We are to have the worst of both worlds, as we shall have a weakening of the existing system and a half-baked, one-line minimum which in reality will not mean a great deal to those who are covered by the wages councils in the industries to which the amendments relate.
      Mr. Greville Janner: The hon. Member for Langbaurgh (Mr. Holt) is living in another world. He does not seem to realise that in the clothing, catering, hotel and retail industries, to which wages council orders apply, workers are disadvantaged and unprotected. They are not members of unions because, on the whole, they are part-timers and/or women employees who do not join unions as readily as men. They are frightened that if they join a union they will lose their jobs. even if they are not especially good ones.
      I am dealing with a firm in my constituency—I do not want to name it because negotiations are taking place—from which a group of workers came to my surgery seeking my advice. The members of the group told me that the company does not like unions and added, "If we join a union, we are afraid that we shall lose our jobs. We have mortgages and families. Our jobs are not brilliant, but at least they are jobs." They showed me how they were protected by their contracts of employment. They were notified of a change of contract. The reason given for the change was "management decision". In other words, the days of Attila the Hun have not gone from the factories of Leicester.
      7 pm
      In its own way, the clothing industry in Leicester has performed a miracle in staying alive. I salute the resilience of the work force and some of the managements which, through their efforts, have kept the industry alive. However, all that is left is the remains of a great industry. I remember my father saying in the House that Leicester would never be hit by a recession and that it got through the last one because people cannot do without shoes, clothing, hosiery and knitwear. Father was right about many things, including most of his criticisms of his son, but he was wrong about that. The effects of the recession and of unlimited imports have kept people in the clothing industry at the lowest wage level and have put many of them out of work.
      The Government did not abolish the wages councils, as the hon. Member for Langbaurgh (Mr. Holt) would have wished, out of any sense of kindness or compassion, but because many of their supporters in the industries recognised that abolishing wages councils and their orders would invite the cowboys in the industries to undercut them by paying even less then they had to pay under the minimum rates of the wages councils orders. That is why the Government did not get rid of the wages councils. That is why the Government are only prepared to get rid of them in stages. That is why we have had the emasculation of the system rather than its total abolition.
      Leicester used to be the second most prosperous city in Europe. Today, unemployment in Leicester is rife. Unemployment in the hosiery industry in my constituency is as high as 60 per cent. The Government have the odd
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      idea that, if they cut wages further and allow employers in the textile hosiery and retail industries to pay sweatshop wages without conditions, there will be more jobs. They think that employers will be prepared to take on more people if those whom they employ are sweated labour. Labour Members are against sweated labour. We believe that the wages councils regulations provide about the only protection there is against it, especially in periods of high unemployment.
      The Leicester Mercury, Leicester's local newspaper, performed a public service by revealing the sweatshop conditions that exist. As my hon. Friend the Member for Bow and Poplar (Mr. Mikardo) said with his usual eloquence, the conditions are made much worse by cutting the strength of the factory safety inspectorate.
      The number of sweatshops is growing and the cowboys are moving in. Homeworkers are exploited. The Government, in their pursuit of more jobs, are removing the rights of people who have jobs. That is no way to create employment. As the hon. Member for Langbaurgh said, in connection with another matter when he was stopped by the Chair, that will not work. There has been no improvement in employment because the Government's policy has taken away the rights of those at work. There will be no improvement in employment because the Government are seeking the destruction of the wages councils, if not by a direct route, then by an indirect one.
      I support the clause proposed by my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) because it would remove from the legislation the clothing and textiles industry, which is in deep recession, and would give some hope to the people who work in it that hon. Members understand, as the hon. Member for Langbaurgh does not, the problems under which they so ceaselessly labour.
      Mr. Tony Banks: New clause 7 states:
      "The hotel and catering trades shall be exempted from Part II of the Act and wages councils in these sectors shall retain existing powers."
      I am a sponsored member of the Transport and General Workers' Union. Some members of the union will be covered by new clause 7. The hotel and catering sector is the second largest sector covered by wages council protection. Three separate wages councils cover workers in pubs, clubs, licensed hotels, restaurants, cafes and snack bars.
      It seems appropriate that the House, the home of the free lunch, should take considerable interest in the conditions that workers experience in the hotel and catering sector. I hope that when hon. Members next enjoy the benefits of a lunch or dinner in one of London's restaurants or hotels, they will think for a moment about the wages and conditions which the workers who have prepared the food, those who have served it, and those who wash up afterwards, must endure. In common with other wages council industries, poor conditions, low pay and poor prospects combine to produce high labour turnover, even in times of high unemployment, in the hotel and catering industry.
      Union membership in the industry stands at just 6 per cent. of the national work force. Collective bargaining is confined to workers in a few large hotels and chains. The majority of workers rely directly on the wages councils to protect their wages and conditions. That is the answer to the comments of the hon. Member for Langbaurgh (Mr. Holt). Workers in that sector do not join trade unions

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      because, if they do, they will be straight out of the door. The industries rely on high turnover and the threat of unemployment, which scare people from joining trade unions.
      Although we could, no doubt, find some common ground in saying that there are defects in wages councils, Labour Members accept wages councils now because at least they provide minimal protection for the workers who most desperately need protection. I am looking to the next Labour Government to take a completely different attitude to the protection of workers in the hotel and catering sector. Labour Members have clearly demonstrated that the industry has changed dramatically because of the fast food chains and the importation of American systems.
      Mr. Holt: The hon. Gentleman has not participated in the debate up until now. Perhaps he missed the important statement from the Labour Front Bench about what will happen if the Labour Party wins the next general election. The hon. Member for Birmingham, Ladywood (Ms. Short) said that a Labour Government would bring in a national minimum wage. Therefore, the wages councils would be null and void.
      Mr. Banks: That does not necessarily follow. I was merely pointing out that, for the moment, we support a wages council system, because at least it provides some minimal level of protection. My right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) said that the Government have not introduced the legislation to force wages up; they have introduced it to force wages down. It is quite remarkable that the Government's philosophy seems to be that the poor should suffer more poverty as a way of inspiring them to greater effort, but the rich should have greater wealth to inspire them. I have not heard of many judges, admirals, generals, consultants, or even politicians, pricing themselves out of jobs, as they take their large wage increases given by central Government. However, in the catering and hotel industry, where wages and conditions are already appalling, the Government want to take away the minimal protection that workers have. That is why I urge the House to support new clause 7.
      Mr. Trippier: I am anxious to deal with many of the points raised by the right hon. Member for Morley and Leeds, South (Mr. Rees). Although I shall try to cover some of the points made by other hon. Members, I am sure that the House will understand if I concentrate on the right hon. Gentleman's points, which were specific. The right hon. Gentleman and I share the experience of not having to change money at Watford. Those of us who come from and represent constituencies in the north are aware of what life is like there.
      My hon. Friend the Member for Kettering (Mr. Freeman) represents a textile and footwear constituency and I know that much of what the right hon. Member for Morley and Leeds, South said was accurate. It was not conjecture or hypothesis. I agreed with many of his points. On many occasions, there has been all-party support on matters concerning the textile lobby—for example, on renewals of multi-fibre arrangements. Many hon. Members have joined forces, as I did when I was a Back Bencher, to lobby Ministers. There is no difference among us in that respect.
      As I tried to point out in Committee, our differences on this issue are political and, to a great degree,
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      psychological, in that one either accepts what the Government are saying—that those under 21 will be discriminated in favour of as a result of being taker, out of the purview of the wages councils—or one does not. I am not trying to put this bluntly; I am simply saying that one either accepts that view or one does not. We touched on this aspect in the debate on the last series of amendments. No Government in their right mind would go out of their way to do any harm to people under 21. We believe that, as a result of this legislation, we shall increase employment.
      My hon. Friend the Member for Kettering put it well. He has experience in a constituency similar to mine of what is going on in industries which employ people who, by any standards, could be said to be low paid. Because we share that experience, we know what it is like.
      As I said, the intention of clause 22 was to use the precise wording in the 1979 legislation in this legislation. I spent some time considering this aspect and took the advice of lawyers in the Department. I am not satisfied that my initial intervention during the speech of the right hon. Member for Morley and Leeds, South was correct. I think that he has a point. There are wider powers in the Bill. If that is correct, I am sure that he will be pleased, and I am certainly not sorry about that. I hope that we agree.
      Mr. Merlyn Rees: Would it not be a good idea for the hon. Gentleman—I do not want to develop this point now—to help us by advising us on the extent to which the powers have been extended?
      Mr. Trippier: I am happy to do that. I am under an obligation to the right hon. Gentleman to make that commitment.
      Of the Opposition's contributions, the point with which I disagreed most was made by the hon. Member for Bow and Poplar (Mr. Mikardo). That is a pity, because I have great respect for him. We had many exchanges in Committee. The hon. Gentleman implied, as did some of his hon. Friends—it was unique—that the Bill's intention was to drive wage,,, down. That is not true. Labour Members could argue that that could have happened if the Government had gone down the route of total abolition advocated by my hon. Friend the Member for Langbaurgh (Mr. Holt), but we did not.
      I carefully followed the points made by my hon. Friend the Member for Langbaurgh. Today, he developed his argument in a way that differed slightly from his approach in Committee. One would have to be foolish to disagree with him when he says that the wages council system does not appear to have worked. That is not open to conjecture or hypothesis. It is a fact. This Government or any Government would face a dilemma in considering whether they should go for complete abolition or whether they should try to remove youngsters under 21 from the purview of the legislation. Contrary to the comments of the hon. and learned Member for Leicester, West (Mr. Janner), no subterfuge is involved in the Government's intention to keep protection just for those over 21. We were convinced, following the consultation exercise. that protection for adult workers had to remain.
      7.15 pm
      I am sure that hon. Members listened carefully to my hon. Friend the Member for Langbaurgh. If we scrapped the whole of the wages council system, as he suggested,

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      we would be taking an incredible risk. Labour Members would never be prepared to take such a risk and, on this occasion, I agree with them. It would be too big a risk.
      I return to the point that I made to the right hon. Member for Morley and Leeds, South. One either believes that we are helping youngsters under 21 to obtain jobs and to take that essential first step on the employment ladder, or one does not. We can argue for hours on this subject. Indeed, I suggest that we have already done so in Committee. We are talking about not a slight division but a massive chasm between us. It does not please me to say to the right hon. Member for Morley and Leeds, South that we are talking about a massive divide, but we believe that we are right and that the evidence is that youth employment will increase as a result of the legislation.
      We accept—I do not think that any hon. Member mentioned this—that there will be some displacement, and it would be silly to deny that. We have always acknowledged that there would be some displacement, but believe that, on balance, there will be an increase in employment among those under 21 in the wages council industries.
      Despite the comments of the right hon. Member for Morley and Leeds. South on clause 22 and his incorporation in the proposed new clause of the provisions of clause 22, I am afraid that, because I do not believe that we can operate two different types of wages council systems, I have to ask the House to reject the new clause.
      Question put and negatived.

    New Clause 4

      SUNDAY WORKING
      'Notwithstanding whatever other determinations a wages council may make in respect of remuneration, the council shall fix a premium hourly rate of remuneration in respect of time worked by a worker on a Sunday.'.—[Ms. Clare Short.]
      Brought up, and read the First time.
      Mr. Torney: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: Order. The hon. Member cannot move the motion, because he has not tabled the new clause. The motion can be moved formally.
      Ms. Clare Short: I beg to move, That the clause be read a Second time.
      Mr. Torney: Thank you, Mr. Deputy Speaker. I apologise.
      I must first declare an interest. I am sponsored by the Union of Shop, Distributive and Allied Workers. I must say in passing that I was astounded at the apparent lack of knowledge of some Conservative Members about the way in which wages council orders work and how they tick. I should be happy to explain how they work to the appropriate Conservative group. I am sure that I can do that because I served for many years as a full-time officer of my union.
      The Government must surely know to their cost that Sunday is special. Despite the Conservative party's huge majority in the House, it was defeated recently on the Shops Bill. That is proof, if ever it were needed, that Sunday is special. The Government's defeat was evidence of the fact that right hon. and hon. Members thought that Sunday was special. Tory Members contributed in no
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      mean way to the Government's defeat. Sunday is as important a part of the Wages Bill as it is of the Shops Bill. The Wages Bill encroaches on our Sunday just as much as the Shops Bill would have done. Conservative Members cannot have double standards. They defeated their Government then: they should defeat them again.
      It has long been established that if a worker is called upon to work on a day that is not a working day, but is a holiday or, as in the case we are discussing, the Sabbath. premium payments should be made. The wages council orders have made it obligatory for such payments to be made by employers to workers called upon to work on the day I described.
      Sunday for most people is a day of relaxation. Relaxation is taken in many different ways. Some people favour amateur sports activities, and others may simply wish to rest, perhaps after a hard week's work. Certainly Sunday is a family day when all can be joined in the true spirit of family life and it is also a day for friends. We should never take action which would prevent people from following their democratic right to attend a place of worship. The employer who asks a worker to give up his freedom on a Sunday should be compelled to pay dearly. It is not just a question of workers wishing to increase their earnings. We should make it as expensive as possible for an employer to call upon his employees to work on a Sunday to deter employers from using workers in that way.
      Wages council orders were introduced to give protection to workers in depressed industries such as retail distribution, catering and other industries mentioned in the previous debate by many hon. Members, where, through lack of trade union organisation. the workers were unable to seek protection in any other way. In my youth I worked in a shop and I know from experience that without the meagre protection provided by the wages councils I would have been expected to work all hours and all days, including Sundays, for a mere pittance paid weekly.
      The introduction of wages councils, while not giving the best conditions to workers in depressed industries, at least provided a basis for better conditions. Wages councils also gave a measure of protection to those workers who were better organised in their trade unions and enabled them to secure better conditions for trade union members.
      Wages councils were hailed by the better employers because they had to sell their wares in the same market as bad employers and, therefore, were subject to unfair competition from those bad employers who would not hesitate to exploit workers and force them to work on Sundays without extra payment. Let us not delude ourselves: there are plenty of employers today, certainly in retail distribution which I know so well, who will work their employees on a Sunday without premium payment and will ask them to work unsocial hours if the Bill is passed in its present form.
      The Government are not a caring Government. They care for profits, not people. That is shown by the Shops Bill which would have compelled people to work on Sundays. The Shops Bill provided no protection for the conscience of workers and, coupled with the abolition of wages councils and Sunday premiums, would have provided no protection for workers. The Shops Bill would have been aided and abetted by a Wages Bill designed to give greater opportunity for private profit while reducing the standard of life of workers in the lowest paid sections of industry, which includes all forms of retail distribution

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      and catering. We must add to that the mass unemployment and the Government's attacks on the trade union movement which are all designed to create a low-wage, high-profit economy. Therefore, I ask the Government to withdraw the Bill or hon. Members to defeat it when it is put to the vote.
      Mr. Trippier: It may be that the hon. Member for Bradford. South (Mr. Torney) was not present two hours ago when I referred to a booklet written by the Trades Union Congress. It sets out the TUC's views, which are in direct contrast to those of the hon. Gentleman. I shall send the hon. Gentleman a copy of the booklet because he will find that the TUC was not in agreement with the latter part of his speech.
      Mr. Torney: Which part?
      Mr. Trippier: I am somewhat short of time and I do not want to repeat what I have already said to hon. Members who have been here for all of the debate. I think that that is a fair point. I shall certainly write to the hon. Gentleman.
      If new clause 4 and amendments Nos. 60, 61 and 62 to clause 14 were to be accepted. they would give wages councils additional powers which the Government cannot accept.
      Under the Bill, the powers of councils are limited to fixing a minimum hourly rate for basic hours and a minimum hourly overtime rate for time worked in excess of the basic hours. If a worker works on a Sunday and that time is in excess of the basic hours laid down by the wages council, the worker will be entitled to the minimum hourly overtime rate for all time worked on that Sunday. The Government strongly believe that the role of wages councils should he restricted to providing only basic protection and that other matters, including holiday payments and differential rates, should be left to be agreed between employers and workers.
      There was almost universal support among employers responding to the consultation exercise for the view that the system had to be drastically simplified if it were to remain. We really cannot continue to put businesses in a straitjacket in which they are prevented from negotiating, as freely as possible, the terms and conditions of employment they can afford.
      If new clause 4 and the amendments were carried, they would undo one of the prime objectives of the Bill—that of releasing employers from unnecessary burdens and enabling them to give more time to running their businesses.
      New clause 5 would enshrine in statute the existing rights of 2·7 million workers in wages council trades. The House will wish to know that many of the arguments advanced by the Opposition in support of this proposal were debated at length in Committee. I am happy to restate the Government's case.
      Part II of the Bill is about deregulation and simplification. Wages councils have been able to fix a wide range of terms and conditions. That has had the effect of putting employers in the legal straitjacket I referred to earlier, which has made it all but impossible for them to negotiate with their workers in a way that is more closely tailored to the needs of the business. The majority of employer responses to the consultation exercises were clearly in favour of radical reform if the wages council system were to be retained.
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      The House will wish to be aware that workers currently employed under a contract incorporating any or all of the terms of existing wages orders can expect their employment to continue on that basis unless the terms of their contract are changed. A contract cannot be changed unilaterally, but either party may seek at any time to change the terms of the contract by agreement.
      If an employer seeks to change the terms of a worker's contract and the worker is unwilling to accept the new terms, he can sue in a civil court for breach of contract, whether or not his employment has terminated. As a separate right, the worker can, if he wishes, seek compensation through an industrial tribunal on the ground that he has been constructively dismissed, provided he has at least two years' service. It will be for the tribunal to decide whether the change in contractual terms is sufficient in law to amount to constructive dismissal. These are substantial protections, as the House will recognise.
      Part II of the Bill is a balanced measure. It will prevent the detailed prescription of a multiplicity of terms and conditions which are more properly for agreement between employer and worker. At the same time. it preserves the essential core of the system by providing basic protection. The amendments are wholly incompatible with the Government's objectives, and I ask the House to reject them.
      7.30 pm
      Ms. Clare Short: The lack of interest in new clause 4 shows an extreme case of double standards. There was a major revolt in the Conservative party on Sunday trading, when we were told that there was deep concern to keep Sunday special because of people's Christian commitments or humanitarian concern for the family. so the Bill was defeated and the Government were forced to withdraw it. Today, the new clause attempts to minimise the requirement for shopworkers tc work on a Sunday, and no one is interested.
      We all agree that some people must work on a Sunday, but most of us think that Sunday work is unfortunate and should be minimised. Anyone who is asked to work on a Sunday should be rewarded accordingly. At the moment shop workers, for example, get double time if they have to work on a Sunday. That makes the work expensive arid means that employers are less likely to demand it. The power to set a premium for Sunday work is being abolished by the Government, which exposes a lack of concern for shop workers and others working on a Sunday. That shows the hypocrisy in the Tory party's stand on Sunday trading. We believe that the power to set a special rate for Sunday should be restored to wages councils so that all workers are not too readily required to work on a Sunday and are adequately rewarded if they are so required.
      New clause 5 is also important. It says that those currently employed by wages council industries should not have their conditions of work reduced. The Minister talked about their contract of employment and certain conditions that they might have under their contract, but surely anyone working in a wages council industry has as an implied term of his contract the right to the protection of the conditions that are laid down in the wages council orders. That includes overtime, differential and premium

      917
      rates, holiday pay and holiday entitlement. Suddenly, by legislation, the Government are weakening the workers' contracts, and the protection that they have.
      It is perhaps widely understood that young people will suffer as a consequence of part II, but it is less well understood that adult workers in wages council industries will suffer gravely. No longer will there be provision for holiday pay or holiday entitlement, or premium payments for night work, Sunday or Saturday work, and so on. No longer will there be differentials for skill. There is concern among employers that that will lead to less training and more poaching, and that they will not be able to hold skilled workers. All that is to be wiped away by the Government in their dogmatic adherence to deregulation, as they call it, but we know that it is all about reducing workers' wages.
      Amendments Nos. 60, 61 and 62 attempt to give back to wages councils the power to fix premium rates for Sundays, differential rates and holiday pay. The power would not have to be used by the wages council. Why do the Government not allow wages councils to fix those rates if they think they are beneficial to their industries? The Government talk about freedom of choice and freedom for employers and workers to regulate conditions in their own industries as they see fit. We say that the Government do not mean that. If they did, they would leave to the wages councils the power to fix conditions which they thought best for their own industries. Instead, the Government are wiping away those powers and thus reducing the conditions of work for the poorest workers in the wages council industries.
      Question put and negatived.

    Schedule 2

      CONSTITUTION ETC. OF WAGES COUNCILS
      Mr. Trippier: I beg to move amendment No. 59, in page 32, line 4 at end insert—
      '(1A) Unless it appears to the Secretary of State to be inappropriate in all the circumstances for this sub-paragraph to apply to the wages council—

      (a) the employers' association nominated by him for the purposes of sub-paragraph (1)(a), or

      (b) where two or more employers' associations are so nominated, at least one of those associations,
      shall be an employers' association appearing to him to be representative of small businesses within the scope of operation of the wages council.'.

      In Committee my hon. Friend the Member for Darlington (Mr. Fallon) tabled an amendment to schedule 2 designed to ensure that the voice of small businesses had a chance to be heard when important decisions affecting their prosperity, and even their survival in some instances, were being discussed in their wages council. My hon. Friend withdrew his amendment on the understanding that we would table another with the correct technical wording to cover the point that he made. The hon. Member for Bow and Poplar (Mr. Mikardo) was very supportive of the amendment.
      As the Secretary of State does not normally appoint employers' or workers' representatives himself—it would not be appropriate for him to do so in most cases—the way in which to secure the result intended is to
      918
      ensure that at least one of the associations that he nominates to appoint employers' representatives on the council is truly representative of small firms.
      The amendment is without prejudice to the fact that on many councils there are already representatives of associations which claim to represent small businesses or to represent both large and small businesses—some do both. My hon. Friend's point was extremely well made and accepted by the vast majority of, if not all, members of the Committee. I undertook to table another amendment, and that is the reason for the amendment. I hope that the House will accept it.
      Mr. Michael Fallon: On behalf of Conservative Members, I thank my hon. Friend for fulfilling the undertaking that he gave in Committee. My amendment commended itself across the Committee. I was grateful for the support that I received, especially from the hon. Member for Bow and Poplar (Mr. Mikardo).
      My hon. Friend the Minister took away my amendment, and I notice that his amendment expresses the effect of my amendment in about 50 words, whereas I struggled to contain it within only eight. However, it would be wrong to carp at this stage of the proceedings.
      This is a small but important point. The amendment means that from now on small businesses will have a watchdog on each wages council, able to speak directly to the heart of Government on the way in which wages councils and their orders operate. This applies not just to the larger companies that are covered by wages council legislation, but to the very small—the one-man or two-man family business. I am particularly pleased with this provision.
      Amendment agreed to.

    Clause 14

      WAGES ORDERS
      Mr. Trippier: I beg to move amendment No. 63, in page 14, leave out lines 10 to 12 insert—
      '(1A) Any such order may—

      (a) make different provision under subsection (1) in relation to periods of time beginning with different dates;

      (b) provide for any matter fixed by the order in pursuance of that subsection to have effect only as from a date later than that on which the order comes into force;
      but no such order shall provide for a limit fixed in pursuance of paragraph (c) of that subsection to have effect at a time when no rate or rates fixed in pursuance of paragraph (a) or (b) of that subsection will have effect under the order.'.

      This is essentially a technical amendment designed to remove a possible doubt that arises in the wording of the Bill as to whether wages councils will be able to continue to provide, within the space of one wages order, for staged increases in minima or reductions in the point at which the overtime rate becomes payable. As hon. Members may know, under past legislation the councils are free to stage increases if they so wish. It is not an everyday occurrence, but there are times in negotiations when both workers' and employers' sides are glad to make use of it.
      It was never our intention that the reference in the new legislation to single rates should remove that flexibility from future negotiations and make it necessary for councils to meet all over again, issue new proposals and make new orders just because they wish an uplift in one particular item to be staged rather than implemented all at

      919
      once. It seems that they may have to go through that laborious, expensive procedure if we do not make this minor adjustment to the Bill. I am sure that negotiators on both sides would be disturbed if they found, on enactment of the Bill, that we had inadvertently imposed the extra burden of additional meetings upon them.
      I ask the House to accept the desirability of the amendment in the interests of retaining the present flexibility for negotiators on both sides.
      Amendment agreed to.
      Mr. Trippier: I beg to move amendment No. 64, in page 14, line 36, leave out from 'In' to 'as' in line 37 and insert
      'this Part any reference, in relation to a time worker, to time worked by that worker shall be construed'.
      Mr. Deputy Speaker (Sir Paul Dean): With this it will be convenient to take Government amendments Nos. 65 to 74.
      Mr. Trippier: All the amendments in this group are for the purpose of clarifying the Bill and safeguarding workers' rights. Clause 14 requires any reference to time worked by a time worker in subsections (1) and (3) to be treated as including a reference to waiting time, which is time during which a worker is required by his employer to be available at his place or work and waiting for work to be given to him to perform, but where no work is available. The need for such a provision is self-evident.
      Amendment No. 64 clarifies and strengthens the "waiting time" provision by making it clear beyond doubt that any reference in part II—not just in subsections (1) and (3) of clause 14—to time worked by a time worker shall be construed as including a reference to time during which he is required, whether in accordance with his contract or otherwise, to be available for work and is so available at his place of work.
      This is a small but important additional safeguard which I commend to the House as being necessary to avoid any possibility that could result in workers somehow not being entitled to payment for "waiting time".
      The intention behind amendments Nos. 65 to 74 can be simply explained. The amendment to subsection 1(3) is designed to make it absolutely clear that the offence of failing to pay not less than the statutory minimum requirement is normally tied to a particular week. This effect may well be achieved because, as the subsection is currently drafted, an employer is required to pay any worker to whom an order applies not less than the statutory minimum remuneration, which is defined in clauses 14 and 15. Nevertheless, it is considered desirable for this subsection, which creates a criminal offence, to be completely clear and unambiguous. The amendment achieves this objective.
      If an employer is convicted of failing to pay a worker not less than the statutory minimum remuneration, clause 16(4) and (5) enable the court to award arrears of wages which have accumulated during the two-year period prior to the date of the offence. As drafted, the effect of clauses 16(4) and (5) is that all remuneration paid to the worker for the entire two-year period would have to be added together and compared with all SMR due for that period. Any shortfall in SMR would be the amount that a court could order the employer to pay to the worker. However, this method of calculation could produce the result that no
      920
      arrears might be due even though, for some periods during the two years, the worker had been underpaid, or indeed paid no wages at all.
      The Government consider that this result is not within the spirit of the legislation and does not adequately protect the interests of workers. That is why we have tabled these amendments. Their effect will be that the court, in deciding the appropriate sum to award by way of arrears, will focus only on weeks or, where appropriate, groups of weeks up to four, during which the worker was underpaid in the two-year period prior to the date of the offence, ignoring weeks when the worker may have received in excess of the minimum, and to make an order for repayment on that basis.
      It is necessary to make provision for periods of up to four weeks to be grouped because some workers—most commonly those who work in restaurants, shops and supermarkets—are paid under their contracts by reference to periods of longer than a week—usually a cycle or rota not exceeding four weeks—during each of which they may work a varying number of hours, but for which they are paid a fixed sum each week. Taking the whole of that cycle into account, it might be the case that no underpayment occurred even though, in individual weeks during the cycle, the worker's pay may have been above or below the statutory minimum. In this situation it would be unfair for the week or weeks of underpayment falling within the cycle of employment to be taken separately in the calculation of arrears when, over the whole cycle, the worker had not been underpaid.
      These amendments are balanced and sensible and will assist part II to operate as intended. I commend them to the House.
      Ms. Clare Short: The Opposition support any amendment that makes it more likely that workers who have been illegally underpaid will get their arrears of pay. This is a small adjustment, but it is welcome and the Opposition do not resist it.
      May I ask the Minister to repeat the undertaking that he gave in Committee about the redrafting of clause 17? I am grateful to him for having raised the matter with me and for saying that it is still under consideration and that he intends to hold to his undertaking. It is right, however, that it should be on the record. Will the Minister give an undertaking that his promise to look at the clause and redraft it in the way that was suggested in Committee still holds?
      Mr. Trippier: I am glad that the hon. Lady was kind enough to refer to the fact that earlier today we were in touch on this matter. I gave a clear undertaking in Committee, and I do not have the slightest wish to move away from it. We detected in Committee what we believed to be a dichotomy between part I and part II, and I said that on Report we would come back with a clear amendment, which I think will have to be to part II. The parliamentary draftsman says that he requires more time That is not to suggest, by any stretch of the imagination. that we are moving away from our undertaking. I give a clear undertaking now to the hon. Lady that the clause will be ready for amendment in the other place. I am sure that we shall be able to meet the point that the hon. Lady raised with me in Committee.
      Amendment agreed to.

    Clause 16

      EFFECT AND ENFORCEMENT OF WAGES ORDERS
      Amendments made: No. 65, in page 16, line 25, after 'who', insert
      ', in relation to any week,'.
      No. 66, in line 33, leave out
      'then, subject to subsection (6)'
      and insert
      'the court may (subject to subsection (5A)) order the employer to pay to the worker the appropriate sum in respect of the week in relation to which the offence was committed, and (subject to subsections (5A) and (6))'.
      No. 67, in line 35, leave out 'such' and insert 'other'.
      No. 68, in line 36, after 'employer', insert 'such'.
      No. 69, in line 37, leave out 'during' and insert
      'in relation to any week falling within'.
      No. 70, leave out line 44 and insert
      'in respect of the week in relation to which the failure occurred'.
      No. 71, in page 17, line 5, leave out
      'during the period of two years'
      and insert
      'in respect of the week'.
      No. 72, in line 7, leave out 'any' and insert 'the'.
      No. 73, in line 9, leave out 'during that period' and insert
      'in respect of that week'.
      No. 74, in line 10, at end insert—
      '(5A) A court shall not make an order in the case of any time worker under subsection (4) in respect of any such offence or failure as is mentioned in that subsection if—

      (a) the offence was committed or the failure occurred in relation to a week forming part of a cycle of weeks (not exceeding four) during which the time worked by that worker in a week was different in different weeks: and

      (b) the total remuneration paid to that worker in respect of the total time worked by him during the cycle was not less than the aggregate of the statutory minimum remuneration provided for him by the relevant order under section 14 in respect of the time worked in the constituent weeks of the cycle.'.—[Mr. Trippier.]

    Clause 19

      OFFICERS
      7.45 pm
      Mr. Tom Pendry: I beg to move amendment No. 75, in page 19, line 29, at end insert
      'and he shall appoint an adequate number of inspectors to ensure that the law is complied with in all workplaces covered by Wages Council orders'.
      Mr. Deputy Speaker (Mr. Ernest Armstrong): With this, it will be convenient to discuss amendment No. 77, in page 21, line 19, at end, insert—
      '(8) Officers acting for the purposes of this Act shall normally prosecute on the first occasion when an offence is discovered.
      (9) A report shall be published annually listing the cases where prosecution was not brought and detailing the reasons for non-prosecution'
      Mr. Pendry: These are very important amendments. If the Minister thought that his amendments were balanced and sensible, these are even more so.
      Yesterday, a basic myth, which has been widely held, concerning the Tory party was smashed and is now dead and buried. When the Paymaster General rejected new clause 10, which would have given workers the option either to be paid in cash or by cheque, the party that proudly boasts that it is the party of freedom of choice for
      922
      the individual lost one of its basic claims. We argued that there should be freedom of choice for the worker, but the Government voted against it.
      If the Government reject these amendments they will not be seen to be the party of law and order. Many of my right hon. and hon. Friends feel that the Government have already lost that claim, following their disastrous record on crime since 1979. The Government's policy on law enforcement in the industrial sphere is at stake in this debate. We debated at some length in Committee the basic principles that underlie the amendments, but the Minister was at his most unconvincing when he tried to answer the points put to him by me and some of my hon. Friends.
      In a BBC Radio 4 interview on 24 April the Under-Secretary of State said that he favoured a firmer line being taken by the wages inspectorate with employers and that he intended to come down like a ton of bricks on recalcitrant employers. That could only mean more prosecutions. The Opposition intend to hold the Minister to that undertaking. However, there are many reasons why the Opposition find it difficult to believe that undertaking. One reason is that, on Second Reading, the Under-Secretary of State said that only 8 per cent. of those who are visited are found to have broken the law, and that the Government were concentrating on the worst offenders. I shall demonstrate later what his Department means when the Minister says that it is dealing with the worst offenders.
      There is another good reason for our disbelief in the Minister's intentions: the well-known letter to me of 8 April in which the Minister informed me that he intended to cut the wages inspectorate by 85 personnel following the enactment of the Bill. In other words, 85 policemen—for that is what they are—will be taken away from the already inadequate number of people who are responsible for upholding the law. The charge that was levelled at the Minister then, as now, is that he has grossly overstated the simplification of the wages orders. The Bill is unlikely to reduce the inspection resources needed by the Bill. The most complex provision of current wages orders, the piecework rate, is to be retained and will be made even more important, as clause 15 prevents any other rate from being applied to pieceworkers.
      Most of the work of the wages inspectorate consists of visiting employers and checking their records. Although the number of records to be checked will be less, there will still be the same number if not more employers covered by the wages councils.
      The absence of records for a significant proportion of workers will present new difficulties. As a result of the exclusion of those up to the age of 21, unscrupulous employers could simply not keep the records required by clause 18(1), especially for home workers. At present, many inspections are confined to the records and the underpayment of workers for whom records are, illegally, not kept will go undetected. Inspectors will have a greater need to interview workers to discover their ages which, at present, employers are required to record. Such interviews would be extremely time-consuming. The Minister has not thought that through.
      With regard to home workers, the inspectorate will be completely powerless to carry out any check if the employer denies using home workers under the age of 21. Most of the Minister's claims to justify the proposed cuts in the wages inspectorate are bogus. The exclusion of young workers will not mean less work. The workers may be fewer in number, but the number of firms will be

      923
      greater. In Committee, the Minister said that more firms would register. We argue that the 21-plus rule introduces an additional age check. From today's debate we learn that the Minister has not thought through the effect of increasing the powers of the wages inspectorate as a consequence of clause 22. That is an obvious case of the Minister not thinking through the need for additional wages inspectors.
      How many staff have been allocated to the task of checking and how many will be allocated to cope with the additional responsibilities? In Committee, the Minister claimed that it should be possible to increase the number of postal checks. Such checks are ineffectual and allow the potential underpaying employer a self-check. It also gives an advance warning of a possible factory inspector visit. In how many other areas does a law enforcement officer give advance notice of a visit to check whether an offence has been committed? I hope that the Minister will give details of his plans to expand the postal questionnaire.
      The Minister has an opportunity to make the wages inspectorate a truly effective policing body, but he intends to cut that body by 40 per cent. At present, an employer in the wages councils sector can expect, on average, to have a visit from an inspector once every 12 or 14 years. Even then, the employer is forewarned. It is no wonder that there are so few prosecutions. [Interruptions.] It is quite clear that the Minister is not following the argument.
      Mr. Trippier: I disagree with it.
      Mr. Pendry: If the Minister disagrees, he has every right to intervene.
      I do not believe that the Minister can disagree with a great deal of what I have said, as sometimes his own logic would draw similar conclusions. It is no wonder that there are so few prosecutions. Even when there are prosecutions they hardly make a dent in employers' profit margins.
      Recent figures from the Department of Employment show just how few prosecutions occur. In 1979, there were 12 investigations which resulted in prosecution and conviction. In 1980 there were eight, in 1981 there were eight, in 1982 there were seven and in 1983 and 1984 there were two.
      At constant June 1985 prices, the average amount of fines paid out was £177 in 1979, £246 in 1980, £446 in 1981 and £107 in 1984. There were 8,227 complaints recorded in 1982 and 8,027 in 1983. There were six prosecutions in England in 1982. In 1983 there were two. In 1982 and 1983 there were none in Wales. In Scotland there was one in 1982 and none in 1983. All these figures show the kind of operation which is presently in practice. So much for the Minister's claim that he is concentrating on the worst offenders. Anyone who believes that will believe anything.
      A comparison of the number of such prosecutions with the number for television licence evasion makes unlikely reading. In 1984 there were 109,143 prosecutions for television licence evasion. Also in 1984, 27,000 people were prosecuted for not having a licence fixed to their cars. Some 226,000 people were prosecuted for registration offences and some 192,308 people were prosecuted for vehicle test offences.
      I could go on, but I do not wish to labour the point. The offences in industry are far worse than some of those offences, but the employers go unpunished. Few of the people prosecuted for the other offences were given a
      924
      second chance—they were prosecuted on their first offence. Prosecution in industry should be for the first offence. Some employers are punishing the low-paid workers in our community who are sometimes on the poverty line.
      There should be an annual listing of prosecutions not brought and detailed reasons for non-prosecution. We could then judge effectively how the Bill is operated and have more meaningful debates on the subject.
      The case for amendment No. 75 and amendment No. 77 was made out in Committee when practical illustration after practical illustration was given to the Minister, especially by my hon. Friends the Member for Birmingham, Ladywood (Ms. Short) and for Bow and Poplar (Mr. Mikardo). They described the sweatshop conditions in the east end of London and in Birmingham, and they may give some more examples tonight. The Minister appeared to be listening in Committee as he appears to be listening now, but he does not often respond in a fair and reasonable manner. In truth, I feel a weeny bit sorry for him because he is not in charge of the Bill and nor is his right hon. and learned Friend the Paymaster General. The long arm of the Treasury effectively controls the Bill. Nevertheless, the Minister's inconsistencies are considerable. In Committee, he said that he wanted an improvement in the register of firms under the purview of the wages inspectorate. He admitted that a number of employers were illegally evading registration. Surely, the logical conclusion of that must be that, if there are more firms, there must be more factory inspectors. The Minister also said he wanted more prosecutions, and the logical conclusion of that must be that there should be more inspectors.
      The Minister does not follow his own logic. If he did, he would support our amendments. The Minister's failure to do so shows that he is not in command of the situation The Government are softer on law and order than anyone thought hitherto. Many unkind people say that the Government are looking after their friends by introducing this legislation. Others would say, more accurately, that the Government's intention is to scrap wages councils. The Bill is a first step in that direction. We will not have to wait too long, however, to have a Government who will reverse that trend. In the meantime, the damage done by legislation such as this must be resisted with all our power.
      It is quite possible that following the example of what happened with the Shops Bill, Conservative Members in another place will have a more sensible debate than we have had, and the Bill might be legislated out of sight. If we do not divide the House, it is not because we do not feel strongly about the amendments, but because of lack of time. We await the Minister's reply and expect the other place to hear this debate. It will be able to draw its own conclusions.
      All is not lost, however. The Minister might realise that what he said on Radio 4 on 24 April about coming down like a ton of bricks on bad employers can be achieved only by supporting our amendments.
      8 pm
      Mr. Ken Eastham: This is a subject on which we could go on at great length, expressing our disgust. If ever a clause needed attention, this is it. Before the Committee stage, the House raised the

      925
      shortage of wages inspectors with Ministers during Question Time. We deliberated the matter at great length in Committee.
      The Government's desire to cut the protection of workers is now exposed. The Minister is shaking his head in disagreement. I do not believe that he could make a genuine case justifying reducing the number of wages inspectors. I look forward to his speech, knowing that the only case that the Government can make is rotten.
      I should like to put the matter in perspective by illustrating what happens in Manchester. There are only six wages inspectors for the whole of the Greater Manchester area in which there are 25,000 workplaces. Each inspector is therefore responsible for more than 4,000 workplaces.
      Mr. Mikardo: Perhaps my hon. Friend would like to carry the arithmetic a little further. If each of the inspectors inspected five establishments a day, which would be a pretty full day's work, he would get round to each establishment once every 18 years on average.
      Mr. Eastham: I am obliged to my hon. Friend. They would be extremely fortunate to manage five visits a day as there is paper work to be done, all manner of documentation, and travelling time.
      I recall the Minister trying to pacify the Committee by saying that inspectors cope in other ways. They have the magical method, he told us, of going through the Yellow Pages and telephoning factories, presumably asking each, "Are you still operating? Are you abiding by the wages council's guidelines? Could you tell us whether you are breaking the law?" One can just imagine the employers replying. "Yes. Everything is right here. We pay the right rate and conditions are right." That is absurd, but the Government are not satisfied. They have decided to reduce the number of inspectors still further. I remember my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) asking about the decline in the number of wages inspectors. The Minister admitted that there would be further reductions.
      When some trade unions made inquiries among working groups in wages council establishments, they discovered that two thirds of the workers were unaware of their legal rights. I realise that that slots in nicely with what the Government want. The Minister said earlier that the Government consulted the employers, who wanted this, that and the other. He never talked about consulting the trade unions and asking them about the Bill.
      Mr. Trippier: The hon. Gentleman knows very well that we consulted the trade unions. We discussed this matter at great length in Committee.
      Mr. Eastham rose—
      Ms. Clare Short: But the Government did not listen to them.
      Mr. Trippier: The hon. Lady says that we did not listen. The wages councils have not been completely abolished, so we did listen to a certain extent, did we not?
      Mr. Eastham: That is marvellous. What a revelation. The Minister claims that the fact that we still have wages councils proves that the Government listened to the trade unions. Never mind the Bill, he argues, we have a sop in that we still have wages councils. So that is the Minister's
      926
      consultation. I bet that he want into far more detail with the employers. I bet that he went through the Bill clause by clause establishing what they wanted. The Committee stage lasted nearly three months, but very little has been given to worker groups and the trade unions.
      We are faced with sheer hypocrisy. The Government are turning a blind eye to any malpractice and any breach of the law. Anything that employers can get away with goes. The Government applaud this new type of management, which is a form of legal gangsterism. The workshops that are covered by wages inspectors enjoy the worst working conditions.
      Mr. Donald Thompson: Name one.
      Mr. Eastham: Never mind about "Name one"; we would be here for about two years giving a list if we were given a little time.
      Ms. Short: In a minute I hope to make a speech, and I shall tell the Minister of at least 25 firms in my constituency which are breaking the law—information for which he asked in Committee.
      Mr. Eastham: If the hon. Member for Calder Valley (Mr. Thompson) took the trouble even to visit his back yard, never mind the rest of Greater Manchester, the midlands and London, he would probably find scores of such companies. I should be pleased if the media investigated the matter and inquired whether some factories fit within that category. Perhaps we could arrange for inquiries to be made, in view of the hon. Gentleman's remarks.
      Workshops are usually unorganised and, unfortunately, without trade unions. Often the majority of workers are women, who are often traditionally timid. That gives rise to gross abuse, and advantage being taken of the workers.
      On many occasions the Minister admitted that he recognised there were cases of underpayment. That is one of the biggest and most important issues to which wages inspectors apply themselves. The Minister admitted that an underpayment of £11·9 million over five years had been discovered. Obviously, he immediately said that the wages inspectors intervened and managed to recoup 80 per cent. of that sum. But the fewer inspectors, the greater the sums that will be stolen from workers because of reduced policing action. The truth is that neither the Minister nor the Government want to know because this is a pay-off to employers. With an election approaching. the Government promise this, that and the other, and this time the pay-off is that employers will be allowed to introduce rotten conditions.
      I shall conclude by reinforcing some points which my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) eloquently put on the record. Home workers are the most exploited worker group. Usually they are married women who cannot go out to work, perhaps because they have young children or sick parents to look after. Consequently, they are not in a position of strength, and are isolated. Their only hope is for support in legislation and from wages inspectors.
      This is a blatant example of the Government encouraging sweatshops. The Minister may argue that this new Bill is better than the last Bill, but there is no reason to make it a rotten Bill because the previous one had some inadequacies. Today, we should be introducing a good Bill with clauses which benefit both sides, but this Bill is extremely one-sided. It is loaded on the side of employers.
      Ms. Clare Short: Amendment No. 75 requires the Government to appoint an adequate number of inspectors to enforce the law in all workplaces covered by wages councils orders. We are amazed that the Government will resist the amendment. If they resist it, they will be telling us that they do not intend the law to be enforced in all workplaces where wages councils orders should apply?
      Amendment No. 76 says that there should be a change in prosecution policy. That is extremely important because the law has been widely breached and employers know that they will not be prosecuted. We want a change in the declared policy of not prosecuting on a first offence to normally prosecuting on a first offence. We do not mean on all occasions. On some occasions it may be reasonable not to prosecute, but we do not accept that the present policy is right. It is a blank cheque to employers to break the law, and they know it.
      In Committee the Minister gave us an undertaking—he has been honourable in complying with most of his undertakings—that he would review the prosecution policy. We are looking forward to that review. It is an extremely important undertaking because the need for a change in prosecution policy is urgent.
      The problem is that the old law has been widely broken and the inspectorate does not ensure that it is enforced. We now have a weaker law and a weakening of the inspectorate, so we can expect that law to be widely broken and that there will be virtually no standards. The hon. Member for Langbaurgh (Mr. Holt) may get what he wants because, in practice, we will not have wages council and the law will not matter in most sectors of industry. There is a real danger of that.
      In Committee, the Minister undertook to make a special examination of the new textile industry in my constituency. I am not asking for any special favours for my constituency, but I would like the law to be applied there. That seems to be a reasonable request.
      8.15 pm
      Mr. Holt: The hon. Lady referred to her constituency. May I remind her that in Committee she also talked about her constituency and said:
      "Tuberculosis has reappeared in my area. People who do not have proper housing or clothing and are not eating properly are vulnerable to such diseases".—[Official Report, Standing Committee K, 10 April 1986; c. 508.]
      That is exaggerated language. I took the trouble to find out the facts. From 1974 to 1984 the number of cases of tuberculosis in Birmingham fell from 477 to 293.
      Mr. Deputy Speaker: Order. I am finding it difficult to relate these remarks to the amendment.
      Ms. Short: The hon. Gentleman's information may be right, but I recently visited a youth training scheme workshop from which two young men had left with TB. That was the case to which I was referring, and I can give chapter and verse to the hon. Gentleman, if that is what he wants. TB has reappeared among young males whom one would not normally expect to have TB. Both the people who run the workshop and I find that shocking, and it is worthy of comment.
      The Minister undertook to look into the problems in my constituency, and asked me to provide him with whatever information I could find about them. The experience of my hon. Friend the Member for Bow and Poplar (Mr. Mikardo) of the textile industry in his constituency is
      928
      noteworthy. My constituency is not a traditional textile area. The new textile industry in the west midlands developed in the late 1970s and accompanied the great rise in unemployment. I have gone to some trouble to answer the Minister's request.
      A project called Aekta is based in my constituency and seeks to work, particularly with Asian workers, in the largely Asian new textile industry so that their legal rights are enforced. It produced a report, which was published yesterday, on how the law is widely breached—I hope that the Minister is listening.
      Mr. Trippier: I am listening.
      Ms. Short:—the Minister is not listening—and how the inspectorate does not assist individuals who approach it for help. The report gives chapter and verse. It is shocking, and I should like to give a copy to the Minister, together with a list of employers, compiled by the project, who are known to have broken the law. I ask the Minister to look at them, and not merely to put the matter right in Ladywood, but to draw lessons about what is going on elsewhere.
      The law is being widely flouted. If the Minister proceeds with his present proposals to cut the wages inspectorate and to continue with a no prosecutions policy on a first offence, the law will continue to be flouted. The Government are almost encouraging employers to turn a blind eye to the law. It is outrageous.
      In my area, there is an association of the owners of those firms. They advise each other on how to get round the law, and the inspectorate is probably convinced that they do not know the law. It is no excuse for someone to say that he does not know the criminal law. It is time that we prosecuted employers who break the law; then they would all start complying with it. I ask the Minister seriously to comply with the undertaking which he gave in Committee to review prosecution policy. If he reviews it, he will have to concede our other amendment, whether tonight or later, and appoint more wages inspectors because the law cannot be enforced by the present inadequate number or the number after the threatened cut in inspectors.
      Mr. Trippier: I am happy to confirm that I am anxious to review the prosecution policy. I am also anxious to study in detail the information which the hon. Member for Birmingham, Ladywood (Ms. Short) has brought to my attention. In Committee, the hon. Lady sought to draw the attention of all hon. Members to the problem in her constituency. As the Minister responsible for this area, I must consider carefully the position there. No Minister of any Government would condone the breaking of the law.
      The hon. Member for Stalybridge and Hyde (Mr. Pendry) made an uncharacteristic, unfriendly and unkind speech. I have come to know and respect the hon. Gentleman over many years, but he broke with tradition today. I could not believe what heard. Although the hon. Gentleman was right in quoting accurately from the first part of the letter that I sent to him—I stand by the figures I gave—he did not mention the second page of the letter, which I shall strengthen and develop in my reply to the debate. Indeed, it will form the substantive part of my reply to him and to the hon. Member for Manchester, Blackley (Mr. Eastham)—
      Mr. Eastham: It was a very weak second page.
      Mr. Trippier: No. I spent a long time putting it together. It was not a case of speaking off the top of my head. It was well prepared, well thought out and researched.
      I wish to go a little further than the hon. Member for Blackley was prepared to go in his speech. He quoted what I said on the "Today" programme on Radio 4. It is true that I said that I wanted to take a firmer line, but I also said that we should not come down like a ton of bricks. I also said that it was important to recognise that, as a result of our simplifying the wages council orders, there would be less likelihood of an employer praying in aid the fact that he could not understand the wages council order and that that was why he was underpaying his worker by mistake. All members of the Standing Committee agreed on that point.
      Let me try to develop the argument that I put in the letter to the hon. Member for Stalybridge and Hyde, which still bears close examination. First, I said that, as a result of the legislation,
      "wages orders will not have any of the present complexities and it will be simpler and quicker to check compliance: there will be much less likelihood of underpayment due to employers being unable to understand the intentions of councils; workers will be clear about their legal entitlement; the number of workers whose pay has to be checked will be about 20 per cent. less because those under 21 years of age are to be excluded; and it should be possible to increase the proportion of initial checks carried out by postal questionnaire."
      Mr. Eastham: The Minister's remarks show that it does not matter about those below the age of 21. It reduces the numbers.
      Mr. Trippier: That is not the point and the hon. Gentleman knows it. We are talking about two different things. We are talking about taking those aged under 21 out of the purview of the wages councils. What joins the Opposition and the Government is that we are determined to ensure that the law is observed. By any standards, the figures given by the Opposition on Second Reading and in Committee are wildly exaggerated. During the past three years, 5 per cent. of the workers whose pay was checked by inspectors were found to be underpaid. We are worried about the percentage of workers; at least, that is what I thought we were discussing in Committee.
      Mr. Eastham rose—
      Mr. Trippier: May I finish this exposition of my letter to the hon. Member for Stalybridge and Hyde? The sixth point was that a significant reduction in the inquiries received by wages inspectorate officers is expected. On compliance with wages council legislation, I said that figures were not available yet for Greater Manchester. How the hon. Member for Blackley can say that he has the figure when we have not made a decision on it stretches credulity to breaking point.
      Mr. Eastham: It is no great state secret. I got the information from the Low Pay Unit.
      Mr. Trippier: I could have put money on its being the Low Pay Unit.
      Ms. Clare Short: It is usually right.
      Mr. Trippier: We have had some disputes about what the Low Pay Unit says, and we discussed it at some length in Committee. I assure the hon. Member for Stalybridge and Hyde and his hon. Friends, including the hon. Member for Bow and Poplar (Mr. Mikardo), who is
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      worried about it, that I am anxious, where possible, to ensure that there is compliance. It cannot be in the interests of any Government to be seen to encourage people to break the law. It cannot be good for the industries in the wages council sector.
      The worst signal that could go to employers is going out from this debate. The Opposition are signalling the fact that employers can get away with it. That is the exact point that I was anxious to make on the "Today" programme. I make it clear again on the Floor of the House that the people who assume that they will get away with it can forget it.
      Mr. Mikardo: Does the Minister believe that the employers in the sweatshop industries did not know before today's debate that they could get away with breaking the law? I listened to him with care, but I must tell him that I gave up believing in fairy tales at the age of seven.
      I shall detain the House for only a minute to make a simple point. I often understand a Minister's rejection of an amendment even when I do not agree with it, but I am bound to say that the Minister's rejection of amendment No. 75 is incomprehensible. It beggars belief. Here is the Minister with his big talk about our all wanting the law to be enforced, but he refuses to accept the obligation to appoint an adequate number of inspectors to ensure that the law is complied with. The Minister is saying, "I want the law to be complied with, but I will not take the one measure without which we cannot ensure that the law will be complied with."
      Mr. Trippier: Will the hon. Gentleman give way?
      8.30 pm
      Mr. Mikardo: I shall give way later, because I wish to ask the Minister a question.
      I am trying to persuade one of my noble Friends in the other place to table an amendment, because I want to suss out the sincerity of the Department of Employment. I want him to table an amendment saying:
      "The Minister shall appoint a number of inspectors inadequate to ensure that the law is complied with".
      This would create a situation in which the employer can break the law with impunity. Will the Government spokesman accept that with avidity, because that is the only logical consequence? I remind the Minister that he is speaking for the party that claims to be the party of law and order. This representative of the party of law and order is now saying, "I am going to give encouragement to employers to break the law with impunity, as I refuse to set up the machinery that prevents them from doing it."
      Mr. Trippier: But I am not going to say that.
      Amendment 75, as worded, if strictly interpreted would present the Government, any Government, with an impractical task, a mandatory requirement to provide
      "an adequate number of inspectors to ensure that the law is complied with in all workplaces".
      That is truly unrealistic, and the hon. Gentleman knows it.
      Amendment negatived.
      Mr. Trippier: I beg to move amendment No. 76, in page 19, line 32, at end insert
      ', and if it appears to any such officer that any person with whom he has dealings while so acting does not know that he is an officer acting for the purposes of this Part he shall identify himself as such to that person. '.
      There was a full debate in Committee on whether wages inspectors should as a matter of course automatically

