Sitting of 28 April 1987

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

    LONDON REGIONAL TRANSPORT BILL (By Order)
    Order for consideration, as amended, read.
    To be considered upon Thursday.

Oral Answers to Questions
  EDUCATION AND SCIENCE

    Schools (Accommodation Standards)
    Mr. Meadowcroftasked the Secretary of State for Education and Science if he will undertake a review of unpublished reports of visits made by Her Majesty's inspectors to determine what recent trends are shown in the numbers and proportions of lessons seen where poor or unsuitable accommodation was considered to be restricting the quality of work; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. Bob Dunn): In their national survey reports Her Majesty's inspectors draw on evidence from all types of inspection, including those which do not result in published reports or have not yet done so. All such survey reports have commented on the state of accommodation of schools or colleges. Undoubtedly, future reports will do the same.
    Mr. Meadowcroft: Why is the Minister so coy about publishing these reports, which are bound to show that teachers are coping remarkably well in appallingly deteriorating conditions? Is he aware that in Leeds there are a number of schools where teachers must double up because they cannot occupy accommodation? I know of one school in west Leeds, Christchurch primary school, where a temporary classroom which has been there since the war cannot be occupied during the winter because it cannot he heated. The report should be published.
    Mr. Dunn: I am somewhat mystified by the approach of the Liberal party in the House on this matter. There are many different types of inspections. Only some of those are intended to lead to the publication of reports. Those that are intended for publication are always published. The House must congratulate the Government on taking the decision in the early part of 1983 to publish the reports of Her Majesty's inspectors of schools.
    Mrs. Virginia Bottomley: I congratulate my hon. Friend on his point about the Government making Her Majesty's inspectors' reports available. Has he seen the recent report which suggests that in inner London, while the majority
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    of lessons were well provided for with small classes and excellent resources, the majority of science teaching lessons were regarded as unsatisfactory or very unsatisfactory? It is the quality of the teachers that counts.
    Mr. Dunn: My hon. Friend is quite right in what she says. Undoubtedly the usefulness of the inspectors' reports is that they can be a lever for the improvement of quality of teachers and that which is taught, and I recognise and welcome that.
    Mr. Duffy: Has the Minister had a chance to study the recently published report by Her Majesty's inspectors on education in Sheffield following a two-year investigation? It highlights much outstanding work. Some of that, notably in my own constituency, is carried out in the type of accommodation which other less impressive local educational authorities have long since left behind. What conclusion does he draw from that?
    Mr. Dunn: The conclusion that I draw from the publication of that report, the recent report on the London borough of Brent, and many other reports which have gone through our Department in recent years is that it is essential to inform people of the state, quality and levels of school activity in the communities in which they live.
    Mr. Nicholls: Does my hon. Friend not have some difficulty in understanding the concern of the hon. Member for Leeds, West (Mr. Meadowcroft) about overcrowding, bearing in mind that the alliance plans to restrict the charitable status of independent schools will drive a great many people who presently educate their children in the independent sector back into the state sector? Would that not increase the sort of overcrowding about which the hon. Gentleman is crying crocodile tears?
    Mr. Dunn: It is worth placing on the record the fact that all the Opposition parties are committed to doing tremendous damage to, or the destruction of, the independent sector.
    Mr. Andrew F. Bennett: Does the Minister not accept that there is overwhelming evidence from the reports of Her Majesty's inspectors of the steady deterioration of school buildings and of the major problems with which teachers are faced in having to work in inadequate conditions? However good the teacher and pupils, if we have buildings where the roof leaks and the windows are unsatisfactory it is extremely difficult to give one's best. What will the Government do about the problems in places such as Sheffield, Leeds and Bradford, with regard to the lack of funds for school buildings?
    Mr. Dunn: I share the concern expressed by the inspectorate and others, who have made clear their point of view about the poor physical state of many school buildings. However, that is not a new event. It springs from the gradual effects of neglect over the past 20 years. I remind the House that the problem in the London borough of Brent had nothing to do with the quality of school buildings; it was the quality of management and the quality of teaching.