      931
      produce their authenticated documents on every occasion on which they had dealings with any person in connection with enforcing part II of the Bill. My hon. Friend the Member for Darlington (Mr. Fallon) argued forcefully that this was essential on the grounds of courtesy and common sense and because officials generally had too many powers of entry. The Government took the view that the act of producing the warrant, as the inspector's document is called, tends to create a barrier of officialdom between employer and inspector and can prevent the inspection from being carried out in a helpful and constructive manner.
      I indicated to the Committee that in practice the inspector initially identifies himself by means of a printed visiting card that shows his name, office address and telephone number which the employer or worker can retain for future reference. This arrangement, readily acceptable to the employer, has worked well for many years. He always produces his warrant when asked to do so.
      The hon. Member for Bow and Poplar (Mr. Mikardo), like my hon. Friend the Member for Darlington, put a fairly compelling case. Although the amendment was lost in Committee, none the less I thought it fair, in view of what was said by my hon. Friend the Member for Darlington and by the hon. Member for Bow and Poplar, to return with this amendment, which I think meets in part, if not totally, the points raised in Committee.
      Mr. Fallon: I thank my hon. Friend for going even further than his original undertaking. As I recall, he undertook to look at the matter again if I withdrew the amendment.
      The dispute in Committee arose from the distinction between the officer identifying himself—none of us wants bogus people on the premises or people falsely claiming to be officers of various departments—and establishing the rights given to him under the schedule and his ability to exercise them on the premises. I think that this is a rather confused area, although in the main my hon. Friend has gone further than he did originally when several times he attempted to dissuade us from dividing the Committee.
      I hope that the amendment will be satisfactory to the inspectors. I know that my hon. Friend was concerned that their task should be made no more difficult. I am sure that it will be satisfactory to those business men for whom the first visit from the inspectors can be a traumatic experience.
      I am delighted to welcome the amendment.
      Amendment agreed to.

    New Clause 6

      REDUNDANCY PAYMENTS
      'The provisions of Part III of the Act shall not take effect until the national insurance payments made by employers and employees into the redundancy fund are reduced to a level sufficient to cover no more than the likely costs to the fund of redundancy payments.—[Mr Prescott.]
      Brought up, and read the First time.
      Mr. Prescott: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Sir Paul Dean): With this it will be convenient to take amendment No. 80, in clause 32, page 29, line 39, leave out 'August' and insert `November'.
      Mr. Prescott: There are two principles embodied in these proposals. New clause 6 is concerned with the principles of the contribution and distributiom of the redundancy fund. Amendment No. 80 is concerned largely with the date. Dealing with the times from which the proposals in the Bill would apply to remove the rebate of 35 per cent. to companies employing over 10 people in redundancy situations, the date is 1 August. Although the date in the Bill, as I recall, is 31 July, it is effectively applicable from 1 August.
      The debate in Committee showed that we recognise that the redundancy fund established in 1965 has covered different forms of rebates. It started with something like 75 per cent. This was changed by the previous Labour Government to 50 per cent. A year or so ago it went to about 35 per cent., the level at which it remains.
      The operations of the fund are such that it is a contributory fund in terms of the employee and the employer. Its profits in its last year of operation were about £9 million, according to the last annual report, with approximately £751 million in receipts. While that is not a large amount, the fund is in surplus and has attracted the attention of the Chancellor. The first mention of it came in the Budget speech when he proposed to remove the 35 per cent. rebate in the case of companies with more than 10 employees. The Chancellor estimates that there will he a saving of about £200 million. The justification, according to the Government, is that this would be used to fund some of the employment scheme measures, particularly those which are long term. It is a pity that the moneys that we are always finding from one source or another are all for employment schemes and never to do with real training or jobs, but that is the nature of this Government's approach.
      It is perhaps appropriate that we should be debating this on the day on which the unemployment figure is at a record level of well over 3·2 million. Considering that and the scale of redundancies, the levels of unemployment in the country are on a scale comparable to the 1930s. Unemployment now lasts longer and has been increasing every year for six years. In the 1930s, the increase each year continued for four years. That is the scale of change in the economy that has taken place in recent years. That has had an effect on redundancies and subsequently the great claims that are being made. After the recent announcement, there are to be further redundancies in a number of companies.
      Our position was made clear in Committee. We did riot wish to amend the relevant clause or the one concerning dates and times. We thought that the redundancy fund was paying out fairly. The 35 per cent. kept it in balance with a surplus of £9 million.
      If the Government were so concerned about the money, perhaps the surpluses could be paid off, as our amendment suggests, to the employers and the employees by making a reduction in their contributions. Instead, the Government have chosen to save money and use it in another way. The case is not unique. There is a strong feeling that, with contributory funds, the Government are denying the rights for which the people paying and then denying them benefits promised from the fund. Employees and employers were promised that they would receive in redundancy cases a 35 per cent. rebate. That was changed, which is a denial of benefit to people who have paid into the redundancy fund.

      933
      My memory goes back to the graduated pension fund, another great swindle perpetrated on the British electorate. Despite the fact that people had paid contributions, the Government finished the fund, the money was transferred and the benefits were either denied or were so small as not to be worth a great deal. The earnings-related benefit is a more modern example. If a private company had changed the fund in the same way, it would have been taken to court. The Government, with their power, can raid public funds, and today another public fund is raided to finance some of the Government's other policies—in this case, employment schemes. We have not sought to amend the Bill in this way, but we are making it clear that, to be fair, the surplus should go to those employers and employees who have contributed.
      We hear a great deal from the Government about the costs of industry, and here we are talking about, as the CBI pointed out, an extra £200 million of costs on industry for financing redundancies. Unemployment is continually increasing, and no member of the Government is able to say when it will stop doing so, let alone go down. We can assume that redundancies will continue apace. If we wanted any reminder of that, we have only to listen to the radio or watch the television today. About 4,000 people are to lose their jobs in the shipyards; British Caledonian will be making 1,000 redundant; and today the first suggestion came of more redundancies, at British Rail Engineering Ltd, which will mean that a few more thousand are unemployed, leaving BR ready for the privatisation proposed by the Government, or the transfer of the parcels business. Perhaps many of these companies will be encouraged to rush through their redundancy programmes because substantial amounts of money are still available under the 35 per cent. rebate on redundancy.
      In Committee, my hon. Friend the Member for Jarrow (Mr. Dixon) asked whether the 90-day principle applied. Clearly, if it were applicable until August, 90 days before that would be 1 May. If a company—say, British Caledonian or British Shipbuilders—puts in an application now, will the company be able to get the money for redundancies? If it will, that will encourage companies to throw people out of work much more quickly than they might otherwise do. In that sense, the Government may be using their £200 million for employment schemes, but they have created a financial incentive for people to be thrown out of work at a faster rate. We may not have seen the end of that, because this can run up to 1 August.
      Perhaps it is the Paymaster General's view that, by bringing the scheme forward to August, the Government will avoid a mass of redundancies because people will wait even longer than a year. The Minister needs to give us a clear answer showing how that applies. An answer was not given in Committee, and Ministers may not have known it. However, the Minister should tell us the position of a company that makes application for payment under the fund. Is the payment allowable on the day that the redundancy takes place or from when the company gives notice and makes the application for the redundancy fund?
      That brings us directly to our amendment, which is about setting a time. In Committee on 29 April, the date of 31 July was written into the Bill, but that is creating a number of problems. The first is that to which I have just referred—companies rushing through redundancy
      934
      schemes. A second difficulty arises out of other legislation. In Committee on the Transport Act, we warned that the Act would bring about many redundancies and reductions in services, and that deregulation would be disastrous. The Government have never accepted that argument, but it seems that the by-elections and local elections have painfully printed it on their minds.
      8.45 pm
      Mr. Nellist: My hon. Friend may be interested in the figures from the west midlands. We already know that 500 of the 1,800 buses in the west midlands will stay in the garages from 26 October. If this part of the Bill goes through unamended, with the loss of the 35 per cent. rebate to the transport authorities, which have already had their grants cut by the Secretary of State for Transport, the redundancies, with which I disagree, will be even higher because the authorities will have to find the 35 per cent. as well as the cuts in the transport supplementary grant.
      Mr. Prescott: I was coming to that point.
      The passenger transport executives, or the district authorities such as Hull, will have many difficulties. Several of my hon. Friends may mention the case of south Yorkshire, where all the PTEs expect redundancies as a result of the reorganisation now that the subsidies and funding for transport have been reduced. South Yorkshire will lose about 1,800 jobs. All the PTEs together will lose about 9,000.
      This is a problem not just for the PTEs but for the municipal bus corporations. In previous legislation, it was agreed that there will be a transfer to another body—for example, in Hull, to a private company. The local authorities cannot give financial support to those companies from 25 October. That would mean that the transfer has to be done by August. Therefore, most PTEs and municipal authorities, with the reorganisation required of them by previous legislation, took into account the redundancies that will take place and the cost of financing them. However, they are now being denied the 35 per cent. rebate, which they assumed would apply to October or November—hence the relevance of our November amendment. The PTEs no longer have the resources to fund the level of redundancies except by cutting services or by making even more redundancies, and problems could be even more accelerated, bringing about yet more redundancies.
      Mr. Don Dixon: There is no supplementary rate either.
      Mr. Prescott: My hon. Friend reminds me about my next point—the similar legislation on financing that prevents councils from making a supplementary rate. Other legislation has not been co-ordinated with this date. The Chancellor saw a chance to get a few bob on the side to finance his employment scheme, and to take a penny off the rate of income tax. It would have been better to keep the tax at the same rate and fund the employment schemes, but he wants to give money to those who can well afford to live without tax cuts. He has robbed redundancy funds to find that money.
      If the councils are not to raise a supplementary rate, how are they to get over their difficulties? If the Government would accept an amendment to extend the scheme to November, the PTEs could proceed to do what has already been determined under the financing of their

      935
      reorganisation as required under other legislation. On 29 April, the Minister made it clear, when challenged by a number of my hon. Friends:
      "I have no doubt that we shall divide on it. If it assists the hon. Gentleman, I shall write to him and the hon. Member for Ladywood, with a copy to each member of the Committee, take on board the points made and explore still further whatever I undertook to consider this morning. I can say no more than that."—[Official Report, Standing Committee K, 29 April 1986; c. 879.]
      I note that he wrote to my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) and probably to one or two other members of the Committee. He made it clear in the letter that discussions were still being undertaken with the Department of Transport and the Department of the Environment. He did not think that he would be able to amend the Bill on Report. There is a possibility therefore that he will have it amended in another place.
      We should like to know what the Paymaster General thinks about this matter. Is he making desperate phone calls and conducting discussions? Perhaps he could enlighten the House as to what is happening on this important matter. What does he intend to do in another place to amend this point?
      There is a great deal of anxiety among transport authorities at the moment. They have carried out their statutory obligations under other legislation but now find themselves forced against the wall. The Government, in all justice, could keep their principles by accepting the amendment. They could say that the change will not be applicable until 1 November.
      Mr. Richard Caborn: The Government have hit the jackpot again with part III. The trade unions and the employers, through the Confederation of British Industry, have said that they do not want the redundancy payments to be tampered with or effectively removed in relation to Government contributions. That point was revealed in an article in the Financial Times on 17 March, which we discussed fully in Committee. It showed that the Government are out of tune with what is happening in industry.
      My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) made a number of pertinent points, and I should like to cover several other matters which cover future employment patterns and so discuss what the Government are putting on the employers' plate.
      The Government's action over the qualification period for redundancy pay could mean, as my hon. Friend the Member for. Kingston upon Hull, East said, that redundancies will be declared in the near future. The Government's actions could accelerate the number of redundancies either before 1 August, or beyond that date, depending on the Paymaster General's reply about the 90-day period. The Government's action could spark off a considerable number of redundancies in companies which are considering rationalisation, and we have seen many examples of such redundancies this week.
      When the Bill reaches the statute book, it could destabilise the labour market. An employer will ensure that he does not have long-term employees, and therefore will not have to bear the full burden of redundancy costs. In future, an employer might not necessarily declare a policy, but will work to a policy which will ensure that people are not on payrolls for more than two or three years. This will ensure that the employer has to pay only a
      936
      minimum amount of redundancy pay at any one time. I could quote many examples of industries where that kind of attitude might be prevalent.
      Redundancy payments have been funded on a commonsense approach. Through national insurance contributions, all industries contribute to the redundancy payments fund. The sole burden for redundancy payments is not placed on the industries which are having problems with finance or restructuring. The burden has been borne, to some extent, by profitable industries, and the employees in the successful industries have been paying into the central fund, which has been used to make redundancy payments. Responsibility has been shared across industry and commerce throughout the United Kingdom.
      When part III reaches the statute book, it will compound the problems of the industries which are having difficulties with finance or restructuring. Liquidations and closures might be brought forward because, if there are more than 10 workers in a company, that company will have to bear 35 per cent. of the redundancy payments. Increasing the redundancy payment burden to 35 per cent. might tip the balance for a small company, employing 12 or 14 people, which was previously on an even keel. It could cause that small company to go into liquidation or bring in the receiver. The collective funding of redundancy will be altered and a company will have to bear the full cost of any redundancy pay. Rather than helping small businesses or industries which are in financial difficulties or which are restructuring, the Government are compounding their problems.
      I should like to consider amendment No. 80, which is important for my constituency in south Yorkshire. If the amendment is not accepted, or if there is no response from the Government to our proposition, there could be serious problems for constituencies such as mine.
      My hon. Friend the Member for Kingston upon Hull, East, was fortunate to receive a letter from the Minister. In Committee I asked:
      "Will the Minister do the same with the Department of Transport, with regard to transport supplementary grant? Probably as profound a case can be made on this as has been made by my hon. Friend on the local authorities."
      The Minister replied:
      "Absolutely, I am delighted to respond to the hon. Gentleman on that point."[Official Report, Standing Committee K. 29 April 1986, c. 870.]
      I have not received a letter on that issue, and I have nor seen the correspondence to which my hon. Friend the Member for Kingston upon Hull, East, referred.
      South Yorkshire passenger transport executive is probably the executive that has been hit hardest. It has had to bear about £30 million worth of cuts in transport supplementary grant. This has caused fare increases of 250 to 300 per cent. It has also meant a reduction in services, and a reduction of 35 per cent. in the number of passengers carried.
      The effect of the Transport Act 1985 on south Yorkshire has been to rip the heart out of the community. Now, in this part of the Bill, we see the vultures of the Department of Employment homing in to pinch another £1·5 million to £2 million. This means that we could see further redundancies, in addition to the 1,600 redundancies which south Yorkshire will experience as a result of the Transport Act.
      South Yorkshire made representations to the Secretary of State for Transport on the transport supplementary grant. In Committee the Minister refused even to look at

      937
      the redundancy payments issue, but at least the calculation of the transport supplementary grant did include something for redundancies. From that date to this, as a result of part III, the full cost will have to be borne. It is estimated that in south Yorkshire this will be about £1·5 million.
      Will south Yorkshire reduce services further and have more redundancies? It will not be able to go out to tender or subsidise those routes. Will it put the fares up? It can do that, and if it does there is every chance that passenger numbers will decline again, leading to further redundancies.
      9 pm
      It is now incumbent upon the Paymaster General to answer the questions that we put in Committee. Those questions must be answered within the next few weeks, because the tenders for those routes have gone out and decisions have to be made. It might mean that the executive will bring forward the redundancies to some time in July, to protect the services and stop further fare increases.
      Unless the Paymaster General or a Minister from the Department of Transport gives us a decision, things will be extremely difficult for PTEs throughout the country. It is estimated that as a result of the movement of three months they will lose about £9 million which will effectively be taken away from the subsidies for the routes, many of which will be rural routes, which I have no doubt many Conservative Members would wish to maintain.
      I hope that the Paymaster General will accept the modest amendments. If he is not prepared to do so, it is incumbent upon him to tell us how the PTEs and the other local authorities will operate.
      Mr. Peter Hardy: Amendment No. 80 contains an entirely reasonable and responsible proposition, and it is that proposition to which my brief remarks will be addressed. This matter should not be considered now; it should already have been resolved. The Government clearly bear a serious responsibility and it should have been accepted before now.
      My hon. Friends the Members for Kingston upon Hull, East (Mr. Prescott) and for Sheffield, Central (Mr. Caborn) have put the basic arguments. The fact remains that the PTEs have been placed in a dreadful position over their redundancies. They have been put in that position as a result of the timing in the Bill. I imagine that if any Minister were here from the Department of Transport he would have to accept—he could not deny—that the arrangements made by the PTEs have been dreadfully imperilled, and they were made at the behest of this Administration.
      As the Bill stands, the proposals mean that PTEs in south Yorkshire and elsewhere face substantial burdens which in this financial year may be intolerable. They made those arrangements in response to Government policy, and the Secretary of State for Transport was well aware of them and could be said to have been a party to those arrangements.
      As has been pointed out, the PTEs cannot raise interim revenue directly. Rate capping and other local authority expenditure controls make that clear. Nor can they guarantee to raise the income which will otherwise be required if the Government do not accept the amendment, because if they increase fares, the certainty in south
      938
      Yorkshire is that ridership will decline, and income might be diminished rather than enhanced. The PTEs cannot easily make additional redundancies. The burden accepted is already well nigh intolerable. In any case, if they make additional redundancies they could aggravate the situation about which we are complaining now.
      As a result of the Bill, passenger transport executives are being squeezed between the upper millstone of Government negligence and the lower millstone of Government incompetence. The Secretary of State for Transport is not present, but someone from that Department should be here. The passenger transport executive acted in good faith. It was not enthusiastic about the arrangements. We in south Yorkshire do not like the arrangements, and I do not think that any of the other PTEs in metropolitan areas like them either. The PTE made a democratic response to statute, and now the Government have changed the ground rules. That is intolerable.
      I should have thought that at least a junior Minister from the Department of Transport would have the grace to come to the House to make it clear that that problem, which the Department created, and which the Department of Employment is now compounding, exists. In the absence of such a Minister, the Paymaster General must make a responsible response to the House; otherwise the Government will once again be shown up in a very poor light. By their response to amendment No. 80, the Government will demonstrate whether they are prepared to act with integrity, like a sensible Administration.
      Before we conclude this debate, I hope that the Government will recognise that the PTEs have a powerful case. The Government should respond to it and relieve the anxieties that exist in my PTE area in south Yorkshire and in all the other PTE areas. I trust that the Paymaster General will reassure us that there will not be any insistence on the irresponsibility and incompetence to which I have referred.
      Mr. Allen McKay: I wish to reinforce the arguments made about the clause and the amendment. I am sure that the Paymaster General did not envisage the problems that would he created by altering the redundancy scheme, particularly in relation to the south Yorkshire PTE. When legislation makes a change, there is always a dividing line, and there are always problems with it. There are always losers and winners on either side of the dividing line. The problem is where to draw it.
      I believe that the Government are slowly moving towards not making any contributions at all. People will be dismissed, and will get just a vote of thanks before moving down the road. We are discussing how the legislation will affect, in particular, the south Yorkshire PTE. We pointed out the problems that deregulation would cause and we will be proved right. South Yorkshire has had to cut about 30 per cent. of its traffic. By and large that affects the rural areas, weekend services, and school and hospital services. I have a list of the services being tendered for. There are fairly isolated areas round Penistone, but there are no Sunday or Saturday services. The first bus into Penistone is at 8 am and the last bus out is at 7 pm. We do not yet know how people will get to work. That is why we are trying to overcome some of these problems.
      No one knows what the cost to the local education authority will be. After all, all the school services have

      939
      been stopped. I accept that the process has not yet come to an end. But this is where the legislation is relevant. The £9 million that it will cost the south Yorkshire PTE is the £9 million that it hopes to use for subsidies. Thus, one Department is not thinking about the effect of its legislation on another. The amendment does not make a very big change, but it is a sensible change. There is nothing to stop the Paymaster General accepting it. He could give us an assurance that he will consider it, or arrange for the Bill to be altered in the other place. However, he should not dismiss our arguments out of hand by rejecting the amendment.
      About 30 per cent. of our bus services have disappeared. I hope that we can find the money to reinstate them. If the Bill is not amended, the PTE will have to make 1,600 people redundant immediately. That is the only way that it can save £9 million to £10 million. However, we are approaching the holiday period and. if it makes 1,600 people redundant, how will it cope with holiday absences? It would mean even less services.
      Of course, the PTE could try to recoup the finance from another area. However, fares have already risen by 250 to 300 per cent. and there has also been a severe cut in services. If the PTE has to raise fares again, that will mean even fewer services and more redundancies. Where will the PTE find the money? Local authorities cannot increase rates or they will face rate capping. It is a catch-22. Without any shadow of doubt, the problems are very serious.
      I am sure that the Paymaster General did not consider the problems that would be caused. Government policy has caused problems by deregulation of transport, and Government policy will cause further problems with transport, which the local authorities will have to overcome. Rather than compound the problems, the Government should accept an amendment that would help to alleviate them.
      All local authorities budget for a 12-month period. Indeed, the Government have stopped local authorities from making any interim rate increases. That is another outlet that the Government have blocked, and there are no longer any gaps or outlets for the PTE. I ask the Government seriously to consider the problems that this legislation will cause. It is bad legislation. Local authorities have budgeted on the Government's original intentions, and that should not be altered now.
      Mr. Nellist: My hon. Friend said that one avenue of escape for the south Yorkshire PTE was to bring forward the 1,600 redundancies. The social security costs for 1,600 sacked workers must be about £100,000 or £200,000 a week, so for every week that the redundancies are brought forward the DHSS will have to find a couple of hundred thousand pounds. That is another financial idiocy in this part of the Bill.
      Mr. McKay: My hon. Friend is right—the Bill shuffles the problems from one Department to another. It is hardly the way to treat workers who have worked for a firm for 30 or 40 years. All the planning has been carried out in accordance with Government wishes.
      Mr. Caborn: The PTE faces another problem. Within the normal functioning of a commercial department, the profit from one area can be transferred to a less profitable area; it is called cross-subsidisation. However, that option
      940
      has been removed by the Transport Act. The PTE cannot transfer profits from a route in a city or town to a less profitable route. Every avenue has been closed.
      Mr. McKay: Every loophole has been closed and there is no room left to manouevre. It is ridiculous to introduce such proposals halfway through a financial year. If a local authority had done that, there would be slapped wrists and bottoms. If the Paymaster General thinks about the problems a little more deeply, he will come to realise that he should never have brought forward the proposal.
      We are asking the Minister to have another think. The Government will not gain anything by implementing this provision because any benefit to them will be lost in DHSS payments. The people need to be treated in a better way than that which the Government propose.
      9.15 pm
      Mr. Dixon: This issue arose in Committee on 29 April. Any employer who pays out more than 100 employees must give 90 days' notice of his intention to do so. The idea of that notice—the Paymaster General should know this because he is the Minister in charge of labour relations—is to enable trade union representatives to negotiate with employers to ascertain whether some of the redundancies can be avoided or whether the impact of redundancies can be alleviated. For example, it is sometimes possible to arrange transfers. Any employer who wanted to qualify for the 35 per cent. discount would have had to give the unions notice two days after the Government's amendment was moved. The amendment was moved on 29 April and the 90-day requirement for negotiations with trade unions would have compelled employers to issue notices only two days afterwards.
      We did not receive a satisfactory explanation from the Minister in Committee. He told us that a decision had been taken above his head and explained that it would save £55 million in public expenditure. In fact, he meant that £55 million would be stolen from le contributions made by employees and employers to the central fund.
      The purpose behind the Government's amendment was to steal money from others, and they are damaging industrial relations. It will be impossible for anyone to qualify for the redundancy rebate and for the unions to be given 90 days notice to negotiate with the employer to try to avoid redundancies by, for example, arranging transfers.
      Mr. Flannery: Those of us who were not members of the Committee are beginning only now to grasp the trickery that has gone on. The issue before us arose only on the Committee's final sitting. It is almost unbelievable that the Government should have introduced such a provocative measure at this stage. Anyone who canvassed prior to the local elections will realise that the Government are in a mess. They could not have planned their own demise more brilliantly.
      We in south Yorkshire feel especially deeply about the Government's proposals. In part, that is because we have only just learnt about them. The ordinary people in the area are unaware of what has gone on. The Minister may laugh, but the facts have not been brought home to ordinary people.
      In south Yorkshire, we have kept fares down to the best of our ability. There was a larger vote at every election for the Labour party because of its policy of holding down the

      941
      level of fares. It was a process of real democracy. Rate capping pushed us into an extremely difficult position and the result was that fares had suddenly to be tripled. Indeed, they will have to be increased again.
      On Saturday morning, I travelled into Sheffield from outside the town. I had to pay nearly four times as much for my ticket as I had been used to paying. I travelled on a one-man bus. Nowadays, most buses do not have clippies. The bus on which I travelled pulled up at every stop. Because it was a one-man bus, the driver was completely occupied collecting fares, to the danger of the public. On double decker buses, vandalism and activities of that nature could take place upstairs. That poses great difficulty. I cannot believe that the Government could plan to do what they have done at the last minute. If it were explained to an ordinary person, he would not believe that it could happen.
      Mr. Kenneth Clarke: The hon. Member for Barnsley, West and Penistone (Mr. McKay) implied at one point, in an otherwise careful, considered and clear speech, that we might be moving to a position whereby an employee who faces the unfortunate possibility of redundancy might lose his statutory entitlement. That is certainly not contemplated by the Government or the Bill. When we consider the amendments, we must bear in mind which part of the Bill they relate to. The Bill does not affect in the slightest the statutory entitlement to redundancy compensation of an employee who faces redundancy. The Bill aims to get rid of a method of financing companies that make redundancies—a method which in our opinion, is obsolete.
      I shall not repeat the arguments I used on Second Reading to explain why economic circumstances have changed since the measure was introduced. The rebates actually make it cheaper and easier for an employer to contemplate redundancy. An employer receives a subsidy—it was reduced by the Labour Government and ourselves to 35 per cent.—which is taken out of a fund to which employers and employees contribute. It is a churning of money to make it easier to make people redundant. In the present conditions of unemployment, we did not think that that should continue.
      Because the payments out of the fund, by the conventions used by former Governments and our own, technically count as public expenditure, we were able to make public expenditure savings which we have diverted to the other employment measures which we announced last autumn and in this year's Budget.
      Neither the Opposition's proposed new clause nor their amendment challenges the fundamental policy decision to end the rebates. Both bear on the timing of the change. Assuming that the House carries the Bill, that it goes to another place and becomes law, I expect that, if the labour party ever came to power, it would not bring back the redundancy rebate system, in view of present labour circumstances.
      The new clause and the amendment essentially urge delay. One says that we should delay until the contributions to the fund have been brought down so that the fund pays for redundancy payments only, and the other says that we should delay from August to November. That is the only issue before us regarding the new clause and the amendment.
      942
      I can understand, in some ways, the need for delay, but I do not think that it goes with the arguments that have been made to us about the fear that employers will somehow speed up redundancies in order to get the rebate. In my opinion, that is not a relevant consideration. Normally, employers declare redundancies only when they are forced to do so. They do so extremely reluctantly. Nobody times redundancies to get a rebate. I think that under the arrangement, an employer receives, on average, £600 each rebate. If an employer is contemplating redundancies and is tempted to speed them up then, of course, the more time that is given before the change comes into effect the more likely it is that people will act to speed up the redundancies.
      The hon. Member for Jarrow (Mr. Dixon) intervened briefly and said how bad it was that we had tabled an amendment in such a way that employers planning large redundancies, who had to give 90 days notice to the trade unions, had only two days in which to do so. If he really feels that there is a danger of employers rushing forward, which I do not agree with, all I can say is that if we give them more time there is more chance of them bringing forward redundancies.
      We had to introduce an operative date. Whatever date we chose, there would have been hardship for some employers from a cash flow point of view. The more time we give, as advance warning, that we plan to end the rebates, the more likely it is that an employer who feels doomed to make redundancies, and for some reason is tempted to bring them forward to get the rebate, will actually do so. I do not follow that point.
      I shall deal with the practical reasons why the new clause and the amendment are somewhat misconceived. It is important to realise that the fund is not just for redundancy payments. It will not be wound up completely. Last year, as well as paying out nearly £250 million in rebates to employers and £55 million direct to employees when their employer defaulted on the redundancy payments they were due, the fund paid out some £50 million to employees who were owed arrears of wages, accrued holiday pay, pay in lieu of notice and certain other debts when their employer had gone into liquidation, receivership or bankruptcy owing money to the employees. When the Bill is enacted, the fund will still be paying out statutory redundancy payments to those redundant workers whose firms could not afford to pay what they owed and will be paying out those other sums owed to employees when a firm unfortunately goes into receivership. The basis upon which the new clause is intended to operate is misconceived.
      The new clause refers also to contribution levels by employers and employees to the inevitably reduced fund. I accept that that is a relevant point, but I point out that every autumn we review the contribution levels for national insurance generally. Any changes are included in the Social Security Contributions (Rerating) Order which both Houses debate in November or December each year. At present, the contributions to the redundancy fund represent 0·25 percentage points of the standard 9 per cent. employee's national insurance contribution and 0·15 percentage points of the employer's standard 10·45 percent. contribution. When the time comes to make the rerating order, obviously my right hon. Friends the Secretary of State for Social Services and the Chancellor will have to look at the total make up of what is required to finance all the national insurance funds.
      Mr. Prescott: Put up the rates. That is another £200 million.
      Mr. Clarke: The rates might even come down.
      The fund is in surplus and, obviously, payments are not likely to go down. That is only one part of the picture. Under the present arrangements, all Governments have to consider all the components of the overall contribution together if they are to make any sensible changes. We cannot do that until the autumn.
      It has been said that we are stealing the money from the fund. All sorts of allegations have been made. Obviously, some hon. Members have a vision of a swag bag being put over someone's shoulder and carried away.
      Mr. Prescott: £200 million.
      Mr. Clarke: Thanks to the accounting convention used by Governments, this is one of those marvellous public spending savings where we do not take away any money from the fund.
      Changing the rebate entitlements in August, rather than next April, does not cost the fund any money. The £140 million which is saved stays in the fund and earns interest for the fund. But the reduction in public expenditure, which counts now, enables us to boost our spending on the positive employment measures which we announced in one instalment last November and again in this year's Budget.
      For those reasons, I ask the House to accept that the new clause and the amendment which are designed to alter the time when a change comes into effect—I cannot believe that any hon. Member would contemplate reversing that—are misconceived and should be rejected.
      The hon. Members for Sheffield, Central (Mr. Caborn), for Wentworth (Mr. Hardy), for Kingston upon Hull, East (Mr. Prescott) and for Sheffield, Hillsborough (Mr. Flannery) have raised a matter on behalf of the south Yorkshire passenger transport executive, and it is relevant also to the west midlands passenger transport executive and other such bodies. They are concerned with the impact on those groups if the Bill becomes operative in August and with possible redundancies that those PTEs will have to make as they prepare to make themselves more competitive and face up to the new position in the autumn. The hon. Member for Kingston upon Hull, East thought that this matter arose out of legislation we used to debate when we both spoke on transport Bills. We disagreed on the deregulation of coach transport and I have no doubt that we disagree in the same way about the deregulation of local bus services. I am an enthusiastic supporter of the recent Transport Act and I believe that improvements will come from deregulation.
      9.30 pm
      I do not think that the hon. Member for Kingston upon Hull, East or I would claim to have bang up-to-date knowledge of all the technical details which flowed from the Transport Bill, on which we were not directly engaged. I do not know that within the passenger transport authorities the PTEs are looking to a date when they will become separate entities with their own trading accounts. There is a tendering exercise to go through in the summer before we will know the full extent of the services available in south Yorkshire, the west midlands and elsewhere. I will not be drawn into debating the transport
      944
      policies of the south Yorkshire passenger transport authority. I am on record as having discussed that in the past. I regarded the business of freezing the fares to some set date, which I believe was back in the 1960s, as absurd and loading the Government with subsidy and the ratepayers of Sheffield with an unnecessary burden. That is all behind us.
      Having listened to the speeches, I know hon. Members obviously feel very strongly that a problem is being faced by the passenger transport authority. I have had some talks with my right hon. Friend the Secretary of State for Transport following the exchanges that took place between my hon. Friend the Under-Secretary and others in Committee and I shall certainly continue those discussions. Some of the figures bandied about as to the costs struck me as extraordinary. If, in order to enter the new competition, redundancies are contemplated, costs will obviously arise and the effect of those costs on passenger transport undertakings will depend on the day on which they take effect. I was asked some questions about that. If the redundancy is one of which notice has been given and which has taken effect before 1 August, rebate will be payable. If there is a late claim, after 1 August, but the redundancy became due before that date again, rebate will be payable. Thereafter, rebate will not be payable.
      Until the tendering exercise has been undertaken, hon. Members cannot make assertions about what services they will or will not have, as the hon. Member for Barnsley. West and Penistone tried to do, and nobody can calculate with precision how many redundancies might be necessary. I have not claimed expertise on this matter. I have undertaken to consider the points made by the members from Yorkshire arid the west midlands and to continue discussions with my right hon. Friend the Secretary of State for Transport to ensure that an announcement is made on behalf of the Government in time for consideration in another place.
      Mr. Allen McKay: Is a correct that the Minister accepts that people made redundant before 1 August will be subject to rebate but those made redundant after 1 August will not? I do not accept the right hon. and learned Gentleman's arguments because one has to plan 12 months or two years ahead and, irrespective of what the Minister says, at least 1,600 people will be made redundant, even in the best scenario. Is the right hon. and learned Gentleman saying that, if notice is given before 1 August that the PTE is expecting 1,600 redundancies in October, they will receive a rebate?
      Mr. Clarke: If the notice is given and dismissal on the grounds of redundancy takes place before 1 August and the claim is made the rebate will be received. I shall happily continue to attend to those details and I know that my right hon. Friend the Secretary of State for Transport is considering the matter. As I have said, an announcement will be made on behalf of the Government.
      Mr. Hardy: I recognise that the Minister appears to be moving in the direction of concession, but I should like to tie him down just a little. Does he not accept that he needs to consult the Secretary of State for Transport to establish one thing above all—that the Department of Transport, in effect, endorsed the plans for redundancies, which were under way in the passenger transport executives before the

      945
      Bill received Second Reading? If the Secretary of State for Transport accepts that that was the case, the moral obligation on the Government is unanswerable.
      Mr. Clarke: Before the hon. Gentleman assumes that I am moving in the direction of concession, I should like to tell him that, for example, to concede new clause 6 would cost about £140 million if it delayed the implementation of the change until April 1987, which it would at the earliest. To concede amendment No. 80 would cost £55 million of public expenditure, if we moved the implementation from August to November. No doubt many other industries would find that they would benefit from rebates if we chose the month of November, and they would not if we chose August. Because of the political position of transport and its position vis-à-vis local authorities and central Government, the south Yorkshire passenger transport executive has its usual ability to beat its way to the Chamber of the House of Commons, unlike other industries.
      Nevertheless, what is being said is that it is the Government's policies and the two pieces of legislation that are giving rise to the problem. I have undertaken to do pretty well what the hon. Member for Wentworth (Mr. Hardy) repeated—to carry on consultations, which I have already begun, with my right hon. Friend the Secretary of State for Transport. The Government will honour any obligations that it may transpire we have towards the passenger transport authorities. We shall look at the concessions with care.
      Hon. Members will want to know at what stage an announcement will be made so that it can be considered. I hope that an announcement will be made on behalf of the Government before consideration begins in another place. On that basis, we can defer the argument and the battle—if there has to be one—about the passenger transport authorities to a later stage. I ask the House to reject the new clause and the amendment, on the narrower point.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 155, Noes 203.

      Division No. 182]

      [9.37 pm

      AYES

      Abse, Leo

      Campbell-Savours, Dale

      Adams, Allen (Paisley N)

      Carter-Jones, Lewis

      Archer, Rt Hon Peter

      Clark, Dr David (S Shields)

      Ashley, Rt Hon Jack

      Clarke, Thomas

      Ashton, Joe

      Clay, Robert

      Atkinson, N. (Tottenham)

      Clelland, David Gordon

      Bagier, Gordon A. T.

      Clwyd, Mrs Ann

      Banks, Tony (Newham NW)

      Cohen, Harry

      Barnett, Guy

      Cook, Frank (Stockton North)

      Barron, Kevin

      Cook, Robin F. (Livingston)

      Beckett, Mrs Margaret

      Corbyn, Jeremy

      Bell, Stuart

      Cox, Thomas (Tooting)

      Benn, Rt Hon Tony

      Craigen, J. M.

      Bermingham, Gerald

      Cunliffe, Lawrence

      Bidwell, Sydney

      Cunningham, Dr John

      Blair, Anthony

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

      Boothroyd, Miss Betty

      Deakins, Eric

      Boyes, Roland

      Dobson, Frank

      Bray, Dr Jeremy

      Dormand, Jack

      Brown, Gordon (D'f'mline E)

      Duffy, A. E. P.

      Brown, Hugh D. (Provan)

      Dunwoody, Hon Mrs G.

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

      Eadie, Alex

      Brown, Ron (E'burgh, Leith)

      Eastham, Ken

      Buchan, Norman

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

      Caborn, Richard

      Evans, John (St. Helens N)

      Callaghan, Jim (Heyw'd & M)

      Faulds, Andrew

      946

      Field, Frank (Birkenhead)

      Millan, Rt Hon Bruce

      Fisher, Mark

      Miller, Dr M. S. (E Kilbride)

      Flannery, Martin

      Morris, Rt Hon A. (W'shawe)

      Forrester, John

      Morris, Rt Hon J. (Aberavon)

      Foster, Derek

      Nellist, David

      Foulkes, George

      Oakes, Rt Hon Gordon

      Fraser, J. (Norwood)

      O'Brien, William

      Freud, Clement

      O'Neill, Martin

      George, Bruce

      Orme, Rt Hon Stanley

      Godman, Dr Norman

      Park, George

      Golding, John

      Parry, Robert

      Gould, Bryan

      Patchett, Terry

      Hamilton, James (M'well N)

      Pavitt, Laurie

      Hamilton, W. W. (Fife Central)

      Pendry, Tom

      Hancock, Michael

      Penhaligon, David

      Hardy, Peter

      Pike, Peter

      Harrison, Rt Hon Walter

      Prescott, John

      Hart, Rt Hon Dame Judith

      Randall, Stuart

      Haynes, Frank

      Raynsford, Nick

      Heffer, Eric S.

      Redmond, Martin

      Hogg, N. (C'nauld & Kilsyth)

      Rees, Rt Hon M. (Leeds S)

      Holland, Stuart (Vauxhall)

      Richardson, Ms Jo

      Home Robertson, John

      Roberts, Ernest (Hackney N)

      Hoyle, Douglas

      Robertson, George

      Hughes, Dr Mark (Durham)

      Rogers, Allan

      Hughes, Robert (Aberdeen N)

      Rooker, J. W.

      Hughes, Roy (Newport East)

      Ross, Ernest (Dundee W)

      Janner, Hon Greville

      Rowlands, Ted

      John, Brynmor

      Sedgemore, Brian

      Kennedy, Charles

      Shore, Rt Hon Peter

      Kilroy-Silk, Robert

      Short, Ms Clare (Ladywood)

      Lambie, David

      Silkin, Rt Hon J.

      Lamond, James

      Skinner, Dennis

      Leadbitter, Ted

      Snape, Peter

      Lewis, Terence (Worsley)

      Spearing, Nigel

      Litherland, Robert

      Steel, Rt Hon David

      Lloyd, Tony (Stretford)

      Strang, Gavin

      Lofthouse, Geoffrey

      Straw, Jack

      McDonald, Dr Oonagh

      Thomas, Dafydd (Merioneth)

      McKay, Allen (Penistone)

      Tinn, James

      McKelvey, William

      Torney, Tom

      McNamara, Kevin

      Wareing, Robert

      McTaggart, Robert

      Weetch, Ken

      Madden, Max

      Welsh, Michael

      Marek, Dr John

      Wigley, Dafydd

      Marshall, David (Shettleston)

      Williams, Rt Hon A.

      Martin, Michael

      Wilson, Gordon

      Mason, Rt Hon Roy

      Winnick, David

      Maxton, John

      Young, David (Bolton SE)

      Maynard, Miss Joan

      Meacher, Michael

      Tellers for the Ayes:

      Meadowcroft, Michael

      Mr. Don Dixon and Mr. Ray Powell.

      Michie, William

      Mikardo, Ian

      NOES

      Aitken, Jonathan

      Browne, John

      Amess, David

      Bruinvels, Peter

      Ashby, David

      Bryan, Sir Paul

      Atkinson, David (B'm'th E)

      Bulmer, Esmond

      Baker, Nicholas (Dorset N)

      Burt, Alistair

      Baldry, Tony

      Butler, Rt Hon Sir Adam

      Banks, Robert (Harrogate)

      Butterfill, John

      Batiste, Spencer

      Carlisle, John (Luton N)

      Bellingham, Henry

      Carlisle, Kenneth (Lincoln)

      Bendall, Vivian

      Carttiss, Michael

      Bevan, David Gilroy

      Cash, William

      Biggs-Davison, Sir John

      Chapman, Sydney

      Blackburn, John

      Chope, Christopher

      Body, Sir Richard

      Clark, Dr Michael (Rochford)

      Boscawen, Hon Robert

      Clark, Sir W. (Croydon S)

      Bottomley, Mrs Virginia

      Clarke, Rt Hon K. (Rushcliffe)

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

      Clegg, Sir Walter

      Bowden, Gerald (Dulwich)

      Cockeram, Eric

      Braine, Rt Hon Sir Bernard

      Colvin, Michael

      Brandon-Bravo, Martin

      Coombs, Simon

      Bright, Graham

      Cope, John

      Brinton, Tim

      Couchman, James

      Brooke, Hon Peter

      Cranborne, Viscount

      Brown, M. (Brigg & Cl'thpes)

      Critchley, Julian

      947

      Crouch, David

      Lyell, Nicholas

      Currie, Mrs Edwina

      McCrindle, Robert

      Dickens, Geoffrey

      MacGregor, Rt Hon John

      Dorrell, Stephen

      MacKay, Andrew (Berkshire)

      Dover, Den

      Maclean, David John

      Durant, Tony

      McNair-Wilson, M. (N'bury)

      Dykes, Hugh

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

      Evennett, David

      Major, John

      Eyre, Sir Reginald

      Malins, Humfrey

      Fallon, Michael

      Maples, John

      Favell, Anthony

      Marland, Paul

      Fookes, Miss Janet

      Marlow, Antony

      Forman, Nigel

      Mates, Michael

      Forth, Eric

      Mather, Carol

      Freeman, Roger

      Maude, Hon Francis

      Fry, Peter

      Mayhew, Sir Patrick

      Gale, Roger

      Merchant, Piers

      Galley, Roy

      Miller, Hal (B'grove)

      Gardiner, George (Reigate)

      Mills, Iain (Meriden)

      Gardner, Sir Edward (Fylde)

      Mitchell, David (Hants NW)

      Garel-Jones, Tristan

      Moate, Roger

      Glyn, Dr Alan

      Montgomery, Sir Fergus

      Goodhart, Sir Philip

      Moynihan, Hon C.

      Gorst, John

      Mudd, David

      Greenway, Harry

      Murphy, Christopher

      Gregory, Conal

      Neale, Gerrard

      Griffiths, Sir Eldon

      Nelson, Anthony

      Griffiths, Peter (Portsm'th N)

      Newton, Tony

      Ground, Patrick

      Nichotls, Patrick

      Grylls, Michael

      Norris, Steven

      Hamilton, Hon A. (Epsom)

      Oppenheim, Phillip

      Hamilton, Neil (Tatton)

      Oppenheim, Rt Hon Mrs S.

      Hampson, Dr Keith

      Osborn, Sir John

      Hanley, Jeremy

      Page, Richard (Herts SW)

      Hargreaves, Kenneth

      Patten, J. (Oxf W & Abgdn)

      Harris, David

      Pawsey, James

      Haselhurst, Alan

      Percival, Rt Hon Sir Ian

      Hawkins, C. (High Peak)

      Portillo, Michael

      Hawkins, Sir Paul (N'folk SW)

      Powell, William (Corby)

      Hawksley, Warren

      Powley, John

      Hayhoe, Rt Hon Barney

      Price, Sir David

      Hayward, Robert

      Proctor, K. Harvey

      Heathcoat-Amory, David

      Raffan, Keith

      Heseltine, Rt Hon Michael

      Rathbone, Tim

      Hickmet, Richard

      Renton, Tim

      Hicks, Robert

      Rhodes James, Robert

      Hind, Kenneth

      Rhys Williams, Sir Brandon

      Hogg, Hon Douglas (Gr'th'm)

      Robinson, Mark (N'port W)

      Holland, Sir Philip (Gedling)

      Roe, Mrs Marion

      Holt, Richard

      Rost, Peter

      Howard, Michael

      Sainsbury, Hon Timothy

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

      Sayeed, Jonathan

      Howarth, Gerald (Cannock)

      Shaw, Giles (Pudsey)

      Howell, Rt Hon D. (G'ldford)

      Skeet, Sir Trevor

      Howell, Ralph (Norfolk, N)

      Smith, Sir Dudley (Warwick)

      Hubbard-Miles, Peter

      Soames, Hon Nicholas

      Hunt, David (Wirral W)

      Spencer, Derek

      Hunter, Andrew

      Stokes, John

      Jessel, Toby

      Taylor, Teddy (S'end E)

      Johnson Smith, Sir Geoffrey

      Thompson, Donald (Calder V)

      Jones, Gwilym (Cardiff N)

      Thompson, Patrick (N'ich N)

      Jones, Robert (Herts W)

      Thome, Neil (Ilford S)

      Key, Robert

      Trippier, David

      King, Rt Hon Tom

      Viggers, Peter

      Knight, Greg (Derby N)

      Wakeham, Rt Hon John

      Knight, Dame Jill (Edgbaston)

      Waller, Gary

      Knowles, Michael

      Wardle, C. (Bexhill)

      Knox, David

      Watts, John

      Lamont, Norman

      Wells, Bowen (Hertford)

      Latham, Michael

      Wheeler, John

      Lawler, Geoffrey

      Whitfield, John

      Lawrence, Ivan

      Whitney, Raymond

      Leigh, Edward (Gainsbor'gh)

      Wilkinson, John

      Lewis, Sir Kenneth (Stamf'd)

      Wood, Timothy

      Lightbown, David

      Yeo, Tim

      Lilley, Peter

      Lloyd, Ian (Havant)

      Tellers for the Noes:

      Lloyd, Peter (Fareham)

      Mr. Mark Lennox-Boyd and Mr. Michael Neubert.

      Lord, Michael

      Luce, Rt Hon Richard

      Question accordingly negatived.

    Schedule 6

      TRANSITIONAL PROVISIONS AND SAVINGS
      Amendments made: No. 78, in page 38, leave out lines 17 and 18 and insert
      'for the time being fixed in relation to the worker by an order made under section 14 of the 1979 Act or (as the case may be) by a permit granted under section 16(1) of that Act'.
      No. 79, in page 39, line 5, at end insert—

      TRANSITIONAL PROVISIONS AND SAVINGS

        'Saving for accrued rights under wages orders
        5A.—(1) In the case of any provision contained in an order under section 14 of the 1979 Act and ceasing to have effect (whether wholly or in part) at any time in accordance with section 23 of this Act, the Secretary of State may by order provide, for the purpose of preserving the effect of rights accruing under that provision before that time, for that provision to continue in force as front that time subject to such modifications and transitional provisions as may be specified in the order.
        (2) A provision contained in an order under this paragraph may be made with retrospective effect as from the date on which this Act is passed or any later date.
        (3) Any order under this paragraph shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.—[Mr. Kenneth Clarke.]
        Order for Third Reading read.
        Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Kenneth Clarke.]
        [Queen's consent and Prince of Wales's consent signified.]
        9.49 pm
        Mr. Prescott: Of all the Bills that have been brought before the House in the seven years of this Tory Government, this must be the most despicable. By the Government's own admission, it is designed to deregulate and to reduce the wages of people in the lowest paid industries in the country—shops, hotels, restaurants and hairdressing. Previous Tory Governments have felt that there should be laws to prevent exploitation and the development of the sweatshops, which are beginning to emerge.
        The Bill dispels any doubt about whether Britain is departing from normal civilised standards. It means that the Government are denouncing international obligations. We will be the only one to do so out of the 94 countries which signed an International Labour Organisation convention recognising that certain trades are poorly organised, poorly paid and liable to exploitation. All the signatory countries agreed to introduce legislation to provide reasonable and fair conditions in those industries but, to our eternal shame, Britain alone has denounced those obligations. It is just another denunciation of international standards. We have done it far more than any other civilised country.
        By any criteria, the Bill is mean and despicable. It concentrates all the power of the law against people in the lowest-paid occupations. The Paymaster General knows that we are talking about people who earn £40 or £50 a week. The Bill is designed to drive even those rates further down, as the rejection of our amendments has shown.
        The Tories claim to be the party of law and order. They have lectured us all about obeying the law, but there have been very few prosecutions under present legislation for paying miserable wages. The Opposition have proposed amendments which would have strengthened the controls

        949
        to ensure that agreed rates are enforced, but the Government have rejected those amendments. That is consistent with the 40 per cent. reduction in the number of wages inspectors. Many employers save millions of pounds which they should pay to their employees, by flouting the law.
        The Bill is consistent with the Government's approach. They believe that the poor will work harder if they are paid less, but that the wealthy need to be paid more to work harder. It is no wonder that unemployment has increased, as the figures published today show. We are beginning to witness a divided nation. All that rubbish about St. Francis of Assisi when the Prime Minister came into No. 10 should be contrasted with the reality of a divided and bitter nation. The Government are wiping their hands of their responsibilities to provide work and choose to make low pay the solution to our problems.
        The Paymaster General paid us a compliment today. The Labour party launched its alternative fair wage strategy yesterday, and the right hon. and learned Gentleman knows that the British people have a sense of fairness and believe that people should have a fair return for their work. They do not want Britain to return to sweatshop industries and child labour. That is what the Bill is about, however. We are proud to have opposed it. A Labour Government will use the law on behalf of the poor to guarantee them a reasonable standard of living. The House has an obligation to do that, but has flunked it tonight by introducing this pernicious legislation.
        9.54 pm
        Mr. Holt: The Bill on which we are about to pass judgment will abolish the Truck Acts which have existed since 1831 and have been good law for more than 150 years. When they were introduced some hon. Member probably said, "Hurry up. Get on with it, sit down, and let everyone go home," but they have affected the lives of many people during those years.
        I have grave reservations about the legislation, especially those parts which refer to industrial tribunals. As the House will know, I have taken a considerable interest in the workings of industrial tribunals, and have spoken many times on the subject. I do not believe that the addition of the nonsense contained in part II to the burden on industrial tribunals will increase the protection of workers. Indeed, in many ways it is a smoke screen which will reduce some of the present protection.
        I am not sure that industrial tribunals want that additional responsibility. Since 1961 and trade levies, whenever the Department of Employment has needed to find a repository for anything, it has found one in industrial tribunals, so that today we have case after case on subjects which I am sure it was never dreamt would come before them. I doubt whether those who passed the legislation which set up industrial tribunals for unfair dismissal thought that the tribunals would try the case of a singing rabbi or of a dismissed football manager, yet those are the realms with which they deal. I am worried that, when we initiate such legislation, we do not know how far it will go.
        At this stage hon. Members who have not listened to our debates in Committee or on the Floor of the House have an opportunity to realise the importance of the vote that we are about to hold. The complete abolition of the
        950
        Truck Acts was not generally canvassed. Indeed, I suspect that most people thought that the Wages Bill would cover wages councils only, and that many hon. Members would not choose to vote for the other aspects of the Bill. Now they are, perhaps, understanding for the first time what it is they are being asked to vote for—the abolition of payment in cash and in the coin of the realm.
        Even at this late hour it is important for me to put that on the record, so that someone in the other place may have the wisdom to consider it and prevail on the Government not to pursue this line of enabling everyone to go to an industrial tribunal on what may well be a minor matter. If an employer deducts £6 a week from an employee when he should be deducting only £5, that employee will have, enshrined in legislation, an opportunity to take the matter to an industrial tribunal. In other words, an employee may go to a tribunal for the sake of £1 a week at a cost of thousands of pounds a day for the tribunal. I do not believe that the Government have thought that matter through.
        If an employer and employee are in dispute about sums that have been paid or deducted within the areas covered by the Bill, there must be another mechanism to deal with it which is simple, quick and acceptable to both parties. Industrial tribunals are not acceptable to both parties. Employers' organisations and trade union organisations have criticisms of them.
        Mr. Nellist: On a point of order, Mr. Speaker. Do I remember correctly that yesterday you gave a hint, if not a ruling, that those who sought to oppose a ten-minute rule Bill without dividing the House had your displeasure? Does that apply equally to those who seek to speak on Third Reading with no intention of voting against the Bill, as the hon. Member for Langbaurgh (Mr. Holt) has done for the last three months in Committee?
        Mr. Speaker: They are totally different criteria. This is a Third Reading, not a ten-minute rule Bill.
        Mr. Holt: The laws of the land are in our hands. People look to us to make good laws. They look to us not to see whether it is time to catch the train home, but to make sure that what we are doing is right. I believe that it is wrong—
        It being Ten o'clock, the debate stood adjourned.

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Wages Bill may be proceeded with, though opposed, until any hour.—[Mr. Archie Hamilton.]

    Wages Bill
    Question again proposed, That the Bill be now read the Third time.
    Mr. Holt: I do not wish to detain the House much longer—[Interruption.] However, I am going to detain the House long enough to make sure that every hon. Member on the Conservative Benches at least knows what he or she is voting for.
    I am not sure that everybody has studied in detail the ramifications of what will happen when industrial tribunals are looking into what deductions will be made. I doubt at this stage whether we can manage to read all the documentation that comes to us. We rely on hon. Members who serve in Committee and on experts to help and guide

    951
    us. I am not satisfied that that has been done in the case of industrial tribunals. I believe that they are over-legalistic, as I have said repeatedly.
    I have had a commitment from the Front Bench that the Government will look into the working of industrial tribunals but, instead of doing that, they are adding to the workings. It is on average 13½weeks before a worker can take a complaint to a tribunal, which is not satisfactory. I think that—
    Ms. Clare Short: Boring.
    Mr. Speaker: Order. We have just passed the 10 o'clock business motion. The hon. Gentleman has a right to be heard.
    Mr. Holt: In the last few days, industrial tribunal decisions have been made by the most learned in the land which have overturned quite important previous decisions. I believe that we are opening up a floodgate of legislation in which so-called protection will be given to workers which will not be acceptable in practical terms.
    The Government ought to have considered another method to afford the opportunity of a speedy and proper judgment to those who feel they have been disadvantaged. It will not help to impose a delay of 14 to 15 weeks before cases that have a 10 per cent. ceiling on them can come to court. I cannot believe that those who are responsible for advising the Minister have taken this point on board.
    In 1965 the number of books on industrial relations to be found on any lawyer's shelf would total one; today they fill the wall. There will soon be a similar increase in the load on the subject of deductions of money from employees.
    No area of the business community has asked for this, yet the Government seek to bring it in. We will make a laughing stock of ourselves if we introduce legislation that provides the opportunity for employees to go to an industrial tribunal for what will he trivial sums of money—£3 to £4. It will lead to industrial tribunals having a greater backlog of work, and the whole system will fall into disrepute. I hope that when the Bill goes to the other place, their lordships will, in their wisdom, find an opportunity not to send all these cases to industrial tribunals.
    10.5 pm
    Mr. Penhaligon: Few things deserve more genuine admiration than a Member who dedicates himself to trying to make sure that we understand the legislation on which we shall vote. It is odd in this case that the hon. Member for Langbaurgh (Mr. Holt) understands the Bill decides that he does not like it, but still will vote for it. The hon. Gentleman's attitude is astonishing, to say the least.
    One of the great privileges given to Ministers of the Crown, Secretaries of State and the Paymaster General is the power to protect the vulnerable. That is one of the most honourable and justifying reasons for our system of Government. Since 1909 one of the vulnerable sections has generally been agreed to be the low paid. Repeatedly since 1909 we have tried to protect them from the worst exploitation by wages councils legislation. The Bill removes the most vulnerable part of the low-paid sector from protection—those under 21.
    The Minister has made a number of speeches, and we have had a number of debates, but nobody has yet given me satisfactory reason to believe that the abolition of such
    952
    protection will achieve the objects for which the Minister has argued. He has identified a problem: there are times when paying an 18-year-old the adult rate militates against that young person's opportunity to obtain employment. That calls for a modification of the law on wages councils, not their abolition. However, the Government have decided on abolition.
    Nobody can defend a person aged between 16 and 20 from the most outrageous exploitation. The Under-Secretary has failed by allowing the legislation to be put before the House. Given his record on a number of issues, I am surprised that he has done so, because some of us regard him as nearly civilised, compared to the peculiar company that he keeps. I am amazed by what he has done. This is a bad day, and bad legislation. Many people between the ages of 16 and 20 will regret the day that the Bill was passed. They will remember it, and we shall remind them of it.
    Any Parliament other than one dominated by a Conservative Government elected by just 42 per cent. of the electorate will bring back some protection for those people.
    10.7 pm
    Mr. Kenneth Clarke: If we are to maintain the present growth in the economy and in employment opportunities, we have to continue to work at being a modern labour market. The Bill is a useful package of reforms that takes away various obsolete legal requirements, and will improve employment opportunities for a number of people and young people in particular.
    I point out to my hon. Friend the Member for Langbaurgh (Mr. Holt) that the repeal of the Truck Acts of 1831 is a little overdue, and, if it had been done before today, it would have enabled us to move towards more sensible methods of making payments. We have introduced new protection for those who are liable to deductions from pay in the retail trade, and I do not share his fear about the working of the industrial tribunal system.
    By ending the rebate system, we shall be taking off the statute book an outdated law. It is no longer necessary to make it cheaper and easier to make people redundant, and public money can be spent on employment measures in more positive ways.
    Our aim is to improve employment opportunities. We are not abolishing wages councils. We are retaining protection for adult workers and making the orders more simple. We are taking away the present complex and sometimes unintelligible rigmarole that surrounds the details of wages orders, whereby every aspect of employment for every employee is fixed by a panel of people in terms that are difficult to apply in practice. We shall still enforce it with the inspectorate, although there will be fewer inspectors because fewer workers will be covered, and the orders will be simpler. The method of enforcing the law will be exactly the same as that used by the previous Government, and so will the style of the wages inspectorate. Labour party spokesmen have argued for an approach to this legislation that they never followed when they were in power.
    There has been a welcome reduction in the rate of youth unemployment. During the past three or four years, there has been a reduction in the rate of unemployment among young people compared with the adult rate. That has arisen because we have a more sensible understanding of the

    953
    relationship between the wages earned by young people in their first jobs out of school and the wages earned by more experienced adults.
    The wages councils have no contribution to make in that area. Far from exposing youngsters to risk, we are ensuring that their employment opportunities will be increased.
    It is the tradition on Third Reading to make short speeches. Usually the Minister says that this is the finest piece of legislation to pass through the House in modern times. Usually the Labour spokesman says that he cannot, in his entire Parliamentary career, remember a worse case of grinding the faces of the poor. In reality, and considering the contents of the Bill, this is a sensible and, and most cases, a much overdue reform of obsolete bits of present employment law, and I commend it to the House.
    Question put, That the Bill be now read the Third time:—
    The House divided: Ayes 214, Noes 160.

    Division No. 183]

    [10.10 pm

    AYES

    Aitken, Jonathan

    Critchley, Julian

    Amess, David

    Crouch, David

    Ashby, David

    Currie, Mrs Edwina

    Atkinson, David (B'm'th E)

    Dickens, Geoffrey

    Baker, Nicholas (Dorset N)

    Dorrell, Stephen

    Baldry, Tony

    Dover, Den

    Banks, Robert (Harrogate)

    Durant, Tony

    Batiste, Spencer

    Dykes, Hugh

    Bellingham, Henry

    Evennett, David

    Bendall, Vivian

    Eyre, Sir Reginald

    Bevan, David Gilroy

    Fallon, Michael

    Biffen, Rt Hon John

    Favell, Anthony

    Biggs-Davison, Sir John

    Fookes, Miss Janet

    Blackburn, John

    Forman, Nigel

    Body, Sir Richard

    Forth, Eric

    Boscawen, Hon Robert

    Freeman, Roger

    Bottomley, Mrs Virginia

    Fry, Peter

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

    Gale, Roger

    Bowden, Gerald (Dulwich)

    Galley, Roy

    Braine, Rt Hon Sir Bernard

    Gardiner, George (Reigate)

    Brandon-Bravo, Martin

    Gardner, Sir Edward (Fylde)

    Bright, Graham

    Garel-Jones, Tristan

    Brinton, Tim

    Glyn, Dr Alan

    Brooke, Hon Peter

    Goodhart, Sir Philip

    Brown, M. (Brigg & Cl'thpes)

    Gorst, John

    Browne, John

    Greenway, Harry

    Bruinvels, Peter

    Gregory, Conal

    Bryan, Sir Paul

    Griffiths, Sir Eldon

    Budgen, Nick

    Griffiths, Peter (Portsm'th N)

    Bulmer, Esmond

    Ground, Patrick

    Burt, Alistair

    Grylls, Michael

    Butler, Rt Hon Sir Adam

    Hamilton, Hon A. (Epsom)

    Butterfill, John

    Hamilton, Neil (Tatton)

    Carlisle, John (Luton N)

    Hampson, Dr Keith

    Carlisle, Kenneth (Lincoln)

    Hanley, Jeremy

    Carttiss, Michael

    Hargreaves, Kenneth

    Cash, William

    Harris, David

    Chapman, Sydney

    Haselhurst, Alan

    Chope, Christopher

    Hawkins, C. (High Peak)

    Churchill, W. S.

    Hawkins, Sir Paul (N'folk SW)

    Clark, Dr Michael (Rochford)

    Hawksley, Warren

    Clark, Sir W. (Croydon S)

    Hayes, J.

    Clarke, Rt Hon K. (Rushcliffe)

    Hayhoe, Rt Hon Barney

    Clegg, Sir Walter

    Hayward, Robert

    Cockeram, Eric

    Heathcoat-Amory, David

    Colvin, Michael

    Heddle, John

    Coombs, Simon

    Heseltine, Rt Hon Michael

    Cope, John

    Hickmet, Richard

    Couchman, James

    Hicks, Robert

    Cranborne, Viscount

    Hind, Kenneth

    954

    Hogg, Hon Douglas (Gr'th'm)

    Nelson, Anthony

    Holland, Sir Philip (Gedling)

    Neubert, Michael

    Holt, Richard

    Newton, Tony

    Howard, Michael

    Nicholls, Patrick

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

    Norris, Steven

    Howarth, Gerald (Cannock)

    Onslow, Cranley

    Howell, Rt Hon D. (G'ldford)

    Oppenheim, Phillip

    Howell, Ralph (Norfolk, N)

    Oppenheim, Rt Hon Mrs S.

    Hubbard-Miles, Peter

    Osborn, Sir John

    Hunt, David (Wirral W)

    Ottaway, Richard

    Hunter, Andrew

    Page, Richard (Herts SW)

    Jessel, Toby

    Patten, J. (Oxf W & Abgdn)

    Johnson Smith, Sir Geoffrey

    Pattie, Geoffrey

    Jones, Gwilym (Cardiff N)

    Pawsey, James

    Jones, Robert (Herts W)

    Percival, Rt Hon Sir Ian

    Kershaw, Sir Anthony

    Portillo, Michael

    Key, Robert

    Powell, William (Corby)

    King, Rt Hon Tom

    Powley, John

    Knight, Greg (Derby N)

    Price, Sir David

    Knight, Dame Jill (Edgbaston)

    Proctor, K. Harvey

    Knowles, Michael

    Raffan, Keith

    Knox, David

    Rathbone, Tim

    Lamont, Norman

    Renton, Tim

    Latham, Michael

    Rhodes James, Robert

    Lawler, Geoffrey

    Rhys Williams, Sir Brandon

    Lawrence, Ivan

    Ridley, Rt Hon Nicholas

    Leigh, Edward (Gainsbor'gh)

    Robinson, Mark (N'port W)

    Lennox-Boyd, Hon Mark

    Roe, Mrs Marion

    Lewis, Sir Kenneth (Stamf'd)

    Rossi, Sir Hugh

    Lightbown, David

    Rost, Peter

    Lilley, Peter

    Sayeed, Jonathan

    Lloyd, Ian (Havant)

    Shaw, Giles (Pudsey)

    Lloyd, Peter (Fareham)

    Skeet, Sir Trevor

    Lord, Michael

    Smith, Sir Dudley (Warwick)

    Luce, Rt Hon Richard

    Soames, Hon Nicholas

    Lyell, Nicholas

    Spencer, Derek

    McCrindle, Robert

    Stokes, John

    MacGregor, Rt Hon John

    Taylor, Teddy (S'end E)

    MacKay, Andrew (Berkshire)

    Thompson, Donald (Caider V)

    Maclean, David John

    Thompson, Patrick (N'ich N)

    McNair-Wilson, M. (N'bury)

    Thorne, Neil (Ilford S)

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

    Trippier, David

    Major, John

    Viggers, Peter

    Malins, Humfrey

    Wakeham, Rt Hon John

    Maples, John

    Walker, Rt Hon P. (W'cester)

    Marlow, Antony

    Waller, Gary

    Mates, Michael

    Wardle, C. (Bexhill)

    Mather, Carol

    Watts, John

    Mayhew, Sir Patrick

    Wells, Bowen (Hertford)

    Merchant, Piers

    Wheeler, John

    Miller, Hal (B'grove)

    Whitfield, John

    Mills, Iain (Meriden)

    Whitney, Raymond

    Mitchell, David (Hants NW)

    Wilkinson, John

    Moate, Roger

    Wood, Timothy

    Montgomery, Sir Fergus

    Yeo, Tim

    Moynihan, Hon C.

    Mudd, David

    Tellers for the Ayes:

    Murphy, Christopher

    Mr. Tim Sainsbury and Mr. Francis Maude.

    Neale, Gerrard

    NOES

    Adams, Allen (Paisley N)

    Brown, Hugh D. (Provan)

    Archer, Rt Hon Peter

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

    Ashley, Rt Hon Jack

    Brown, Ron (E'burgh, Leith)

    Ashton, Joe

    Buchan, Norman

    Atkinson, N. (Tottenham)

    Caborn, Richard

    Bagier, Gordon A. T.

    Callaghan, Jim (Heyw'd & M)

    Banks, Tony (Newham NW)

    Campbell-Savours, Dale

    Barnett, Guy

    Carter-Jones, Lewis

    Barron, Kevin

    Clark, Dr David (S Shields)

    Beckett, Mrs Margaret

    Clarke, Thomas

    Bell, Stuart

    Clay, Robert

    Benn, Rt Hon Tony

    Clelland, David Gordon

    Bermingham, Gerald

    Clwyd, Mrs Ann

    Bidwell, Sydney

    Cohen, Harry

    Blair, Anthony

    Cook, Frank (Stockton North)

    Boothroyd, Miss Betty

    Cook, Robin F. (Livingston)

    Boyes, Roland

    Corbyn, Jeremy

    Bray, Dr Jeremy

    Cox, Thomas (Tooting)

    Brown, Gordon (D'f'mline E)

    Craigen, J. M.

    955

    Cunliffe, Lawrence

    Mason, Rt Hon Roy

    Cunningham, Dr John

    Maxton, John

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

    Maynard, Miss Joan

    Deakins, Eric

    Meacher, Michael

    Dobson, Frank

    Meadowcroft, Michael

    Dormand, Jack

    Michie, William

    Dubs, Alfred

    Mikardo, Ian

    Duffy, A. E. P.

    Millan, Rt Hon Bruce

    Dunwoody, Hon Mrs G.

    Miller, Dr M. S. (E Kilbride)

    Eadie, Alex

    Morris, Rt Hon A. (W'shawe)

    Eastham, Ken

    Morris, Rt Hon J. (Aberavon)

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

    Nellist, David

    Evans, John (St. Helens N)

    Oakes, Rt Hon Gordon

    Faulds, Andrew

    O'Brien, William

    Field, Frank (Birkenhead)

    O'Neill, Martin

    Fisher, Mark

    Orme, Rt Hon Stanley

    Flannery, Martin

    Park, George

    Forrester, John

    Parry, Robert

    Foster, Derek

    Patchett, Terry

    Foulkes, George

    Pavitt, Laurie

    Fraser, J. (Norwood)

    Pendry, Tom

    Freud, Clement

    Penhaligon, David

    George, Bruce

    Pike, Peter

    Gilbert, Rt Hon Dr John

    Powell, Raymond (Ogmore)

    Godman, Dr Norman

    Prescott, John

    Golding, John

    Radice, Giles

    Gould, Bryan

    Randall, Stuart

    Hamilton, James (M'well N)

    Raynsford, Nick

    Hamilton, W. W. (Fife Central)

    Redmond, Martin

    Hancock, Michael

    Rees, Rt Hon M. (Leeds S)

    Hardy, Peter

    Richardson, Ms Jo

    Harrison, Rt Hon Walter

    Roberts, Ernest (Hackney N)

    Hart, Rt Hon Dame Judith

    Robertson, George

    Haynes, Frank

    Rogers, Allan

    Heffer, Eric S.

    Rooker, J. W.

    Hogg, N. (C'nauld & Kilsyth)

    Ross, Ernest (Dundee W)

    Holland, Stuart (Vauxhall)

    Rowlands, Ted

    Home Robertson, John

    Sedgemore, Brian

    Hoyle, Douglas

    Shore, Rt Hon Peter

    Hughes, Dr Mark (Durham)

    Short, Ms Clare (Ladywood)

    Hughes, Robert (Aberdeen N)

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

    Hughes, Roy (Newport East)

    Silkin, Rt Hon J.

    Hughes, Simon (Southward)

    Skinner, Dennis

    John, Brynmor

    Snape, Peter

    Kennedy, Charles

    Spearing, Nigel

    Kilroy-Silk, Robert

    Stewart, Rt Hon D. (W Isles)

    Lambie, David

    Strang, Gavin

    Lamond, James

    Straw, Jack

    Lead bitter, Ted

    Thomas, Dafydd (Merioneth)

    Leighton, Ronald

    Tinn, James

    Lewis, Terence (Worsley)

    Torney, Tom

    Litherland, Robert

    Wareing, Robert

    Lloyd, Tony (Stretford)

    Weetch, Ken

    Lofthouse, Geoffrey

    Welsh, Michael

    McDonald, Dr Oonagh

    Wigley, Dafydd

    McKelvey, William

    Williams, Rt Hon A.

    MacKenzie, Rt Hon Gregor

    Wilson, Gordon

    McNamara, Kevin

    Winnick, David

    McTaggart, Robert

    Young, David (Bolton SE)

    Madden, Max

    Marek, Dr John

    Tellers for the Noes:

    Marshall, David (Shettleston)

    Mr. Don Dixon and Mr. Allen McKay.

    Martin, Michael

    Question accordingly agreed to
    Bill read the Third time, and passed.

  Ambulance Service (Bromley)
  Motion made, and Question proposed. That this House do now adjourn—[Mr. Archie Hamilton.]
  10.21 pm
  Mr. John Hunt: I am grateful to you, Mr. Speaker, for giving me this opportunity to draw attention to the recent very serious deterioration in Bromley's ambulance service. It is causing great distress and difficulty to many of my constituents. The story that I shall recount to the House is one of muddle and misjudgment by the London ambulance service, which apparently failed to foresee the consequences of its own recent decisions. I was first alerted to the potential problems at the beginning of this year, when a Bromley ambulance man, who is one of my constituents, warned me of the impact of the new rotas that had been agreed between management and the unions.
  As a result, I wrote at once to the chairman of the South West Thames regional health authority, which, for reasons not immediately clear to me, administers the whole London ambulance service. At that time, my concern was primarily with emergency cover. In his reply, dated 6 February 1986, the chairman, Mr. Tony Driver, offered me considerable reassurance. He told me, for example, that for some months the authority had been looking into
  "A more efficient use of vehicles which would be more responsive to the pattern of demands."
  The letter continued:
  "There will in fact be an overall increase in emergency cover."
  Thus, I was reassured. But of course I had been told only half the story. It subsequently transpired that the cuts were being made not in emergency but non-emergency cover—the walking patients as they are sometimes called.
  The cuts were in direct contradiction to specific assurances that had been given to my hon. Friend the Member for Chislehurst (Mr. Sims), who has also been actively engaged in these matters, but who is unfortunately overseas on parliamentary business tonight. My hon. Friend received a letter dated 25 February from the chief officer of the London ambulance service, in which he was told that special funding was being provided to meet the situation. As far as I am aware, no such funding has been made available.
  It was about that time that I and other of my hon. Friends who represent constituencies in the borough of Bromley began to receive complaints from our constituents about the numerous cancellations and delays within the local ambulance service. I therefore wrote again to Mr. Driver on 22 April expressing some surprise that I had not been forewarned of the reductions, and telling him of their disastrous impact on my constituents.
  At about the same time, the district general manager of Bromley health authority, Mr. P. A. Ward, wrote in similar terms to the regional general manager of the South-West Thames RHA. Mr. Ward expressed his serious concern at what he called "the sudden and unplanned" reduction in Bromley's ambulance service. His letter highlighted the draconian cuts that were being imposed.
  Apparently, the original demand from the London ambulance service had been for an immediate reduction of 40 per cent. in non-emergency patients. That in itself' was bad enough, but by April the position had become immeasurably worse—a demand was made by the divisional ambulance officer for a reduction not of 40 per

  957
  cent. but of 70 per cent. in the service for walking patients. That represents a reduction in coverage from 513 patients a week to 163. It was, therefore, hardly surprising that the many patients affected were up in arms and wrote, and are still writing, to me and other Members of Parliament.
  I wish to quote one letter from a young lady living in Hayes in my constituency. She said
  "I am writing to you about the ambulance cut backs. I am disabled and used to go to Guy's hospital in London by ambulance but I have been told that due to cut backs I cannot have transport any more. The hospital has tried to get me transport and so has my own doctor, but it has been to no avail, so I can't go to the hospital any more. I can't walk very far. I have arthritis in my legs and my hands."
  That young girl of 23 is clearly suffering greatly.
  In Bromley, ambulance service support has been withdrawn from the Phoenix centre for physically and mentally handicapped children at Farnborough hospital. That centre does magnificent work in providing therapeutic treatment for more than 20 severely handicapped children from all parts of the borough. Surely their parents have enough to cope with without the additional strain of having to make individual travel arrangements for them every day.
  Mr. Humfrey Malins: I am sure that my hon. Friend is aware of the immensely successful hospital in Croydon, the Mayday, and the fantastic work that it does. However, is he aware that many consultants at the hospital have approached myself and other hon. Members representing Croydon constituencies because they are concerned about the effectiveness of the London ambulance service? They are worried about the problems with the service in the Croydon area.
  Mr. Hunt: I am grateful to my hon. Friend, because his intervention emphasises how widespread the problem is. I do not wish in any way to suggest that it is confined only to Bromley; I know that it goes very much wider than that.
  Another example in Bromley is the Stepping Stones club, which provides facilities for patients who are recovering from mental and other illnesses. Only this morning I received a letter from the chairman of the Bromley Council for Voluntary Service, His Honour Judge David Griffiths, expressing his concern at the withdrawal of ambulance service support. Part of his letter reads:
  "There appears to be severe cuts in ambulance service or community care and yet it appears to be Government policy to increase and encourage this very type of service."
  That emphasises a policy contradiction in what is happening.
  I have seen a copy of a letter sent by a distinguished ophthalmic surgeon in Bromley to various health authorities and hospitals expressing his great concern at the effect of the cuts on his patients. A section of his letter reads:
  "a high proportion of our patients are old and unable to use public transport, and unfortunately many of them have no relatives living locally and appear to have no neighbours who are able to help and hence rely entirely on the ambulance service to attend outpatients."
  The letter continues:
  "As you will appreciate, these patients include those with long-term conditions, such as glaucoma, which need to be kept under review. There are also post-operative patient and it is essential we see these patients as required at the outpatient
  958
  clinics. If they cannot attend I can foresee that inevitably there will be disasters with regard to their treatment which could lead to diminution or even loss of their vision which would not be rectifiable."
  That is what is happening in Bromley. It is inhuman and intolerable. Faced with this crisis. I am bound to say that I regard the response of the London ambulance service as both casual and complacent. I can only describe the most recent reply that I received from the chairman of the South West Thames regional health authority to my latest letter of protest as quite remarkable. I shall quote two sections of it. He wrote:
  "The London Ambulance Service has been faced with an almost impossible task since March as the introduction of the new structure had to be subject to a free vote of all ambulancemen before we, as the managers, would know whether it should be introduced and, following from that. the extent to which ambulancemen would then be willing to undertake over-time if required, could not have been foreseen."
  Surely any competent and responsible ambulance authority would never have embarked upon a new structure of working until it had assessed the full impact of the new rotas upon the patients that it is there to serve. Mr. Driver's letter continues:
  "When the introduction of the new salaried structure was decided, we and the LAS between us wrote both to Regional and District General Managers throughout London pointing out that in the short-term the imbalance between need and availability could only be matched if the number of patient journeys could be radically reduced. The impact of this on individual patients was a matter which was largely in the hands of the Health Authorities themselves, since they alone can restrict demand."
  It seems that that comment begs the question why it was necessary to restrict demand in the first place. I think that that was dodging the issue. A major miscalculation has been made and now Mr. Driver tells me that the London ambulance service is hoping to recruit more men, and perhaps women, to fill the gaps in the present provision.
  I ask my hon. Friend the Minister three specific questions. First, when will the shortfall be made up? Secondly, is the recruitment of the additional ambulance men subject to any financial restraint or cash limit? Thirdly, when will the 70 per cent. cut in non-emergency provision in Bromley be restored?
  I came into politics, as I am sure my hon. Friend did. to improve the lot of those whom I represented. Cuts in ambulance provision of this nature and magnitude, cruelly affecting the most vulnerable sections of the community, make a mockery of all that I have been seeking to do throughout my period in public life. I beg my hon. Friend to act, and to act quickly, to restore the qualities of care and compassion both to the London ambulance service and to our Government.
  10.34 pm
  The Parliamentary tinder-Secretary of State for Health and Social Security (Mr. Ray Whitney): I am grateful to my hon. Friend the Member for Ravensbourne (Mr. Hunt) for the opportunity to respond to what is clearly an important matter. I was already well aware of the strength of his feeling on the subject, but he has reinforced my impression of his deep concern. I am grateful also for the opportunity to respond to the intervention of my hon. Friend the Member for Croydon, North-West (Mr. Malins). I accept, too, that he is disturbed about what has been happening to the ambulance service for his own constituents.
  I must say, at the outset, that we recognise that there have been problems and indeed, in some cases, serious

  959
  problems, and improvements must be made. I hope that I shall give my hon. Friends some reason for believing and hoping that those improvements are now in train. Certainly, positive things are happening.
  I shall attempt, initially, to set the whole effort in context. These days, we hear far too much about expenditure cuts in the National Health Service. As my hon. Friends the Members for Croydon, North-West and for Ravensbourne recognise, the National Health Service is enjoying a significant increase in resources—a 24 per cent. increase in real terms since 1979.
  We recognise that the pressures on the service have increased because of its success. Factors such as the ageing population, our success in making medical advances, and the additional number of nurses and doctors we have recruited all put pressure on the service. The issue also involves the operation of the resource allocation working party, which is known as RAWP.
  However, tonight we are talking about the ambulance service. Since the Conservative party came to office it has increased ambulance service expenditure by almost 10 per cent. in real terms. Some of the increase has been shared by the London ambulance service, to which my hon. Friends referred, as it covers Bromley and Croydon.
  A new salaried structure for ambulance men and women was introduced recently. The objective of the development was to lead to a more efficient and effective service which was more sensitive to the needs of patients. It was welcomed not only by the management side but by the trade union side of the ambulance Whitley council. There was no intention that the new salaried structure should reduce the level of service provided to the general public as a consequence of the agreement. The purpose of the salaried structure was to replace a pay system which encouraged inefficient working practice.
  Both management and the trade unions recognised the importance of reducing overtime to the absolute minimum necessary for operational purposes, and the need to eradicate other working practices which frustrated the establishment of a more cost-effective and efficient ambulance service. The "all-in" salary replaced the former system under which the basic rate of pay was substantially enhanced by additional payments for overtime, shift and weekend working. In many services, but not in the London ambulance services, bonus payments were also made. Now, the basic rate covers all payments for a standard working week worked round the clock and seven days a week as operational needs may require.
  The national agreement provided management with the opportunity to review critically, for example, the level of accident and emergency cover to ensure that the level provided matched that indicated by operational need. It provided for rotas to be reviewed and, where necessary, changed, using the criterion that operational necessity is the basis for staff being on duty. The agreement also encouraged the development of extended training in certain life-saving techniques. Out-patient and day centre arrangements were also to be reviewed and altered to provide the optimum vehicle and manpower utilisation. The agreement provides, too, a commitment for working practices to be kept under continuing review and for changes to be made where indicated.
  Our constituency experience over the years has shown us there have been serious inefficiencies and waste in the Health Service. I am certain that our basic principle, which was carefully worked out with specialist experts who were
  960
  brought in to advise, is the right way to go. There is no doubt, however, that there have been problems. The national agreement on salaried status was expected to result in major changes in the organisation and delivery of ambulance services and to lead to an improved service to patients, which is what we seek. There have been teething troubles. Although we are not resigned to that, the problems might be regarded as not particularly surprising. Regrettably, this has been happening in London recently and in other parts of the country.
  The London ambulance service management has reviewed its working arrangements and reached local agreement with the staff about the changes necessary to provide the level of service it considered appropriate. It decided that there was a need to divert more resources to the emergency side of the ambulance service. My hon. Friend the Member for Ravensbourne recognised that. I am sure that he agrees that, when difficult decisions have to be taken, the emergency service must take priority
  The changes effected will improve response and activation times and demonstrably provide an improved service which will be of direct benefit to patients. That must be good news. I believe that it will be welcomed by all hon. Members.
  This improvement in the emergency service has, as my hon. Friend the Member for Ravensbourne pointed out, had the unfortunate effect of reducing the manpower available to carry out non-emergency duties. We believe that that is a temporary phenomenon. Active steps have been taken to recruit additional staff. Of course, new staff need to be trained to enable them to carry out these important duties. I am pleased to report—I respond to some of the questions put to me by my hon. Friend—that the London ambulance service has been able to recruit 65 new staff who are currently being trained and who will all be available between now and the end of June to carry out operational duties. Further recruitment is taking place and another 32 staff will start training at the beginning of June. The London ambulance service management is encouraged by the response to the recruitment campaign. As an interim measure, the LAS is making use also of the hospital car service, taxis and other hire cars. It has offered district health authorities the loan of ambulances, together with the cash for drivers if suitable people can be recruited locally.
  On this issue, it is not a question of money. The Thames regional health authorities have made available additional resources to enable a level of service considered appropriate to be provided. This has taken account of continuing growth in demand for ambulance services, but, of course, this is an aspect in which everyone can help. There is frequently abuse of the ambulance service. I acknowledge that the Health Service has a responsibility to provide the best and most effective service it can. But those responsible for ordering ambulances, and the public have a responsibility to ensure that requests are made only for transport for those patients who meet the medical need criterion. Patients travelling to hospital by public or private transport who receive supplementary benefit or who are on a low income are entitled to reimbursement of their fares.
  We regret the inconvenience and distress caused to patients who had their transport cancelled, particularly when they had no time to make alternative arrangements. We believe that the situation should now be improving and that it will continue to do so as the new staff gradually

  961
  come on stream. Coupled with the real improvement that has already taken place in the quality of the emergency service in London, I am sure that this demonstrates that, within the resources available, our determination remains clear to provide the best ambulance service possible for London and for my hon. Friend's constituents. I should be grateful if my hon. Friend will convey my regret to his constituents about what has happened so far. However, I
  962
  believe that the outlook with respect to the non-emergency services is improving in the directions I have mentioned. Certainly, the emergency services have improved. I hope that the new arrangement and the new salaried structure will benefit not only ambulancemen but, what at the end of the day is infinitely the most important, the Health Service patients—our constituents.
  Question put and agreed to.
  Adjourned accordingly at sixteen minutes to Eleven o'clock.

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

Overseas Aid: Voluntary Agencies
Baroness Elliot of Harwood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the percentage increase in their funding of voluntary agencies working in the field of overseas aid since 1979.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, we provide financial support for two main areas of work by voluntary agencies. The first is long-term development work, for which our support has increased by 169 per cent. in cash terms between the financial years 1979–80 and 1985–86. This includes the Volunteer Programme. The second is disaster, famine and refugee relief; our funding of the agencies for these purposes was very slight in 1979–80, and has increased by over 15,000 per cent. in the same period. We provide support on a much smaller scale for a range of other work by the agencies, but information on this is not held centrally.
Baroness Elliot of Harwood: My Lords, I thank the noble Baroness very much for that excellent reply. Does it not show that the Government are determined to do all they possibly can for the voluntary agencies? Am I right in thinking that we have increased our programme for these agencies by 240 per cent?
Baroness Young: My Lords, I thank my noble friend for those supplementary questions. I have given the percentage increases for the years about which she has asked, and I think that it represents a very good record. We all appreciate how much work the voluntary agencies do in this field and that often, particularly so far as disaster relief is concerned, they are the quickest to get to the area and they make a most cost-effective use of the resources.
Lord Oram: My Lords, we can all welcome the support given from official funds to voluntary agencies because, as the noble Baroness has said, they disburse the funds directly to the people who need them more quickly sometimes than official projects can get under way. May I ask the noble Baroness how much of the funding that she has announced is under the pound-for-pound scheme which recognises in a practical way that the voluntary agencies do a great deal of fund raising themselves? This was true particularly during the course of the past year.
May I ask the noble Baroness a specific question concerning the need for education in this country about the problems of developing countries? For
1270
example, is she aware that the Centre for World Development Education has been facing serious financial difficulties in providing the excellent material that it does for our schools? It has had to dismiss three of its senior staff because of financial difficulties. Will the noble Baroness therefore ensure that in the review that I believe is taking place of that centre's finances every possible support will be given to it?
Baroness Young: My Lords, I have not a breakdown of the figures in precisely the form for which the noble Lord asked in his first supplementary question, but I agree with him that much of the money which goes to the overseas development projects is raised by the charities themselves in their own fund-raising activities, which, again, we greatly welcome. The Government have contributed on top of what the charities themselves have provided. To this end we are very glad that my right honourable friend the Chancellor of the Exchequer announced proposals in the Budget which are designed to give charities further tax advantages.
The other supplementary question that the noble Lord, Lord Oram, asked about developing education is wide of the original Question, which is on overseas aid, but of course if he cares to put down such a Question, I shall be happy to answer it.
Lord Taylor of Gryfe: My Lords, can the Minister assure me that those doing voluntary service overseas are not disadvantaged in their taxation arrangements as a result of this service? Secondly, do teachers who are engaged in the VSO programme get due credit for that service in their career structure?
Baroness Young: My Lords, I understand that some of the charities have asked questions about the Budget proposals. This is a matter for my right honourable friend the Chancellor of the Exchequer, and I understand that his officials are discussing it with the charities. On the noble Lord's second point, I think it is very much to the advantage of the education system that those young volunteers who have done two years service overseas are able to return to teach in this country with that valuable experience.
Lord Taylor of Blackburn: My Lords, will the Minister take note of my noble friend's question? If teachers are to be assessed, will it be a good mark in their career structure if they have done overseas voluntary service or similar work?
Baroness Young: My Lords, the noble Lord, Lord Taylor, will appreciate that that specific question about teacher assessment is wide of the original Question, and, again, if he cares to put it down on the Order Paper, I shall be happy to answer it.
Baroness Macleod of Borve: My Lords, can my noble friend the Minister give us any idea of the number of people from these islands who are helping voluntarily, or on a voluntary basis, overseas?
Baroness Young: Yes, my Lords; the latest figure available is 1,303. That is for the end of March 1986.
Lord Hatch of Lusby: My Lords, once again we have a Minister giving figures in cash terms in comparison with the figure for 1979. Presumably the subsidies to voluntary organisations come out of the overseas aid budget. What in real terms is the size of the overseas aid budget today compared with the figure for 1979? May I press again the question raised by my noble friend Lord Oram? Surely development education also comes out of the overseas aid budget, and therefore should there not be an answer available to the question he asked?
Baroness Young: My Lords, the grants to voluntary agencies for long-term development projects, often through joint funding schemes and the British Volunteer Programme, were in 1979–80 £4·6 million and in 1985–86 £12·5 million. That represents an increase in real terms of 56 per cent. The noble Lord will be aware that the proportion of money that goes to voluntary organisations is a relatively small proportion of the whole aid budget. But the point I am making is that we believe it to be very valuable that we are able to contribute to the voluntary organisations because they provide a cost-effective and quick way of dealing in particular with disasters. On the noble Lord's other point, as I said to the noble Lord, Lord Oram, if he cares to put down a Question about development teaching, I shall be happy to answer it.
Lord Hatch of Lusby: My Lords, with respect, the noble Baroness has not answered my question. I asked her what is the size of the total overseas aid budget today compared with that of 1979—the total overseas aid budget.
Baroness Young: My Lords, the Question on the Order Paper is about the money being given to voluntary agencies, and if the noble Lord puts down the Question to which he refers, again I shall be happy to answer it.
Baroness Fisher of Rednal: My Lords, does the noble Baroness also agree that the voluntary agencies have gained considerably from the original support for Band Aid, which the general public took to their hearts and to which they gave thousands and thousands of pounds? Is she aware that this week-end the Sports Aid programme is to take place throughout the world, sponsored by sportsmen from all over the world?
Baroness Young: Yes, my Lords, we all think that the work done by Band Aid and the fund raising efforts that have followed have been very commendable indeed and have made a major contribution to helping charities in the field.
Lord Mackie of Benshie: My Lords, will the noble Baroness tell the House whether the aid, which has risen by 240 per cent. in the case of the voluntary agencies, has resulted in a rise in the GNP of the countries concerned, or has it been entirely negatived by the fall in commodity prices?
Baroness Young: My Lords, I do not have figures with which to answer that particular question. Some of the aid goes to long-term development projects, and it is much to be hoped that it will make a major
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contribution to the GNP of the countries concerned. Other aid is, as the noble Lord will know, emergency disaster aid that is designed to help people in an immediately critical situation.
Lord Rea: My Lords, while we all very pleased that the funding of voluntary agencies has increased in this way, is it not the case that the total budget for aid overseas has actually decreased by some 20 per cent. over the past six years?
Baroness Young: My Lords, as I indicated earlier to the noble Lord, Lord Hatch, the Question on the Order Paper concerns money going to charitable agencies.