    General Certificate of Secondary Education
    Mr. Thurnhamasked the Secretary of State for Education and Science what recent representations he has received about the funding of the GCSE examinations; and if he will make a statement.
    Mr. Dunn: In the past three months we have received 150 representations about the funding of the GCSE examinations.
    The Government have made substantial provision for the successful launch of the GCSE. We look to local education authorities to direct that provision in support of GCSE work in their schools.
    Mr. Thurnham: Will my hon. Friend confirm that a sum of over £250,000 is being provided by the Government for GCSE examinations in Bolton—a sum fully in line with others being provided elsewhere for schools? Will he look into the provision of top-up sums for Bolton council to ensure that sufficient funds are available in total?
    Mr. Dunn: I am happy to confirm what my hon. Friend has said. Last year the Government provided a total of £112,900 for GCSE expenditure in Bolton. This year the Government are providing for expenditure of £60,700, through education support grants for books and equipment. We have also provided £95,000-worth of expenditure for training Bolton's GCSE teachers. I undertake to continue to review top-up expenditure.
    Mr. Ashdown: The Secretary of State keeps on telling us that there is adequate funding for GCSE, but everywhere we hear—from parents, teachers and local education authorities—that there is a desperate situation in the making with too little—[Interruption.]
    Mr. Speaker: Order. Mr. Ashdown.
    Mr. Ashdown: We hear that there is a desperate situation in the making, with too little funding being provided too late and beginning to blight the future of 600,000 children. To resolve this matter, will the Secretary of State take action similar to that which he took in the face of public concern about Brent, by calling for an HMI report to be produced urgently to look into GCSE funding in, say, 100 representative schools across the country?
    Mr. Dunn: I have no need to do that. Her Majesty's Inspectorate judges that these courses have got off to a satisfactory start and that pupils are generally enthusiastic about their GCSE lessons. HMI has said that on average there are sufficient material resources in schools at this stage.
    Mr. Jessel: How much additional money are the Government providing in the current year for GCSE, and how much does that work out per child in the fourth or fifth year on average? Can the Government take action to ensure that the local education authorities do not purloin any of this money for other purposes? Will he ask them to provide an assurance that they are spending that money for the purpose for which it was intended?
    Mr. Dunn: This year the Government's plans provides for the spending of £100 million of GCSE non-teaching costs—that is, for books, equipment, materials and ancillary staff. We shall continue to monitor carefully the resources that local education authorities target to their schools in support of GCSE activities.
    Mr. Radice: Is it not the case that only £25 million is being hypothecated for the GCSE examination? Is not the real truth that head teachers and parents alike recognise that the GCSE examination is under-funded and under-prepared and that there are far too many reports coming in of inadequate supplies of books, equipment and material, as well as shortages of teachers and lack of
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    training? Is it not the case that if we are to rescue this examination from being a damaging failure the Secretary of State must take immediate action?
    Mr. Dunn: This examination and its funding are the best endowed of any examination in recent history. We will, of course, continue to monitor the direction of funds by local education authorities to the funding of GCSE activities, but that, of course, is a matter for them.

    City Technology Colleges
    Mr. Peter Bruinvelsasked the Secretary of State for Education and Science what features of grammar school education he envisages the new city technology colleges adopting; and if he will make a statement.
    The Secretary of State for Education and Science (Mr. Kenneth Baker): My intention is that city technology colleges should develop new ways of improving the quality of education in a number of urban areas drawing on examples of existing good practice in maintained and independent secondary schools, including grammar schools.
    Mr. Bruinvels: Having always admired the work and dedication of staff at all our grammar schools, may I say how much I am encouraged by the news that Leicester is likely to receive a city technology college. I urge my right hon. Friend to give the go-ahead for that college as quickly as possible, as I know how much the students will benefit by the type of system that my right hon. Friend so ably presented to the House. It will certainly encourage all our young children to get on and develop.
    Mr. Baker: I am glad that my hon. Friend is pressing me for a city technology college in Leicester. I very much hope that it will be possible to find sponsors for one—certainly it might be possible to find sponsors elsewhere in the east midlands. I am sure that my hon. Friend will welcome such a college, as it will increase the choice for parents, which is presently limited, for free education from 11 to 18.
    Mr. Janner rose—[Interruption.]
    Mr. Speaker: Order. The hon. and learned Member for Leicester, West (Mr. Janner) is seizing his opportunity.
    Mr. Janner: The hon. and learned Member is very grateful for his opportunity to ask the Minister whether he thinks that Leicester, along with other cities, would be much better served if it had adequate educational resources. That would ensure that we have enough nursery schools, enough facilities for our primary and secondary schools and proper education for older people instead of being starved of resources, the means for which have been cut by this awful Government.
    Mr. Baker: The only opportunities that the hon. and learned Gentleman can seize are those created for him by my hon. Friend the Member for Leicester, East (Mr. Bruinvels). The resources available for city technology colleges are not at the expense of local education authorities' expenditure. The money that has been provided for CTCs is extra money. Therefore, the local education authorities will not lose money through the establishment of such schools.
    Mr. Holt: Would my right hon. Friend care to say that the new CTCs, like grammar schools, will be places of