Universities: Teaching and Research Standards
3.11 p.m.
Lord Hunter of Newington: 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, by reducing the number of universities, they are prepared to concentrate available resources on maintaining a high standard of teaching and research at the remainder.
Baroness Hooper: My Lords, the Government's policy is to maintain and, wherever possible, enhance standards of teaching and research at all of Britain's universities. My right honourable friend the Secretary of State for Education and Science expects to receive very soon advice from the University Grants Committee about how the funds available for the universities should best be distributed.
Lord Hunter of Newington: My Lords, I thank the noble Baroness for that reply. Do the Government not accept the overwhelming nature of the evidence that has been presented by many agencies, including the Royal Society and the Select Committee of your Lordships' House? There really is no contrary evidence. Do the Government not accept also that there is a delay before the damage that is being caused will be evident?
Baroness Hooper: My Lords, I am not sure that I followed entirely the noble Lord's train of thought in putting that question. If he was referring to funding, then he will be aware that the Government take advice from the University Grants Committee, and that the Secretary of State has made it plain that any systematic evidence of adverse effects upon universities as a result of funding policy will be taken into account during the annual expenditure review.
Lord Rochester: My Lords, will the noble Baroness bear in mind that some of us are in fundamental disagreement with the premise underlying the Question of the noble Lord, Lord Hunter of Newington? We feel strongly that there are sound economic, industrial and social reasons why there

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should be no reduction in the number of universities in the United Kingdom at a time when we are making provision for higher education for a much smaller percentage of our population than our major trading competitors.
Baroness Hooper: My Lords, I believe that the Question was founded on recent press reports that have been entirely speculative about possible closures. In its 1984 strategy document the University Grants Committee stated that there might be circumstances in which the phasing out of grants to some universities might be the least damaging way of solving the problems facing the university system. However, I wish to make it absolutely clear that the University Grants Committee has not made any recommendations to that effect, let alone named particular institutions.
Baroness Lockwood: My Lords, I wonder whether the Minister can tell the House how the Government expect to enhance the standards of research and teaching in universities and at the same time reduce the resources that are available to universities?
Baroness Hooper: My Lords, in that area as in others the Government seek to spend the money available in the best possible way. It is for that reason that we have asked the University Grants Committee to submit plans for the allocation of grants to universities and to underline priorities.
Lord Grimond: My Lords, do the Government not agree that at present there are people who are fitted and who have the qualifications to go to university but who cannot get places? Will they undertake that there will be no further reductions in the number of places and no further attack upon the Robbins principle; and that people who are fitted and qualified to get university places will have a chance to get them?
Baroness Hooper: My Lords, the number of entrants to universities is not being reduced. Since 1979 the evidence shows that the number of home students has increased by nearly 80,000. The proportion of 18 year-olds to 19 year-olds entering higher education has increased by 15 per cent., and the number of mature entrants has risen by 12 per cent. The Government's plans envisage further increases in participation rates over the next decade.
Lord Mackie of Benshie: My Lords, does the noble Baroness not accept that any decision by the University Grants Committee to recommend the closing of universities must solely spring from the cutting of the supply of money by the Government, and that the ultimate responsibility is the Government's?
Baroness Hooper: My Lords, as I said earlier, the University Grants Committee will be offering advice to my right honourable friend in the summer on the current and prospective financial position of the universities, and the recommendations of the University Grants Committee will be taken fully into account in any plans for future spending as part of the
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Government's annual review of their expenditure plans.
Lord Irving of Dartford: My Lords, while recognising the need to maintain the highest standards, does the noble Baroness not realise that it is more and not less higher education that we need in this country if we are to compete with our competitiors in France, Germany, America and Japan? Is the noble Baroness also aware that despite what she has said, there has been a cut of 2·7 per cent., or 12,000 students per annum, in the numbers entering our universities in each year between 1980–81 and 1984–85, whereas employers, according to the PA Personnel Services Report, seek a 4 per cent. growth in the number of graduates through to 1990 if industry is to prosper?
Baroness Hooper: My Lords, I can only refer the noble Lord to my earlier answer about the increasing number of students, and emphasise the fact that in areas such as science and engineering the number has also been considerably increased.
Lord Hunter of Newington: My Lords, does the Minister not agree that the basic research funding of universities over the past five years has been steadily reduced?
Baroness Hooper: My Lords, I am not aware of the figures behind the noble Lord's supplementary question; but the University Grants Committee's decisions are based very much on the merits of the research being undertaken in various university departments. The Government welcome that approach, which gives extra support for high quality research work.

Anglo-Spanish Trade
3.18 p.m.
Lord Gainford: 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 are the prospects for improved Anglo-Spanish trade in the light of King Juan Carlos' historic visit.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, the very successful Royal visit last month focused British attention on Spain at an important point in the development of Anglo-Spanish trade relations. Her Majesty's Government expect the recent growth in our trade with Spain to accelerate as trade barriers between the two countries are reduced over the next seven years.
Lord Gainford: My Lords, I thank my noble friend the Minister for that Answer. Does he have any information on the prospects for this country's export trade in cars?
Lord Lucas of Chilworth: My Lords, United Kingdom car exporters will benefit from the

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immediate reduction in Spanish tariffs and their phasing out over the next seven years, with half the reduction in the next three years. They will benefit also from the introduction of VAT in Spain which removes elements of discrimination against imported cars. Additionally, Spain has increased the reduced duty quota for EC cars.
Lord Somers: My Lords, does not the noble Lord agree that one of the most important aspects in accelerating this trade is to produce goods that appeal to the Spanish love of high quality?
Lord Lucas of Chilworth: My Lords, indeed, the noble Lord, Lord Somers, is quite correct, and of course that argument prevails elsewhere in the world.
Lord Ezra: My Lords, can the noble Lord indicate whether in view of the auspicious occasion of Spain joining the European Community the British Overseas Trade Board is mounting any special initiative in the Spanish market?
Lord Lucas of Chilworth: My Lords, the British Overseas Trade Board had nine separate missions, seminars or conferences in Spain during 1985. There were 30 seminars in the United Kingdom, advising about 1,500 potential exporters of the opportunities, and the work continues into 1986.

Environmentally Sensitive Areas
3.21 p.m.
Lord Chelwood: 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 provide a breakdown of their estimate of £6 million in a full year as the cost of designating five or six environmentally sensitive areas, and what is their estimate of the savings to the taxpayer from the much reduced subsidies, grants and other costs resulting from such a change in land use.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, at this stage it is not possible to provide a breakdown of the £6 million, since the recommendations we have received from the Countryside Commission and Nature Conservancy Council on the areas under consideration vary a good deal from area to area. Costs will therefore depend on the areas chosen and the management prescriptions offered. We would expect some farmers to reduce their output in areas designated as environmentally sensitive areas. This should have some effect on production subsidies. But it is too soon to assess the size and type of effect, given that the environmental agencies have proposed a wide range of possible measures which we are still analysing.
Lord Chelwood: My Lords, I am certainly grateful for that Answer, but it does not get us very far. Will my noble friend confirm that Article 19 of Regulation
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797—in the drafting of which the Secretary of State played an enlightened and significant role—permits the use of national funds to encourage farming practices significantly different from those being followed at present? If advantage is taken of the use of national funds for that purpose, will there not be built up very substantial savings in subsidies which at present are going, for example, to subsidise farmers to grow wheat and barley on a colossal scale simply to put it into intervention; it being wheat and barley which nobody wants? Has the Treasury taken any account of that, at any rate for future years?
Lord Belstead: My Lords, I am grateful to my noble friend for his recognition of what my right honourable friend did to obtain agreement within the Community for the principle of designating environmentally sensitive areas. That recognition, of course, was for the use of national funds and the £6 million which is to be devoted to the designation of these areas is our national money.
I do not in any way contradict my noble friend when he says that he would expect there to be a reduction in production in these areas, but I must repeat what I said in my original Answer—it is too soon to assess the size and the type of effect which designation will have. I hope that we will know more quite soon. I very much hope that designation will take place by 1st January 1987.
The Earl of Onslow: My Lords, may I press my noble friend on the point made by my noble friend Lord Chelwood? If we are to reduce the supply of wheat and barley and encourage extensive rather than intensive farming methods, this must reduce the amount of money that is to come out of the common agricultural policy funds. Does my noble friend not agree that that money should be further used to top up national moneys and to create yet more methods of extensive farming and environmentally important methods of farming?
Lord Belstead: My Lords, my noble friend's logic is immaculate. However, he has overlooked the fact that at the moment support for market prices in the Community is running enormously above what anybody budgeted for a year ago. We must first think about that.
Lord Gallacher: My Lords, will the noble Lord the Minister allow that if there is an offset, even though it is at present too soon to calculate what it is, it might be used to allow his right honourable friend the Minister to designate perhaps more areas than the six originally chosen? In publishing a list of some 14 from which the selection of six has been made undoubtedly some disappointment has been generated in those areas which have not been selected on this occasion.
Lord Belstead: My Lords, in no way do I disagree with the noble Lord, Lord Gallacher. The Government want to see as many of the areas designated out of the 14 as is possible. However, this will depend initially and very considerably on the costs of the areas. Once again, they differ enormously. As far as we can see from the proposals which have been put to us they vary from as much as only £140,000 capital

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which would have to be put into one area I have in mind to about £2.5 million which would have to be put into another area. Therefore, we will have to look at the costs of each area to see how many areas we can squeeze out of the £6 million.
Lord Mackie of Benshie: My Lords, does the Minister agree with his noble friend's statement that there is production of wheat and barley which nobody wants? Is that not an extraordinary exaggeration of the situation? Can the Minister say what percentage of the wheat and barley is unwanted and what this country will do without the percentage which is wanted?
Lord Belstead: My Lords, I must apologise to the noble Lord since I do not have that percentage with me at the moment. However, it is a fact that the storehouses are groaning with cereals at present. As the noble Lord, Lord Mackie of Benshie, knows better than I do, the Council of Ministers has now decided that we must try to grow more for the market, which means growing more milling wheat and malting barley.
Baroness Nicol: My Lords, can we take it from the Minister's apparently sympathetic reply to my noble friend's supplementary question that the Treasury veto which is to be written on to the face of the Bill will not be applied at least until the £5 million or £6 million has been spent?
Lord Belstead: My Lords, the £6 million is firmly secured so far as agreement with the Treasury is concerned.
Baroness White: My Lords, should the Welsh environmentally sensitive area prove to be one of the rather more economic ones, can we have some assurance that we shall have more than one designated area? We put in for several and we should like to have more of them in our beautiful country?
Lord Belstead: My Lords, we must see where we go so far as designation is concerned. I have no doubt that we shall be discussing this in some depth when we reach the Committee stage of the Bill.
Lord Hunt: My Lords, can the Minister say, even at this early stage, how long he expects the initial experiments with six designated areas to run, bearing in mind the threats in that period to the other areas within the total of 14 recommended by the Countryside Commission and the Nature Conservancy Council? When does the Minister expect that it will be possible to move from the pilot stage to a wider extension of the scheme?
Lord Belstead: My Lords, I should have thought that a period of five years would be about right for the initial designation of environmentally sensitive areas; but again, this is something on which we would want the views of the House.

Business
3.27 p.m.
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Airports Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Dental Auxiliaries Regulations 1986 and the Industrial Training Levy (Engineering Board) Order 1986 will be taken.

Spring Bank Holiday Recess
Lord Denham: My Lords, it may also be for the convenience of the House if I announce that, subject to the progress of business—and I must emphasise that—the House will rise for the Spring Bank Holiday Recess on Thursday 22nd May and return on Monday 2nd June. The House will sit at 11 a.m. on Thursday 22nd May, but I think I should mention that, nevertheless, the House is expected to sit until a late hour that night.

Televising the Proceedings of the House
The Lord President of the Council (Viscount Whitelaw): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That pursuant to the Resolution of the House of 12th May instant and certain recommendations made in the report of the Select Committee on Televising the Proceedings of the House:

(1) the British Broadcasting Corporation and the Independent Broadcasting Authority ("the television authorities") be authorised to provide and operate singly or jointly cameras and other equipment required for the purpose of televising the proceedings of the House and of certain of its committees, subject to the directions of the House or a committee empowered to give such directions ("the committee");

(2) the television authorities may supply television pictures made pursuant to this resolution to other television organisations, and shall supply them to any other organisation whose request for such a facility shall have been granted by the committee, on such conditions as the committee may determine;

(3) no television pictures made pursuant to this resolution shall be used by the television authorities, or by any organisation supplied with such pictures, in light entertainment programmes or programmes designed as political satire; nor shall any film, tape, video cassette or other device making use of such television pictures be published unless the committee shall have satisfied themselves that it is not designed for such entertainment or satire;

(4) tapes of all proceedings of the House which have been broadcast by the television authorities shall be supplied by them to the House for archive purposes, in a form to be decided by the committee, who shall also determine which such tapes should be permanently preserved.—(Viscount Whitelaw.)

Viscount Whitelaw: My Lords, your Lordships will recall that at the conclusion of Monday's debate on the Motion of my noble friend Lord Boyd-Carpenter to continue the televising of our proceedings I undertook to move as soon as was practicable the Motions which would be necessary to enable this to happen. This first Motion empowers the television authorites to televise and sets out certain criteria to be observed. It follows very closely the Motion of 28th July 1977 under which the sound broadcasting of the House's proceedings has been conducted with, naturally, appropriate modifications. My Lords, I beg to move.
On Question, Motion agreed to.

Broadcasting Committee
Viscount Whitelaw: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
This second Motion sets up a new Select Committee which will exercise the powers of the House in relation to both sound broadcasting and television. As I said on Monday in response to representations, I am sure that in selecting the membership of this committee the Committee of Selection will have in mind the need for a balance of opinion on the proposed committee on the question of television. I beg to move.
Moved, That it is desirable that a Select Committee be appointed to exercise the powers of the House in relation to sound broadcasting pursuant to the resolution of 28th June 1977 and to television pursuant to the resolution of this day and that the resolution of 14th February 1978 establishing a Select Committee on Sound Broadcasting be discharged.—(Viscount Whitelaw.)
On Question, Motion agreed to.

Airports Bill
3.31 p.m.
The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Earl of Caithness.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Power to direct reorganisation of BAA'S undertaking prior to appointed day]:
Lord Underhill Lord Underhill moved Amendment No. 1:
Page 1, line 14, at end insert—
"Provided that any such proposals relating to Stansted Airport shall make provision for that airport to be operated by an independent free-standing company.")
The noble Lord said: I think it may be for the convenience of the Committee if I speak not only to Amendment No. 1 but also to Amendment No. 3 at the same time. With the leave of the Committee I
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should like to make one or two introductory remarks, but I shall not make a Second Reading speech.
From these Benches we are still opposed to the whole principle of privatisation and to the whole principle in Part II regarding local authorities, but our purpose in all our amendments will be to make the Bill a better and more workable Bill. It is important that it is recognised that we are the first country to enter the new ground of private ownership of airports, and it is therefore very important that consideration be given to all the new clauses and all the amendments that are put forward.
The Government have recognised this by the large number of amendments that they have already tabled for the Committee stage. We are grateful to the noble Earl for having given us some Notes on Clauses for at least some of the new clauses, and we hope that the balance will be coming along. That indicates that the Government have had to have second thoughts on a number of matters since the Bill came from the other place.
As I said, we adhere to our general desire to retain public ownership of British airports. The amendments that we are proposing have certainly not been tabled with any aim of separate privatisation for Stansted. Members of the Committee will recall that when the inspector's report was debated we were prepared to support limited development of Stansted, in that developments outside Stansted or at Stansted itself might relieve pressure on other areas of the South-East. But if Stansted is now to develop, it should operate fairly in relation to other airports, particularly the airports outside the South-East. No one can deny that hitherto Stansted has not been a free-standing airport. It has been generally agreed that the existing charges at Stansted are very much lower than those at, say, Manchester, Birmingham or Luton. In fact, when one looks at the figures given by Grieveson Grant—and the Committee will recall that I have already quoted the leading stockbrokers Grieveson Grant—in their investment research aimed at encouraging people to purchase BAA shares whenever it should be privatised, on page 25 one finds the following figures: in 1981–82, the total income was £2.4 million but the loss at Stansted was £4.3 million; in 1982–83, the income was £2.3 million but the loss was £4.5 million; in 1983–84, income was £2.9 million and loss was £3.9 million; and in the last year, 1984–85, income was £3.7 million with an operating loss of £3.1 million.
Therefore, it can be appreciated that we are concerned that Stansted would not be operating fairly if that sort of thing continued under the provisions of the Bill as they are now before us. Let me make it absolutely clear that on these Benches we are not opposed to financial help when it is essential for economic and social purposes, but that certainly cannot be said to apply in the case of Stansted. We must ensure that all finances are transparent and that any finances in the form of loans must be obtained on the open market.
The Secretary of State has said that arrangements would be made to eliminate any possibility of subsidy and that the market would determine the pace of development at Stansted. That is one purpose of these

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amendments, but it should be written into the Bill and not be the subject of a statement from the Secretary of State. Political developments are such that the present Secretary of State may not be there to implement these aspects of the Bill. Therefore, one must ensure that this provision is actually written into the Bill.
It may be argued that the Civil Aviation Authority will have power to prevent predatory pricing but that—in those words—is also absent from the Bill. The subsidy could be justified if it assisted in planning to form part of a general coherent policy and would not cause any detrimental effects to the rest of the system. I refer to the whole system of the aviation industry throughout the United Kingdom. It cannot be denied that if Stansted were given a special pricing position or given special subsidies it would have an effect on the aviation industry in other parts of the United Kingdom. The subsidy to Stansted would not meet the criteria which I have suggested should be part of a coherent policy which does not cause detrimental effects elsewhere.
The regional airports have to operate on a free-standing basis. When I looked to see the view which was expressed on behalf of the Government, I found that the Under-Secretary of State, Mr. Michael Spicer, speaking in the other place on the 20th February, said:
"It is totally accepted by the Government that none of the three London airports should be able to develop or trade unfairly against other United Kingdom airports. That is why we will insist that the London airports will be run as separate companies with transparent accounts. They would only be able to borrow at market rates of interest and unfair cross-subsidisation would not be allowed between, for instance, Heathrow and Stansted airports".
With that quite definite statement one would hope that the Government would therefore give wholehearted support to these amendments. That is the purpose of them, and we want that statement written into the Bill in the form of the amendment which I now propose to move. I beg to move.
Lord Broxbourne: Before the noble Lord sits down, would he be good enough to enlighten the Committee as to the term "free-standing company"? What is its legislative status and provenance? Is it a term of art? I do not think I can be the only member of the Committee to be ignorant of this phrase. From informal inquiries that I have made it seems there is a widespread, if possibly regrettable, ignorance as to its exact significance. I notice the noble Lord turns to his neighbour. I hope that he does not share our ignorance on this matter.
Lord Underhill: I am certain that the noble Lord, Lord Broxbourne, understands full well what is meant.
Lord Broxbourne: No; indeed, no.
Lord Underhill: I am certain the noble Lord knows what is meant, and if there is any doubt on the issue then let the Government accept these amendments and in an interpretation clause declare exactly what it should mean. That is a way out of the issue. Our interpretation of an independent free-standing company is that it will stand on its own feet within the privatised BAA. It will not receive cash subsidies from the successor company. It will not be given special predatory charging arrangements. That is our
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interpretation. If that does not satisfy the Government, I shall be happy if they accept the principle with the undertaking that they will put forward an amendment to have it stated in the Bill exactly how an independent, free-standing company should be interpreted. I beg to move.
Baroness Burton of Coventry: It is not necessary for me to tell the Committee that I am worried and have grave misgivings about Stansted. As I said on Second Reading, I am not against the development of Stansted but I am against the size of the development now projected, and I emphasise the word "now". Fundamentally, I believe that the Government will subsidise Stansted to any amount that they consider is essential to push through this too hasty amount of development. Furthermore, I believe that if that financially damages regional airports, it will be just too bad; the development will still go ahead.
On many occasions I have protested about Stansted being supported from the profits made at Heathrow and Gatwick, and I remember explaining how Luton had suffered as a result. In future, if the Bill goes through unamended not only Luton but regional airports as a whole will suffer. I suggest that that will be unavoidable because of the scale of subsidy necessary for that too large amount of development at the present time.
In another place right through the Bill, both in Committee and on the Floor of the House, it was stressed again and again that the main concern of Members was to ensure that Stansted is not unfairly subsidised. Behind that fear was the concern that as things stand it is possible for the British Airports Authority to offer to the Secretary of State a structure that will give it generous scope to hide a lot of the management costs of Stansted within the holding company or in some other way.
I take the date of 11th February, which was the date that I believe the noble Lord, Lord Underhill, took. On that date at column 39 in Standing Committee, Mr. Spicer contended that under the provisions of Clause 37(2) any subsidy from one BAA company to another must be transparent; and also that Clause 38(2)(b) provides that the Civil Aviation Authority may impose conditions when such a subsidy results in a BAA company imposing charges which are below the rate justified by cost and are therefore predatory. Transparency is all very well, but can we be sure that action will be taken on that?
I have no doubt that if the Government and the BAA get their way there will be substantial investment in the infrastructure of Stansted Airport. What many critics say is that they would like to see the Government make the same commitment to investment in the other airports. Let us take the affair of the British Railways (Stansted) Bill. The noble Earl has written to me on the matter and I shall come back to his letter in a few minutes.
That Bill had its attempted Second Reading in another place on 24th February. I say its attempted Second Reading because the House would have none of it and the matter was talked out. Since then that Bill has appeared on the Order Paper weekly and discussion on it has been deferred weekly: from 6th March to, successively, 13th, 20th and 27th March, to

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10th, 17th and 24th April and to 1st, 8th and 15th May, which is today. I have it written down here to ask the Minister whether he can tell the Committee whether there will be further deferment tonight. But I have just had a note passed to me to say that the Second Reading debate will be resumed in another place tonight and that there will be an amendment proposing,
"That the Bill be now read a second time upon this day six months".
We shall have to wait to see what transpires.
What has gone wrong? If the Government want the Bill, which presumably they do, and British Rail wishes to build the rail link, why is there the delay? I can give one reason and it is linked with what I am trying to say today and what I believe is behind the amendments that we support. Those Members in another place who wish to see more regional development are furious that Mr. Ridley has shown no sign of approving the detailed plans of British Rail for a line to serve Manchester Airport, despite, as many of them believe, earlier hints that Manchester would get its rail link before Stansted; and nobody believes that Stansted can be viable without a rail link.
The noble Earl, Lord Caithness, kindly sent me a letter that he hoped would clarify the issue. I am grateful to him for the letter. The issue did not really need clarifying. I have lived with this matter so long that I feel that I know what is going on. He did not put in his letter something which I am sure he knows but which he could not be expected to have put into it: while the taking of a Private Bill in another place is not directly the responsibility of the Government, it is their actions over this whole affair that have produced the reactions in another place to the Bill which have delayed it since 24th February until today.
Let us be realistic. Stansted loses money and as it stands at the moment it is not a viable proposition. It has not been a viable proposition even with the subsidy received from the profits of Heathrow and Gatwick. Putting up charges is not likely to attract more custom, and more custom is needed to make it viable. In view of the Government's commitment, I believe that they will cover the increased charges by subsidisation and that we shall see traffic directed to Stansted Airport.
As I think is obvious, I consider that the whole affair of Stansted has been mishandled and mishandled badly. The Government have allowed themselves to be pushed by the BAA into this large-scale development and they have found themselves from the beginning having to push through a project with which instinctively the House felt too much was wrong: and the word "instinctively" is important. There has been far too much undercover work in all this. That goes right back to the equally ill-fated Civil Aviation Bill, which was abandoned by the Government in May 1985 in view of the almost total condemnation in another place, from all sides, of the manner in which they felt that they were being pressurised over the development of Stansted. I join with those critics. As the undertones become more and more evident, I have reached the stage, where Stansted is concerned, that I just do not trust the Government at all.
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These amendments are not against subsidy as such but against unfair subsidy. Those of us who speak to these amendments believe that, unamended, this Bill makes for unfair competition between Stansted and the regional airports. I hope that we shall ensure support from the Committee in making the necessary changes and that our amendments will prove acceptable.
Lord Boyd-Carpenter: This is a very odd amendment and it has been supported by even odder arguments. I am bound to say that I was a little amused when the noble Baroness referred to the over-hasty development of Stansted. It was decided in 1964 that Stansted should be developed as the third London airport. Even with our own stately procedures and an interminable series of interminable public inquiries, while a period of 22 years for gestation of the project might well be criticised, it can hardly be criticised on the grounds that it is over-hasty.
It is evident from the speech of the noble Baroness that she is basically against Stansted and so, I suspect, is the noble Lord on the Front Bench. I hope that they will both accept that after prolonged processes the Government have, in my view rightly, at long last and belatedly decided to go ahead with Stansted. The reason is clear. With the big surge in civil aviation development which many of us think is close upon us, assisted as it is, of course, by the fall in oil prices, it is obvious that London will shortly be under-provided with airports.
Heathrow is already near to physical capacity with regard to runways although the fourth terminal has relieved the pressure on the terminals. The foolish decision—here I know that I carry the noble Baroness with me—not to put in the second runway at Gatwick, accentuates the problem. It is clear that if Stansted is not developed quickly and urgently, this country will lose air traffic because of the lack of airport capacity in the London region. That would have serious effects on our tourist trade and our civil aviation industry.
Baroness Burton of Coventry: This is a belated interruption because I was chasing through my notes. The noble Lord said that I spoke about the too hasty development of Stansted. That was not a happy choice of words. I have just been looking at my notes. Is the noble Lord aware that I spoke of the too big development of Stansted and that capital expenditure of £290 million at present is far too much for Stansted?
Lord Boyd-Carpenter: I am glad that the noble Baroness has withdrawn the suggestion of over-hastiness. I agree with her about the capital costs of development. If Stansted had gone ahead in the middle 1960s, as it should have, it would have been built up at an infinitely lower cost than it now has to be. Equally, if those who even now seek to hamper the development of Stansted are successful and they delay it further, that will increase the cost. I am glad that I carry the noble Baroness with me on that point.
The feeling about Stansted arises not so much because some people feel that there will be excessive provision for the London area—no one can really study the matter and believe that seriously—but because it is thought that the development of a third

1285
London airport is in some way unfair to regional or provincial airports.
I believe that to be a complete fallacy. People come to or interline through London because that is the way they want to come. If we do not provide the facilities in London, they will not go to Birmingham, Coventry, Manchester or Glasgow; they will go to Schiphol, Charles de Gaulle or Frankfurt. That is the fact of the matter.
Those who speak for the provincial airports—I have great admiration for many of them and for the way in which they have been most bravely developed, notably Manchester, where the Manchester Corporation did an extremely good job in developing the airport—make the most frightful mistake if they think that by hampering the provision of adequate airports for London they will therefore help the provincial airports. I believe that the effect will be the reverse. It will diminish the flow of traffic into this country and therefore diminish rather than increase the potential flow of traffic into those airports.
The only other point that I wish to make follows the effective intervention in the speech of the noble Lord, Lord Underhill, by my noble friend Lord Broxbourne. What on earth is an "independent free-standing company"? The noble Lord admitted that he did not know. He said that he would like to put it in the Bill and then have the Government put in an interpretation clause to interpret the uninterpretable. With respect, that is not the way to legislate. An amendment to a Bill is an attempt to alter the law of the land, and to put into the law of the land a phrase which it is apparently agreed no court would know how to interpret and to which there can be no definable legal meaning is, if I may say so with respect to the noble Lord, wasting the time of the Committee. For that reason and the general merits of the matter upon which I have said a word or two, I hope your Lordships will reject the amendment.
Lord Broxbourne: I am singularly unqualified to address the Committee on this subject partly because I do not know what the amendment means—
Lord Boyd-Carpenter: Nor does he.
Lord Broxbourne: As my noble friend Lord Boyd-Carpenter says, nor does the noble Lord the Minister. We are in consimili casu or even in pari delictu.
Lord Tordoff: I do not understand what that means either.
Lord Broxbourne: I shall supplement the noble Lord's knowledge. I will do so gladly. It may not be the only matter upon which his knowledge requires supplementing by the Committee, in which case I am sure that there are many other noble Lords more fitted to fill the inexhaustible voids in his knowledge than I. In consimili casu means "in the same case" and in pari delictu means "in equal dereliction".
I was not proposing to return to the question of the nomenclature, which has been so admirably dealt with by my noble friend Lord Boyd-Carpenter. No doubt those mysteries will be unravelled in the course of time by my noble friend the Minister. The only reason I rise
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is to say the briefest of words on behalf of the sensibilities and apprehensions of my former constituents. Stansted was not part of my constituency but a large area within the operation of the Stansted airport was. Not unnaturally, I have received representations from my former constituents about their anxieties with regard to the future of Stansted and its possible expansion.
My noble friend Lord Boyd-Carpenter, with his unrivalled authority and experience, has dealt with the generality of the matter from the point of view of the national need for the expansion of facilities and, of course, of that I take full account. I venture to put in a small plea on behalf of my former constituents that the implementation of the generally excellent principle of privatisation will not bring as an unwelcome by-product, an injurious effect on the environmental amenities of that agreeable countryside and the small towns in the neighbourhood. I put in that respectful plea, and I hope that my noble friend will have regard to it.
I no longer depend upon the suffrage of my former constituents but I still cherish any small place I may have in their affections and therefore wish to put in that plea on their behalf. I hope that I do not appeal in vain to my noble friend to say a reassuring word as to their apprehensions in that regard.
4 p.m.
The Earl of Caithness: If the Committee will permit me a preamble, as it did the noble Lord, Lord Underhill, I should like to thank the noble Lord for his kindness and his constructive attitude. I remember from my days on the Cross-Benches, before joining this party, that I sometimes found it frustrating when the Government did not accept amendments that I had tabled. Afterwards, when the dust had settled, I realised that I was trying to put into reverse the vehicle that the Government were moving in a particular direction. It was therefore not surprising that they would not accept the amendments. However, I shall listen carefully. Any constructive amendment that takes us forward will, of course, be considered with the utmost care.
There has been a noticeable change in the Opposition's attitude towards Stansted. I am grateful to the noble Lord, Lord Underhill, for clarifying the position and for reiterating that it is the Labour Party's intention that Stansted should not pose a problem to regional airports on an unfair basis and cause unfair competition. That is, indeed, the Government's aim. I do not believe that this is likely in any event. Stansted's prices have been much lower than Manchester's throughout the last six years. But one soon sees that Manchester's traffic has grown from 3·5 million passengers to over 6 million passengers a year, whereas Stansted is handling only half a million. I do not believe that these airports are in direct competition. My noble friend Lord Boyd-Carpenter, in an excellent speech, pointed out where the competition comes from. It comes from our friends in Europe.
In so far as there is competition between the airports, we share the noble Lord's aim that such competition should be fair. I should therefore like to reiterate the steps that we have taken to ensure that

1287
there is no unfair competition. These were put into the Bill purposely. We were aware that my right honourable friend the present Secretary of State would not be around for ever to protect the position, so we have written things on to the face of the Bill. We have proposed reorganisation of the BAA so that each airport is operated by a separate subsidiary of the successor company. This will be achieved by my right honourable friend using his powers under Clause 1. Secondly, we have provided in Clause 38 that each airport must publish separate accounts regardless of the structure of ownership, and that these accounts must reveal any subsidy from whatever source.
Thirdly, and most importantly—this relates to a point mentioned by the noble Baroness, Lady Burton—we have made specific provision in the Bill to ensure that Stansted cannot engage in predatory pricing. Clause 39 ensures that the CAA can prevent an airport charging prices that are below costs or are artificially low, for instance because of cross-subsidy, which harm or are intended to harm another airport's business. This provision has been considerably strengthened during the passage of the Bill. Clause 39(5) makes clear that for the purposes of assessing predatory pricing the CAA will regard an airport as a free-standing company, disregarding its membership of a group. I can therefore assure the noble Lord, Lord Underhill, and the noble Baroness, that no unfair cross-subsidy to Stansted will be permitted that would enable it to compete unfairly with regional airports' business. I do not believe, therefore, that the amendment is a necessary addition to the Bill.
The noble Baroness said that the Government will continue to subsidise Stansted to any degree that they feel necessary. She went on to say that she does not trust the Government over Stansted. In that case, the answer is for her to support us in privatising Stansted as part of the BAA, where it will not be in Government hands. She will not then be able to accuse us of subsidising it to any degree that we feel fit.
Baroness Burton of Coventry: Is the Minister not aware that some of us are very alarmed at more power still being given to the BAA?
The Earl of Caithness: There is also the argument that some people are very alarmed that the Government still retain too much power. The noble Baroness went on to say that the Government should subsidise any other airport as well. It is pleasing to see the noble Baroness, Lady Fisher of Rednal, here. She will know better than I of the recent developments at Birmingham, where the Government paid some £24 million in subsidy. I hope that this answers the point made by the noble Baroness. She went on to refer to that lovely example of hers, the BR Stansted Bill. She gave the reply that I was going to give. It is a private Bill. It is therefore not for the Government to say when it is debated. The noble Baroness will know from her experience that the normal procedure in another place—far be it from me to comment on the procedure in another place—is that it goes down weekly.
The noble Baroness also mentioned a Manchester rail link. I can tell her that there was a meeting yesterday between my right honourable friend the
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Secretary of State and my honourable friend the Minister for Aviation and representatives from British Rail and Manchester local authorities. They have gone away to consider the matter further with all the parties involved.
My noble friend Lord Boyd-Carpenter took up the noble Baroness's point about being over-hasty on Stansted, which she withdrew equally hastily. That rather surprised me. We were criticised on the Channel Tunnel for making a decision after 100-plus years. So 22 years—well, I suppose that in some cases this could be acting hastily—
Baroness Burton of Coventry: I apologise for getting up and down. I have now tracked down the phrase that the noble Lord, Lord Boyd-Carpenter, heard. An important part was left out. I referred to too hasty an amount of development at Stansted now. The "amount of development" was left out.
The Earl of Caithness: Yes; and what the noble Baroness says takes me on to the point made by my noble friend Lord Broxbourne. It was because of this potential over-development at Stansted that my right honourable friend the Secretary of State set out in the White Paper agreed by Parliament that the development of Stansted cannot go above eight million, although it has the potential to go up to 15 million, without further parliamentary consent. It has to come back to another place and to this House if larger development is to be permitted.
The provisions that I mentioned earlier achieve what the noble Lord, Lord Underhill, seeks in the amendment—namely, a unified approach to the management of the London system combined with a guarantee that common ownership cannot be abused in order to harm other airports. I hope that this explanation will be sufficient to cause the noble Lord to reconsider the thought behind the amendment. I must remind him, too, that it is slightly imprecisely worded. I find it difficult to understand. But it also leaves open the possibility that Stansted can be privatised separately in its own right. Having heard the noble Lord again today, I do not think that that is what he wants. But it can be interpreted that way, I am assured by lawyers. In order, therefore, to stop those people who would like to see Stansted privatised separately from the rest of the BAA, I hope that the noble Lord will withdraw the amendment.
Lord Denning: I hope that your Lordships will not accept the amendment. On first reading it, I asked myself what an "independent free-standing company" is. I have no idea. If the matter came before a judge, I am sure that he would say, "What is an independent free-standing company?" And counsel would say, "My Lord, I have no idea." As a result, the judge would say, "I am going to ignore this clause because it is meaningless". I hope that your Lordships will reject it accordingly.
Lord Dean of Beswick: I am sorry that I was not here for the early part of the debate on this amendment, but I was engaged somewhere else. I would not have thought that laymen would find the words confusing. The phrase means, surely, something that is indepen-

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dently managed and responsible for its own financing. I do not believe that it requires the wisdom of the noble and learned Lord, Lord Denning, to explain that. I do not find it confusing at all. It means that it has to stand on its own feet in every respect, including financially.
I heard the last few minutes of the speech of the noble Lord, Lord Boyd-Carpenter. It would be no comfort to people in the North-West who are relying heavily on the development of Manchester airport if its future was to be damaged by Stansted or the French airports. I am sure that they would not accept either of the two evils. All that we are asking is that Stansted be made to stand on its own feet financially and to be individually managed. I do not think that is a lot to ask at this stage.
Lord Underhill: It may be felt in view of the opposition from the noble Lords, Lord Broxbourne, and Lord Boyd-Carpenter, because they are two very formidable debaters, that these amendments should be resisted. But that is what they are: formidable debaters.
It is suggested that no court can interpret the words used here. The noble Lord, Lord Boyd-Carpenter, suggested that if I felt it was desirable that the Government should make an interpretation it is wasting the Committee's time. That is very strange. I have been in this Chamber for only seven years, but time and again we have had arguments between learned counsel on the Cross-Benches as to what is the meaning of certain matters in a Government Bill. It has eventually been agreed that there should be an interpretation given in the Bill. Therefore do not be deluded by the suggestion that I am wasting the Committee's time. We can overcome this problem if we wish.
The noble Earl has made the best of a difficult case in justifying why these amendments should not be carried. Noble Lords will have noticed that he said the Government's aim is the same as the objectives which I stated in my opening remarks. If that is so, then let us write something clearly into the Bill. I do not want to be drawn into the arguments of rail developments to Stansted or Manchester. They are irrelevant to this issue. We are dealing with the position of the Stansted Airport company under the successor company when that is formed and we eventually have privatisation.
It is true that I was critical of the original development at Stansted. However, I have accepted that the position set out in the White Paper has now been generally approved. As the noble Earl says, with an initial development for up to 8 million passengers and, if necessary permission to go up to 15 million passengers, there will be ultimate provision, if desired, for up to 25 million. We want to ensure that the Government's own desires will be carried through: that is, that market forces will determine the progress of Stansted, not any hidden subsidies.
I am informed that we have many examples of subsidiary companies which are prohibited through their articles of association from obtaining inter-company loans. They are forced to survive either through their own earnings or through loans obtained
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themselves directly in the market. Those are the kind of principles which are involved in this criticised phrase "independent free-standing company".
I am very grateful for the support of the noble Baroness in this matter. I do not think that the criticisms have been set on one side. The noble Earl has made it absolutely clear that what we wish to achieve in this amendment is the aim of the Government; but for some reason they do not want to write it into the Bill. I think noble Lords should decide that this is what we want in the Bill. If there is to be proper competition, it will be competition on a freestanding basis. That is what is meant by the amendment and there should be no attempt to provide, under any circumstances, for hidden subsidies outside what might be the market demand created for Stansted.
I therefore ask the Committee to divide and support this amendment.
4.14 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents 105.

DIVISION NO. 1

CONTENTS

Airedale, L.

Kings Norton, L.

Ardwick, L.

Kirkhill, L.

Attlee, E.

Listowel, E.

Aylestone, L.

Llewelyn-Davies of Hastoe, B.

Banks, L.

Lloyd of Kilgerran, L.

Birk, B.

Lockwood, B.

Blease, L.

Mackie of Benshie, L.

Boston of Faversham, L.

McNair, L.

Bottomley, L.

Mais, L.

Briginshaw, L.

Manchester, Bp.

Bruce of Donington, L.

Mayhew, L.

Burton of Coventry, B.

Mishcon, L.

Carmichael of Kelvingrove, L.

Molloy, L.

Cottesloe, L.

Nicol, B.

Crawshaw of Aintree, L.

Oram, L.

Darwen, L.

Plant, L.

David, B. [Teller.]

Plowden, L.

Dean of Beswick, L.

Prys-Davies, L.

Elwyn-Jones, L.

Rathcreedan, L.

Ennals, L.

Rhodes, L.

Ezra, L.

Ritchie of Dundee, L.

Falkender, B.

Rochester, L.

Falkland, V.

Sainsbury, L.

Fisher of Rednal, B.

Scanlon, L.

Foot, L.

Seear, B.

Gallacher, L.

Sefton of Garston, L.

Galpern, L.

Silkin of Dulwich, L.

Gifford, L.

Simon, V.

Gladwyn, L.

Stedman, B.

Graham of Edmonton, L.

Stewart of Fulham, L.

Grey, E.

Stoddart of Swindon, L.

Hampton, L.

Taylor of Blackburn, L.

Hanworth, V.

Taylor of Gryfe, L.

Harris of Greenwich, L.

Taylor of Mansfield, L.

Hatch of Lusby, L.

Tordoff, L. [Teller.]

Hooson, L.

Underhill, L.

Houghton of Sowerby, L.

Vernon, L.

Hunt, L.

Wallace of Coslany, L.

Irving of Dartford, L.

Wells-Pestell, L.

Jacques, L.

White, B.

Jeger, B.

Williams of Elvel, L.

Jenkins of Putney, L.

Winstanley, L.

Kilbracken, L.

1291

NOT-CONTENTS

Alexander of Tunis, E.

Lauderdale, E.

Ampthill, L.

Layton, L.

Annan, L.

Long, V. [Teller.]

Auckland, L.

Luke, L.

Bauer, L.

McAlpine of Moffat, L.

Belhaven and Stenton, L.

McFadzean, L.

Beloff, L.

Macleod of Borve, B.

Belstead, L.

Mancroft, L.

Bessborough, E.

Margadale, L.

Boyd-Carpenter, L.

Marsh, L.

Brabazon of Tara, L.

Masham of Ilton, B.

Braye, B.

Merrivale, L.

Brookes, L.

Mersey, V.

Brougham and Vaux, L.

Milverton, L.

Broxbourne, L.

Monckton of Brenchley, V.

Butterworth, L.

Monk Bretton, L.

Caithness, E.

Morris, L.

Cayzer, L.

Mottistone, L.

Chesham, L.

Mountevans, L.

Coleraine, L.

Mowbray and Stourton, L.

Cork and Orrery, E.

Murton of Lindisfarne, L.

Cox, B.

Newall, L.

Cross, V.

Onslow, E.

Cullen of Ashbourne, L.

Orkney, E.

Davidson, V.

Portland, D.

De La Warr, E.

Rankeillour, L.

Denham, L. [Teller.]

Renton, L.

Denning, L.

Renwick, L.

Derwent, L.

Richardson, L.

Dilhorne, V.

Rodney, L.

Drumalbyn, L.

Romney, E.

Dudley, E.

Rugby, L.

Duncan-Sandys, L.

St. Davids, V.

Ellenborough, L.

Seebohm, L.

Elton, L.

Sempill, Ly.

Fanshawe of Richmond, L.

Shannon, E.

Fortescue, E.

Shaughnessy, L.

Fraser of Kilmorack, L.

Skelmersdale, L.

Gainford, L.

Strathspey, L.

Gardner of Parkes, B.

Swansea, L.

Geddes, L.

Swinton, E.

Gray of Contin, L.

Terrington, L.

Gridley, L.

Teviot, L.

Hailsham of Saint Marylebone, L.

Thurlow, L.

Trefgarne, L.

Hardinge of Penshurst, L.

Trumpington, B.

Harmar-Nicholls, L.

Vickers, B.

Hives, L.

Vivian, L.

Holderness, L.

Ward of Witley, V.

Hooper, B.

Whitelaw, V.

Hylton-Foster, B.

Wolfson, L.

Kinnaird, L.

Young, B.

Lane-Fox, B.

Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.22 p.m.
Lord Underhill Lord Underhill moved Amendment No. 2:
Page 2, line 5, after ("association") insert ("including proposals for the representation of employees of the Board").
The noble Lord said: In moving Amendment No. 2 it may be convenient if I also deal with Amendment No. 6 which concerns the same principle. We see from Section 1(4) of the Airports Authority Act 1975 that it was clearly intended that the board members of the authority should have a very wide range of interests. It says:
"persons who appear to the Secretary of State to have had wide experience of and to have shown capacity in air transport, other forms of transport, industry, commercial and financial matters, administration, the organsiation of workers or the representation of the interests of consumers".
No such requirements, no such criteria, are laid down in the present Bill. Surely the same type of criteria are needed.
As I mentioned in my opening remarks on the previous amendment, we are still opposed to privatisation. However, if the Government are to have their way on this Bill we must ensure that the Bill is improved. Amendment No. 2, in particular, is directed to that end. Ministers have repeatedly said that they want workers to invest in their own company, and the Secretary of State for Employment has repeatedly stressed the need for a better understanding between management and workers. This amendment is one way in which to work towards that end. The Government have said elsewhere that this is a matter for shareholders to determine. Surely, while we are laying down many other features of the successor company and the eventual companies, Parliament can decide that this is one matter that should be included in the Bill.
Amendment No. 6, as well as seeking representation of employees on the board also suggests that there should be earmarked for employees a certain shareholding—8 per cent. of the investment. As we all know, the employees of the BAA number about 7,000. When a somewhat similar amendment was proposed in Committee in the other place there was considerable discussion on the experience of other privatisations. I shall not go into all the figures, but we have them and they were all mentioned in Committtee in the other place. I am sure that all noble Lords will have read them and will have seen the holdings of individuals, what they were at flotation and what they were a year afterwards. The Minister will have read the report, and therefore I shall not repeat the figures. In any case, it is not relevant to this particular amendment.
What we are saying in the amendment is that if we really want to achieve a proper understanding between management and workers, particularly in the light of certain ideas which have been floated recently by the Chancellor, then we ought to ensure that there is provision for representation of employees on the board. That is what Amendment No. 2 seeks to do. Amendment No. 6 asks for the same thing, and in addition that there should be a minimum of 8 per cent. of the shares allocated to the employees. I beg to move.
Lord Boyd-Carpenter: The difficulty about employee representation on the board has often been discussed because, for the good purpose to which the noble Lord, Lord Underhill, has referred of securing better relations between the management and employees of a company, it has often been suggested in the private sector. However, it has always seemed to me that there is one inherent difficulty in having a category or class of director representing only a category or class of shareholder. The difficulty is this. Under the Companies Acts every director is subject to very considerable constraints and carries considerable general responsibilities. Your Lordships' House, in the not so distant past, tightened that up quite a bit, and in my view quite rightly.
However, what is the situation of a director on a board representing employees if, as could well be the case, an issue arises where there is a clash of interest between the general interests of the company and those of the employees? The simplest and most obvious example is the case where a company is in

1293
difficulty and is yet faced with a substantial wage claim which, if accepted, may well seriously damage the company. Under the ordinary law the responsibility of a director is therefore perfectly clear: he must vote against accepting that claim. However, if he is an employee representative, and if he is asked by those whom he represents to support that claim, what is he to do? That is the fundamental difficulty of having employee representatives on the board.
I know—and I shall refer to it because otherwise other noble Lords will do so—that in Europe where they have the two-tier system of boards there are some employee representatives on one tier, and one tier only, of the board. The net result generally is that all important decisions are taken by the other tier, but that is by the way. Under our law there is no division of that type. If you are a director you carry the full responsibilities of a director to the company as a whole and to the wellbeing of the company as a whole, and not to one section, however important, of those interested in it. That seems to me to be the fatal flaw of Amendment No. 2.
The same point arises as regards Amendment No. 6 except that it is suggested that there should be one employee representative director. However, there is another quite unworkable proposal and that is that at least 8 per cent. of all shares are maintained in the ownership of the employees of the company. Let us suppose that the employees of the company prefer to dispose of those shares. They may well do so, and they may well have perfectly good reason to do so. If they know a good deal of what is going on in the company and if it is doing badly, they may sensibly wish to realise their shares.
What is to happen if you get down to 8 per cent.? Is it contemplated as the effect of this that you would say to an employee, "You are a shareholder, and you have these shares. Whatever the circumstances, you are forbidden to sell them because you will take it below the statutory 8 per cent."? This really is an impractical proposal, and I hope that my noble friend Lord Caithness, in the polite and courteous way he always does, will say so.
4.30 p.m.
Lord Tordoff: It will not come as a surprise to your Lordships that in principle I give my support to Amendment No. 2, but it will be observed that I have not put my name to Amendment No. 6, and largely for the reasons that the noble Lord, Lord Boyd-Carpenter, has set out. The mechanics of it are extremely doubtful, although I understand the principle that lies behind it. With Amendment No. 2 it says:
"… articles of association including proposals for the representation of employees of the Board".
It does not spell out the mechanics of that in Amendment No. 2.
The noble Lord, Lord Boyd-Carpenter, may believe that it is impossible under any circumstances. I do not believe it is, but in some ways this is hardly the time to go into a long and complex argument about employee representation at the top level of company boards. I disagree with the noble Lord in what he said about the situation in Germany, that only the important
1294
decisions are taken at the lower tier, where employees are not represented. Some of the most important and strategic decisions are still retained at the higher level, and that is as it should be.
I do not think that the mechanics of this are important at the moment. I believe it is to seek from the Government some assurance that there will be clearly spelled out in the articles of association some mechanism for the representation of employees at the highest level of the company, with the intention of ensuring that they are committed to the company and they use their good offices to secure the success of the company. There is no doubt that in the case of German industries this has been shown to be the case.
While I say that it is not necessary the mechanics should be spelled out at this stage, I would press for such representation to be multi-chanelled. I should not like to see the appointment of only trade union officials to the boards of companies as the right and proper route for employee representation at that level. With that caveat, I support Amendment No. 2.
Lord Auckland: I approach this as one who has never been a member of a trade unon, but like most of your Lordships I have done a certain amount of flying. The pilots, members of BALPA, particularly, have enormous responsibilities. I should like to see in this amendment, if one might be semantic, at least provisions for representation—not necessarily mandatory—and there may well be in other parts of this rather long Bill something on these lines. There are certain persons working within the ambit of this Bill, such as the airline pilots, who will carry enormous responsibilities, and I should have thought that at least provision for them to be represented could be written into the Bill.
Lord Williams of Elvel: May I answer the two points raised by the noble Lord, Lord Boyd-Carpenter, and in so doing answer one point raised by the noble Lord, Lord Tordoff? There is no attempt at all to rewrite the Companies Act in this amendment. As the noble Lord, Lord Boyd-Carpenter, pointed out, directors have responsibilities under that legislation, and clearly this is not the place to reconsider that legislation. Any director who may represent employees is bound by the companies legislation and will continue to be bound by the companies legislation, and this amendment is not designed to change that. Nevertheless, there is a case in the context of that companies legislation for having, as the noble Lord, Lord Auckland, said, somebody on the board, or some people on the board, who may represent the interests of the employees. I think that the noble Lord, Lord Tordoff, would agree with that.
The second point on which the noble Lord, Lord Tordoff, and I have a difference—and certainly I have a difference with the noble Lord, Lord Boyd-Carpenter—is on Amendment No. 6, where the proposal is that there should be:
"plans for ensuring that a minimum of 8 per cent. of all shares are maintained in the ownership of the employees of the company".
Clearly if these are individual shareholdings the point made by the noble Lord, Lord Boyd-Carpenter, is valid. However, we are now quite used to trusts in this country. We are quite used, if I may say so to the noble

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Lord, Lord Tordoff, to the profit-sharing scheme introduced by the Labour Government with the help of the Liberal Party.
There would be no great difficulty in creating a trust which was for the benefit, or the beneficiaries, of the employees, but which itself maintained a market. If the employees wished to dispose of their shares they would go back into the trust and the trust would be, if I may use the expression without offence to your Lordships, free standing, and would make a market itself in the shares and would sell them on to employees as new employees came in.
I do not think that the technical objections, if I may describe them as such, of the noble Lords, Lord Boyd-Carpenter and Lord Tordoff, stand up. I think that the noble Earl would do well to recognise that when he replies to the amendment.
The Earl of Caithness: Perhaps I may state at the beginning that the Government, as has been said so often from this Dispatch Box, welcome the development of employee involvement in the industries in which they work. But, as my noble friend Lord Auckland will be aware, we believe that this should be voluntary, and thus we are opposed to prescriptive legislation in this area because this would be detrimental to the spirit of harmony and cooperation necessary for employee involvement to be truly effective, as was clearly pointed out by my noble friend Lord Boyd-Carpenter.
I do not therefore believe that it would be right to bind either the subsidiary airport companies, or the BAA holding company in which shares will be sold, to creating employee directors. These companies are to form part of the private sector. The whole purpose of the Bill is to reduce the restrictions which the state imposes on the airport industry. Therefore, we consider that the shareholders of companies must have the freedom to choose directors as they wish. My noble friend Lord Auckland pointed out one group in particular, BALPA, whom he felt ought to be represented because of their important role in the aviation world. There are many important roles in the aviation world, but in view of our proposed encouragement for employees to buy shares they will be in a position to put up those they consider suitable, or to recommend those they consider suitable, for directorships.
The second amendment also requires at least 8 per cent. of the shares in these companies to be owned by employees. We anticipate that the shares in the subsidiary airport companies will be 100 per cent. owned by the BAA holding company—it is the shares in this holding company which will be offered for sale, we shall be encouraging BAA's employees to take a financial stake in their company's future, offering them special incentives to purchase shares at the time of the offer for sale. In the Government's privatisation programme as a whole, over 80 per cent. of employees have taken up shares in their own companies, in the recent example of the BT sale, 96 per cent of the workforce participated, taking up some £147 million worth of shares.
The details of the BAA employee share scheme have not yet been finalised, but it is likely that we should
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like to offer benefits on a similar scale of generosity to the BT scheme (which offered £70-worth of free shares; two free shares for every one purchased up to a maximum of a further £200-worth of free shares, and a 10 per cent. discount on the purchase of up to a further £2,000-worth of shares)—in addition to ongoing schemes such as profit-sharing and Save As You Earn to be introduced by the company.
Lord Williams of Elvel: Is the noble Earl saying that the British Telecom arrangements will be duplicated, and that employees will be subsidised to take up shareholdings?
The Earl of Caithness: I did not say duplicated, I said "along the lines of". As we have not finalised our proposals, we should of course welcome the noble Lord's input into it. I am sure that many employees, regardless of what scheme we propose, will choose to purchase a substantial holding in the privatised BAA, recognising its potential for growth and profitability in the private sector. But this is not something that we believe we should legislate on and attempt to impose an arbitrary level of employee ownership. Indeed, it is not at all clear how in practice we could achieve this. Presumably shares would have to be given free to employees with some bar on their resale, or else further shares would have to be given to maintain the 8 per cent. level when employees sell some of their holdings, as my noble friend Lord Boyd-Carpenter pointed out, and whether or not it is in a trust—
Lord Tordoff: With respect to the noble Earl, if I may interrupt him, I do not think he was really listening to what the noble Lord, Lord Williams, said earlier which I think answered the point he is just making.
The Earl of Caithness: As the noble Lord interrupted me I was saying that it was in regard to trusts. I do not think it makes that amount of difference because the trustees themselves have certain duties. If they feel that the shares ought to be sold for the benefit of those participants of the trust and they are under a bar not to sell them, they have certain difficulties, as I envisage it, in trying to achieve the best for their members.
We believe that the incentives for efficiency and profitability in the privatised BA would be much more effective if employees have invested their own money spurred on by the benefits of the employee share scheme which will be offered rather than being guaranteed a particular level of shareholding. I hope that my noble friends will support me if this is pressed to a Division because we believe that the right way to go forward is on a voluntary basis.
Lord Williams of Elvel: May I ask the noble Earl whether he will consider the possibility of having an employees' trust, the beneficiaries of which are the employees, because I do not think his remarks exactly responded to the point I was making?
The Earl of Caithness: Of course I will. I think it would be helpful if the noble Lord would like to enlarge on his remarks, perhaps not now but by

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writing to me, because I should certainly like to take this forward.
Lord Underhill: The noble Earl has said that any arrangement for an employee to be on the board should be voluntary, it should not be prescriptive. I was pleased to note that he did not say that it was a wrong principle to have an employee representative on the board; neither did he say that it was unworkable. He just thought it was something that should not be mandatory in the Bill. In that respect I believe he disagreed with his noble friend Lord Boyd-Carpenter.
Lord Boyd-Carpenter: My noble friend does not disagree with me at all on that. I welcome employees being appointed to the board—but appointed in the usual way together with other directors and not imposed by statute as a special minority with special responsibilities.
Lord Underhill: I ought to learn never to mention the noble Lord by name. At least we know that we always get a reply and so have some better understanding of where we are. The noble Earl referred to the high percentage of workers of British Telecom who took shares, but that is not the position. I said I would not refer to the figures that were given at the Committee stage in the other place because I thought everybody would have read them. However, perhaps I had better repeat them. Of the share value of British Telecom 1·9 per cent. are held by the employees; in Jaguar it is 1·3 per cent.; in British Associated Ports 4·3 per cent.; in Britoil 0·1 per cent.; in Amersham International 3·7 per cent.; and in Cable and Wireless 1·4 per cent. It may be accepted that they should stand in the same way as other shareholders to get their representation on the board, but on those figures they will have to do a lot of effective lobbying to get an employee representative on the board.
The principle behind our amendment is to encourage better understanding between management and workers. I am glad that the noble Earl has said he will look carefully at it and I am certain that my noble friend Lord Williams will take up his suggestion and let him have a note on it. Therefore, we may encourage a further useful amendment at the Report stage, arising from the exchange of correspondence. When we see Hansard it might be useful to study not only what my noble friend has said but also what else has been said in the debate. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
4.45 p.m.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 4:
Page 2, line 17, at end insert—
("( ) The Secretary of State shall require that before he approves proposals under subsection (3) the memorandum and articles of association of any nominated company to which the proposals relate contain such restrictions on the allotment and transfer of shares that the holding or holdings of any one or more shareholders (whether individual or corporate) who own or have a controlling interest in any airline cannot exceed in aggregate ten per cent. of the issued capital of the company.").
The noble Lord said: This amendment or the same idea, has been drifting about in the other place and in this place since Second Reading and right through Committee in the other place. It was also raised on Second Reading in this Chamber when the Minister promised that he would consider the idea.
The Earl of Caithness: I am sorry to interrupt the noble Lord, and at this stage I welcome his taking up the batting for the Opposition. Is he also speaking to Amendments Nos. 5, 8, 10, 11, 18 and 19?
Lord Carmichael: Yes, I apologise. I should have said that I hoped it would be for the convenience of the Committee if we also discuss with this amendment, Amendments Nos. 5, 8, 10, 11, 18 and 19.
The purpose of Amendment No. 4 is to try to give some security to the British Airports Authority, in whatever new form it may be, from predation by any airline, but particularly foreign airlines. Since we started discussing airports we have all been aware of the competition that exists from Schiphol, Charles de Gaulle and Frankfurt. As the noble Lord, Lord Boyd-Carpenter, said, London will shortly be under-provided with airports and the competition will get even tougher as time goes on.
When the Minister spoke on Second Reading on 21st April he said that he would have a good look at the question of a golden share. It was also said in another place by the honourable Member Mr. Ancram, that he would consider the possibility of having some sort of mechanism by which control of British airports would be in the hands and would be controlled by the people of this country, and that would reduce the possibility of people using it for their own ends.
I said last time that I am not sure how a golden share operates. I hope the Minister will have taken note of that and will be able to explain it fully to us. One of the worrying things is that an airline could gain control of an important airport, such as Heathrow, Gatwick, Stansted or any other airport that was to be privatised, by buying sufficent shares in it. It could have a bigger interest outside that particular airport and although the responsibility of the directors should be to the immediate shareholders, the airline may feel that it has a responsibility towards other shareholders in the much larger company. Therefore it might act in the best interests of the larger company and not in the best interests of the particular airline. For example, the airline could control the landing slots and many other facets of the airport which would give that airline preference over another airline.
The more important point is that if a group of people decided that they would prefer to orient the traffic towards a particular airport in Europe rather than to Heathrow, Gatwick or elsewhere, because of their power in the boardroom they could force a delay or the advancement of certain necessary changes in the domestic airports in this country so that a foreign airline could take advantage of the lack of facilities at a particular airport. I am thinking in terms of, for instance, large investment in modern landing equipment or landing equipment that may still be to come, and there could be a deliberate holding back on a British airport in order that a foreign airport should take most of the traffic.

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These may seem far-fetched ideas, but I think that they have happened historically, not perhaps in the airline industry but in other industries. I know that there are problems here; I am aware of the difficulties that are imposed by the Treaty of Rome—I think in Article 221, where the treatment of member state nationals must be even all the way through. That was one of the reasons why it was suggested that there should be something embodied in the articles of association so that the control of British airports will be maintained within British hands.
However, one of the main points of this group of amendments is to suggest to the Government that merely to have it in the articles of association is not enough because the articles of association could be changed in the future. What we should like, therefore, and what these amendments seek to do is to have these conditions or conditions similar to these—and we shall be fairly flexible if the Government come up with better wording—appearing on the face of the Bill so that in future there will be no possibility of a board being able to change what I think is the genuine desire of both Houses in this matter, and of most of the people that I have spoken to, that, whatever happens to the airports, they should be maintained in the control of the British people.
I hope that the Minister will give thought to that. In view of the period that the Bill has been under consideration in the Commons from the Second Reading onwards and after the Second Reading in this House, I think that the department should by this time have worked out what no doubt is a rather difficult and complicated matter. I hope that they will be able to give us something that will allay our anxieties over the matter of the British airports remaining British. I beg to move.
Lord Mountevans: I wish to speak to Amendment No. 8, which is standing in my name on the Marshalled List. I trailed this amendment at our Second Reading debate. I shall not delay your Lordships' Committee with a speech on the massive contribution made to our balance of payments by our tourism airline industry. Suffice it to say perhaps that the noble Lord, Lord Trefgarne, opening our debate on the White Paper noted that we had not only the world's "favourite airline" but also, in Heathrow and Gatwick, two of the world's busiest international airports.
It is this latter pre-eminence that my amendment seeks to preserve. Very simply, the amendment places restrictions on shareholdings of foreign competitor interests such as rival airports on the Continent or foreign airlines. The restrictions on foreign airlines—in sub-paragraphs (i) and (ii)—are to ensure that such entities cannot individually or in concert reach a position where they could influence the airport's management in favour of themselves and to the detriment of other airlines or, indeed, the airports' customers, whose interests must remain our prime consideration. Sub-paragraph (iii) makes similar provisions in respect of other foreign entities which might use control of the airports authority to advance the competitive position of other airports, to stifle traffic to London or otherwise interfere in what I deem
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to be key strategic and economic interests of this country. The amendment includes a power for the Secretary of State to vary the above provisions if he so wishes.
My amendment goes along with that moved just now by the noble Lord, Lord Carmichael, in giving the Minister an opportunity to tell us of the Government's thinking subsequent to his undertaking regarding the "golden shares" and the articles of association given during our Second Reading debate. I look forward to hearing progress on that matter. Meanwhile it might be felt that what I am proposing is somewhat strong in its restrictions but we live in a competitive world. The Committee may remember the hymn which begins:
"Christian, dost thou see them
"On the holy ground".
The airports business is very much one where the troops of Midian, if I may say so, prowl and prowl around. My amendment seeks very basically to ensure that those troops do no more than prowl.
Lord Boyd-Carpenter: The noble Earl on the Front Bench is, I am sure, under no illusion that concern on this matter is felt only on the other side of the Chamber. I think he is aware that the general issue which this group of amendments raises is one that has caused a good deal of concern to some of his noble friends and it is a problem on which we are very much hoping to hear from my noble friend what the Government have in mind.
There seem to be two practical risks if control of the British airports companies which are to be set up under the Bill falls into the wrong hands. First of all, there is the point which the noble Lord, Lord Carmichael of Kelvingrove, made very well about a particular airline, foreign or British, obtaining such control over the airports that really matter, the major airports, particularly Heathrow, and using that control to further its own interests at the expense of other airlines—particularly, as he said, in the allocation of slots and also the provision of terminal facilities and the like.
There is then the subtler (but I should have thought not wholly non-existent) risk of an acquisition by foreign interests designed not crudely to damage the operation of our airports but working so as to prevent their proper development, to let them get out of date or inadequate in capacity so that airports in the countries from which these foreign holders came should benefit.
I mentioned in an earlier speech the obvious factor of the competition which exists at the moment between the London airports, on the one hand, and the airports in Paris, Amsterdam and Frankfurt on the other. Perhaps it is not too fanciful to see the possibility that, if interests associated with those European airports were to obtain control over Heathrow or over Gatwick, they would not sabotage Heathrow or Gatwick but they simply would not put in any additional funds to improve them, to enable them to become up to date and to remain competitive. They would let them gradually be faded out or phased out when new development was concentrated on their own airports in their countries.
With the difficulties that all of us know only too well that anyhow face those who want to improve and

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extend British airports added to by that sort of factor, we could very easily see our airports losing the supremacy which we have at the moment—with Heathrow with more international movement than any other airport in the world—to our European competitors. This is a risk which I think it is proper to ask the Government to ensure that the Bill deals with.
Reference was made by a noble Lord a few moments ago to the "golden share" concept. As I understand it, what is done in that case is to entrench in the articles of association some fairly definite provisions preventing the holding of more than a certain number of shares in the company either by a foreigner or by an interested party such as an airline and retaining the golden share in the hands of the Government, having provided that the articles shall not be amended save with the agreement of the holder of that golden share. I see the noble Lord nods his assent. I think that that is the golden share concept.
I should have thought it possible that that expedient was a practical one in that case. I am sure that my noble friend has considered it. But there are other variants. I do not pin my own faith solely on that but I say to my noble friend that it would be very wrong in the course of this—in my view—very proper privatisation of the British Airports Authority if we were to run even a marginal risk of losing control of our airports with the kind of consequences which I outlined a moment ago and which I shall not weary your Lordships by repeating. I shall listen to what my noble friend has to say—I always do listen to him with interest—with special interest on this occasion.
5 p.m.
Lord Tordoff: May I from these Benches support this raft of amendments in principle. I have my name attached to some of them, but not to others. It is not attached to No. 8, and there is a competition between Nos. 4 and 5 and No. 8 and several others. I do not think I need add much more, in terms of the principle, to what has already been said from all sides of the Committee.
It seems to me that there is one residual difficulty. As the noble Lord, Lord Carmichael, said, in putting down a number of these amendments we have excluded specifically ordinary residents in the European Community. That, presumably, is something that we have to do because of our membership of that Community. Nevertheless, it is from that direction that the danger may come most strongly. As the noble Lord, Lord Boyd-Carpenter, has said, it could come from the cities of Amsterdam, Paris or Frankfurt. I am sure that the Minister will give us a favourable reply in principle, and I hope that he can help us over that difficulty. It may be that the golden share would avoid that particular difficulty, but in principle I accept that one or other of these amendments, or indeed a Government amendment, should go through.
I believe that on the face of the Bill—and here I would reinforce what the noble Lord, Lord Carmichael, said—or in some other entrenched way about which we can have certainty, we must have protection from this predatory attack on our airports. It is not good enough at this stage for the Government to say that something will be written into the articles of
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association because, as the noble Lord, Lord Carmichael, said, there is always the possibility of articles of association being changed by a majority vote of the shareholders. I think we all look forward to having some positive support from the noble Earl.
Lord Mulley: Very briefly, I should like to support what has been said. Following the eloquent speeches of my noble friend Lord Carmichael and the noble Lord, Lord Boyd-Carpenter, I think very little needs to be said now on the point of principle. I can understand and agree with the noble Lord, Lord Tordoff, that so far as individual foreigners are concerned we cannot and should not seek to exclude any members of the European Community, but we can meet the real point to which, if I may say so, I thought the noble Lord, Lord Boyd-Carpenter, directed us very clearly; and that is competition from the states, their airlines and their airports. We can surely do that by excluding any airport company or authority, or any airline, including British, from holding any specified amount of shares. I would have thought there was no reason why they should have any shares in the company at all. That being the case, we would get over the problem of being in the EC as well as the other matters.
However, I would plead with the Minister that while we have a great respect for statements made by Ministers as to their intentions, and so on, this is an extremely serious matter and, as has been said, one that concerns all parts of the Committee. We will not be content to see this Bill become a statute without there being some entrenched provision on the points that have been raised.
The Earl of Dundee: I should like to support the remarks of all noble Lords who have addressed themselves to these amendments. The amendments relating to this question clearly are not proposed for incorporation within the Bill. If the case for restricting share ownership of certain categories is accepted, then it must be better to write any particular restrictions into the articles of association of the BAA's successor company, rather than write them into the Bill. But, of course, the first question is: should the articles of association contain any restrictions at all, and, if so, should they be along the lines proposed? If we were already to have safeguards elsewhere, then the current proposals might be either unnecessary or, counter-productive.
Under Clause 38 we know that the CAA, an airport regulator, has powers to prevent a trading practice which unreasonably discriminates against any other class of user. The CAA also has powers to prevent predatory pricing. Then, under the Fair Trading Act 1973 the Monopolies and Mergers Commission is empowered to prevent a shareholder from achieving too much influence over policy and from gaining effective control. But it seems to me that these safeguards, while serving a very useful purpose by addressing themselves to problems which are fairly easily noticeable and measurable, do not also tackle those which may well be less so. And where there is a conflict of interest of the type envisaged there could be all kinds of ways—some more subtle than others—in which investment policies contrary to the broader interests of United Kingdom aviation might be

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pursued. My noble friend Lord Boyd-Carpenter has already made that point very clearly: hence the need to restrict airline share ownership and foreign share ownership, where dual loyalties are present for both categories.
Regarding the consistency or otherwise of the amendments with other considerations, since nationals of member states of the European Community are exempted from the proposed restrictions there would be no contravention, for instance, of Article 221 of the Treaty of Rome. The fixing of restrictions at one per centage level rather than another might always fall foul of Stock Exchange or other regulations. Possibly my noble friend will need to comment on that point when he replies, if minor adjustments should be desirable to achieve consistency. Any other adjustments, if and where necessary, to what is proposed should not be difficult to make in order to arrive at an acceptable balance for incorporation within the articles of association. It is very much to be hoped that this matter will be dealt with in view of the nature of the Bill's existing safeguards in this context, which do not appear to go as far as they should.
The Earl of Caithness: So far this has been a classic House of Lords debate. In 21 minutes we have had six speakers who have each put over the points that they wanted to make very punchily. I think it shows that a short speech is more effective than a long verbose one, because one tends to lose the point. I have listened with great interest to this debate because I am under absolutely no illusions as to how seriously your Lordships take this matter. My right honourable friend the Secretary of State and I were discussing it this morning and we both agreed that the debate today would play an invaluable part in helping us to make up our minds on the final thoughts about it.
However, I believe that some noble Lords have tended to overlook the whole series of safeguards which exist against, undesirable action being taken by an airport company, control of which has been acquired by a particular shareholder or class of shareholder. My noble friend Lord Dundee was perhaps the exception. He mentioned some, but if the Committee will bear with me I should like to take your Lordships through them.
First of all, there are the safeguards in this Bill. For instance, the CAA, as airport regulator, has powers under Clause 39 of the Bill to prevent any trading practice or pricing policy which unreasonably discriminates against any class of user of an airport, or particular users, or which unfairly exploits the airport's bargaining position, for instance, in setting the general level of charges. These powers could be used if an airline gained a degree of control over an airport company and sought to charge its own aircraft at more favourable rates than those of competing airlines, or unreasonably discriminated over the provision of services and facilities to airlines using the airport. The CAA also have powers to prevent predatory pricing and at designated airports (which initially will comprise the BAA's three London airports and Manchester) the CAA will be required to set limits on airport charges and the Monopolies and
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Mergers Commission will review all aspects of the airport business every five years.
In addition there are safeguards to prevent discrimination over access to an airport. Airports which hold public use licences issued by the CAA must not allow discrimination over access, and Clause 33 of the Bill ensures that the CAA can require an airport to hold such a licence: that is, a public use licence. This power is further reinforced by Clause 28, which ensures that the Secretary of State can direct an airport to comply with our international obligations, including those in respect of non-discrimination over access to airports.
Safety will continue to be regulated by the CAA through the aerodrome licensing system. My department will continue to regulate security, issuing directions to airports, where necessary, under the Aviation Security Act 1982. In the event of war or emergency, the Government have wide-ranging powers under the Civil Aviation Act 1982.
It is therefore very difficult to see what benefit could be gained by an individual or company seeking to make a substantial investment in an airport company—other than the normal commercial benefit of investment in a profitable venture. To suggest that a foreign interest might invest very substantial sums of money—they would need to be such sums—simply to attempt to close down an airport, or to strip it of its assets, is not very credible.
Lord Williams of Elvel: I am sorry to interrupt the noble Earl. Will he respond to the point made by his noble friend Lord Boyd-Carpenter that if a foreign operator gained a predominant position in one of these airports it might by lack of investment let it run down to the detriment of that airport versus the European competition?
The Earl of Caithness: I hope I shall come on to that point in due course. Airports would only be of value to the investor when used for the purpose for which they are intended—to provide a service for airlines and their customers. If a certain section of shareholders run down that airport—the noble Lord, Lord Williams, has just reminded me of the point made by my noble friend—it is investing money to no great degree of remuneration, which would cost it dear.
There are also the safeguards of the Fair Trading Act, ensuring that there can be a reference to the MMC if a shareholder proposes to acquire enough shares to be in a position materially to influence policy or to gain effective control—another point for the noble Lord, Lord Williams. If the proposed acquisition is judged by the MMC as being against the public interest—and the effect on competition between airlines would be a relevant factor in this—my right honourable friend the Secretary of State for Trade and Industry has powers to prevent it. This provides yet a further safeguard against the purchase of shares for use in a manner detrimental to the interests of airports or their users.
In the light of this series of safeguards, I believe that any specific restrictions on the ownership of shares written into the BAA successor company's articles of association would be very much a belt-and-braces approach. Nevertheless, we have listened carefully to

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the concerns expressed—and I have listened carefully this afternoon—and I can tell the Committee that we are exploring the feasibility of introducing an appropriate restriction into the company's articles to meet these concerns.
The noble Lord, Lord Carmichael of Kelvingrove, said that we ought to have come forward with something by now, but I have to tell the Committee that considerable practical problems are involved. One of these has been recognised by the amendments as formulated. This is the fact that any general restrictions on foreign ownership would contravene our obligations under the Treaty of Rome. The amendments as drafted get round this by excluding Community nationals, but a foreign ownership restriction of this kind would be rather odd, bearing in mind that the London airports' main competitors are those in the Community, as the noble Lord, Lord Tordoff, has reminded the Committee.
I have more sympathy with the amendment's proposals to restrict airline share ownership, but here there is a question of compatibility with the Community admissions directive applied by the Stock Exchange (Listing) Regulations 1984, which requires shares to be "freely negotiable" and requires "equal treatment" for all shareholders.
As I have said, we are at present examining the need for and the feasibility of drafting restrictions on the ownership of shares in the privatised BAA and I hope to be in a position to report our conclusions shortly. I hope that that will be before Report stage. I should like to get it down as quickly as possible. If we decided to introduce restrictions, they would be written into the articles of association of the BAA's successor company, possibly accompanied by a golden share—an effective mechanism used in a number of other privatisations and understood and accepted by investors.
The noble Lord, Lord Carmichael, asked me to define a "golden share". A golden share would be one share of the company held by the Secretary of State which would give him a right of veto over any proposal to change the provision in the articles of association of the BAA which place restrictions on shareholdings. Specific provision in the Bill is therefore unnecessary. Restrictions in relation to the BAA's subsidiary airport companies should also be unnecessary as these will be 100 per cent. owned by the BAA successor company and their shares will not be offered on the open market.
We would not of course want to give local authority airport companies less freedom than the BAA to introduce such restrictions if they considered this was desirable. Your Lordships will have noticed that we are as a result bringing forward an amendment—Amendment No. 44—which is down on the Marshalled List to replace Clause 24 of the Bill, which as currently formulated would prevent local authority airports introducing restrictions of this kind in their articles, with a provision which will allow this type of restriction. I am sure that noble Lords will recognise this as evidence of our concern to allow for appropriate and practical restrictions where this is considered necessary—but in a flexible manner, without forcing particular types and levels of restrictions on to individual
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airport companies. The noble Lord, Lord Tordoff, said there was some competition between the amendments. That is not my true concern. My true concern is that we get it right, and this I hope we shall do.
5.15 p.m.
Lord Sefton of Garston: Before the noble Earl sits down, perhaps I may say this. I may be mistaken but I do not believe that the noble Earl has answered the noble Lord, Lord Boyd-Carpenter. May I present a scenario and then ask the Minister for his view on it? Written into my memory of Liverpool and its misfortunes is the position of the Liverpool Docks and Harbour Board. That organisation had the responsibility of looking after Liverpool Docks. To hold shares in the Liverpool Docks and Harbour Board was considered to be very much a blue chip holding. It was almost considered to be a government-backed organisation. But over the years the control of that organisation got into the hands of people who used Liverpool's docks, and the vested interests of those people created such a situation that finally central government had to step in and establish a new set-up. It was quite simply done. Those people manipulated the harbour dues and everything else in order to ensure that their own trading interests in Liverpool Docks were safeguarded, and it led ultimately to the downfall of the organisation.
What has the noble Earl the Minister told us that deals with the position raised by the noble Lord, Lord Boyd-Carpenter? What if Amsterdam airport or any other airport within the EC decides on an issue of whether or not to invest a large sum of capital in that airport and then realises that if the same sum of money was invested in Heathrow there would be a conflict of interests? How, under the measures proposed by the noble Earl the Minister, will he prevent that happening? For one thing, he would not even know whether the company owning Heathrow had taken a decision. Secondly, it would not have to take a decision. All it would have to do would be to do nothing—just be absolutely negative—and in the meantime allow the airport companies or the airport organisations on the Continent to prosper. The net effect of that would be to decimate the airport industry in this country.
Lord Boyd-Carpenter: I am grateful to my noble friend for his response and in particular for his indication that it is his intention to make an early statement about the Government's proposals on this point. I was not sure whether I understood him to say that he would make it before the Report stage or during the Report stage.
The Earl of Caithness: I hope that it will be before Report stage.
Lord Boyd-Carpenter: I am very much obliged. I take it that my noble friend will make a Statement to the House in that event so that all your Lordships—
The Earl of Caithness: I am not sure about that, but I hope that if it is announced before Report stage it will

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be my right honourable friend the Secretary of State who will make the announcement and therefore we shall also know in this House. Whether it will be by Statement I cannot say to my noble friend.
Lord Boyd-Carpenter: I am much obliged, and I share my noble friend's hope that it will be before the Report stage, not least because that would save us a great deal of time during that stage of the Bill.
Having cleared up that point, I want to take up gently one further matter with my noble friend. He did not seem to think much of my argument, which was picked up by the noble Lord, Lord Sefton, as to the possibility of someone with an interest in other, basically European, airports acquiring control at Heathrow and allowing it gently to run down. My noble friend said that such an interest would have to invest—and he is quite right—a substantial sum to get that control. But if they did, they would of course still receive for a good many years a good return on that money, because it would take a good many years before the deterioration that would follow simply from not expanding and not developing Heathrow was reflected in the receipts. Indeed, in the short term it might be more profitable because they would not have to raise new capital in order to make the extensions.
My noble friend seemed to doubt whether anyone could have a motive for doing that. I think that they could. If in return for an investment in Heathrow that would for some years, at any rate, be quite profitable and provide a good return, they could gradually have the major transatlantic traffic, above all, diverted to their own airport—be it Dutch, German or French—they would be building up their own asset into a highly profitable one. I beg my noble friend not to brush aside that risk quite as easily as I thought he did in his speech. It is a long-term matter. It is by no means a certainty; but it is a risk against which it would be wise at this stage to guard. I should be most grateful if my noble friend would consider that point in the context of the statement that he has promised to make to us.
The Earl of Caithness: I am grateful for the extra contribution of the noble Lord, Lord Sefton of Garston. I was delighted to be taken back to the shipping world for a moment, and to the Liverpool Docks and Harbour Board—
Lord Sefton of Garston: The noble Earl would not be delighted if he had anything to do with shipping in Liverpool.
The Earl of Caithness: I do have something to do with the shipping in Liverpool and quite a lot to do with Liverpool docks at the moment, as I hope the noble Lord is aware.
Lord Sefton of Garston: The noble Earl should not be delighted, because it was an extremely serious situation. It was not caused by government doing anything; it was caused by government and other bodies not doing something.
The Earl of Caithness: The noble Lord is tempting me into a long shipping debate. I am delighted to be
1308
involved in Liverpool. I do realise the situation. I am also honoured to be involved in Liverpool.
My noble friend Lord Boyd-Carpenter has raised a very important point and I am grateful to him for expanding upon it. It is exactly the point that my right honourable friend the Secretary of State and I were discussing this morning. My noble friend's expansion of his point has been extremely useful and will enable us to formulate our thoughts more clearly. We welcome all contributions, and if any noble Lord wishes to pursue the matter further with my department, we will be very happy for him to do so. I particularly welcome the involvement of my noble friend.
Lord Carmichael of Kelvingrove: We are all grateful for the great effort that the Minister has obviously made to try to find a way out of the problem. He spoke of being glad to see safeguards in the Bill, but those safeguards really have little relevance to the very serious problem that we are discussing. The noble Lord, Lord Boyd-Carpenter, was rather concerned with the brutal stripping of assets and with the closing down of an airport. The danger is possibly much more subtle than that.
What concerns me is how, in a Bill such as this, one guards against an interest taking control of our hub airports in particular, and taking traffic away from them, by sheer procrastination in the development of those airports. That is an extremely difficult situation to handle. I do not want to be too unfair to the Minister, and I put this with the very best of motives. We feel that it is absolutely vital that something should be written on the face of the Bill. After all, we could reach the stage where another Minister or Secretary of State takes a different view of how to use the golden share. Still the matter would not need to come before Parliament, and still there need be no possibility of Parliament having any control.
At the end of the day there must be wider protection. That is why, with reluctance, I ask the Committee to make a decision on this matter. I shall be very happy if the Minister is able to come forward at Report stage with something really suitable, with an amendment to withdraw in effect the amendment that I hope will be carried today. That may be unusual, but the situation is so serious that I would rather test the opinion of the Committee, so that the Minister and his department, as well as the Minister's right honourable friend, will be given that extra push to do what I know they want to do. I do not feel that we should let the matter go at this time without having such an absolute assurance. I therefore intend to divide the Committee.
The Earl of Caithness: I hope that the noble Lord does not choose to divide the Committee. I want to study everything that has been said today. I cannot over-emphasise that point. The matter is seriously under discussion in my department at the moment. My right honourable friend the Secretary of State, the Minister for Aviation and myself were discussing the matter only this morning. With due respect to the noble Lord, it would not be beneficial to divide the Committee now. At a later stage that might be the right thing to do, but I hope that the noble Lord will not choose to do so while we are still formulating our final thoughts.
Lord Carmichael of Kelvingrove: I can see the difficulty confronting the Minister and the Committee. I hope that the noble Earl also recognises just how serious is this matter and will take it back. In the light of the assurance that he has given, and in particular his last contribution, I beg leave to withdraw the amendment.
Lord Underhill: Before my noble friend sits down, may we have a definite assurance that a statement of some kind will be made before Report stage? It would be a great pity if we missed the opportunity to record our view today and then at Report stage find that the whole thing is inadequate.
The Earl of Caithness: I am happy to give the noble Lord that assurance.
Amendment, by leave, withdrawn.
[Amendments Nos. 5 and 6 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 7:
Page 2, line 45, at end insert—
(" (10) The Secretary of State shall, in each session of Parliament following the session in which this Act is passed, lay before Parliament a report as to the exercise of his functions under this section including a statement in general terms of the nature of the property, rights and liabilities transferred to each nominated company and of the activities of each nominated company.")
The noble Lord said: I rise to move Amendment No. 7, and it may be for the convenience of the Committee if I speak to Amendment No. 12 also. We come to a very important principle which we have examined in Committees of your Lordships' House dealing with other Bills. It is the question of parliamentary accountability under the proposed legislation.
Clause I of the Bill as it stands gives the Secretary of State very wide powers and wide discretion. He can change schemes put forward to him by the BAA, he can change articles of association; he has only to consult, he does not have to report back to Parliament, and he does not have to consult Parliament before making any changes that he is entitled to make under Clause 1.
Amendment No. 7 really has two points to it. The first is that the Secretary of State should be required to lay before Parliament a report as to the exercise of his functions before the appointed day. The second is that the Secretary of State should continue to report on the activities of the nominated company as and when it becomes the successor company and as and when it takes up the activities that the Bill gives it.
It does not seem to me to be a very onerous task that we are trying to lay on the Secretary of State. We are not asking him to come back to Parliament. We are not asking him to come back for authorisation. We are proposing to allow him to exercise the functions that Clause 1 of the Bill enshrines. Nevertheless, it seems only reasonable to ask that there should be some form of report back by the Secretary of State in each Session of Parliament on exactly what he has done and how the various successor organisations (or organisation) are performing.
Amendment No. 12 has a similar thrust except that it concentrates particularly on the ownership of the successor company and the sums realised on disposal
1310
of securities. We have had a debate on the question of foreign ownership and I do not intend to go over the ground that has been covered. Nevertheless, we again have here a problem of Parliamentary accountability, or at least reporting to Parliament.
Again, this amendment is extremely mild. The Secretary of State is merely required to lay a report before Parliament. I very much hope that the noble Earl, in replying, will accept that we on this side of the Committee, on this and on other Bills, have a problem of how Parliament is to be kept informed and how Parliament is to keep control of what goes on after a Bill is enacted.
Some of us, in other Committees, are moving rather more restrictive amendments which would try to control rather more precisely what the Secretary of State may do. These two amendments do not do that; they simply ask the Secretary of State to report. I very much hope that the noble Earl will feel that this is not such an onerous requirement and will be able to accept these amendments on behalf of the Government. I beg to move.
5.30 p.m.
Lord Tordoff: I want only to say that this seems to be a very gentle way of keeping Parliament involved, as the noble Lord said. I often find myself in difficulties when we table amendments which call upon the Secretary of State to place orders of one sort or another in front of both Houses of Parliament because by convention we do not seriously oppose them in this House. It seems to me that we might have slightly more control over the Secretary of State if he has to report and we can then put down a Motion on that report. That is why I admire the way in which these amendments have been drafted.
Legislation is increasingly giving powers to the Secretary of State and we need to have Parliamentary scrutiny of the way in which he has performed during a specific period. This is a Bill in point. There are many instances where the Secretary of State "may" or "shall" do various things. There is very little in the Bill to give Parliament the opportunity of looking back on what the Secretary of State has done during a year.
I know that we can always put down Motions but it is not always easy to do that from the Opposition Benches, and particularly not from the Opposition Benches below the Gangway. Therefore, I should welcome the opportunity of having a report to Parliament from the Secretary of State on which we can comment after having scrutinised it.
The Earl of Caithness: We have never sought to hide from Parliament or the public the facts about our privatisation programme. The reason for that is that we are very proud of our policy—a policy that is giving freedom and incentives to the managements of some of our greatest industries to go out and compete with the rest of the world. Noble Lords can be assured that we will continue to proclaim our success.
I can promise your Lordships that we will report to Parliament on the reorganisation of BAA under the powers in Clause 1 when it takes place. We expect this to be a single event—not one requiring repeated reports as this amendment would require. We shall

1311
also (as in all other privatisations) report the proceeds from the sale of shares. The figure for total proceeds from the Government's privatisation programme is currently in the region of £7.5 billion and we look forward to significant increases on that. It is likely that we shall sell the entire shareholding of the BAA's successor company in one transaction. Again therefore repeated reports on the Government's ownership of shares would not be needed.
In any event—and I hope the noble Lord, Lord Williams, will not mind if I point this out to him—under Clause 7 of the Bill my right honourable friend the Secretary of State is required to lay an order setting a target investment limit equal to the number of shares held by the Government after any have been sold and he can fix lower limits should disposals be made. Therefore, Parliament will be kept informed of the Government's shareholding should it be disposed of in tranches.
In view of what I have said, and although I agree with the noble Lord, Lord Williams, that the amendments are certainly not wrecking amendments, we feel that they are already catered for.
Lord Williams of Elvel: I am very disappointed with the noble Earl's reply, as I am sure he will recognise. I did not expect to get a party-political blast as a result of these amendments. We are not asking for the noble Earl to write the Conservative Party manifesto into the Bill. All we are asking is for continuing reports on what goes on. After all, as my noble friend Lord Underhill said earlier, this is the first major country which is to have a privatised airport system. It seems only right that Parliament should be informed by the responsible authority, which at the end of the day is the Secretary of State, on a continuing basis on how that is going.
I hope very much that the noble Earl will reconsider the matter. I also hope that, particularly on Amendment No. 7, he will see fit to take it away, look at it, and endeavour to come back on Report with something which will satisfy what I believe are legitimate demands from this side of the Committee.
5.37 p.m.
On Question, Whether the said amendment (No. 7) shall be agreed to?
Their Lordships divided Their Lordships divided: Contents, 80; Not-Contents 102.

DIVISION NO. 2

CONTENTS

Airedale, L.

Ennals, L.

Ardwick, L.

Ewart-Biggs, B.

Attlee, E.

Falkender, B.

Aylestone, L.

Fisher of Rednal, B.

Beaumont of Whitley, L.

Foot, L.

Birk, B.

Gallacher, L.

Boston of Faversham, L.

Galpern, L.

Bottomley, L.

Gifford, L.

Bruce of Donington, L.

Graham of Edmonton, L.

Burton of Coventry, B.

Grey, E.

Carmichael of Kelvingrove, L.

Hanworth, V.

Cledwyn of Penrhos, L.

Hatch of Lusby, L.

Crawshaw of Aintree, L.

Hirshfield, L.

David, B.

Houghton of Sowerby, L.

Dean of Beswick, L.

Howie of Troon, L.

Diamond, L.

Irving of Dartford, L.

Elwyn-Jones, L.

Jacques, L.

1312

Jenkins of Putney, L.

Ritchie of Dundee, L.

Kilbracken, L.

Rochester, L.

Kilmarnock, L.

Scanlon, L.

Kirkhill, L.

Seear, B.

Listowel, E.

Sefton of Garston, L.

Llewelyn-Davies of Hastoe, B.

Silkin of Dulwich, L.

Lockwood, B.

Simon, V.

Longford, E.

Stallard, L.

Lovell-Davis, L.

Stedman, B.

McNair, L.

Stewart of Fulham, L.

Mais, L.

Stoddart of Swindon, L.

Manchester, Bp.

Strabolgi, L.

Milner of Leeds, L.

Taylor of Mansfield, L.

Molloy, L.

Tordoff, L. [Teller.]

Monson, L.

Underhill, L.

Mulley, L.

Vernon, L.

Nicol, B.

Wallace of Coslany, L.

Ogmore, L.

Wells-Pestell, L.

Oram, L.

Whaddon, L.

Ponsonby of Shulbrede, L. [Teller.]

White, B.

Wigoder, L.

Prys-Davies, L.

Williams of Elvel, L.

Rhodes, L.

Willis, L.

Richardson, L.

NOT-CONTENTS

Abinger, L.

Lucas of Chilworth, L.

Alexander of Tunis, E.

Luke, L.

Bauer, L.

McAlpine of Moffat, L.

Belhaven and Stenton, L.

McFadzean, L.

Belstead, L.

Macleod of Borve, B.

Boyd-Carpenter, L.

Mancroft, L.

Brabazon of Tara, L.

Margadale, L.

Braye, B.

Marsh, L.

Brookes, L.

Massereene and Ferrard, V.

Brougham and Vaux, L.

Merrivale, L.

Broxbourne, L.

Mersey, V.

Butterworth, L.

Milverton, L.

Caithness, E.

Monckton of Brenchley, V.

Campbell of Alloway, L.

Monk Bretton, L.

Cathcart, E.

Morris, L.

Coleraine, L.

Mottistone, L.

Colville of Culross, V.

Mountevans, L.

Cork and Orrery, E.

Mowbray and Stourton, L.

Cox, B.

Murton of Lindisfarne, L.

Craigavon, V.

Pender, L.

Cullen of Ashbourne, L.

Poltimore, L.

Davidson, V.

Rankeillour, L.

De La Warr, E.

Renton, L.

Denham, L. [Teller.]

Renwick, L.

Dilhorne, V.

Rodney, L.

Drumalbyn, L.

Romney, E.

Dudley, E.

Rugby, L.

Ellenborough, L.

St. Aldwyn, E.

Elton, L.

Saint Brides, L.

Faithfull, B.

St. Davids, V.

Fanshawe of Richmond, L.

Sandford, L.

Ferrers, E.

Seebohm, L.

Fraser of Kilmorack, L.

Sempill, Ly.

Gainford, L.

Skelmersdale, L.

Geddes, L.

Strathclyde, L.

Gisborough, L.

Strathspey, L.

Glenarthur, L.

Swinfen, L.

Gray of Contin, L.

Swinton, E. [Teller.]

Gridley, L.

Teynham, L.

Hailsham of Saint Marylebone, L.

Todd, L.

Torrington, V.

Halsbury, E.

Trumpington, B.

Hardinge of Penshurst, L.

Vickers, B.

Harmar-Nicholls, L.

Vivian, L.

Hives, L.

Ward of Witley, V.

Hooper, B.

Westbury, L.

Hylton-Foster, B.

Whitelaw, V.

Kings Norton, L.

Wolfson, L.

Lane-Fox, B.

Young, B.

Lauderdale, E.

Ypres, E.

Layton, L.

Zouche of Haryngworth, L.

Long, V.

Resolved in the negative, and amendment disagreed to accordingly.
5.45 p.m.
Clause 1 agreed to.
Clause 2 [Dissolution of BAA and vesting of its property etc. in a successor company]:
[Amendment No. 8 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 9:
Page 3, line 19, at end insert—
("( ) An order under subsection (2) above shall include the successor company's articles of association.")
The noble Lord said: In moving this amendment I find myself in something of a difficulty, as the noble Earl will recognise. He was kind enough to say to the Committee that he would take Amendment No. 4 and have a look at it and that before the Report stage of this Bill there would be a Statement which he hoped would satisfy the opinions that were expressed during the debate on that amendment and the other amendments which were linked with it.
To a certain extent this amendment follows Amendment No. 4 and the ones that were linked with it. We believe that if there is to be a golden share arrangement, it is not enough—as I think my noble friend Lord Carmichael of Kelvingrove remarked—just to have it in articles of association that are not in some parliamentary form, if I may use that expression. This is for the very simple reason that if it is in the articles of association—which is the normal way in which golden share provisions are drafted—any future Secretary of State who may well change his mind and decide that he wants to relinquish his rights under the golden share will not have to come back to Parliament.
The point of this amendment is that if the articles of association, which are to be changed by the Secretary of State are enshrined in the order, the order would have to be revised and again laid before Parliament so that Parliament would have the opportunity of discussing the matter. If the noble Earl will tell me that he will look at this point alongside the other points in connection with Amendment No. 4 and the amendments that are linked to it, I shall be happy to leave it at that. If he says that he is not prepared to do that, I should like to take the matter a little further. I beg to move.
The Earl of Caithness: I am grateful to the noble Lord, Lord Williams, for his explanation of this amendment. I originally thought that it would be grouped with Amendment No. 4, but when I heard that this was not the case, I thought that there must be something devilishly subtle about it and that some Labour Party ploy was in view, but I am glad that it is not—
Lord Bruce of Donington: Never!
The Earl of Caithness: Perhaps with Lord Williams, no; perhaps with Lord Graham, yes; we do not know. Of course I shall take it back and look at it because it relates to what I said on Amendment No. 4, and I think it would be wrong to take up the time of the Committee now in going back over what I have already said.
Lord Tordoff: I am astonished that the noble Earl should think that I would lend my name to an amendment that was a Labour Party ploy or plot, or whatever he said.
The Earl of Caithness: I thought that the Liberals were quite happy to lend their name to anything which was a nasty ploy.
Lord Tordoff: Only ploys of our own. I should like in fact to say again what I did not have the opportunity to say at the end of the last debate, which is that this again reinforces the strong feelings that there are on these Benches, as well as around the Chamber, not only that something must be done and be seen to be done, but that it really must be entrenched as firmly as it can be. Therefore, it seems to me that this provision needs to be on the face of the Bill and in such a way that successors—successive Secretaries of State—cannot change it without coming back to Parliament. Of course, nothing is permanent, but the place to make significant changes of this kind is Parliament. That is why this amendment is very important and I hope that the Government will incorporate it in whatever measures they put forward.
Lord Williams of Elvel: In the light of the noble Earl's remarks I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 10 and 11 not moved.]
Clause 2 agreed to.
Clause 3 [Cancellation of liabilities of BAA to the Secretary of State]:
On Question, Whether Clause 3 shall stand part of the Bill?
Lord Underhill: Clause 3 of the Bill cancels the liabilities of the BAA to the Secretary of State. It provides that the authority's outstanding debt be written off once restructuring has taken place. We understand that the debts are currently £45 million, but by the time of restructuring they could undoubtedly reach £50 million. The policy outlined in the clause is somewhat similar to that in relation to public transport under the Transport Act 1985. The public transport companies to be set up under that Act must be in operation by October 1986. In many of the metropolitan areas those public companies will be operated on a viable basis only by the PTEs servicing the debts, though the assets to which they relate will be transferred to the companies. The PTEs will have to service those debts by borrowing, naturally with interest to be paid. That will affect the limited support that may be available for the public transport network.
I mention that because there we have an example of what appears to be developing under recent legislation. Part of the external financing limit of the BAA for 1986–87 will undoubtedly relate to Stansted. As was explained at some length in Committee in the other place, that in effect would be writing off a further subsidy for Stansted. From reading the Official Report of the Standing Committee in another place it seemed to me that the Minister appeared to appreciate the

1315
concern expressed. It would be helpful if the noble Earl could not only express concern but would say what the Government propose to do if that concern remains.
The Earl of Caithness: The noble Lord expresses concern that by writing off the BAA's debts we seem to be indulging in a give-away of public money to a shortly-to-be-privatised company. I can assure him that this will not be the case. The debts in question are those of the BAA to the National Loans Fund. As the noble Lord said, those totalled about £45 million—in fact I have a figure of £45·8 million—as at 30th September 1985, which is a small proportion of the BAA's total value. The National Loans Fund is the government fund which is used for making loans to all nationalised industries.
Private sector companies are, as the noble Lords will know, financed by combinations of equity and debt. It would not be appropriate for the private sector BAA to continue to have loans from the National Loans Fund and such loans cannot be transferred to the private sector. Its debt must be converted to the private sector equivalent debentures and equity introduced into its financial structure. The mechanism for this change is as follows. Immediately before the appointed day (that is, the day on which the BAA's business passes to a company wholly owned by the Secretary of State) the public sector debt will be extinguished. The Secretary of State will then use his power to direct the company to issue to him securities to replace the loan.
The extinguishing is achieved by this clause; the replacement is effected by Clause 4. These securities will comprise some mixture of equity and debentures. We have given a firm commitment that at least as much debt will be created in the form of debentures as was written off from the National Loans Fund.
Let me compare the situation of the BAA just before the appointed day with the position of its successor company immediately afterwards. The BAA before the day will owe the Government's National Loans Fund something over £40 million. The successor company after the day will owe the Government that amount or more by way of debt instruments, and in addition the Secretary of State will have received without payment a large number of shares. On privatisation these shares and debentures will be sold to the private sector and the proceeds will be paid into the Consolidated Fund.
I appreciate that I have offered rather a technical defence of this clause, but it is an essentially technical matter. The write-off of debt is no more than a formal procedure to give the successor company appropriate liabilities for private sector operation. I hope that that explanation will satisfy the noble Lord.
Lord Williams of Elvel: We are grateful to the noble Earl for giving us the explanation of the clause. Am I right in thinking—it may be a slip of the tongue—that he was referring to Clause 5 as being the enabling measure which allows the Secretary of State to acquire securities, rather than Clause 4, which is entitled,
"Initial Government holding in the successor company"?
I may be misinterpreting the Bill. That is just a point of clarification.
1316
But more importantly, and on a point of principle, I notice that there crept into his reply a number of phrases such as "equivalent or more". Such expressions kept on coming back; I noticed them two or three times. I should be grateful if he would explain what the Government have in mind. I can understand it if the Government say that there is a public sector debt and the exact equivalent will become private sector debt. That would seem to be a perfectly logical way of doing it.
But what I find difficult to understand is the Government saying that there is a certain amount of public sector debt and that the equivalent or more will become private sector debt. Does that mean that the Government intend to load the successor company with extra debentures, unsecured loan stock or any other piece of paper that they may feel is marketable? Does it mean that the Government feel no restriction on the debt that they are prepared to see the successor company assume? I should be grateful for the noble Earl's comments.
The Earl of Caithness: I am grateful to the noble Lord for that helpful intervention which allows me to reiterate that I was referring to Clause 4 rather than to Clause 5, because the matter has to go to the holding company first.
I said that there may be more solely because of the debt equity ratio. As the noble Lord with his vast experience in these matters knows better than I do, when one is launching a company into the private sector one wants to get the debt equity ratio in the right proportion. Therefore it may be more, but it certainly will not be less than the money owed to the National Loans Fund.
While I am on that point it is relevant when we come to the local authority airports that we get the debt equity ratio right. Therefore we require the flexibility. We have not finalised our thoughts on this matter, but the amount will certainly not be less than the sums owed to the National Loans Fund.
Lord Williams of Elvel: I am grateful to the noble Earl, and I am sorry to take up the Committee's time. But if we can just concentrate on the debt equity ratio, I can fully understand that the Government wish to have a proper capital structure of the successor company and that they rightly wish to redeem for themselves the money that they have lent from the National Loans Fund. That I understand perfectly. What I am worried about is the total amount of money that the Government are to accept in securities of the successor company versus the total amount of loans from the National Loans Fund. Whether the total in privatised securities are in debentures, convertible debentures, preferred shares or shares does not seem to affect the issue. As the noble Earl quite rightly says, it is a question of the debt equity ratio. I am talking about the total amounts and perhaps he would address himself to that.
The Earl of Caithness: At this stage I cannot give the noble Lord an answer. I do not think that we have finalised our thoughts on the matter purely because it is too far away from the appointed day when these

1317
decisions have to be made, and the market can change meanwhile.
Clause 3 agreed to.
Clauses 4, 5 and 6 agreed to.
Clause 7 [Target investment limit for Government shareholding]:
[Amendment No. 12 not moved.]
Clauses 7 and 8 agreed to.
6 p.m.
Lord Underhill Lord Underhill moved Amendment No. 13:
After Clause 8, insert the following new clause:
("Superannuation and pension rights.
. In order to protect the superannuation and pension rights of airport employees no change shall be made to the structure, provisions or coverage of the BAA superannuation scheme without the agreement of those presently recognised trade unions who are members of the BAA central negotiating committee and that negotiations will be with BAA plc (or whatever format and title the private holding company and subsidiaries hold).")
The noble Lord said: Whenever we have a piece of legislation which deals with privatisation we always have the important question of employees' superannuation and pension rights. This has as much right to our consideration as any other part of a Bill that sets up private companies. BAA's combined trade union side has over many years co-operated in the maintenance and improvement of the superannuation scheme. I understand that it is self-financing and is a financially sound scheme. The employees are obviously extremely concerned that such a scheme should continue.
The Secretary of State has said that the authority's scheme for its employees is generous. It is index linked. It amounts to two-thirds of pensionable pay on retirement for an employee who has 36 years' service. Such a scheme is one which the employees will be jealous to keep in the event of privatisation.
We recognise that there may be some changes, but any changes should be made only with the agreement of the trade union side and with the central holding company, not with any of the subsidiary companies. In Clause 26 the Government have introduced the provision of limited protection for the pension rights of employees of local authority airports in the local authority airport companies which have to be set up. There appears to be nothing for the employees of BAA.
I recognise that the Secretary of State has said that there can never be a guarantee of pension rights in any undertaking which has been privatised, but we should receive some undertakings from the Government on the important question of the pension rights of BAA employees. The existing scheme is a good one. We must do everything that we can to ensure that the scheme is continued. It provides the most important point of co-operation between the management and the work force. I beg to move.
The Earl of Caithness: As the noble Lord, Lord Underhill, said, BAA provides a generous pension scheme for its employees. Pensions, which are index
1318
linked, amount to two-thirds of pensionable pay on retirement for an employee with 36 years' service.
Following consultation with my department Sir Norman Payne wrote to all BAA employees on 16th August 1985 making it clear that the pension rights of the BAA's existing staff and pensioners would remain unaltered following privatisation.
The scheme is managed by a board of trustees which is comprised of three representatives each from the staff and mangement sides, plus a chairman. Proposals for amending the scheme are discussed fully at joint meetings of managment and work force. BAA has shown in the past that it is ready to listen to its employees' views, as any good employer would be. Like any private sector company, BAA must retain the freedom to manage its own affairs, but I am sure that it will continue to do so in full consultation with its work force. I am pleased to see the noble Baroness, Lady Burton, in her place because she does not trust the Government. Do not believe me, believe the combined trade union side which wrote to me this morning. It commented on the new clause and said:
"We feel that there is no requirement to change the scheme for either the present or future employees. We accept that as has happpened in the past this scheme will be changed but this has always been carried out with the agreement of the combined trade union side".
I therefore believe that there is no need for the amendment.
Lord Tordoff: I am pleased with what we have heard from the noble Earl. How different this is from the arguments that we had on the buses Bill. I congratulate Sir Norman Payne and the combined trade unions on having, apparently, come to an amicable agreement on this matter. I wait to hear what the noble Lord, Lord Underhill, has to say in reply.
As we know, during the buses Bill last year the Committee was concerned at the lack of entrenchment of pension rights, but in this case there seems to be a mechanism and an intention on all sides to ensure that pensioners are no worse off than they would have been under their previous circumstances. I welcome that.
Lord Underhill: As the noble Lord, Lord Tordoff, has said, we welcome the statement made by the noble Earl. It is a step forward from the long deliberations we had on the subject of pensions on other privatisation measures. Although I have previously said that the Secretary of State may change and we should therefore have matters written in to the Bill, I appreciate the problems of trying to write into a Bill something which must be carried out by a public limited company which has its own rights under company law. The assurances that the noble Earl gave about the discussions held with the chairman of BAA on the future for the employees will be most welcome to the employees. Under those circumstances I shall not press the amendment. The statement will be clear in Hansard. If anything should go wrong, I am sure that the trade union side will raise the matter and quote the noble Earl. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 14:
Insert the following new clause:
("Collective bargaining.
. All negotiations covering pay and conditions of employees of the British Airports Authority shall be conducted with the presently recognised trade unions and BAA plc or its successor company.")
The noble Lord said: It may be for the convenience of the Committee if I speak to Amendment No. 15 as well. The amendments relate to trade unions wishing to maintain the present good relationship that there is between the employer and the trade union side. The noble Earl the Minister was good enough to pay a tribute to BAA as a good employer. He said that the combined trade unions were reasonable and were able to reach an agreement on superannuation and pension rights. I welcome that, and I agree with the noble Lord, Lord Tordoff, that there is a big difference between this Bill and the buses Bill where there was great uncertainty and worry throughout the country because it was not possible to make an arrangement between the trade unions and those who were going to take over the buses.
The amendments try to consolidate the good relationship. I hope that it will continue. I hope that there will be no possibility of a new group taking over and breaking up the existing collective bargaining arrangements. The present negotiation system within BAA has been in existence for about 19 years. The system has dealt with all issues of staff pay and conditions.
The main worry over the privatisation of BAA is that each of the airports will be set up as a separate limited company. It is possible that each company could attempt to negotiate separately with its own members of staff. That could result in a great deal of conflict and differential pay rates for each of the airports. That would stifle career development within the airports because one of the strengths has been that people have moved around the airports. There has been a genuine ladder of progress which has been for the good of the different airports. New blood with slightly different attitudes has come from other airports.
If the negotiations result in different rates of pay and conditions of service, it would cause friction among the airports and stop the cross-fertilisation from one airport to the other which has been to the benefit of the system as a whole. Whether or not the industry is privatised, it will still be looked upon as one industry. I therefore hope that the good points that have arisen from collective bargaining can continue.
All pay and conditions of service should be negotiated by the central trade union side as happens at present within the British Airports Authority. There is a policy of transferring employees from one location to another. If there was not some central negotiating machinery for pay and conditions, this would permit individual airports to negotiate separate terms which, in my view (and, certainly, the trade union side feels this) would be detrimental to the growth of the whole industry of British airports. I hope that the Minister will see the value of what I propose in view of the remarkably good co-operation that has been received
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from British Airports Authority staff. I hope that he will do everything he can to encourage it. We believe that these amendments will contribute to that process.
Lord Boyd-Carpenter: The noble Lord, Lord Carmichael of Kelvingrove, moves amendments in such a cosy manner that one is almost lulled into a lack of suspicion as to their possible effects. I felt myself rather subjected to that process during his short speech. On studying the amendments, however, I am not particularly happy about them. They are, I understand, intended to be the law for some time ahead. Therefore, to confine negotiations for all time, as Amendment No. 14 does, to the presently recognised trade unions plainly excludes the possibility of recognising any new union that might come into the field. It is an example of the closed shop that I would find some difficulty in accepting. It is not, after all, unknown in industry for new unions to emerge to meet situations. It might be almost tactless to remind the noble Lord that this is what happened in the mining industry where, following recent troubles, a new and strongly led union has emerged. To freeze for all time negotiating rights to what are deliberately described here as presently recognised trade unions seems a rather dangerous concept.
As to Amendment No. 15, I do not know why we should take it for granted, as the noble Lord seemed to do, that rates of pay and conditions should indefinitely remain absolutely the same at all airports. Conditions of work are very different; the stress of work is very different; the cost of living is very different as between one airport and another. I would have thought that these were matters properly left for negotiation between successor companies and whichever are the trade unions then appearing to represent the workers.
Lord Tordoff: The noble Lord, Lord Boyd-Carpenter, has anticipated me in some of the remarks that I was going to make. I would like to reinforce the belief that the situation between employees and management in the British Airports Authority is in many ways a model of what should exist in the rest of industry. I see that the noble Lord, Lord Boyd-Carpenter, nods in agreement. It would be very much to the benefit of all if the machinery were to be kept intact, well oiled and properly working. The point made by the noble Lord, Lord Carmichael, about career development was something that I mentioned at Second Reading. The virtue of the structure that the Government have decided to set up for the future of the British Airports Authority is that it can allow transfer of personnel in a sensible career structure from airport to airport. That is a valuable asset.
However, like the noble Lord, Lord Boyd-Carpenter, I believe that the Committee would be foolish to entrench in legislation that current arrangements should be set in tablets of stone for ever and a day. Indeed, there may be new functions that come into the running of airports for which there is no known trade union at the moment. At the rate at which technology is progressing, I would hate to hear it said that anyone with a new skill necessarily had to become a member of an existing trade union. I support everything that the noble Lord, Lord Carmichael, said in terms of our wish that the good industrial relations

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that exist should continue and indeed flourish to the benefit of the airports. I cannot, however, go along with the amendments.
6.15 p.m.
The Earl of Caithness: These new clauses would impose upon the BAA's successor company and its subsidiaries requirements that would exceed those placed on any other private sector company, or, for that matter, any employers in the public sector. The agreement of all recognised unions would be required before the introduction of any change in employees' terms and conditions that might include some element unfavourable to their members. I do not believe, with due respect, that the noble Lord, Lord Carmichael, has made a case for putting this group of employees in a privileged position, one of having statutory protection against changes in their terms of employment additional to those existing for other employees. They will have, like other employees, the protection of the Employment Protection (Consolidation) Act 1978 against any unilateral change in their terms of employment that amounts to a constructive unfair dismissal.
The pay of the BAA's employees after privatisation will be a matter for negotiation between employees and management. It would be wrong, we believe, to fetter this process as the noble Lord proposes. The position of employees will not be changed by the privatisation process. Contracts of employment with the BAA will be transferred to the successor company with no amendment.
The first new clause, Amendment No. 14, deals with collective bargaining procedures. It seeks to protect the presently recognised unions regardless of the future wishes of staff, a point ably made by my noble friend Lord Boyd-Carpenter and by the noble Lord, Lord Tordoff. I am pleased to have the noble Lord on my side. We can, I am sure, make room for him on these Benches should he wish to cross the Floor. This Government have given much more freedom to trade union members to determine how they should be represented. An essential part of this freedom is the ability to move from one union to another if one is dissatisfied with the way that one is represented by one's present union. This new clause would deny the BAA's employees that freedom. We believe that both new clauses are inflexible and unnecessary and to the detriment of the employees themselves.
Lord Carmichael of Kelvingrove: I am grateful to the Minister for his explanation and for his remarks on my proposed new clauses. I am also grateful for the kind words of the noble Lord, Lord Tordoff, and also for the flattering words—although I am not so sure about this—as to the soporific quality of my speech made by the noble Lord, Lord Boyd-Carpenter. On reflection, I believe that it is perhaps too much to ask that this should be embodied, as the noble Lord, Lord Tordoff, said, in tablets of stone. We were concerned really to raise this matter and to obtain the good offices of the Minister in order that the British Airports Authority plc or its successor will recognise the feeling of people for the existing negotiating machinery. I was glad to note that the Minister said that contracts of
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employment would be the same when staff moved from the British Airports Authority to whatever successor company took over. With these explanations from the Minister and the guidance received from other noble Lords, I am glad to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 15 not moved.]
Clauses 9 and 10 agreed to.
Clause 11 [Interpretation of Part II]:
Lord Underhill Lord Underhill moved Amendment No. 16:
Page 9, line 18, at end insert—
("and
(c) in relation to an airport vested in a passenger transport authority, includes that authority.").
The noble Lord said: This clause deals with the interpretation of certain terms in Part II of the Bill. Of the term "principal council" the Bill says:

"[a) in relation to England and Wales, means the council of a non-metropolitan county, of a district, or of a London borough; and

(b) in relation to Scotland, means a regional or islands council".

It may seem rather strange but our only means of clarifying the Government's intentions in relation to the future ownership of Liverpool airport is through this amendment. Responsibility for the airport was only recently transferred to Merseyside passenger transport authority by order of the Secretary of State, under the provisions of the Local Government Act 1985. The passenger transport authority did not seek responsibility for the airport. Nor was it consulted before it was transferred. Nevertheless, the authority has accepted its responsibility with good grace. It is convinced that Liverpool airport brings considerable economic benefit to the region and is a stimulus to industrial development and urban regeneration.
Noble Lords will appreciate that unemployment at Merseyside stands at over 20 per cent. Therefore, good communications are essential if the area is to attract business and get these people back to work. This faith in Liverpool airport is shared by the EC, in particular, who with a now abolished Merseyside county council, and with the full support of the Government, have invested heavily in new facilities which significantly improve the operational efficiency of the Liverpool airport.
The financial effect of the Secretary of State's order transferring the airport to the PTA was to impose an operational deficit of £3·5 million in the current year. Unfortunately, the way the Government calculated the rate support grant made no allowance for the authority's airport expenditure. It is therefore seen as an overspending authority, and a grant penalty imposed. As I think will be appreciated, this is manifestly unfair on the Merseyside passenger transport authority, which is being penalised for the actions taken by the Secretary of State.
The key term is the "principal council". For these purposes that means, as I have said, a district or county council. I should say that there has been fairly lengthy correspondence with the department of which the noble Earl will undoubtedly be aware, and I shall not therefore refer to the correspondence in detail. As

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the Bill now stands there is uncertainty surrounding the future ownership of Liverpool airport which could unwittingly damage the marketing efforts being made to capitalise on recent improvements. We therefore think it is absolutely essential that we include in this definition of "principal council", where the airport is vested in a passenger transport authority, that it shall include that authority. That will help to clarify the position at Liverpool and any other PTA which might find itself in a similar position in the light of airport developments. I beg to move.
Lord Sefton of Garston: May I urge on the Government and in particular, the Minister today that this should be taken as an urgent matter. The history of Liverpool airport is a long and complex one. I think that at this stage I should refute completely the suggestion made by the noble Lord, Lord Tordoff, that Liverpool was behind Manchester in deciding to set up airport facilities within that town. When Manchester's airport facilities were as some people mentioned, a tent and a Nissen hut, Liverpool already had a permanent airport terminal—and a very good one, too. Although it is not my role to defend the City Fathers of the 1930s I must congratulate them on that, although they were certainly not of my political persuasion and left the place in a hell of a mess. That was the start. It was not long after the war when everybody realised the real need for an airport. The need for an airport does not start because someone says, "We shall put the airport there. That is where we used to have the ocean terminal and that is therefore the logical place for a new airport". An airport is justified by the activity that is contained within the area of that airport.
It was essential for the interests of the North-West that the airport should be centralised to handle that region's problems within the centre. Liverpool never objected to the concept that Manchester airport should be the central and growth point for airport facilities in the North-West. Obviously somebody coming from the other side of the Pennines would not want to pass Manchester and then go to Liverpool in order to catch a plane—although I could suggest that was better than going to Manchester.
The airport was then involved in a discussion about Burtonwood. When I was chairman of the North-West Economic Planning Council there was a very strong view that central government should subsidise the refurbishment of Burtonwood airport because at that time it was a much better airport from the point of view of runway facilities than Heathrow. It was equidistant from Manchester and Liverpool. The solution of the airport problems in the North-West would have been solved by that imaginative stroke. Unfortunately, the Coal Board were more interested in getting the coal out from under the runway. The North-West Planning Council had to take a decision. The Minister decided that coal was more important than setting up the infrastructure of airports in the North-West.
We then come to the modern situation. When I left Liverpool the situation was that it was quite prepared to give up most of its interest in the Liverpool airport if it could be established that we then had an airport
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consortium for the North-West. There is no doubt about this simple fact: if Manchester is insisting on staying on its own, ultimately it will come up against the problem that it will be constrained by the geographical factors around Manchester. It will not be able to expand in order to cope with the traffic that should be generated by the activity in that area. If that is true—and I believe implicitly that it is—the need for Liverpool airport will then be pressing and urgent. Therefore, Liverpool should be kept in existence.
I give that history in order to demonstrate this important factor. We have a letter written by the passenger transport authority to the Minister on 8th May. They still do not know the position. I plead with the Minister to let them know the position and, if possible, to tell the Chamber today. I appreciate that this may be under consideration in the environs of the Ministry, and perhaps they have not yet arrived at a solution to the problem.
The simple question is: where does the PTA stand? I believe that in the interests of the North-West, of airports generally and of the nation, these matters should be planned, and that if possible Liverpool airport should start the process of amalgamation with Manchester in order to have one company handling the affairs of the airports in the North-West.
Lord Dean of Beswick: I was not going to speak in this debate, and I do not disagree with some of the points of my noble friend and colleague Lord Sefton. Nevertheless, history is very often the history as written by the individual. Some historical facts to which my noble friend Lord Sefton referred are quite correct. There was the basis of an airport at Liverpool before that at Manchester. But he used the word "geographical", which says it all. If one draws a 50-mile radius around Manchester it is the biggest centre of population in the United Kingdom. Liverpool has the disadvantage that one side of it is water and the coastline. Before I left Manchester, in political terms, the catchment area for Manchester airport was then 14 million people. That is mainly the reason why Manchester progressed.
It would be wrong if I did not issue a warning. I have no direct interest in Manchester now. I do not live in Manchester, but in Leeds. However, I am familiar with the philosophy behind the development of Manchester airport. That was on a non-party basis. It was not only my party which was involved. Conservative councillors and aldermen at the time played as important a role in developing this on behalf of Manchester as any of my colleagues who were then on the council.
But it is not the first time that it has been said that there ought to be an amalgam of the two airports. Anyone who said that there ought to be an amalgam would literally have to force it on Manchester. In my view there is no way in which whoever controls the Manchester city airport now or in the future will accept that type of proposition because, as I have said, it is right in the middle of the biggest conurbation outside London. Indeed, if you drew a 50-mile radius around London, that area would encompass fewer people than would a 50-mile radius around Manchester. That is one of the major reasons why Manchester is a success.

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I have also heard it said in Leeds that Leeds and Bradford airport may well have developed faster than did Manchester, but that the people in political control in Leeds and Bradford—and they were members of various parties, not just one—were not as bold and were not as forward-looking as the people in Manchester.
I have made my intervention to put the matter in its proper perspective. In talking about the airport at Manchester we are talking about an airport which is situated in a bigger centre of population on the basis of a 50-mile radius than is any other airport in the United Kingdom. Anyone who loses sight of that fact misses out a large component of our discussions and arguments. Having said that, naturally I support the amendment and the way in which it has been moved.
6.30 p.m.
Lord Tordoff: We are in serious danger of this debate developing into a long discussion. I see that the right reverend Prelate the Bishop of Manchester is present as well as my noble friend Lord Crawshaw of Aintree, who is actually a Salfordian. I also see the noble Lord, Lord Scanlon, who may say something about the benefits of Barton Airport, because at one time he was a trade union branch secretary covering that particular branch area. However, I do not want to go down that track.
I wish to remind the Committee that this amendment is about a particular problem which is experienced by Liverpool and I am glad to be able to stand up in support of Liverpool and say that if the definition of "controlling authority" is not sorted out, a number of succeeding clauses which purport to deal with the situation will not appear to apply to Liverpool airport. I cannot think that it is the intention of the Bill, or even subconsciously the intention of the Bill, to put Liverpool airport out of business. However, reassurance is needed not only for Liverpool but also for the tour operators and airlines operating out of Liverpool. I hope that the Government will give a fair wind to the amendment or at least come up with some reassurance.
Lord Sefton of Garston: Will the noble Lord, Lord Tordoff, accept from me that had the Liberals had their way in Merseyside and Liverpool, there would not have been any airport about which to talk?
Lord Tordoff: I am sorry; will the noble Lord repeat his question?
Lord Sefton of Garston: If the Liberal Party in Merseyside and Liverpool had had its way, there would not have been any airport about which to talk.
Lord Tordoff: I have no idea. I shall not get involved in the competitive merits of Liverpool airport. Liverpool airport went down the drain because Liverpudlians thought that Cunarders would always go on taking people across the Atlantic and it was only later that they woke up to the fact that they had all moved to Southampton and then it stopped. I do not want to get into that argument this afternoon.
The Earl of Caithness: As the Bill is drafted a passenger transport authority owning an airport may, at the direction of my right honourable friend the Secretary of State, form an airport company and transfer to it—following approval of a scheme—the assets of the airport. But it may not hold shares in that company or do any of the other things which a principal council may do in respect of an airport. This was a quite deliberate decision taken by my right honourable friend because the Government did not see PTAs as an appropriate body to hold shares in an airport, to deal in such shares, to provide certain services to an airport, to make loans to it and the other things which principal councils are enabled to do under Clauses 15 to 26 of the Bill. We believe that public sector shareholdings in the public airport companies should be held by directly elected bodies, rather than indirectly elected ones. The proposed amendment would reverse that policy.
As the noble Lord, Lord Underhill, quite correctly pointed out, there is only one airport involved, and that is Liverpool. The Government believe that the principle that PTAs should not own shares remains valid. Furthermore, they believe that direct control of Liverpool airport by the five district councils involved—with freedom for shares to be transferred and traded—will, if anything, enhance the chances of Liverpool airport reducing its present high level of losses.
We fully appreciate the importance of all regional airports and I hope that what I have said has clarified the position. The noble Lord, Lord Underhill, and his colleagues may not like it, but I hope that I have clarified the position, which is what the noble Lord asked me to do. I do not believe that what I have said will affect the present marketing proposals of Liverpool airport. We wish it well.
If the people of Liverpool and Manchester wish to get together and rationalise their airports, that is up to them; it is certainly not a government matter. If that is what they wish to do, we shall certainly provide any help if they come to us and ask for it. However, we shall not take the lead on that matter. Therefore, it is a deliberate decision that the elected district councils not the PTA, should be the owners. I appreciate that the noble Lord, Lord Underhill, will ask, "Why is it a PTA only for one year?" I sympathise with the noble Lord. I think that perhaps it is not the most satisfactory way of doing it, but the overriding principle is to get the elected bodies as the shareholders.
Lord Underhill: I must confess that I am a little confused, first, with the argument between Liverpool and Manchester, which has nothing to do with my amendment at all and which may have confused the situation, and, secondly, with the noble Earl's reply. Liverpool airport wants to know who actually owns Liverpool airport. The Secretary of State has ordered that it be transferred to the PTA. Admittedly the PTA is made up of representatives of the various local authorities. Could a situation arise whereby if a PTA is not classified as a principal authority, there could be difficulties regarding some important clauses of the Bill

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The next amendment dealing with Clause 12 refers to principal authorities and I shall be asking that certain things should be done. If by the amendment not being agreed to a PTA is not to be recognised as a principal authority, we shall have difficulties when we come to clauses such as Clause 12.
Therefore, the position has not been satisfactorily resolved or thoroughly cleared and our friends in Liverpool will I am certain still be rather confused as to, first the position of the ownership of the airport, and, secondly, the position of the debt to which I referred and the fact that the rate support grant presents them with certain penalties.
Lord Dean of Beswick: Before my noble friend sits down, it would be as well to make noble Lords present aware of the facts of the situation. There may be a slight difference of accent between the noble Lord Lord Sefton, and myself regarding Liverpool and Manchester airports. However, there are some facts on which we totally agree. The reason for some of the difficulties is that a government some years ago decided to reorganise local authorities. At that time the airport in Liverpool was owned by Liverpool City Council and the airport in Manchester was owned by Manchester City Council. I do not know what happened in Merseyside, but I know what happened in Manchester. The Greater Manchester County—the new body—immediately put it on its shopping list to take over.
It is a fact of life, and it can be examined in detail by anybody who wants to challenge what I am saying, that when the reorganisation took place in the early 1970s there was a whole series of disputes between metropolitan districts and metropolitan councils as to who would do what. One of the most profound disputes arose over the fact that there was removed from the local authorities—the districts—the right to manage their own pension funds. That type of activity was given to the counties, though the districts and the cities had done it well themselves in the past. We were faced with a situation in Manchester where I knew, as the then leader of Manchester City Council, that if the issue was unresolved by the two bodies concerned and went to the Secretary of State, there would be no question at all that he would have ruled on behalf of the new metropolitan county. There was a whole succession of disputes in various parts of the country between metropolitan districts and metropolitan counties. I think I am right in saying that without exception the then Secretary of State for the Environment, the Member for Hexham, found in favour of the counties.
I had to protect what I saw as my priority, the interests of the ratepayers in Manchester who had funded that airport, with various degrees of government assistance, during its history. An agreement was reached with the county council that there would be 50 per cent. control by each of them, with an annual change of chairman; one from the City of Manchester one year, and the next year from the county. That worked until the present situation.
I do not think it is being too simplistic to imagine that the Government may well have turned the clock back completely in what they have done, and handed
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the airports back to the people who had developed them originally. The whole situation is bedevilled by the enforcement of a situation on local authorities in a way that—and I hate to use the term—has a sense of hybridity in it whichever way you look at it.
In my younger days on the city council I was never able to obtain a place on the Manchester city airport committee because it was known as one of the blue chip committees, and the older and more experienced members gravitated towards it, but now we have a position where it will no longer be in that situation. At that time there was an airport committee which ran Manchester Airport. I have no doubt that there was one that ran the Liverpool Airport on a strictly municipal basis. They were just members of the council. They were not directors. The chief legal officer of the airport was usually the town clerk. Under him there would be what is termed now an airport director. We used to call them airport managers. Nevertheless, it worked.
I cannot for the life of me think who spawned this present suggestion to deal with airports, which originally were taken away from authorities without any attempt to find their views on what ought to be done. Literally at the stroke of a pen they were removed because the Government of the time thought that was the right thing to do. Those airports were developing well and functioning well. If the present Bill had been looked at in the sense of going back to the situation as it was before, a lot of the arguments and debates taking place in your Lordships' Chamber during the passage of the Bill could have been avoided, and the Government could have achieved their wishes in a far more acceptable way than they are doing today.
Lord Sefton of Garston: I apologise to Members of the Committee if they consider that I am wasting time, or keeping them here unnecessarily, but I should like to go back. The only reason I sketched in the history of Liverpool Airport and the North-West was to demonstrate the importance of something happening in Liverpool so that they know where they are. The history is quite clear. Liverpool City Council set up an airport committee and maintained an airport. The reorganisation of local government came in, and there was no dispute on Merseyside. The whole of Merseyside agreed that an airport was not really the right subject for a city, but a sub-regional affair that should be handled by the county. The county took it over. Then the Government were warned that if they went ahead with the local government Bill there would be some particular problems with regard to Liverpool, and the airport was one of them.
Come the Airports Bill and the dissolution of the county council, and Liverpool are prepared to take over the airport, full stop. But somebody in Whitehall decided, "You can't take the airport over because the other district councils are not so keen and enthusiastic". Hence my reference to Liberals in Merseyside, who in my opinion betrayed Merseyside, but that is all in history.
The situation now is that Liverpool do not know what to do. The Government have said to the PTA, "Take it over". The Government have produced this Bill. Then they say to the PTA, "But you can't be on

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all fours with other authorities which are taking airports over". It has not gone out of the hands of elected representatives through anybody's fault on Merseyside. It has gone out of the hands of elected representatives because of government and ministerial decision, and that is why it is not in the hands of elected representatives. All the PTA say is, "Don't put us in the situation of inheriting a debt that we may have to cover and then not give us the powers to set up the company and invest in Speke Airport for the future of Speke Airport and the North-West, or until certain other people in the North-West take a more enlightened view of the total problem in the North-West". That is all they want to know, and they deserve, and should get, a straight answer. Who owns it and who is going to be responsible for the administration of this Bill in regard to Speke Airport, or Liverpool Airport?
6.45 p.m.
The Earl of Caithness: I thought I had given that answer. I apologise to noble Lords opposite if I did not make myself clear. It was obviously my fault. May I try once more? Clause 11 defined "principal council" for the purposes of Part II. The definition omits passenger transport authorities. However, Clause 12(7) effectively brings the PTAs within the definition for the purposes of Clauses 12 and 14 only—that is, the formation of a company and the transfer of assets.
I am sorry if it is not clear. It is clear to me that the PTA own the airport. We believe they are not the right body to own it, and we appreciate the problems that have arisen over the temporary basis, and perhaps it is not the ideal way of doing it, but we believe that following privatisation it should be the five district councils who own it. The PTA do now; they are incorporated into the Bill for Clauses 12 and 14, which are the relevant clauses for the purposes of the formation and transfer of assets.
The question of apportionment of debt is something we ought to wait for until the debate on that subject, because there are amendments down for a later stage of the Bill and it would perhaps be wrong of the Committee to preempt them now. I hope I have clarified the particular question that noble Lords asked me.
Lord Dean of Beswick: Does the Minister not understand that in his answer lies the inherent unfairness to the local authorities which spawned these airports, developed them, and were the sole controllers? They were taken off them without any compensation. Manchester got a 50 per cent. arrangement with the county, but in order to put a package together to form a plc Manchester suggested that 45 per cent. of the shares be divided among the other nine metropolitan districts, who played no part whatsoever in the birth or development of Manchester Airport.
As my noble friend Lord Sefton said, the original people who built and started Liverpool Airport—and he said that it had its financial troubles in running it but it must have had some valuable assets—are being asked to divide it among the other districts, which had no say in the birth or development of that particular airport. The other nine districts are exceptionally lucky in Manchester, in that Manchester, in order to form a plc, has made an accommodation for them to
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have a share in an asset that has nothing to do with them. If the Government had switched the clock back to the original position, I am sure that they would have avoided a lot of the contentious issues being raised during the Committee stage of this Bill in your Lordships' House.
Lord Sefton of Garston: I wish the noble Lord would not confuse Manchester with Liverpool, because there is a fundamental difference between the problem in Manchester and the problem in Merseyside. The fundamental problem is £3½ million. Manchester is making a profit. Who would turn that down? It has a good future for the reasons that I outlined. It is in the centre of the conurbation. Liverpool has not a good future. It has to be held in reserve in case Manchester cannot provide the necessary airport facilities in the future. While it is being held in reserve, perhaps we can settle my part of this debate anyway by asking the Minister whether he will please write to me to tell me what his department intend if the five district councils cannot agree to take over the responsibility through the PTA for floating any loans or investments in the airport? Will he tell me how he will handle the situation when the PTA has been compelled to take over the airport, but has been denied the jobs that the principal councils and the other authorities have in the airport structure? If the Minister will write to me, I can use his words in quotations.
The Earl of Caithness: I accept the noble Lord's offer with alacrity. I shall write to him.
Lord Sefton of Garston: Thank you very much
Lord Tordoff: I am sorry, but that does not help the rest of us.
The Earl of Caithness: Perhaps I had better put a copy in the Library.
Lord Tordoff: That does not help us at this moment. Although I think that the noble Earl has gone some way to explaining the position I still do not think he has got to the nub of it. As I understand it, the situation is that on the break up of the Merseyside County Council, Liverpool City Council wanted to take over control of the airport. They were refused permission to do that on their own by the Secretary of State. I shall not go into Liverpool politics, for that is far too complicated; but for whatever reasons the surrounding district councils were not prepared to join a consortium of some kind and therefore the Secretary of State handed this over to the PTA, forced it upon the PTA. The Secretary of State is now saying that that will not do so far as this Bill is concerned except for the two clauses mentioned by the noble Lord.
Regarding the operating conditions, the PTA is left in complete limbo as well as having a debt round its neck. Unless district councils can be forced to join in or unless the Secretary of State is prepared to give it to Liverpool City Council (which it may or may not want, I do not know) the PTA is in this totally anomalous position of having a shell of a company with no real powers to operate and a £3½ million debt round its neck. I am afraid that the Minister still has been unable to explain to the Committee, or at least to

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me, where the PTA goes from here. I understand that it finds itself in an extremely difficult position.
Lord Underhill: I am grateful both to my noble friend Lord Sefton and to the noble Lord, Lord Tordoff, for putting the position regarding Speke Airport in the simple terms that are facing the people in the area. As I said at the outset, I believe that there has been lengthy correspondence with the appropriate section of the department from the PTA on this issue. I am not clear—I do not think many other noble Lords will be clear—exactly where we stand at this moment. The offer of the noble Earl to send a letter is appreciated. I hope he will send a copy to every noble Lord who has taken part in this debate. I think it is important that we should have that.
The noble Earl referred to Clause 12(7). This clause and Clause 14, together with Clause 11(3) and (4), shall apply to a metropolitan county passenger transport authority as they apply to a principal council. Speaking off the top of my head, I cannot say whether that is satisfactory. We shall need to seek advice about whether those sections cover all the dangers that exist without a PTA being classified as a principal authority. We shall need advice in the light of what the noble Earl has said.
Although the noble Earl said that we should leave the discussion on outstanding debts until we come to those items, I have a terrible feeling that when we come to those items of outstanding debt the noble Earl still will not be able to explain what will happen to the debt which is left apparently with the PTA which is not recognised as a principal authority. We may find ourselves in some difficulty when we reach that item. But with the assurance that we shall have this correspondence supplying the information before the Report stage, I beg leave to withdraw the amendment in order to solve our confusion.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Clause 12 [Transfer of airport undertakings of local authorities to companies owned by such authorities.]:
Lord Underhill Lord Underhill moved Amendment No. 17:
Page 10, line 10, at end insert—
(" (1A) The Secretary of State shall notify all the principal councils by whom an airport is controlled of his intention to give a direction under subsection (1) above relating to the airport and of the nature of the proposed direction and shall before giving the direction take into account representations made to him by any of those councils including any alternative proposals for the management of the airport.").
The noble Lord said: Now we come to the position of local authority airport undertakings. Amendment No. 17 refers to the important provisions under subsection (1). I draw attention to two aspects of the amendment. It reads:
"The Secretary of State shall notify all the principal councils".
The Committee will notice that the reference to "principal councils" comes in once again. At the present time the Secretary of State can under Clause 12(3) decide for himself which local authority with an interest in an airport shall receive a direction. Where
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one authority owns the airport—for example at Luton—there is no problem. The authority will receive the Secretary of State's direction and will act accordingly. But there are many airports with more than one authority with an interest. Leeds—Bradford, Newcastle, Birmingham, Manchester, East Midlands and Teeside airports are some examples. In Manchester's case this could mean ignoring Manchester, or ignoring Birmingham in the case of that airport, in favour of another authority whose interest is much smaller in scale and importance. That decision is left solely with the Secretary of State. It is considered only fair and reasonable that all the authorities are notified with the direction.
In the Standing Committee in the other place, the Government proposed that if all the local authorities are agreed as to which authority took the lead that decision would be honoured by the Government. But that still leaves the question open as to whether decisions should be unanimous or by a majority. The Government have not given any indication about whether a decision on this matter has to be unanimous by all the princiapl authorities concerned or whether it is a majority decision. Therefore I hope that when the noble Earl replies he will clarify that point.
The other important words in the amendment are that,
"The Secretary of State shall … take into account representations made to him by any of those councils including any alternative proposals for the management of the airport".
The local authorities see these consultations as an important means of making the provisions in the Bill more workable. I said at the outset that despite our complete opposition to the Bill we all want to make the position more workable. The local authorities believe that consultations are an essential part of that. Therefore this has relevance for all airports both large and small. If the Government follow their timetable to restructure the regional airports, local authorities will have little more than three months to create company structures and to submit to the Secretary of State a transfer scheme under Clause 14. This, I think it is generally agreed, is not sufficient time.
The other point concerns the provision of an opportunity for local authorities to submit alternative proposals for the management of their airports for the Secretary of State's consideration. This is a reflection of the fact that no two airports are alike and that it is unusual for the Government to argue that they are. That would arise from the present position under the Bill. To be effective, structures need to reflect the individual circumstances of each airport. There is no reason why local authorities will not take the opportunity of presenting constructive proposals to the Secretary of State if this amendment were supported.
The Government may argue that the amendment is unnecessary. I can assure the noble Earl that the local authorities do not accept this. They feel that it is necessary for them to have statutory a right to submit to the Secretary of State alternative proposals for his consideration. It is for that particular reason that I hope that the noble Earl will see the important point of consultation and the right of local authorities to submit alternative schemes and will see fit to accept this amendment.
7 p.m.
The Earl of Caithness: The effect of the proposed amendment would be to require consultation before my right honourable friend the Secretary of State can issue directions to principal councils to form airport companies. The noble Lord, Lord Underhill, has said that the timetable was tight. Although tight, we believe it to be a practical one. I agree when the noble Lord, Lord Underhill, says that I would consider this amendment to be unnecessary. Clause 12(4) already provides that my right honourable friend may revoke any direction given under subsection (1) at any time before a company is formed. Thus, if a principal council is convinced that the formation of a company is unnecessary and is able to persuade my right honourable friend that that is so, any direction already given may be revoked.
There is no need for any such council to wait. The 16 airports to which my right honourable friend intends to give directions are well known. Those which feel that there are special reasons why they should be excused from forming a company need not wait until they receive a direction; they can make representations to my right honourable friend at any time. However, I am sure that my right honourable friend will need convincing reasons if he is to exercise his discretion not to require the formation of a company in any case which meets the requirements of Clause 13.
The noble Lord, Lord Underhill, in referring back to the previous amendment on the PTAs, said that there was going to be trouble with the principal council. I do not think that there is a difficulty because there are the cases when the PTA is classed as the principal council. I do not see any confusion arising there. The noble Lord, Lord Underhill, asked me which should be the lead authority. My answer to that is that we are happy to accept the majority decision at the time of discussion. I hope that that is helpful to the noble Lord. Our feeling is that this amendment is unnecessary.
Lord Tordoff: The noble Earl says that he is willing to accept the majority decision. The majority of whom? Is it the majority of the local district councils? If that were the case, that could be as unfair as the noble Lord, Lord Underhill, has just suggested. They could be all of one political persuasion.
The Earl of Caithness: As I understand it, the noble Lord is correct in suggesting that it would be the local district councils.
Lord Underhill: I do not think that the noble Earl has really answered the point of this amendment. Clause 12(1) reads:
"The Secretary of State may give to any principal council who control (whether alone or jointly with one or more other principal councils) … to which this section applies … a direction requiring the council to form a company".
It is left to him to decide. The point of the amendment is that all the principal councils by whom the airport is controlled should be advised of this direction. I have been criticised over words which we have suggested should be put in the Bill. Now we are told that the councils, if they wish to write to the Minister, can do so. There is no statutory right. There is also no
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statutory right that he shall notify them of any direction that he is going to give to a particular council. This is what the amendment is asking for—that he shall communicate his direction to all the authorities concerned and shall take into account representations made to him by any of those councils. If a decision can be a majority decision, surely the minority bodies, the minority councils, ought to have a right to submit representations if they wish.
I cannot understand why, on a simple matter like this, the Government cannot give way. A time comes when a government ought to give way on something that is reasonable and sensible. It appears to me that this is one of those cases where it will do a great deal of good if the Government say: "Yes, this is something that we ought to amend". Or, if the noble Earl cannot go as far as that, he ought to say: "This is a very sensible proposal. I cannot accept it at present but I will look at it and try to bring something forward at Report". If he will do that, I think it will be a sensible thing to do and, if I may say so, it is something which would meet with a lot of reciprocity on this side of the Committee.
The Earl of Caithness: I might not be able to go as far as saying that it is a sensible amendment. Of course I will look at it. The noble Lord can be assured that I shall. I cannot guarantee that I shall come forward with an amendment at Report stage. I shall look at this if that is helpful to the noble Lord.
Lord Underhill: In that case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 18 and 19 not moved.]
Clause 12 agreed to.
Viscount Davidson: I beg to move that the House be now resumed. I think it would be for your Lordships' convenience if I were to say that we shall not return to the Committee stage of the Airports Bill before ten minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Dental Auxiliaries Regulations 1986
7.7 p.m.
Baroness Hooper Baroness Hooper rose to move, That the draft regulations laid before the House on 14th April be approved. [19th Report from the Joint Committee.]
The noble Baroness said: My Lords, I beg to move the Motion standing in my name on the Order Paper.
The Dental Auxiliaries Regulations 1968 provide primarily for the setting up of rolls of dental hygienists and dental therapists and specify the kinds of work these two classes of dental auxiliary might undertake. The draft regulations now before your Lordships consolidate the amendments that have been made over the years to the 1968 regulations, and make a number of minor changes which are necessary in consequence of the Dentists Act 1984 and which

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involve simple up-dating of references and terminology. The General Dental Council have also taken the opportunity to introduce some other, relatively minor, amendments, particularly to Regulations 23 and 27, which set out the dental work which dental hygienists and dental therapists are permitted to undertake. I will refer briefly to these.
The first relates to the question of advice on matters of oral hygiene. Dental health education is important and of benefit to the community at large; it is undertaken not only by dentists, but by other health professionals and others with no dental background. In these circumstances, continuing to define in these regulations the giving of advice on matters relating to oral hygiene as "dental work permitted of a dental hygienist or a dental therapist" would perpetuate an anomaly and would discriminate against qualified dental auxiliaries because they would only be able to give oral hygiene advice under the direction of a registered dentist. The new regulations before your Lordships avoid this difficulty by omitting any reference to the giving of advice on oral hygiene from the list of dental work that the dental auxiliaries can do under the direction of a dentist.
A further change clarifies the circumstances under which analgesia and anaesthesia is administered to patients being treated by a dental therapist. I am incidentally advised that the General Dental Council are of the view that "local infiltration analgesia" is now the correct term in preference to "local infiltration anaesthesia".
The change to which I referred is designed to rectify the anomaly arising under the existing regulations whereby a dental therapist can remove deciduous teeth under local infiltration analgesia but cannot use the same technique when undertaking simple fillings. At the same time the opportunity has been taken to allow a dental therapist to undertake simple fillings, the scaling of teeth and the application of approved prophylactic materials under local infiltration analgesia administered either by himself or in most cases, herself, or under a local or regional block analgesia administered by a registered dentist.
The regulations have been prepared in draft by the General Dental Council and approved by the Privy Council in accordance with the requirements of Section 45(9) of the Dentists Act 1984. Before the regulations are made, this section of the 1984 Act requires the approval of your Lordships' House to the draft. These regulations consolidate and bring up to date a number of separate instruments dating back to 1968. They also clear up a couple of anomalies in the present regulations. I therefore commend them to your Lordships.
Moved, That the draft regulations laid before the House on 14th April be approved. [19th Report from the Joint Committee.]—(Baroness Hooper.)
Lord Ennals: My Lords, may I very briefly welcome the statement made by the noble Baroness in clarifying the statutory instrument. I have no worries about the statutory instrument. In fact, I congratulate not only the noble Baroness but also the draftsman, because I actually find the wording possible to understand.
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This is a consultation measure, as was said. We are doing little more than updating and clarifying at the same time, since it has the support of the General Dental Council and the Privy Council. I make no complaint of the fact that, as a Privy Counsellor, no-one consulted me about this. This is one of the facts of life that one just has to accept.
I warmly welcome the emphasis given not only in the document but by the noble Baroness to dental advice. That is most important. I also welcome the fact that dentists are increasingly, at regular intervals, normally every six months, calling people in to see that their teeth are in a good state.
I should like, if I may, to put two questions about the categories of dental hygienists and dental therapists. These are, to me, new terms, and are well clarified here. Can the noble Baroness tell me something about the training of these two categories and also give some idea of the numbers of dental hygienists and dental therapists who are serving under the direction of fully qualified dentists?
Baroness Hooper: My Lords, I thank the noble Lord. The training of both dental therapists and hygienists is governed by Part III of the new regulations. Questions of training are for the General Dental Council, which approves and inspects courses and examinations. Normally, the courses are held at approved medical schools.
So far as the number in each category is concerned, at 1st January 1986 there were 479 dental therapists on the roll. Incidentally, dental therapists may work only in a National Health Service hospital or in a community dental service under the direction of a registered dentist. Of dental hygienists, there were 2,074 on the roll at 1st January 1986. Their function is to clean, scale and polish teeth and apply prophylactic materials. Most of them are in fact employed directly by registered dental practitioners. I hope that information clarifies the position for the noble Lord.
Lord Ennals: My Lords, I thank the noble Baroness.
On Question, Motion agreed to.

Industrial Training Levy (Engineering Board) Order 1986
7.14 p.m.
Lord Lucas of Chilworth Lord Lucas of Chilworth rose to move, That the draft order laid before the House on 14th April be approved. [19th Report from the Joint Committee.]
The noble Lord said: My Lords, I beg to move that the draft Industrial Training Levy (Engineering Board) Order 1986 be approved. The order is before your Lordships today because one part involves a levy in excess of 1 per cent. of emoluments. It therefore requires an affirmative resolution of each House, under Section 12(6) of the Industrial Training Act 1982. I will outline in a moment the full details of the levy order.
Your Lordships will be well aware of the importance of the engineering industry, which is the largest manufacturing sector in terms of employment.

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Engineering output rose in 1985 by 5 per cent., the fourth consecutive year of growth. Mechanical engineering experienced its strongest growth since 1974, with output 6 per cent. above its 1984 level. If the industry is to build on these achievements then it is important that all firms play their part in training. We must ensure that employers continue to develop the skills of their workforce in order to increase productivity and growth.
The levy is expected to raise about £171·5 million, before taking exemption into account, and just over £19 million after exemption. The levy will cover a period of 12 months to 31st August 1986 and makes no changes to arrangements currently operating which were approved by your Lordships in July of last year.
The levy is in two main parts. First, in the mainstream engineering establishments a levy of 1 per cent. of emoluments is made in respect of establishments with 1,000 or fewer employees, of which 0·06 per cent. is non-exemptable. In larger establishments, 0.06 per cent. is non-exemptable in respect of the first 1,000 employees and 0·054 per cent. is non-exemptable in respect of the remainder.
For establishments in the mechanical and electrical engineering construction industry sector, the levy is in several parts. For off-site employees, no levy is payable by establishments of up to 30 employees. For establishments of more than 30 employees, 1 per cent. of total emoluments is payable, of which 0·15 per cent. will be non-exemptable. For site employees, no levy will be paid on the first £50,000 of emoluments: on emoluments over £50,000 a non-exemptable levy of 1·12 per cent. will be payable. That is the reason for the necessity for the affirmative resolution which is before us today.
Essentially, this means that the smaller employers, who have wage bills for site employees of less than £50,000 sterling, do not pay any levy; but where an employer's wage bill for site employees exceeds that amount he has to pay the full rate of levy of 1·12 per cent. on that part of the wages bill which is over the £50.000 limit to which I have referred. There is no reduction or indeed exemption from levy in respect of training carried out.
The employer and employee members of the Mechanical and Electrical Engineering Construction Industry Sector Committee jointly agreed to the levy unanimously, and the proposals were subsequently approved by the board without dissent. Letters of support have been received from the two major employer organisations in the sector. There is thus consensus in the industry for the proposals, as required by the 1982 Industrial Training Act. I therefore commend the order to your Lordships. It has widespread support and it is necessary to meet the perceived future training needs of the industry. I beg to move.
Moved, That the draft order laid before the House on 14th April be approved. [19th Report from the Joint Committee.]—(Lord Lucas of Chilworth.)
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for having outlined so lucidly the effect and the text of this order. If I may say
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so, it was explained with a great deal more clarity than was the case in another place a little while back when the broad effect of the order was not put forward as lucidly as the noble Lord has put it forward tonight; and for this we are grateful.
I have a number of purely technical questions to ask regarding the order itself and one or two general observations to make. But I shall constrict my remarks to the shortest possible time because I know that my noble friend Lord Scanlon, who is extremely expert in these matters, will do much more than I can possibly do to enlighten your Lordships on the impact or this order. I am not of course well versed professionally in this field.
I should like to start with one general observation on the whole impact of training itself. I have no doubt that the Industrial Training Act 1982, the text of which I have had the opportunity to examine, is designed in the main to ensure effective examination by the board itself of the training abilities and training potentials of the employers in this field, from which it follows that the greater the number of exemptions, the more efficiently in the view of the board the industry is functioning. This leads to the rather odd position of the noble Lord being able to inform us first of all or the gross yield of the levy, which of course is never levied at all because by far the greater amount of the employers in the country are themselves exempt.
I have to take as a reference period, as the noble Lord would expect me to do, the year 1978–79. I observe that the percentage of firms exempt by size has increased considerably. For firms with between 61 and 99 employees there are now 76 per cent. exempt, whereas it was formerly 37·4 per cent. For firms with 100 to 249 employees it was at the end of 1984 some 84.7 per cent. as against 56.1 per cent. And so the figures go on and show in each case that, at any rate in the view of the training board, there has been a progressive increase in the efficiency of what I shall loosely call for the moment "in-house training" by the firms involved.
This sounds extremely encouraging. If one looks further—I am referring now to page 57 of the accounts for the year 1984–85—one finds a very similar trend when one examines the percentage of employees. This follows, broadly speaking, the same upward trend.
It is here that I venture to enter a caveat in case we should become too optimistic on the basis of the observed results. I do not challenge for one moment the ability of the board and its expert staff to be able to assess the relative training facilities in force at the firms that come under its purview. In all probability the figures, unlike some of the figures produced out of the hat by the noble Lord, Lord Young of Graffham, bear some resemblance to the facts of the situation.
My caveat is this—and we come back to what are sometimes called unit labour costs, a term which at the moment does not appear to be perfectly understood by Her Majesty's Government, or at any rate by those of their spokesmen who honour us with their observations in this House. It is assumed that a rise in unit labour costs somehow reflects an increased remuneration of the employees. It is a term quite often used, particularly, if I may say so in his absence, by the noble Lord, Lord Young of Graffham, in conjunction

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very frequently with remarks such as, "We are paying ourselves more than we are earning". The irresistible inference which the House has been asked to draw is that because unit labour costs are rising this is somehow due to increased remuneration paid to employees and that this in some way affects British competitiveness.
I venture to use this opportunity, as we are meeting in comparatively tranquil and non-partisan terms today, to repeat the observations which do not yet appear to have sunk in. Unit labour costs are the result of two factors—not only the wage costs of the employee working on the machinery, but also the efficiency of the plant and machinery on which he works. If unit labour costs go up, it is not necessarily the result of increased wages paid to the employee, whether it is on an hourly or a bonus basis; it is also a reflection of the efficiency, or obsolescence, or increased efficiency, of the machine itself. Until that point is assimilated, particularly in conjunction with the fact that industrial investment in this country's manufacturing industry is still lagging way behind that in France, Germany and Japan, the true significance of unit labour costs will not be understood.
I have said this on at least three occasions. I have not been contradicted by any Member of the Government Front Bench on my analysis of the position as an accountant. I hope therefore in future that when the term "unit labour costs" is used it is used well within that qualification. Training is meant to improve the efficiency of the individual in being able to work the machines and the plant which it is his task to manipulate in order to produce objects of value, in order to produce manufactures and so on. We sincerely hope that, in order to match the obviously successful endeavours that are being made by the training boards themselves, some effort will be made by industry to modernise itself with far more efficient plant than it is able to do in many cases—not in every case—at the present time.
Having used this occasion to redeliver that homily, which I hope I do not have to present again, perhaps I may now turn to the order itself on which I have some questions. The noble Lord said that the levy was in respect of the year ended 31st August 1986, whereas the interpretation clause of the order at paragraph 2(g) refers to "the twenty-second levy period" which is the period between the date that this order comes into operation and 31st August. Therefore, on the assumption that the date that the order comes into operation is 1st June, the levy period appears to be not one year but three months. I shall be glad if the noble Lord can clear that up because it is important.
Paragraph 3(4) of the order states that:
"The levy assessed in respect of an establishment wholly or mainly engaged in engineering construction activities shall be the aggregate of—
(a) an amount equal to 1.12 per cent. of the sum of the emoluments of all site employees employed in the twenty-second base period at or from the establishment by the employer in so far as that sum exceeds £50,000".
The noble Lord has already given the explanation of that provision. I am just anxious to determine beyond all reasonable doubt what is the quantum of the levy. Is the quantum of the levy based on the emoluments
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within one year—as defined by the noble Lord—on 31st August, 1986, or is it limited by the duration of the base period, which, I hazard a guess, may be from 1st June to 31st August 1986, which is a period of three months?
I also ask the noble Lord to explain a point in respect of paragraphs 6(3)(a) and (b); the significance of the figures given there of the portion of the levy that is equal to 0.054 per cent. of the sum obtained by multiplying the average emoluments of any employee by the number by which the number of relevant employees exceeds 1,000. In the next paragraph, there is a reference to 0.06 per cent. within certain other conditions. I am of course familiar with the whole theory of marginal relief as it applies in the taxation statutes but I wonder what is the particular significance of the figures of 0.054 per cent. and 0.06 per cent.
I have only one further query. The policy of the Government as I understand it and as far as it has been articulated (and it is articulated in varying voices from time to time), particularly by the noble Lord, Lord Young of Grafiham, who, unfortunately, because of other duties, is not able to be here today, is that the Government believe in the future prosperity of the country resting to a very large extent on small firms.
I am unskilled in these matters, and my noble friend Lord Scanlon will probably be able to enlighten me if the Minister is not able to supply a reply. However, it seems to me that in exempting firms employing fewer than 40 people, we may be affecting the training that is given to employees in those smaller firms. The noble Lord probably has a perfectly good answer to that point. It just occurs to me as a matter of common sense that, if one rests one's economy, which apparently we are supposed to do now, on the ability of small firms and on the contribution that they can make to the nation's economy, which is a suggestion I would not query for a moment, then one ought to be attending to the training of individuals working for firms who employ fewer than 40 people.
After all, a man is a man, whether he is employed by a firm employing 40 people or by a firm that employs more than 1,000 individuals. He is still the same essential individual employed in the same trade, and so on. I wonder whether the noble Lord can enlighten the House further on that particular point.
Those points are not put forward in any contentious attitude towards the Government. They have already received the approval of all the parties concerned. After a very brief and singularly barren discussion in another place, they appear to have received approval there. We therefore approve them. However, I sincerely hope that the noble Lord will take steps to ensure that the annual report and accounts of the EITB for 1985–86 will be reproduced with some rapidity. On going through the annual report and accounts for 1984–85, I observe that most of the statistical material takes us only to the end of 1984. With the drive for extra efficiency and cost effectiveness that is so resolutely pursued by the Government, we could have a rather greater show of efficiency in the production of those documents. It is never very pleasant on this side of the House, which does not have all the resources of information that are available to the Government through their boards of

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statistical researchers. It would be helpful if we could occasionally be provided with more up-to-date particulars. Having said that, we wish the order well and we entirely support it.
Lord Rochester: My Lords, from these Benches I should like to join in thanking the noble Lord, Lord Lucas of Chilworth, for the clear way in which he has explained the order to the House and has told us why it is necessary to seek parliamentary approval for it. We are glad to know that representatives of both employers and employees support the amount of levy proposed.
I do not intend to use this occasion to widen the debate unduly but, like the noble Lord, Lord Bruce of Donington, I feel that I must say just a few words about the present general position concerning industrial training as I see it. The noble Lord may recall that, on a number of occasions since so many industrial training boards were disbanded under the Education and Training Act 1981, I have expressed disquiet about the absence of adequate national training standards, and I have canvassed the idea of introducing a national training levy, with remission of the levy to the employers to be conditional on their providing training conforming to certain specified criteria.
Various other proposals of the same kind have been put forward, all based on the proposition that a clear link has been established between adequate training and industrial success. One proposal favoured by my noble friends is a remissible tax system under which companies spending more than a standard payroll percentage upon their industrial training would have all the excess remitted to them from public funds. Companies spending less than the prescribed amount would have to pay a tax equal to their underspending.
A recent report commissioned jointly by the Manpower Services Commission and the National Economic Development Office, suggested, as the noble Lord will know, improved tax incentives to stimulate greater investment in training and a statutory requirement that companies should disclose in their annual reports how much they spend on training. I recognise that it is desirable that any such provision should take account of the quality as well as the quantity of training and avoid undue bureaucratic interference.
In my view, however, it is essential that the present unsatisfactory position should somehow be improved in order that we can keep pace with our main trading competitors. It is significant that the authors of the report to which I have referred themselves felt that if some of the things they suggested were not speedily introduced on a voluntary basis they might have to be enforced by statute.
From an answer given by the Secretary of State for Employment to a Question on the subject that I asked two weeks ago, I understood that the whole matter is now under examination. I have also been pleased to learn from the statement made by the Under-Secretary of State when the order was debated in another place on 28th April last that he had recently written to all the non-statutory training organisations previously covered by the industrial training boards
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that have now been disbanded, asking them precisely what they are doing at the moment. I shall be grateful for any further information that the noble Lord, Lord Lucas, can give the House about that consultation exercise. In particular, will he please confirm that its findings will be made known to us and will he tell us when this is likely to be done?
Subject to those important qualifications, and of course, to any telling points that the distinguished former chairman of the Engineering Industry Training Board, the noble Lord, Lord Scanlon, may put before us in a moment, we on these Benches are willing to approve this order.
7.45 p.m.
Lord Scanlon: My Lords, I welcome this opportunity to support this order. In doing so I should like to mention some of the achievements of the EITB. Achievements in training do not receive the banner headlines that disputes and other aspects of the engineering industry receive, so I think it is right and proper that we should use this opportunity of placing before your Lordships' House some of those achievements.
Almost from its inception the Engineering Industry Training Board introduced module training—that is, training to standards and not training to a fixed period of time. Unfortunately, at that time neither employers, trade unionists nor educationists were convinced of the correctness of such a policy. However, over the time that has since elapsed all have been converted to this principle.
I say "all" because my own union was the last in this line; but I am pleased to report—again, it received no banner headlines—that in April of this year the largest union within the engineering industry accepted this principle. This opens the way to really meet the challenge of new technology. It paves the way for multiskill training and it paves the way for the retraining which will be so essential for future generations. No longer will recruits to industry be faced with the position of one set of training in their industrial life. Indeed, three and perhaps four different sets of training will be necessary so rapid is the pace of new technology. It is this achievement of the EITB in bringing about the acceptance of training to standards that will, I hope, make these things possible.
There are many other achievements but time will not permit me to outline them. However, let me say that the field of small firms, mentioned by my noble friend Lord Bruce of Donington, is receiving attention. The unused talents of so many women who could make a contribution in this industry, particularly in the new technologies, is not wasted on the EITB.
Lastly, I mention its work in the mechanical and engineering construction section which is responsible for the building of power stations, chemical plants and offshore oil rigs. It has introduced a national training scheme in spite of geographical and other difficulties. Indeed, it is that industry which, perhaps more than any, is responsible for this order which your Lordships are presently considering.
These, then, are some of the achievements of the EITB, but industry as a whole will be facing many challenges in the coming years. Not the least of these

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challenges is the massive decline in training over the past few years and the resultant skill shortages which will take place. Let me give your Lordships some facts and figures. Since 1978 training in the engineering industry has fallen by three-fifths, while management training—which after all is responsible for the good conduct of industry—has been cut by four-fifths. The number of technicians under training has been cut by half. The only occupational category in which training has increased is the critical category of professional engineers, scientists and technologists; but even here the 5 per cent. increase in those under training has to be set against the approximate 44 per cent. increase in the numbers in this category which will be necessary to meet the challenge of the future.
Apprentice recruitment has declined from around 25,000 in the mid-1970s to about 9,000 in the 1980s. Although much of that fall was to be expected because of the overall decline in employment, apprenticeships have declined far more rapidly than employment has declined. Before any of your Lordships say that this does not matter because of the YTS, let me say that the figure of 9,000 includes those trainees on the YTS who are undertaking engineering training. The result of this massive decline in apprentice recruitment is that not enough craftsmen and technicians are being produced. Skill shortages over the next few years are an absolute certainty and I am afraid that the most likely places to be affected in our country are those places where high-technology industries are concentrated.
Already there is plenty of evidence that skill shortages are beginning to affect British industry. At a time when there are nearly 4 million people unemployed, such skill shortages are holding back output, thwarting opportunities to develop new products and processes and stunting growth opportunities. A recent survey by the CBI and the MSC showed that one in seven manufacturing firms are expecting skill shortages to limit output. Among mechanical engineering firms, one in four said that skill shortages were limiting output. These shortages included professional engineers, machinists, technicians and electrical, electronic and mechanical fitters. There is no need to go further in this category because your Lordships' own Sub-Committee on Science and Technology, together with ACARD, have consistently brought before the House the importance of devoting time and resources to meet this anticipated shortage in all sections.
The implications have already been shown in a study by the National Institute of Economic and Social Research and if we leave our own examinations and consider the position with our industrial competitors the picture is even worse. The gap between ourselves and West Germany on training averaged a 63 per cent. German advantage over our training position. The most important reason for this was not lack of modern machinery but lack of technical expertise and training in Britain relative to Germany.
Finally, this question of training must be contrasted with the state of our whole manufacturing base. If we are to survive at all as a nation I submit to your Lordships that it can only be on the basis of a viable manufacturing base in which the engineering industry plays a predominant role. Within the engineering
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industry training is an absolute must to meet this challenge. It is with those aspects in view and in the hope that the EITB will be allowed to continue its role which, in my submission, it has so adequately fulfilled in the past, that I am pleased to support this order.
Lord Lucas of Chilworth: My Lords, I am most grateful to all three noble Lords for their reception of the order which I have put before your Lordships' House this evening. I do not quarrel with the fact that we have in this last 45 minutes or so moved into some rather wider areas, but I think that noble Lords will not expect me to pick up every single point as perhaps one should like to do in a debate on training in industry. However, there are a number of points on which I think the House would wish me to comment.
The noble Lord, Lord Bruce of Donington, does himself an injustice; I have not known the noble Lord to come to the Dispatch Box opposite without being very well versed in the matters that he intends to discuss. I should like to pick up one particular point that he made when he took some little time to discuss with us his views about unit labour costs, because when he and I have discussed this matter on previous occasions I think he would accept that I have always agreed that wages in fact are one contributory factor, but that there are others. I am sure that he will understand, in the light of today's report, which suggests that in fact wages are 8 per cent. higher than they were last year—against a background of a falling index for retail prices and the big fall in inflation—that one does not wonder why so much emphasis is put on the labour content of that cost.
Lord Molloy: My Lords, perhaps the noble Lord will forgive me for interrupting him, but we are not quite sure whether he said 8 per cent. increase in wages or 80 per cent. I think many noble Lords on this side of the House should like to know precisely what he said.
Lord Lucas of Chilworth: My Lords, I said 8 per cent. I have to say also that against that fact in the engineering trades and industries manufacturing output, investment, profits and indeed exports are all increasing. Output itself was some 6 per cent. higher than in 1985. In mechanical engineering there has been the highest annual growth since 1974. So I think it is not unreasonable to suggest that the industry is doing well and making its contribution.
The noble Lord, Lord Bruce, asked me specifically about the report and accounts for 1984–85 in relation to the number of firms exempted by size. I do not think that that indication of the number of firms gives quite the right guide to the volume of training that is being carried out. As the noble Lord, Lord Rochester, said, my honourable friend in another place, the Parliamentary Under-Secretary of State in the Department of Employment, has undertaken a review of the non-statutory training organisations to see exactly what has been achieved. Certainly I do not anticipate that my honourable friend in another place will expect to wait too long before drawing conclusions. Such conclusions will be made available to interested parties.
The noble Lord, Lord Bruce of Donington, also asked very specifically about the time period. This

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refers to the 12 months ending on 31st August. In fact the training levy amounts are coincidental with the academic year, while the governmental financial year is a different year, and the annual report and accounts are again different. I am sorry for that confusion, but I think that puts the record fairly straight.
A number of your Lordships mentioned the board itself. Perhaps I may remind your Lordships that the board was reconstituted in July 1985 for three years. We are awaiting a further appointment to the board to replace Mr. Terry Duffy, whose death sadly depleted his own union, the engineering industry and indeed this board. We hope that the Confederation of Shipbuilding and Engineering Unions will shortly make their choice for a reappointment. It is important that I mention the board because it has done rather well. It has introduced its new corporate plan which will be launched in a matter of weeks, and I think that this will give the noble Lord, Lord Bruce of Donington, some answers to the kind of questions he raised with regard to the figures in respect of training and so on. Certainly we—that is, the Department of Trade and Industry—are extremely pleased with the vigour that the new board has exercised since its appointment.
The noble Lord, Lord Rochester, raised the point of a national training levy. We have never felt convinced that this would be the best way forward. We believe that a national training levy would involve additional financial burdens for firms. It would certainly increase the amount of bureaucracy and I think that it would reduce the direct influence of employers on training that is currently being carried out.
While I am on the question of training, of course I recognise the points which the noble Lord, Lord Scanlon, made about skill shortages in engineering; but I would point out that overall the skill shortages remain at a relatively low level compared with previous economic cycles. Training and retraining of staff is now one of the major methods used by firms to overcome shortages. Though the board forecasts a shortfall in craftsmen and technicians, its corporate plan will be developing detailed action plans to help overcome these shortages. In particular, the board has committed £1 million to a grant programme designed to help in alleviating shortages in high technology key skills; and £200,000 has come from the MSC.
We recognise, as does the noble Lord, the importance of women in engineering and the great contribution that they can make. Of course it is a theme which your Lordships will recognise as coming from everything that all of us have been saying this year, which is Industry Year. The Engineering Industry Training Board proposes to use the YTS scheme to secure support for the first two years' initial training for 800 additional technicians and 500 craft trainees.
The board has also introduced an advanced technology task force—a new field force—which will be able to give quite positive help to firms in those areas over which they have been criticised for some little while. I remain quite convinced that, in accepting the Motion in my name, your Lordships will give the boards and indeed the industry further and greater
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encouragement themselves to invest some of their own profits in further training and, importantly, retraining, because, as the noble Lord, Lord Scanlon, said, it is upon those skills that our very future in engineering depends.
I hope that I have commented quite adequately in those last few minutes on the various issues that have been raised. I commend this order to your Lordships.
Lord Bruce of Donington: My Lords, I shall not press the noble Lord further in view of the time, but when he examines the Official Report tomorrow he will find that I asked a number of detailed questions with which he has not found it convenient to deal. As I say, in view of the time I wonder whether he will look in Hansard at the specific questions and references and will kindly reply to me by letter so that my files may be put entirely in order and I may have the complete picture from the Government's standpoint.
Lord Molloy: My Lords, may I also ask the Minister whether at some stage he will take up the point which my noble friend Lord Scanlon made and which has caused apprehension among those of us interested in the EITB—even long before it was established? For example, it appears that the German and sometimes the French equivalents of our training board seem to have more assistance and to be doing a more efficient job. That is a genuine reason for concern on both sides of the House.
Lord Lucas of Chilworth: My Lords, I apologise to the noble Lord, Lord Bruce, if I did not answer specifically a number of his detailed points. I shall look through Hansard, write to him in detail and, as is the convention in your Lordships' House, place a copy of the letter in the Library.
I say to the noble Lord, Lord Molloy, that I shall look at what was said and will comment in greater detail in a letter. But sometimes I am a little wearied when comparisions of a rather general nature are made with France, Germany or elsewhere, where conditions are very different. Their education system is different. Let me say this. In government we are sufficiently concerned to encourage more schools to adopt technology in their curriculum, thereby at an earlier stage introducing it for the consideration of young people. They may then take up the great opportunities that there are in our engineering colleges, polytechnics and universities, and thereby overcome to some extent the concern that the noble Lord raises. Noble Lords should not feel that that is a point that is ignored, although sometimes I find it difficult to match the comparisons.
On Question, Motion agreed to.
Lord Brabazon of Tara: My Lords, I beg to move that the House do now adjourn during pleasure until 10 minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.2 until 8.10 p.m.]

Airport Bill
House again in Committee.
Clause 13 [Airports to which s. 12 applies]:
Lord Underhill Lord Underhill moved Amendment No. 20:
Page 11, line 7, leave out from ("if") to end of line 10 and insert—

("(a) the annual number of passengers passing through the airport exceeded 200,000; and

(b) the annual turnover of the business carried on at the airport by the airport operator exceeded £2 milion;

in the case of at least two of the last three financial years ending before the relevant date.")
The noble Lord said: This is an important amendment, and the fact that Clause 13 appears in the Bill at all indicates that the Government accept that the benefits they consider will accrue from company formations do not apply to local authority airports. The clause is based on the assumption that company formation is not applicable to the smaller local authority airports. The Under-Secretary of State, Mr. Michael Spicer, said that the line must be drawn somewhere and that it was a matter of judgment. There is no real formula for determining this matter; it is a matter of judgment.
The question that the amendment seeks to address is whether the judgment the Government have made about where the line must be drawn is acceptable. The annual turnover threshold of £1 million which is contained in Clause 13, as drafted, would mean that local authorities responsible for 16 airports would have to establish airport companies. The airports are, Birmingham, Blackpool, Bournemouth, Bristol, Cardiff, East Midlands, Exeter, Humberside, Leeds-Bradford, Liverpool, Luton, Manchester, Newcastle, Norwich, Southend and Teesside. The effect of raising the threshold to £2 million, as is suggested in the amendment, and including additionally an annual passenger throughput of 200,000, would reduce that number to nine. The nine left would be Birmingham, Bristol, Cardiff, East Midlands, Leeds-Bradford, Luton, Manchester, Newcastle and Teesside.
The clause is of central importance to the operation of Part II and yet to date there has not been a great deal of parliamentary debate about it. The Under-Secretary of State said in Hansard (col. 346):
"I believe that we have the turnover about right. A £1 million business is substantial. Such a business will have an average of 45 employees and a throughput of about 100,000 passengers. If we raise the threshold … we shall introduce more distortions".
The number of local authority airports convered by Part II must be significantly reduced from the list that I gave. The first reason is that the costs of forming a company are likely to be considerable. Authorities will have to buy in specialist legal, financial and administrative skills. Even in the case of the smallest of the airports which will be caught by the thresholds contained in the Bill the cost is likely to be about £50,000.
The second reason is that company formation could affect the viability of local authority airports. That is because of the revised accounting requirements involved and the changed tax liability. In addition to questioning the level of the turnover threshold, we have reservations about the use of a turnover figure and whether it is an acceptable criterion for determining whether an airport authority should have
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to establish an operating company. Turnover does not necessarily reflect profitability.
The number of passengers using an airport each year is a far more simple and direct measure of its size and viability. Ministers criticised an amendment tabled in the other place which was designed to achieve that on the ground that it ignored freight and general aviation. If noble Lords look at the amendment, they will see that it is intended to overcome that criticism by combining turnover and throughput figures. That seems to be more realistic than the Government's proposals, and I hope that the Government will see their way to accepting the criteria. I beg to move.
Lord Foot: I respectfully agree with the noble Lord, Lord Underhill, that this is an amendment of considerable importance and I should like to explain how the clause and the amendment will operate in the case of Exeter airport. Exeter airport is owned by Devon County Council, and the council has been concerned as the Bill has been going through Parliament as to what the outcome will be for Devon and Exeter airport. It still does not know whether the Secretary of State will exercise his discretion provided in the Bill as it now stands with regard to a threshold of £1 million turnover and make a direction to the council with regard to Exeter airport. The council is worried as to what the situation will be if he does.
Earlier the noble Lord, Lord Underhill, rightly said that all these airports have different problems. It may be wrong to try to fit them all into the same framework, as the Bill does.
Perhaps I may draw the Committee's attention to four of the matters which are of interest to Devon Council and Exeter airport. There is no doubt that it is the council's wish that it should not receive a direction and have to form a company to take over the management of the airport if it can be avoided. As the noble Lord, Lord Underhill, said, under the £1 million turnover threshold contained in the Bill Exeter will fall within the definition contained in Clause 13 and will be liable to receive a direction. If, on the other hand, the amendment is carried, Exeter will not fall within the Bill's embraces and the council will be able to continue to manage the airport as it has been doing. There is no doubt that Devon County Council wishes to carry on as before.
There are four reasons why this matter is of special interest to Devon. The first is that so far as I know no one has made any serious criticism of the way in which the airport has been managed and run since it was taken over from the Ministry of Defence in the early 1970s. The second reason is that Exeter airport today is only just over the £1 million turnover threshold and if the threshold can be raised to £2 million with the additional condition of throughput, it will escape. Although it is above the threshold of £1 million, it is still a small undertaking. It is implicit in Clause 13 that it is not appropriate to insist upon setting up a company in the case of small undertakings. As the noble Lord, Lord Underhill, has said, it is a matter of judgment and deciding where to draw the line. Clearly, however, the Government are committed to the principle that if an undertaking is small enough there is no call for the radical measures contained in Clause 12. Those are two of the considerations.

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A third reason is this. Over the past few years Devon County Council has completed a series of capital developments at a cost £3.3 million. The cost of servicing that loan debt is no less than £350,000 a year. The county council entered into that commitment with its eyes open, knowing that it would mean that, for some years to come, the income derived from the airport would be quite insufficient to meet the service of the loan. It did so with the clear intention and in the belief that with the passage of time—in a few years' time—the airport would move into profit and that it would then be able to deal with the loan.
The county council is now in complete doubt as to what will be the situation in regard to the loan if the Secretary of State directs it to form a company in compliance with Clause 12. The noble Earl said earlier, if I recollect correctly, that we would come to the question of dealing with liabilities at a later stage of the Bill. That is, of course, right. There is an amendment down on that subject. But as matters stand the Devon County Council is completely in the dark as to what its situation is going to be.
Possibly the most important consideration of all is the fact that from the time the Devon County Council took over the airport in the early 1970s it has employed and has had a contract with an independent company that has managed the airport on the council's behalf. An arrangement of that kind has existed throughout the whole period. The independent company with which the county council is at present engaged is British Airports International. That is an entirely independent company. The arrangement is that British Airports International manages and runs the undertaking and that it and the council have a share in the profits. What the county council has done is, therefore, largely what would happen if it was given a direction. It has already contracted with this independent company for the management of the concern.
I suppose, therefore, that it has already gone a long way to meet the wishes of the Government in this regard. But it would be an almost impossible situation if the Secretary of State was to issue a direction that it should form yet another company and that that company should be interposed between the county council and the management company that is already in operation. If that was done, not only would it be an enormous complication but it is also difficult to see what function the new company would perform other than that it would be the holder of the freehold of the airport itself.
Those are some of the considerations that have been worrying the Devon County Council. I understand that while the Bill was passing through the other place efforts were made on behalf of the county council to try to find out from the Government what intentions the Secretary of State might have with regard to Exeter. Clause 12, as I understand it, gives the Secretary of State a discretion as to whether or not he will issue a direction. The fact that it falls within the definition of Clause 13 does not automatically mean that the airport concerned is going to be made the subject of a direction. Those efforts were made, but, as I understand it, we were not able to get any confirmation from the Government as to what intentions the Secretary of State may have with regard
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to Exeter, if indeed he has formed any intention up to now. If the noble Earl can give me any enlightenment this evening, I shall be very much obliged.
Baroness Fisher of Rednal: I am not intending to speak about Birmingham airport. I have, however, been approached by Humberside, which is in a very difficult position. Humberside has tried to expand. To a certain extent, this expansion depends upon the servicing of helicopters and aircraft flying back and forth to North Sea rigs. Humberside is very concerned that a small organisation, as it is, will be caught in a crossfire and be unable to afford to set up a plc, which would involve it in an estimated debt of £250,000. This is a considerable amount when one takes account of the size of the airport.
Humberside supports this amendment, giving it perhaps an extra three or five years to continue growth and development. At present, it is at a critical stage of evolution. I understand that the erection of an hotel had been agreed on the site of the airport to be funded by private capital and intended for weekend stays by those working on the rigs. The developers have now pulled out because of fears that, under privatisation, Humberside airport will not be viable. That is rather unfortunate.
Another point is that Humberside is a region able to claim EC grants. There is now an urgent need for these grants in order to extend the runway. It is concerned that on becoming a plc the airport is more likely than not to come out of the categories that are allowed to receive EC grants. Humberside views that again with some dismay. It is concerned that it will be in a very serious position if this amendment is not carried. No doubt the noble Lord the Minister will have some observations to make.
8.30 p.m.
Lord Tordoff: I am grateful to my noble friend Lord Foot for illustrating the Exeter position so well. I agree very much with the noble Baroness, Lady Fisher of Rednal, in relation to Humberside.
It seems to me that the group of airports to which reference was made by the noble Lord, Lord Underhill, forms a separate category. When we look at the pattern of airports in this country we can see that there are the major airports which are in British Airports Authority control at the moment and will remain with them. There are the other major airports—the nine which were referred to by the noble Lord, Lord Underhill—some of which are regional and some partly regional and partly international, such as Manchester and Birmingham. But then there is this group of much smaller airports which are there because of the courage of the local authorities in taking the risk to put money up as part of their investment in their own locality and in trying to improve the infrastructure and communications of their own local area. They may not in the short term be viable. It may be that the risk will not pay off. But at least these areas have taken the risk to invest in their own areas and many of us believe that they should be given the opportunity to succeed if they are going to succeed.
It seems to me that that is what this amendment is concerned with. It is trying to set a level at which this group of airports is allowed to mature—or indeed

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perhaps to fail. They should not be exposed to the total winds of free competition, to the total operation of market forces, until they have had a chance to see whether they can succeed. That is what we are trying to provide for in this amendment that is before the Committee at the moment.
Exeter, Blackpool and Humberside are very good examples of this with different objectives in mind. I referred to the airport at Blackpool at Second Reading. This is again a case where the airport is servicing the rigs in Morecombe Bay and the Irish Sea. Left to the pure interplay of market forces it would probably not succeed. If the airport is privatised the local authority is left not only with the debt based on the risk capital that it has already invested, save only so far as the Government are prepared to offset that—and still do not know until a later stage of the Bill how much that is the case—but also with the very large costs of forming a plc. These are quite high, and could be crippling with regard to local authorities which are already suffering from spending restraints from theTreasury.
We are asking the Government to step back a little from taking the view that everything that is good is private and everything that is bad is municipal or nationalised and to look at these things in a slightly different light. We are asking them to say, "Here is a group of airports which ought to have the chance of showing whether they can perform or not". If the limit is £1 million, most of them will be caught within this network and may very well find themselves not acceptable in the private sector. The local authorities may find themselves carrying debts which they thought were investments. In the case of Exeter in particular it may find itself having to renege on a contract with heaven only knows what consequences in terms of compensation that may have to be paid by the ratepayers of that great city.
I therefore hope that the Government will look sympathetically on this amendment. It may not have precisely the right wording. It may not be precisely the right amendment or be at the right level. But if we can consider airports in three categories—the great national airports, the great regional international airports, and the smaller local authority airports—then the third category needs to be treated rather more gently than this Bill treats it at the moment.
The Earl of Caithness: As Clause 13 is at present drafted, 16 airports are within the scope of the £1 million criterion. The proposed amendment, if put into effect, would, we believe, exclude from the provisions of Clauses 12 and 14 six airports, not seven. I shall come to that in a moment. We believe that the six excluded are Blackpool, Bournemouth, Exeter, Humberside, Norwich and Southend. As I understood it, the noble Lord, Lord Underhill, believed that Liverpool would also be excluded. However, looking at the latest figures I have available, the passengers going through the terminals at Liverpool were 227,800, and with a turnover estimated of £6·1 million I believe that it would be caught even by the scheme of the noble Lord. Does he have different figures from me? I do not want to get into too much detail at this point.
Lord Underhill: I am grateful to the noble Lord for asking me that. I can only go on the information provided to me. Bearing in mind that the amendment refers to,
"in the case of at least two of the last three financial years",
one would have to check that to see whether it meets the criterion of the noble Earl. However, we would have to seek advice on whether or not Liverpool meets the £1 million figure. My information is that it would be excluded.
The Earl of Caithness: That alone highlights the problem which I mentioned at Second Reading, that wherever one draws the line one has a problem.
All the airports I mentioned have passenger traffic of 100,000 to 150,000 passengers a year and directly employ between 40 and 90 people. Some of them—Bournemouth in particular—also have quite substantial cargo traffic. They are not, then, negligible businesses. The noble Lord, Lord Foot—whom we welcome to our discussions on airports—said that they were small. I believe that there are many companies which are benefiting from privatisation and being able to raise money on the market smaller than these airport companies employing between 40 and 90 people.
Perhaps I may deal with some of the points mentioned by the noble Lord, Lord Foot. Because there has been no specific criticism of how the airport has been run to date, that must not blind the noble Lord into thinking that is the right way to proceed for ever. I hope that he, with a liberal mind, would see that matters can always be improved and that doubtless the Government's way is the right way to proceed.
The noble Lord also said that the Devon County Council were in the dark about the future; and asked what the Government were going to do. We should turn the question round and say, "Come on, Devon County Council, come forward and talk to us", which they are doing. It is up to Devon County Council to put forward their proposals. If they have proposals which can convince my right honourable friend the Secretary of State that Exeter should be excluded from the provisions of the Bill as they now stand, then we shall listen to them.
The noble Lord also said that one reason for excluding Exeter was because it is contract-managed by British Airport's International. I think that there are still advantages in the Government's requirements. The basic philosophy is that we want to get airports at arm's length from councils. I think that is right. There is no requirement for Devon County Council to have Companies Act accounts and there are also the directors' responsibilities which will be required in the future. There are certain advantages in that.
The noble Baroness, Lady Fisher of Rednal, mentioned the case of Humberside. The noble Lord, Lord Tordoff, mentioned Blackpool, as he did on Second Reading. We are aware that when an airport is oil-related it is rather different because it can fluctuate. Indeed, few predicted the dramatic reduction in oil prices which must have an effect on an oil-related airport. Indeed, there is a noticeable change at Aberdeen, but we hope that it will not last and that Aberdeen will pick itself up again. However, that is

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one of the points that will undoubtedly be looked at when the airports submit their schemes under the Bill. We shall look very carefully at the situation. We are not immune to arguments on those fronts.
The noble Baroness asked about EC assistance. As I understand it, they will not lose their assistance provided there is majority control by the local authority. Therefore, as I understand it, they could dispose of 49 per cent. of the shares (still retaining 51 per cent.) and still benefit from EC provisions. As regards the hotel development, we were not aware that there was a definite proposal, but we heard that it was in the offing. Without knowing the full details of the situation, it would seem more likely that another effect rather than that of privatisation caused the developer not to proceed to any concrete terms.
I highlighted earlier the problem of drawing the line. If we look at the list of airports, we find that, on the figures which the noble Lord, Lord Underhill, mentioned, we automatically have a problem as regards Liverpool; whereas on the figures produced by the Government and the £1 million threshold, which is nice and simple, there is quite a gap down the league to, I think, certainly Coventry which has a turnover of about £500,000. Therefore, there is quite a large gap below the £1 million figure which the Government have in the Bill at present.
As a result the Government are convinced that those companies—substantial companies—with a turnover of £1 million or more will benefit from being placed in a Companies Act environment and subject to the normal disciplines of companies. We believe that that will benefit the airport companies concerned and that they will provide sharper and more commercial attitudes—something of which I would hope Devon County Council would approve. That will be of benefit to the ratepayers, the regions, air travellers and the airlines themselves.
Another point which we must bear in mind is that as it is a basic philosophy of the Government to move airports outside of political control I can foresee a situation where a particularly politically dominated council would seek not to expand the airport—which would then bring it within the purview of Lord Underhill's criteria because it would be just below the level—and that would be detrimental to the ratepayers and the air travellers. We must bear that in mind. Therefore, I cannot agree to the amendments.
Lord Tordoff: I am sorry, but the noble Earl's last remark is quite unacceptable. To assume that local authorities have so little regard for the economic structure of their local area is grossly unfair to them.
The Earl of Caithness: I certainly did not say "all local authorities"; I was very specific in saying a "politically dominated" local authority.
Lord Tordoff: I have the feeling that all local authorities are politically dominated. It may be that there are those who believe that if they have a Conservative administration it is non-political, but that is not a view which I take.
I talked about there being three categories, and the noble Earl has referred to a fourth division. If the
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Government insist on going down what is essentially a dogmatic road, they will push a great many of the third division people down into the fourth division. In my view the plcs will, frankly, not be able to sustain a number of these airports about which we are talking in the third division. They are there today because local authorities and local communities have had the courage to invest in their own airports in a way which some others have not. If that is taken away, many of these airports will decline and possibly go out of existence. That will be to the detriment of the whole economic environment of the area concerned.
I believe that the Government should think again. Will they please, just for a moment, drop their manifesto and accept that it is not always better all the time to have everything privatised, that there are times when there are other ways in which to finance and direct matters other than totally through the private sector?
The level which the noble Lord, Lord Underhill, has proposed of £2 million has some sense in terms of the kind of delineation to which I have referred. I hope that the Government, even at this late hour, will be prepared to think again and lift the threshold from £1 million to £2 million.
8.45 p.m.
Lord Underhill: I appreciate the support which other noble Lords have given to the amendment. Apart from not understanding what the noble Earl really meant by politically dominated local councils (because even hung councils are dominated by political parties), I cannot understand also the statement which is repeated time and time again by Ministers in connection with the Bill; namely, "We want the local airports to be at arm's length from local councillors". Have we no faith at all in local government? This seems to be a matter which comes up time and time again with this Government in one piece of legislation after another. They really have no faith in local government.
I shall not mention Liverpool because we have to check the figures. However, those that will be excluded by the amendment will be Blackpool, Bournemouth—a solid socialist-dominated area—Exeter, Humberside, Norwich, and Southend. I have met the representatives of a number of those bodies. I have attended various seminars of the Joint Airports Committee of Local Authorities (JACOLA). One matter which has emerged—and I mentioned this on Second Reading—is that irrespective of politics, local authorities are proud of the development of their airports and what they do for their community, trade, general interest and maybe tourism as well.
Therefore, let us put on one side the question of the airports being at arm's length from local authorities or political domination. The noble Earl has admitted that it is a matter of judgment. I believe, from the speeches that we have heard from other noble Lords in support of the amendment, that the local authorities concerned have to make a judgment as well. It is interesting to note that subsection (3) says:
"The Secretary of State may by order substitute for the sum for the time being specified in subsection (1) such greater sum as may be specified in the order".

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It may be argued that is done merely to cope with inflation. However, the Government provide that the figure can be increased if the Secretary of State should so decide by order.
We are saying that before the provision comes into operation, not only should the figure be increased, but also there should be the additional criteria concerning the 200,000 passenger throughput. I hope that the noble Earl will take a careful look at what he has said. I am certain that the local authorities will listen very carefully to what he said about not being immune to listening to them. I hope that every one of the local authorities concerned, whatever eventually happens to this clause, demands to see the Minister to give him firm reasons why he should change his proposals.
The question is—and this was referred to on previous amendments—whether the Minister is prepared to listen or whether he has fixed ideas because of the dogma that it is far better to have what he calls an "arm's length" approach, and that a company will mean that there will be far more effective control than there has been up to now through an appropriate committee of the council.
We shall look carefully at what the noble Earl has said. I hope that he will take note of the points made here. We shall decide whether or not to come back on Report, perhaps with the same amendment with some further figures because they may be important. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Tordoff Lord Tordoff moved Amendment No. 21:
Page 11, line 16, leave out from ("year") to ("but") in line 17.
The noble Lord said: It may be for the convenience of the Committee if we discuss Amendment No. 22 with this amendment. Regardless of what level is finally set, whether it is £1 million or £2 million, or some other threshold, this amendment is intended to exclude grants to an airport from the definition of turnover. It is necessary because in many cases the grant is payable for non-commercial reasons, such as the airport's role in local economic development. We have talked about local economic development already; but that is the sort of non-commercial reason for which grants may be payable.
We consider that as a matter of principal grants should be excluded from the calculations involved in determining whether or not an airport should be subjected to the provisions of Part II. These two amendments are as simple as that, and I hope that the Government will accept them on that basis. I beg to move.
The Earl of Caithness: The definition which these amendments seek to change is important because it sets out what must be included in the threshold criterion which in turn determines which local authorities shall be required to form airport companies. We selected annual turnover because, all things considered, it was the best indicator available of airport activity.
It is a matter of fact that some airports need a subsidy from their parent authorities—regrettable, but we recognise that for some this may be necessary for some time. However, any subsidy (or, as the Bill describes it, "Grants from any public or local
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authority") does represent, in the same way as and together with other revenues, activities of the airport in question. It is therefore proper to include such subsidies—or grants—in the definition of annual turnover.
I think I understood what the noble Lord, Lord Tordoff, was saying—I hope I did. I shall read his remarks. But he has not convinced me that there is a good case for excluding grants in this instance.
Lord Carmichael of Kelvingrove: I should like to support the noble Lord, Lord Tordoff, on this amendment. I am disappointed that the Minister has fallen back on the narrow definition including grant as part of the turnover. He conceded that some airports would require grant or subsidy from the local authority. It struck me then as being unfortunate that he did not give them any credit for making this subsidy.
If he thought about it he would realise that many of the smaller airports started by a seeding grant from the local authority because of local pride and because of a feeling that they needed an airport to give more accessibility to the area. That was one of the reasons when Blackpool airport started. It was not started for oil (nobody thought of oil) but it was started because people felt that Blackpool had to have as many communications as possible. Whatever we say about Blackpool, they have been extremely progressive in attracting tourism and visitors.
The Government are missing the whole point of local pride in the airport, and the importance of the airport to the community, which far outweighs the relatively small grant frequently made from the local authorities. It is vital to the local community and the whole feeling of pride. It is almost like the money spent on advertising. It comes into the same category, although in many cases—and everybody hopes in all cases—it will gradually build up as aircraft become more plentiful and become more spread out throughout the country.
As with places like Blackpool, they will get closer to the black than the red. I hope that the Minister will look at this carefully. It is an amendment that has a great deal of feeling behind it from the local authorities, and I hope that the noble Earl will think once more about it.
The Earl of Caithness: I wonder whether it would be helpful if I said another quick word here without delaying the Committee. It is the Government's intention that when the local authority airport companies are set up, they will be viable enterprises. We do not foresee the situation where we are creating an entity purely for it to go down. That would be entirely wrong, and that is contrary to what we propose.
We are therefore conscious that when creating a new airport company it should be given every chance to succeed in the market and to attract more business and to improve. I think I have also got to say that a grant is a proper measure of activity, and included as such we believe that it must be taken into account in these criteria.
Lord Tordoff: May I delay the Committee for a second while we look at this question of the sort of

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airport we are talking about. We are talking about places that have grown up over a number of years. They have perhaps been private clubs in some cases. They have perhaps been old military airfields in some cases. They have perhaps been non-airfields that have been converted into airfields. They have been brought to the level that they are at the moment because the local authorities have felt that it is in the interests of their community to create an airport for their community.
There is a good future for a lot of these airports, particularly when we start to get short take-off and landing airports in our inner cities. These are the places that will act as a feeder to a lot of these short take-off and landing airports. But they would not have existed were it not that the local authority was prepared to put a grant in aid of them. This is what makes the difference.
This is where you cannot judge them simply on the basis of their turnover. Many of them are in a transitional period, and it is unfair to count into the cut-off level that we are talking about—£1 million, or whatever the level is—the sort of grant aid which has been given to provide the seed corn for these airports. I am clearly not going to press this amendment to a Division at this time of night; but I hope that the Government even at this late hour will recognise that they, from their Whitehall and Westminster perspective, are seeing things from a totally different viewpoint from that of the local authorities. They are not giving sufficient credit to the wisdom and ability of local authorities to make the financial judgments that have to he made in this situation.
They are setting criteria that are far too stringent. The elimination of the grant from the calculation would make quite a difference to a number of these airports at the cut-off point. However, there is no point in pressing it tonight. I hope that the Government will give the matter more thought, and with that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 22 not moved.]
On Question, Whether Clause 13 shall stand part of the Bill?
Lord Sefton of Garston: May I refer the Minister to subsection (3). It says:
"The Secretary of State may by order substitute for the sum for the time being specified in subsection (1) such greater sum as may be specified in the order".
I am puzzled. I understood the Minister to say that if any authority questioned the advisability of having to form a company and made representations to the Government, they would consider those representations. I am assuming—I invite correction if I am wrong—that the Secretary of State would do that under subsection (3). But there is another way of reading subsection (3), which is that it allows the Secretary of State to take care of the inflationary element, but it applies to all authorities. Which is right?
9 p.m.
The Earl of Caithness: It is a flexible provision which is normally written in. I think the provision
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under which the Secretary of State may give a direction to any principal council which controls an airport is in Clause 12(1). Clause 13(3) permits the Secretary of State for various reasons, whatever the reasons, the flexibility by order to substitute the sum.
Lord Sefton of Garston: There is no dubiety about the situation. If one of the authorities wishes to question the advisability of having to form a company, the Secretary of State has the power to say in that case that it need not.
The Earl of Caithness: I should refer the noble Lord to Clause 12(1). The first part of the sentence reads:
"The Secretary of State may give to any principal council".
The word "may" there is precisely the flexibility to which I was referring earlier when I spoke about some of the airports which are, for example, oil related.
Lord Foot: I should like to pursue that for a moment. Is it not right that under Clause 12 (the one just quoted by the noble Lord) whether the Secretary of State decides eventually to give a direction to any council is a matter within his discretion? It does not automatically happen. He is quite entitled, is he not, because it is "may" and not "shall", to say to himself that he will exclude Exeter because there are special circumstances there even though Exeter comes within the £1 million threshold? That seems to be the defect in what the noble Lord said about the right of local authorities to make representations to the Secretary of State about why he should not make a direction or what sort of direction he ought to make.
Devon County Council has been trying for a long time to find out whether the special circumstances of Exeter might influence the Secretary of State to say that he will not make a direction in the case of Exeter airport. The council has been pressing the noble Earl's colleague in the other place as to whether or not he intends to make a direction. Not only has the request come from the Opposition parties but it has been made more than once by the Back-Bench Members of the Government party. We have not been able to learn whether the Secretary of State intends to make any direction about Exeter airport.
The Earl of Caithness: The noble Lord, Lord Foot, was absolutely right in the first part of his statement, which concerned the flexibility of the Secretary of State. As the Bill proceeds through both Houses of Parliament and it becomes clearer, it is easier for the Secretary of State to make the decision with regard to Exeter. We shall be issuing guidance shortly. We are in consultation with Devon County Council. All I can usefully add at this stage is that we hope it will not be too long before the decisions are made on this.
Clause 13 agreed to.
Clause 14 [Transfer schemes]:
The Earl of Dudley The Earl of Dudley moved Amendment No. 23:
Page 11, line 36, at end insert ("in such form as").
The noble Earl said: The Committee may find it convenient to take this amendment in conjunction with the next amendment, No. 24. They stand together. Both these amendments and later

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amendments to which I shall be speaking in Committee have two aims. The first is to give further protection to some local authorities—I cannot arrogate championship of all local authorities, but I hope that my rationale will go right across the board—who own regional airports in respect of the Government's intention for those airports. Secondly, the aim is to provide additional powers to enable those local authorities to fulfil the obligations laid upon them by the Bill at less cost to themselves and in a manner more appropriate to the interests of the ratepayers than is provided for in the Bill.
Although I speak from this side of the Committee with the foreknowledge of seven West Midlands district councils and Birmingham airport, I do so with conviction and in pursuit of principle. I am convinced that it is wholly unfair to create charges which will place an unfair extra burden on ratepayers. I hope that after the events of last week noble Lords in front of me will be sensitive to this issue and will perhaps consider accepting my amendments rather than obliging me to consider whether I should call upon noble Lords on this side of the Committee to vote against the Government in defence of principles which I believe to be of considerable importance.
I also believe that my amendments are in the national as well as the regional interest because they are in line with the statement made in June 1985 and expressed in the Government's White Paper in Section 3.2 which stated:
"It also continues to be the Government's policy that air transport facilities should not in general be subsidised by the taxpayer or the ratepayer. Airports, whoever their owners, should normally operate as commercial undertakings".
I share the Government's view in that respect, as I am sure do most noble Lords on this side of the Committee. Personally, I agree that privatisation of the British Airports Authority will bring substantial benefits, as will company status for the regional airports.
But there are differences in principle between these two separate proposals. Privatisation of the British Airports Authority can have the effect of helping the Chancellor in providing funds which can either be returned to the taxpayer's pocket or spent elsewhere; but Part II of this Bill, as it stands, could have precisely the opposite effect from that outlined in the White Paper. Subsidies in certain circumstances would have to be paid by the ratepayer in many districts where they have never been paid before or might lead to substantial rate increases. I shall deal with this point in more detail when I speak to later amendments, but at the moment I shall confine myself to these two amendments which deal specifically with the provision of greater flexibility to a principal council in preparing an airport scheme for submission to the Secretary of State than is now provided by Clause 14 of the Bill. Those are the specific purposes of this amendment, although they have the general objectives that I have set out already.
In order to explain this amendment I need to ask the Minister and the Committee whether they will accept my analysis of the effect of Clauses 12 and 14 in the preparation of an airport scheme. Under Clause 12(1) the Minister may give a direction to a principal council
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to form a company. However, Clause 13 places an obligation on the council to form a company before the Minister exercises his option to give the direction and before such date as the Secretary of State may specify when he gives that direction. Also, before that date the council is obliged under Clause 14(1) to submit a scheme providing for the transfer to the company which the Secretary of State may direct the council to form (but which, in accordance with Clause 12, it will already have formed) such assets and liabilities which it appears to the council appropriate to transfer to the company.
It does not seem to me to simplify matters that the Secretary of State in another place said that the scheme under Clause 14 could not include a provision that would create and transfer a legal right such as a leasehold after the transfer date. The scheme must provide to give the company the rights it needs by the due date. For a leasehold interest to be granted to an airport it would have to be granted (or put in a binding agreement to grant it) either before or within the scheme. It is unclear to me whether this was the Minister's intention as to the force of Clause 14 or whether it is a condition laid down by him of his acceptance of the scheme. It may be that part of the Bill follows the ministerial purpose which I have not divined and which the Minister can explain in response to my amendment.
I hope that I may be forgiven if I suggest that a riddle has emerged from the Department of Transport in regard to Clause 14, and the purpose of my amendment is to make the clause somewhat less "riddly". The question is whether these clauses are sufficiently flexible to allow the special situation such as the ownership by Solihull on behalf of the West Midlands District Council of the freehold land and buildings at Birmingham airport.
The Bill, taken in conjunction with the Minister's remarks in another place, constrains transferor or transferee in some difficulty to transfer and receive assets and/or liabilities of a newly-formed company as a pre-condition of the Minister's approval of a scheme which he has not yet approved. The councils could find themselves placed by the Secretary of State in a Catch-22 situation and unable to put forward a scheme acceptable to council and airport company because it is not a form acceptable to the Minister.
I believe that this difficulty can be overcome and the council provided with the greater flexibility, if necessary, to submit a scheme to the Minister in the appropriate form by the acceptance of my amendment. The amendment does not remove the final sanction of the Secretary of State required under subsections (2), (3) and (4) of Clause 14, but it has the effect that the scheme may be put forward, and will reach him in the form most appropriate, by the council in conjunction with the airport company. I beg to move.
The Earl of Caithness: I am afraid I am confused. I had hoped my noble friend would have elucidated the amendments for me, but I fear I am even more confused than I was before. I do not think the scenario he painted was the correct one. The direction in Clause 12(1) to form a company is before such date as specified in that direction. Clause 13 does not create

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the obligation: it merely defines the airports to which the direction can be applied. Clause 14, as to the company formed under Clause 12, proposes the transfer scheme. We shall shortly be consulting the local authority associations on the content of that guidance, and will certainly take into account their views in drawing up the final version. It seems best for all concerned if the authorities adopt a consistent approach that should not obscure the particular circumstances of individual airports.
I do not believe, although each airport will be different and will have to be considered on its merits, that the amendments of my noble friend are necessary. However, as I freely admit, I am confused by them. I should like to read in the cold light of day what my noble friend has said before taking this much further.
9.15 p.m.
Lord Williams of Elvel: May I help to resolve the noble Earl's confusion? It seems to me that the noble Earl, Lord Dudley, has moved a perfectly serious and sensible drafting amendment. He complains, I think rightly, that the existing clause in the Bill is too restrictive, and the expression in line 37 on page 11, "which", in fact stops local authorities from presenting a scheme which is in some circumstances going to be more flexible than the Bill would allow.
If one looks at the noble Earl's amendments—leave out "which it" and insert the words "in such form as"—they give the local authority much more flexibility to decide how it is to proceed. If I may say so, I thought the noble Earl, Lord Dudley, was entirely clear in his explanation about the Solihull ownership on behalf of certain other councils. As I understand it, the present wording of the Bill would not permit Solihull or another authority to produce a scheme of sufficient flexibility to allow its ownership to be transferred and for benefits to accrue subsequently. This seems to me to be any more than a simple drafting amendment which would widen the flexibility local authorities would have, If I may say so.
The Earl of Caithness: I am very grateful to the noble Lord, Lord Williams, and I am sorry if I appear to be stupid. I will try not to be, but I think the confusion has arisen because my advice conflicts with what the noble Lord has said and with what my noble friend has said. To our minds, the words "which it" do not restrict the local authorities. I should like to look at this again. Perhaps my noble friend would see fit to withdraw his amendment, and I will discuss it with him.
The Earl of Dudley: I apologise to the noble Earl if I have failed to cut a Gordian knot through the complexities of Clause 14. I must explain that this wording has given some concern to the district councils, who have foreknowledge of what I am speaking about today. It has caused them concern and has caused concern to their advisers. They feel, as I said, that they are in a Catch-22 situation. It may be that they are wrong and that the scenario I painted is incorrect; but I should be grateful if the noble Earl would have another look at this matter. If he feels it would be in the general interest and improve the drafting of this particular section, I would be grateful to leave matters as they stand and to withdraw the amendment.
Lord Butterworth: I wonder whether I can perhaps try to help on the drafting point. If you look at the words in the Bill, the present wording is very restrictive because the transfer to the company is,
"Of any property, rights or liabilities of the council or any subsidiary of theirs, which",
Then if you take the Solihull example, the property belongs to other authorities and not to Solihull or a subsidiary of theirs, and therefore would fall outside this section. If you accept the amendment and put in the words, "in such form as", you get rid of the objectionable word "which" and therefore you make it easier for the local authority to present the scheme.
Amendment, by leave, withdrawn.
[Amendment No. 24 not moved.]
Lord Underhill Lord Underhill moved Amendment No. 25:
Page 11, line 41, leave out ("as to the provisions he regards") and insert (", after he has consulted organisations representing airport operators and owners or operators of aircraft, or by independent financial advisers, as to the provisions which any of them regard").
The noble Lord said: Perhaps it will be for the convenience of the Committee if, as well as moving Amendment No. 25, I speak also to Amendment No. 29. In the light of the previous discussion it may help in the consideration of these two amendments and the next group of amendments to which we shall turn very shortly if I set out what I see as the provisions of Clause 14.
Clause 14 provides that once a "shell" company has been formed under Clause 12 it will be necessary for the Secretary of State to receive proposals for the transfer of property, rights and liabilities to the company. The Secretary of State will have the power to issue guidance and advice as to the form these proposals should take and must approve proposals before any transfer scheme can take effect. If the proposals submitted to him do not accord with the advice that he issued, the Secretary of State will be able to modify a scheme as he thinks fit. Indeed, he would have the powers to substitute a scheme of his own. The only obligation he will have is that before modifying or substituting a scheme he must consult the local authorities concerned. The various local authorities are very concerned about the lack of opportunity for appropriate organisations to be consulted on the advice to be issued by the Secretary of State and the failure to acknowledge the need for independent financial advice to be obtained.
The Secretary of State has confirmed several times that draft guidance and advice will be the subject of consultation with the local authority associations. As the president of the Association of Metropolitan Authorities I welcome that. But it is not enough because it is of great importance that the individual needs of airports are taken into account, not just the general views of the local authority associations. The issuing of general guidance does not reflect this requirement. There is concern that it will be drafted as though all airports are alike. We have on previous amendments mentioned the individual character of airports.
The approach being taken is similar to the one pursued by the Government in connection with the formation of public transport companies under the Transport Act. The concerns of the local authority under Clause 14 are not at all relieved by the present experience of PTAs under the Transport Act. The statutory right to independent advice is considered vital. As Clause 14 of the Airports Bill is at present drafted the Secretary of State will agree to transfer schemes only if they accord with his own views. We have already mentioned Manchester. I hope that I shall be forgiven if I bring up again what is called the Manchester airport saga because this indicates the kind of problems that can arise.
In July 1985 Manchester City Council issued proposals for the formation of a company to assume
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responsibility for the management and control of the airport and for wide consultation with the local authorities in the area, the trade unions and the Government. One of the characteristics of those proposals was the lease of the airport land and buildings to the company. This course of action was taken on the advice of independent accountants—advice which was confirmed by merchant bankers; expert advice. Their advice was based on the tax position and the overall financial profile of the company. It was in the interests of the viability of the company, these experts told the city council, to have a rental determined so that tax liability could be minimised. The Secretary of State did not understand this or seemed not to understand it. Indeed, the fact that the local authorities in Greater Manchester have established a company with a long lease is one of the matters which the Government regard as defective in the Manchester package. At no time in the several months that discussions took place did the Government attempt to question the advice obtained by the local authorities, which was explained in great depth to them. The dialogue ended with the following simple sentence taken from the final letter from the department:
"It remains the Minister's strong preference that the freehold of the land and building should be transferred to the airport company".
It will be appreciated from that brief account of Manchester that the need for independent advice is paramount if all the commercial factors are to be taken properly into account. We have been told time and time again that those matters must be taken into account. Those matters were raised in Standing Committee in another place. The Government accepted the right of local authorities to seek expert advice but refused to allow that to be statutorily acknowledged. The Minister for Aviation made it clear that the Secretary of State wanted to have the final word on those issues and would not wish to be bound by expert advice. That is a key issue and it is the point of the amendments.
In the view of the local authorities, the motivation behind proposals should be the interests of the companies and the local authorities, and not the political objectives of the Government. That can only result in damaging proposals. We hope that the statutory right for independent advice to be sought will be accepted by the Government. That is the purpose of the amendments.
The Earl of Caithness: I wonder whether the noble Lord, Lord Underhill, will clarify whether he would like me to speak also to Amendments Nos. 26, 30, 31, 32 and 33, and deal with all the amendments, including Amendments Nos. 25 and 29, together.
Lord Underhill: If the noble Earl prefers, I will continue, because I have not spoken to those other amendments at all. Therefore, briefly, because I shall have a lot more to say—it all deals with the process of Clause 14—I will now speak to Amendments Nos. 26, 30, 31, 32 and 33.

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The local authorities contest the extraordinarily wide powers that the Secretary of State is seeking to reserve for himself to modify and substitute schemes. Those powers are a recipe for chaos and ill thought-out proposals. That is why I read, I hope carefully, exactly how I interpret the provisions of Clause 14, because there are those exceptional powers given to the Secretary of State.
The local authorities take the view that if schemes are submitted that do not accord with the advice issued by the Secretary of State and the advice received by independent advisers, then the local authorities concerned should be required to submit a further scheme in conformity with that expert advice. The local authorities are best able to respond in a way that will satisfy the Government's view, the interests of the airports and the interests of the local authorities.
The proposed powers of substitution are particularly worrying to the local authorities. They are far too wide. They would enable the Secretary of State to foist upon local authorities something that is against their particular interests. There is scepticism, underlined by virtue of the fact that the Government do not seek similar powers of substitution in relation to the British Airports Authority scheme. I hope that the Government will appreciate that in these two series of amendments we are trying to restrict the terrific powers that have been given to the Secretary of State and to substitute for some of those powers consultation with the authorities and proper consultation with expert advice.
9.30 p.m.
The Earl of Caithness: Clause 14(2) of the Bill as at present drafted requires principal councils, when preparing schemes for the transfer of aerodrome assets to airport companies, to take into account any advice given by my right honourable friend the Secretary of State as to provisions that he regards as appropriate for inclusion in transfer schemes. The purpose of this provision is to ensure that schemes properly reflect Government policy on the establishment of airport companies; and that policy is simply the setting up of companies which can operate in an efficient commercial manner.
The proposed amendments—and I refer specifically to Amendments Nos. 25 and 29—would require my right honourable friend, before giving advice, to consult organisations representing airports and those representing airlines.
Lord Underhill: Will the noble Earl continue to read the rest of the amendment, because it is very important?
The Earl of Caithness: Indeed, I shall come to it in a moment.
The proposed amendment would require my right honourable friend, before giving advice, to consult organisations representing airports and those representing airlines. We believe that this is a recipe not only for increased delay—and we all know how
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long consultation of this sort can take—but for utter confusion. I know that the noble Lord, Lord Underhill, will not like me saying this, but it is close to a wrecking amendment.
Lord Stoddart of Swindon: Nor I.
The Earl of Caithness: The noble Lord, Lord Stoddart, does not like it either. Principal councils would be required to take into account the provisions which any or all of these organisations regarded as appropriate. It is quite clear that the interests of airports and airlines will differ on a number of points. Indeed, it is probable that the interests and advice of individual airports will differ from each other; and likewise with airlines.
The noble Lord, Lord Underhill, asks my right honourable friend the Secretary of State to reconcile these differing and often conflicting interests. We believe that it could lead to a great deal of confusion for the airports themselves. I believe that the amendments, although I must admit that they are superficially attractive, have little that can commend them. They will lead to delay, and the inevitable conflict of interests will cause the confusion to which I have referred. There is a substantial risk that our policy, and the consequent improvement of airport company effectiveness, will not therefore be fully reflected. That will be to the detriment of the airports, airlines and ratepayers.
I move to the second group of amendments: Amendments Nos. 26, 30, 31, 32 and 33. These amendments would do two things. Amendments Nos. 31 and 32 would remove the power of my right honourable friend the Secretary of State for Transport to substitute a scheme of his own for one submitted by a principal council which had ignored my right honourable friend's advice as to the provisions which he regarded as appropriate for inclusion in it. His only recourse under the amendments would be to require the council to submit another scheme and since there would be no guarantee that the council would not continue to ignore his advice this circular process could go on indefinitely. Amendments Nos. 26, 30 and 33 would remove my right honourable friend's powers to modify any unsatisfactory scheme.
Therefore, these amendments would undermine the whole of Part II of the Bill. They would allow principal councils simply to draft their own schemes without regard to Government policies concerning airport companies. Local authorities could leave all major airport assets with the local authorities so ensunng that there could be no proper arm's length relationship between themselves and the airport company. There would be a very real risk that the viable, commercially-minded companies which we seek simply would not materialise, and that would be to the detriment of the ratepayers, the airlines and air travellers.
Are these powers that my right honourable friend seeks new? They are not. We can find the same powers in Sections 1 and 2 of the Transport Act 1981. We find them in the Oil and Gas Enterprise Act 1982; and more recently, in an Act that I remember better than

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the other two, in Section 67 of the Transport Act 1985. The noble Lord, Lord Underhill, and I have been through this before.
But where did these powers originate? They originated from the Transport Act 1968. The noble Lord, Lord Carmichael of Kelvingrove, will remember that Act because he was in another place as Parliamentary Under-Secretary of State for Transport at the time and brought in the powers. I have not heard the case put forward by the Opposition that the noble Lord's proposals as presented at that stage now need to be modified to any serious extent.
Lord Williams of Elvel: In responding to these amendments the noble Earl described them as "superficially attractive" and also "wrecking". If it is indeed superficially attractive to wreck the Bill, who am I to quarrel with the noble Earl the Minister? However, I think he has underestimated the force of the argument behind in particular Amendment No. 25 and the consequential amendment, No. 29. I very much hope that he will look at this again.
In the Bill as at present drafted the Secretary of State may give advice,
"as to the provisions he regards as appropriate for inclusion in the scheme",
and the Bill goes on to define the sort of advice as,
"in particular any advice as to the description of property, rights and liabilities which it is in his view appropriate to transfer to the company".
We are talking about a transfer from local authorities to companies. We are therefore talking about a transfer of value from a public authority into a company which no doubt in the course of time will be privatised, sold off or whatever. It is also true that we are talking about assets of very considerable value. We are not talking about 2p here and 3p there. We are talking about assets worth many millions of pounds. Is it so unusual, is it so unjust, to ask for the Secretary of State to consult organisations which have an interest in this and to take independent advice on the transfer of these major assets into companies which, through their holding company, will be floated off?
In spite of the fact that he accused my noble friend of introducing a provision in an Act which, after all, is now 18 years old, but subsequently quoted a series of Conservative Acts in support of his own case, I ask the noble Earl to look rather carefully at this matter and, if I may say so, take the plain man's view of what is actually happening. I ask him to consider whether or not he feels that independent advice—leaving aside for the moment airport operators and owners—is not right in the case of such a transfer. If he feels that he can take this amendment away, just on the question of independent advice—whether it is a merchant bank or an accountant does not matter—I think that on our side of the Committee we should be comforted.
The Earl of Caithness: I think it may be helpful at this stage if I explain briefly how we propose to consult on the guidance to be given to local authorities on transfer schemes. My department plans to issue draft guidance later this month to local authority associations and airports. We would not issue final guidance under Clause 13(2) of the Bill of course until
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the Bill is enacted. Meanwhile, we shall be inviting comments from the airports and the local authorities on the draft guidance and we will take these fully into account in formulating the final guidance.
So there is nothing to prevent the local authority and the airport from seeking independent advice. If that advice is given to the local authority and the local authority presents it to us before we finalise our thoughts, we shall of course take it into account.
Lord Underhill: The only part of the statement that the noble Earl has just made which concerns me is that the Government will seek advice from the local authority associations on the type of guidance and advice that will be sent out. What will happen if the local authority associations say, "No, you should not do it this way"? Is there any assurance that the Government will say, "Right, we accept the view of the local authority associations"? I have a pretty good idea what one local authority association would say if it was asked what guidance and advice should be sent to local authorities. It would say what the amendments say.
I think that my noble friend Lord Williams has sufficiently answered the accusation about these being wrecking amendments. He has also clearly explained their purpose and the kind of advice that the Secretary of State should get before he gives a decision on transfer schemes. I think that we should look carefully at what the noble Earl has said, and I hope that he will look carefully at what has been said in support of the amendments.
I hope that the advice that the Government will get from the local authority associations once the Bill is passed will be accepted. There have been consultations on a number of government White Papers and there has been overwhelming opposition. For instance, hardly one person said that the Transport Act was a good thing, but the Government ignored the lot. It is not sufficient to say that bodies will be consulted. A lot depends on the frame of mind of the Government when they receive the advice that they have requested. In the meantime I beg leave to withdraw the amendment, but we and the Government should study carefully all that has been said this evening.
Amendment, by leave, withdrawn.
[Amendment No. 26 not moved.]
Lord Underhill Lord Underhill moved Amendment No. 26A:
Page 12, line 6, at end insert ("provided that the Secretary of State shall not give his approval to any scheme unless this provides for existing employees of a council to be transferred to the company upon terms of employment which are no less favourable to them than those under which they are employed immediately prior to such transfer")
The noble Lord said: This amendment deals with the position of local authority staff who will be affected by the clause. Currently staff employed at local authority airports are covered by national joint employer-trade union negotiating machinery, and the majority of pay and conditions of service issues are determined within that machinery. The aim of the amendment is to ensure that when staff are transferred to the new separate airport plcs there is no possibility of their receiving lower pay and conditions, especially as they will be expected to carry out precisely the same

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work for the plc as they are now carrying out directly for the local authority airport.
Many of the staff have given long and loyal service to the local authority airports and it is important to ensure that they suffer no detriment as a result of changing their employer. The Bill as currently drafted provides no safeguards whatever, and we have no faith in the protection of the transfer of undertakings regulations which have failed miserably to protect staff under the Transport Act which forces local authorities to convert bus operations to plcs by October this year. Certain councils are already telling their employees that under the new company arrangements there will be adverse changes in pay and other conditions of employment, sometimes with the threat of redundancy if the changes are not accepted. Such threats arise from the question of tendering which is in the Transport Act 1985.
The inadequacy of the transfer undertakings regulations is further enforced by an article in the Law Society Gazette of 3rd July 1985. I shall not quote from that, but if the noble Earl does not have a copy in the department files, I shall readily send him one. The article confirms that the regulations do not effectively protect employees' rights, as they fall short of what was intended by the EC directive that brought them about. They are also written in a confused way and allow employers to make changes and use arguments that negate the regulations.
It is therefore essential that the Bill should contain a provision that ensures that employees do not suffer a reduction in statutory and contractual entitlement as a result of the Government's legislation. We should remember that what is being proposed is that the local authority airports shall be transferred to local companies of which the local authorities will be 100 per cent. shareholders. There is no reason why the amendment should not be considered carefully by the Government in the interests of the employees. As I have said, many of them have given long and loyal service in building up their local authority airports to the condition that they are in at the moment. I beg to move.
9.45 p.m.
The Earl of Caithness: I have taken the amendment seriously. I fully understand why the noble Lord, Lord Underhill, saw fit to table it. The Government are anxious to ensure that the conditions of employment of local authority employees who become airport company employees are not prejudiced. The conditions of the employees who would be transferred are, except for pensions, already protected under the Transfer of Undertakings (Protection of Employment) Regulations 1981, and can suffer no diminution.
I think I may therefore be excused if I say a word about pensions. We have given careful thought to pensions, which is another important aspect of the matter from the employees' point of view. We shall ensure that provision is made so that the local authorities and the new companies will be able to arrange for their employees to continue membership of the local government superannuation scheme.
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In the unlikely event that that does not happen, in Clause 26 we have provided for the making of regulations which will allow appropriate compensation to be paid. In the light of that short but succinct explanation, I hope the noble Lord will feel that there is no need for his amendment because the point is already covered.
Lord Dean of Beswick: I wish to put a question about employees' conditions of transfer. As the Minister is aware, there are provisions in the Bill which mean that if local authorities want to receive Government assistance or the right to go into the open market for finance they will need to divest themselves of 51 per cent. of the shares in the company. I believe that that is correct. On privatisation the local authority will have 100 per cent. of the shares and that carries total protection for the employees. That point was highlighted by the Minister. What will happen if 51 per cent. of the shares are taken up by people in the private sector? Will they be responsible for providing the benefits guaranteed in the original scheme? Will that carry over to a company which is dominated by private investment?
The Earl of Caithness: Is the noble Lord. Lord Dean, talking about pensions?
Lord Dean of Beswick: I am talking not only about pensions but about general working conditions and rates of pay. I do not criticise the private sector, but history shows that people employed in the public sector tend to have a right written into the terms of their contract which gives them better protection for future employment, pensions and redundancy payments than are given for those employed in the private sector. The employees may be given guarantees under the scheme as it is envisaged at present, but the Government may decide, as they can as the Bill now stands, that the local authority must sell 51 per cent. of its shares to the private sector if it wants to go into the open market for investment. In other words, it will become 51 per cent. dominated by the private sector. What will then happen to the employees who were employed within the public sector? Will they lose their protection, or not?
The Earl of Caithness: I am grateful to the noble Lord for explaining his point further. I think he is mistaken. If a local authority which controls 100 per cent. of the shares of the local airport company wishes to seek private finance, it does not have to sell 51 per cent. of the shares to achieve that aim. As well as receiving money from the local authority, it can receive money from the private market.
Lord Dean of Beswick: That may be so, but does it not lose certain benefits under the Bill which would accrue to it if it sold 51 per cent. of the shares? That is part of the Bills provisions, is it not? Certain sections of the Bill are twisting the arms of the local authorities to make them divest themselves of 51 per cent. of the shares of the company. If they do not, certain financial facilities will be withheld from them. That is the point that I am trying to make.
Lord Williams of Elvel: Did the noble Earl make his last remark in the light of Clause 20, or not?
The Earl of Caithness: I made it in the light of my knowledge of the Bill. I am ready to be corrected by the noble Lord.
Lord Williams of Elvel: We shall come to this on Amendment No. 43. It is a question of Clause 20 and the restrictions on companies.
The Earl of Caithness: My understanding is that we are not forcing local authorities to sell 51 per cent. It is entirely up to them if they wish to do so. Obviously they will not have some of the benefits that they have with the backing of the local authority if the controlling interest in the airport is sold, but they will obtain a lot of the benefits of the private sector.
Lord Dean of Beswick: Is it not a fact that the Government, by pursuing this policy, are imposing a form of (to use another description) rate-capping on publicly-owned airports unless they privatise themselves 51 per cent?
The Earl of Caithness: I do not think that the situation is any different from the present one.
Lord Underhill: The noble Earl has referred to Clause 26. But that clause deals solely with "Compensation for loss or diminution of pension rights". We come to pensions on a later amendment. The amendment that I have moved does not deal solely with pensions as such. The Secretary of State has to give approval to a transfer scheme. I agree with the noble Earl that it is not a transfer scheme to private enterprise but a transfer to a plc. But while the Secretary of State is considering other things, why should he not say that he will not approve a scheme unless it provides for those persons at present employed by the local authority to be transferred to the company upon terms that are no less favourable to them? That is what the amendment says. What is wrong with the Secretary of State saying that if the scheme submitted does not provide for that he will not approve it? That is all that the amendment says
One would have thought that the Minister would grab this chance of saying that this is a good opportunity to show to local authority workers who will be transferred to the company that they will receive exactly the same conditions—not just pension compensation conditions but general conditions—and no less than they are getting at present while directly employed by the local authority. The plc will be 100 per cent. owned by the local authority. Their condition therefore should be no less. The Secretary of State should surely have the right to say that he will not approve a scheme unless that were the position.
The Earl of Caithness: I would turn it round the other way and say that my right honourable friend the Secretary of State is most unlikely to accept a scheme that excludes the employees from the Transfer of Undertakings (Protection of Employment) Regulations 1981, under which they can suffer no diminution.
Lord Underhill: I dealt with that matter sufficiently in my opening remarks. At this time of night I do not propose to continue the argument. We shall look carefully at what the noble Earl has said and take further advice ourselves. It seems to me, however, that this is one of the essential points that the Minister should consider. If the Transfer of Undertakings Regulations are a factor to which the noble Earl is tying himself, I cannot even find that in the Bill. The plc could possibly ignore some of those points, particularly in the light of the frailty of the regulations to which I have referred. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Tordoff Lord Tordoff moved Amendment No. 27:
Page 12, line 6, at end insert—
("(3A) When formulating any advice for the purpose of subsection (2) or considering any scheme for approval under subsection (3) the Secretary of State shall take into account the financial consequences for the transferor authority of implementing the advice or scheme.
(3B) Any advice given under subsection (2) shall take account of the need to ensure, and any scheme approved under subsection (3) shall contain provision to secure, that liabilities attaching or incurred in relation to any property or rights which are transferred to a company pursuant to the scheme are transferred to the company with such property or rights.").
The noble Lord said: It may be useful for noble Lords to consider Amendment No. 28 alongside this. The amendment explains itself when it says:
"When formulating any advice for the purpose of subsection (2) … the Secretary of State shall take into account the financial consequences for the transferor authority".
This is largely for clarification. I dare say that the noble Earl, Lord Dudley, who is to move Amendment No. 28, is seeking the same kind of clarification. A number of airports are very worried about the implications of the Bill in terms of their debt burden.
The Bill is largely modelled on the recent Transport Act. If the Secretary of State follows his advice to authorities on that occasion, he will stipulate the formula for assessing the level of airport-related debt which should be transferred to the new companies. In response to questioning in Standing Committee J, the Minister adopted what has been described as a confused position. I am sure that the Government will not agree with that but that is the view of people who were there. On the one hand he was inclined to the view that the debt should be removed from the companies and retained by the councils. However, he also went on to indicate—and we have had this indication at the earlier stage of this Bill in this Chamber—that the debt position would be unchanged on restructuring, and he suggested that if the debt was currently serviced by airports there would be every chance that it would continue to be serviced by the companies.
We therefore have a serious need of clarification from the Government on this point. Airports are extremely capital intensive. The effect of transferring debt to local authorities would be very significant indeed. It would create a charge on local authorities which they do not bear at present and, due to present rules, would generate grant penalties for incurring this additional expenditure.
Based on the latest accounts, debt outstanding in relation to the 16 airports that were mentioned before amounts to £120 million. Interest charges relating to this level of debt are estimated at £13·5 million. Not to charge this to the companies may create a favourable profit and loss account—and it may be the Minister's intention so to do—but it will create a charge on local authorities that they have not previously borne. This additional expenditure burden on local authorities will add to the problems created by the present block grant system. Some 49 local authorities will be involved in relation to the 16 airports. All of these would lose grant, I understand, if they incurred additional expenditure in 1986–87.
I do not intend to deal with Birmingham, to which I dare say the noble Earl, Lord Dudley, will be referring. However, I should like to say a word about Luton Airport, which is owned entirely by Luton Borough Council, not by a consortium. It is calculated that at 1st April 1987 there will be an existing debt relating to airport assets approaching £17 million. It may be suggested that is the fault of the Luton local authority. The fact is that it was incurred on the understanding that it was an investment from which they could draw revenue if it proved a wise investment. It was, of course, a risk but it was an investment made by them. The present servicing of that debt annually exceeds a cost of £2 million. There is no doubt that the Secretary of State will require the borough council to transfer to the plc the assets which incurred the debt—that is to say, the new terminal building. But there is still considerable doubt as to whether the liability to service the debt will also transfer to the new company or will still reside with Luton Borough Council.
If Luton Borough Council—and therefore the ratepayers—is required to continue to service the debt of £17 million the effect in the first year of transfer could be absolutely horrendous. If one assumes that the servicing of the debt requires an annual payment of £2 million in addition to the present total net expenditure of £10 million by the borough council, then the whole of Luton's £2·5 million rate support grant will be lost.
Therefore, the double effect of debt repayment and loss of grant produces an increase in the rate bill of £4·5 million or 15p in the pound, which is an increase of over 60 per cent. in the borough rate paid by Luton ratepayers. That cannot be the effect which the Secretary of State intended, but it may inadvertently happen.
The Secretary of State argues that the airport dividend available to the ratepayers will be higher if the debt does not transfer and the ratepayers retain 100 per cent. of the shares. However, he ignores the fact that the dividend will not be declared until the end of the year and will be subject to tax. So the first year's effect on the ratepayers will already have been suffered and cannot be avoided if the Secretary of State is prohibited from interfering in the transfer of existing debt liability at the discretion of the borough council, which will have much greater incentive to be concerned about the viability of the airport plc and the Luton ratepayers.
The amendment seems to be entirely reasonable. All that it seeks to do is to put a duty on the Secretary of State to consider the financial interests of transferor authorities in the way in which he issues advice and approves transfer schemes. Clearly this will vary from place to place. I have illustrated one of the most serious situations. I am sure that the noble Earl will be discussing the question of Birmingham in a moment or two. It seems that this amendment is of such importance that it cannot be ignored by the Government. I beg to move.
The Earl of Dudley: Because of the late hour it has clearly been found convenient to take Lord Tordoff's amendment in conjunction with mine. There is a fundamental difference between the amendments, in that Lord Tordoff's amendment places an inalienable obligation on councils to transfer all liabilities, together with assets, to the airports company. My amendment differs from that of the noble Lord in giving the councils power to decide how much of the debt shall be transferred to the company.
It would be more appropriate for me to deal with some of the matters that the noble Lord dealt with when it comes to the next amendment. However, as regards the present amendments, I understand that, as far as one region is concerned, there are amicable and thoroughgoing discussions taking place between the seven West Midlands district councils and the Birmingham Airport Authority to decide upon a number of matters consequent upon the Government's introduction of the Bill, including discussions on the most appropriate and cost-and tax-efficient methods of servicing the Birmingham Airport debt. As I understand it, a number of options are under discussion. It is very much as it should be—there are ongoing discussions between the management of the future airport company and its principal shareholders.
In the past Birmingham Airport has been able to service the debt arising from the development of the new terminal at the airport from its surplus or from reserves. However, when the airport becomes a plc it will have to face depreciation charges, which do not apply at present while the airport is owned by the seven district councils. Those depreciation charges will very likely have the effect of turning a marginal profit into a loss.
Another matter under discussion is that it may well be tax-effective to grant a leasehold of the airport and charge rent, in which case the councils accept that it would be equitable to offset rent receivable by them, by accepting to meet some part of the interest charges on the existing debt on the rates. I am sorry to have to say this, but if I and those whose views have been made known to me were fully confident that an agreement thrashed out between the airport management and the councils would be acceptable to the Secretary of State, there would be no need for my amendment; and probably no need for Lord Tordoff's amendment, although I cannot speak for him.
The Minister in another place said that if none of the debt is put on to the airport company, the present situation would not be changed. This is simply not so in the West Midlands, where there would be a noticeable and onerous rate increase if all the debt is

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allocated to the local authority, as the Secretary of State has made clear in another place is his intention.
On the other hand, it may be that for the reasons I have given it would be equitable for some part of the debt to remain with local authorities, and the local authorities foresee that this possibility might arise. In these circumstances, it seems appropriate that councils should have the last word in the matter.
The Earl of Caithness: I realise the importance of these amendments, the one in the names of the noble Lord, Lord Tordoff, Lord Underhill, and Lord Carmichael of Kelvingrove, and Amendment No. 28 in the name of my noble friend Lord Dudley. These amendments seem to have the main purpose of ensuring that the new airport companies take on the full liabilities connected to any assets which are transferred to them, or vice-versa: that any liabilities are accompanied by matching assets.
Amendment No. 27 would oblige my right honourable friend the Secretary of State to take account of the financial consequences for the transferor authority when formulating advice on, and in considering, transfer schemes. These amendments would undermine a key objective of ours, which is to set up companies with every prospect of commercial viability. I think we are all conscious in the Committee that this is something that we would wish to see. We certainly do not want to set up a new commercial company which has no viability. That will be reflected in the draft guidance on transfer schemes that we shall be circulating for comment shortly, so that the local authority associations will have a chance to comment in detail.
However, it would be no sense to establish companies with a level of debt that would make them dependent for subsidy on the controlling authorities in the long term. That would be no way to obtain the improved commercial performance that we expect from these companies, and we shall be looking at all the transfer schemes on their merits; but in some cases we believe that it will be necessary to leave a large proportion of debt with the controlling authority in order to establish a company with a chance of viability. Where there is no chance of viability, then we shall be suggesting that the companies should be set up without any burden of debt, which would only increase the requirement for subsidy.
The present level of debt attributable to airport undertakings reflects past decisions of the controlling authorities. Instead of making provision for depreciation, as my noble friend Lord Dudley said, which would have enabled the airport to finance more investment from its internal resources, some authorities have chosen to draw high dividends and to finance investment by borrowing. Authorities with loss-making airports have been able to reduce the requirement for subsidy. These policies have enabled authorities to finance higher levels of spending than otherwise would have been possible at the same charge to the ratepayers.
The new companies will have to provide for depreciation, which is necessary to secure their long-term future. Therefore, future dividends may be less than the amount needed to meet the cost of servicing the
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debt from past airport investment. Also any requirement for subsidy may be greater than in the past because of the need to cover depreciation.
In such circumstances, the authorities will have to make savings elsewhere if they are to avoid rate increases. But they should recall that this problem results from their own decisions in the past about the use of airport operating surpluses and the financing of investment.
However, by making provision for depreciation the new companies will be less dependent on borrowing for capital investment and will have more resources to distribute in the longer term. The value of the authorities' equity stake will be greater and therefore the demands for loans will be less.
For those reasons we cannot at the moment accept these amendments, which we believe would remove the necessary flexibility in considering a sensible capital structure for each of the new airport companies. But as it is a complex area and a very detailed technical one when it comes to Government finance, I should like to read and reconsider what the noble Lord, Lord Tordoff, and my noble friend have said. I hope they will see fit at this stage not to press their amendments.
10.15 p.m.
The Earl of Dudley: May I take this opportunity to correct one point which I believe my noble friend made? He said that the councils carried, to some extent, the responsibility for the existing situation. I should remind the Minister that in the case of the Midlands district councils they have had responsibility for only the past few weeks. Before that the airport was in the hands of the West Midlands County Council and before that it belonged to Birmingham city. I think it is wrong to attribute any fault to the existing councils who jointly own the airport.
Baroness Fisher of Rednal: I should like to ask the noble Earl why the local authorities are in a different category from the British Airports Authority. Stansted is a developing airport in the same way as are the local authority airports. However, there is a different way of dealing with the debts of the British Airport Authority. The debts will go back to the airport authorities under the plcs, and they will be repaid to the Government as and when the dates for repayment are decided. Why is there a difference because it is a local authority airport as distinct from a national airport, which is the taxpayers' airport at present under the British Airports Authority? The others are local authority airports which in the main involve part local authority money and part government money, but why should there be this difference in how the debt repayments have to be made? I cannot see why the Government make these distinctions when it is either taxpayers' money or taxpayers' and ratepayers' money.
Lord Butterworth: May I try to give an example from Birmingham, which I hope might be helpful? My noble friend the Minister said a few moments ago that the intention of the Bill was to set up companies with every prospect of commercial viability. I very much agree with him in that objective. But it would not be to the advantage of the airport companies, the local authorities or ourselves if that were done at the expense of the ratepayers.

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There is some widespread concern because it was felt in another place that the Secretary of State did not seem fully to understand the position. He said:
"Therefore, if some of the debt is put on to the airport company, ratepayers in that area will be relieved. If none of the debt is put on to the airport company, the present situation will not be changed". —[Official Report, Commons, Standing Committee J. 4/3/86; cols. 397–8.]
As I understand it, in the case of Birmingham airport while the debt is vested in the local authority the liability to repay the annual amounts at the moment remains with the airport company. Therefore, it is simply not true to say that if some of the debt is put on to the airport company, ratepayers in that area will be relieved, because under the present arrangement the annual payment is made by the airport company. If the legal liability to make the annual payment is placed upon the local authority, the ratepayer's burden will be increased. Of course it is true to say that the local authorities having the benefit of the shares would have the benefit of the dividends; and I think I am right in saying that while the local authority would have to pay the income tax, it could be reclaimed.
However, the problem really rests as to the division between the debt and the equity. When the final scheme comes to be made, it is important that either the Bill or the Secretary of State should recognise that the division as between the debt and the equity should be drawn in such a way that the liability of ratepayers, the ratepayers' burden, is not increased.
Lord Dean of Beswick: Perhaps I may put the point, following the previous noble Lord's speech, that if the debt to the ratepayers is increased in certain circumstances, could that not substantially be to put the local authorities concerned in the brackets where (as I implied a few minutes ago) they may be ratecapped for doing something that is totally unavoidable in servicing a debt that they have taken over?
The Earl of Caithness: I am grateful for the interventions of my noble friend Lord Butterworth and the noble Lord, Lord Dean of Beswick. I think that they only serve to underline that we should all take this matter away and look at it again, which I promised to do earlier when speaking directly to the amendments. I hope that we can achieve a situation that will satisfy my noble friend Lord Butterworth which coincides with our thinking that we want to set up viable companies with a continuing prospect of viability and to look at each transfer scheme on its merits and take into account the financial arguments put forward by each local authority.
The noble Baroness, Lady Fisher of Rednal, asked me about a write-off of debts between the BAA and the local authority companies. There is no difference in our treatment because we are not writing off debt in either case. I hope that the noble Baroness will remember the Clause 3 stand part debate which her noble friend Lord Carmichael initiated, and as I understood her she was wrong in her assumption that we were treating them differently.
Baroness Fisher of Rednal: I was not wrong in my assumption. I understood clearly that the debt is going
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to be repaid but that it is not going to be repaid by the taxpayer. It is going to be repaid by the profits which will come from the airport. The difference with the local authority airports is that the debt is being placed upon the burden of the ratepayers. What I was saying was that if one were doing the logical thing the burden of the debt of the BAA would have been transferred to the taxpayer if one had been doing it equally between local authority and BAA. I cannot understand why the ratepayer has to pick up the debt from the local authority airports. Why can you not do the same thing as you are doing with the BAA?
The Earl of Caithness: I think it will depend upon the scheme put forward by the local authority, to cover the noble Baroness's point. It will vary from scheme to scheme. However, this is another point I should like to look at in more detail tomorrow.
Lord Tordoff: Let me make it quite clear that there is no desire from these Benches to have companies set up which are not viable. If this Bill is going to go through, then let it go through in a way which produces viable airports and viable airport companies; but it seems to me that the price the Government are charging for that is resting upon the local ratepayer. I accept that the Minister has said that he wishes to take this away and look at it again. It is a highly complex matter, and I do not pretend to understand the ins and outs of it, particularly when we are involved in local government finance.
However, I am grateful to the noble Lord, Lord Butterworth, for his intervention, which was most helpful. But the key phrase seemed to me to come from the Minister, when he said, if I may paraphrase him, "The local authorities have got themselves into this mess and therefore they have to pay for it, and it has to be paid for by reducing other services if they want to keep within the rate support grant". That is how I read what he said.
Lord Dean of Beswick: I am grateful to the noble Lord for giving way. Surely, is not one matter the Government might look at that if an authority finds itself in that situation it should receive the most sympathetic consideration from the Government in its rate support grant—the block grant it receives? Otherwise, they may well find that in servicing that they are milking resources away from other services which are more important to the community.
Lord Tordoff: I am grateful to the noble Lord, Lord Dean of Beswick, because that was precisely the interpretation that I put on what the Minister said: that indeed the money would have to be found from somewhere else, and with many of these authorities that does mean a reduction in other services. It is that as much as anything that one still detects in the Government's attitude which makes one worried. We are, after all, at a fairly late stage of this Bill, although the Report stage and Third Reading are still to come; but the Bill has had a lot of time in the other place and received a lot of consideration in Committee. Yet the Government are still saying that this is very difficult and very complex, but really at the end of the day it is up to local authorities to bear the burden. It is for that

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reason that I have been somewhat reluctant to go away and think about it. Of course I accept what the Minister has said—that he will think about it again.
However, we must bear in mind also that the wording of this amendment, although it may not be acceptable to the noble Earl, Lord Dudley, and it may be that his amendment is a better one—I would not dispute that—seeks to ensure that the Secretary of State takes these things into account, and we have had no assurance and no clear indication from the Government at any stage in this debate, or indeed at any earlier stage, that the Government are prepared to take these things into account in any firm or detailed sort of way. That is what we were seeking. If the Minister could stand up and say, "Yes; being practical people, when it comes to it in the case of somewhere like Luton or Birmingham of course we will take this into account and we will find means of getting round this serious problem because there has to be a sharing in some sort of way", I think we would accept that.
On the one hand, we cannot have a situation where the new company is not viable at the start; but, on the other hand, we cannot have the ratepayers totally burdened with this very large burden of debt and with the cost of servicing that debt. I do not detect from the Government even now any willingness to say they will take this into account at the end of the day.
The Earl of Caithness: With due respect, I thought I had covered that when I said that when considering each individual transfer scheme we would take into account the financial arguments put forward by the local authorities; and doubtless the points advanced by the noble Lord, Lord Tordoff, would be exactly the sort of financial arguments put forward.
Lord Tordoff: I thank the Minister for that. I am not sure that it takes us very much further but perhaps it does take us a little further, and I am very grateful for that. I think we must all read what has been said in this debate tonight. In the meantime, it is getting rather late and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 28 to 33 not moved.]
Viscount Davidson: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Greater Manchester (Light Rapid Transit System) Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.
Greater Manchester (Light Rapid Transit System) (No. 2) Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.

Port of Fosdyke Bill [H.L.]
Reported from the Select Committee with amendments and recommitted to an Unopposed Bill Committee.
House adjourned at twenty-six minutes past ten o'clock.

  SCOTTISH HOUSING STATISTICS
  SCOTTISH HOUSING STATISTICS
  HOME INCOME PLANS AND HOUSING BENEFIT
  HOME INCOME PLANS AND HOUSING BENEFIT
  HONG KONG: STATUS OF BRITISH DEPENDENT TERRITORY CITIZENS
  HONG KONG: STATUS OF BRITISH DEPENDENT TERRITORY CITIZENS
  PRISON OFFICERS ASSOCIATION: NEGOTIATIONS
  PRISON OFFICERS ASSOCIATION: NEGOTIATIONS
  PRIVATISATION RECEIPTS
  PRIVATISATION RECEIPTS