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    excellence, hard work, discipline and respect for teachers and the opportunities that they present—especially in my constituency, where planning permission has already been granted by the Labour-controlled authority for a CTC 0on Teesside?
    Mr. Baker: Yes, I have been very glad to hear that my hon. Friend's local authority is prepared to provide a site for a CTC in Langburgh. I think that that decision shows the authority's foresight. At least one local company is prepared to come forward—I suspect others will do so—to provide the private funding. I am sure that, as a result of that CTC, the quality of education and the choice available to the parents in my hon. Friend's constituency will be enormously increased.
    Mr. Sheerman: But surely the Secretary of State must now know how damaging and divisive the city technology colleges will be. He has been told that by every major organisation and every reputable expert in the education world. Indeed, recently the director general of the CBI, John Banham, called the city technology colleges an "irrelevancy". What has the Minister to say about that? What has he to say about the more interesting experiments conducted on the Boston pattern to achieve a better relationship with industry, not a divisive one?
    Mr. Baker: Many companies have come forward to support the CTCs.—[HON. MEMBERS: "Name them."] I shall shortly he in a position to announce a third CTC. I assure the Opposition that sponsorship for others has been pledged and, in the course of time, we shall be announcing further CTCs.
    On the question of starving resources, I remind the Opposition that I do not agree that the CTCs will drain off the teachers. The hon. Member for Huddersfield (Mr. Sheerman) should appreciate that the numbers for teacher training this year have shown a dramatic increase. Overall there has been an increase of 14 per cent. in applications for later this year. There has been a 42 per cent. increase for mathematics teacher training, 80 per cent. for physics teachers and about 92 per cent. for craft design technology teachers. That shows that many young people want to go into the teaching profession.
    Mr. Brandon-Bravo: Does not the opposition to this concept indicate the cultural divide between us, because we on the Government side are looking for choice and variety and all the Opposition parties want just one option—the local authority? Is my right hon. Friend aware that in some authorities commercial and planning pressures are being placed upon those who would help this system? I find that utterly disgraceful.
    Mr. Baker: My hon. Friend is right. Those who oppose the principle of city technology colleges do so because they want to maintain the monopoly of the local education authority. We want to provide choice and variety—significant and real choice for parents. The city technology colleges that we have launched point the way to many other types of schools that we have in mind for after the election.

    School Closures
    Mr. Weetchasked the Secretary of State for Education and Science if he will make a statement on the current criteria and practice relating to the closure of schools in rural areas.
    Mr. Dunn: My right hon. Friend considers all proposals for the closure of schools on their merits, but he would expect local authorities and voluntary bodies, in formulating their proposals, to take account of the general principle set out in the White Paper "Better Schools" concerning the size of thresholds at which schools of different types can economically deliver a satisfactory curriculum. They must also take account of the wider considerations, including the distances to be travelled to alternative schools in the event of closure and of the age of the children making those journeys.
    Mr. Weetch: I thank the Minister for that answer. Does he realise that there is a great deal of discontent about, and indeed outright opposition to, the closure of many small rural primary schools? Does he further realise that many of these schools have built for themselves sound reputations with generations of children and that they are a social focus of village life? Will the Minister take it on board that there needs to be a flexible examination of each case, because at present, particularly in Suffolk, there is a great deal of opposition and discontent about these closures?
    Mr. Dunn: As the hon. Member for Ipswich (Mr. Weetch) knows, I have the responsibility for meeting hon. Members from all parts of the House who bring deputations from the communities that they represent about proposals for school closures and amalgamations. The strength of feeling in urban and rural communities is not lost upon me. Under the law, the task to which we have to respond is to consider individual proposals on their merits. I can gladly give the hon. Gentleman the assurance that we do just that.
    Sir John Farr: In view of the great importance of the village schools that are under threat, can my hon. Friend assure the House that he will treat these as special cases? Moreover, in future will he make arrangements to ensure that no closure will be permitted without specific ministerial consent?
    Mr. Dunn: Yes, Sir. There has to be ministerial consent to any proposal in any event, and I have to recognise the degree of support that rural schools may command in local communities. However, we have to consider the educational and financial arguments for closure, as well as the arguments that closures may affect the local community.
    Mr. Matthew Taylor: Is the Minister aware that in Cornwall over 100 rural schools face closure under present Government criteria? Does he not agree that it would make more sense to change those criteria so that the wider community in the villages is taken into account in deciding the future of those small rural schools?
    Mr. Dunn: The hon. Gentleman may care to spend some time reading our draft circular entitled "Providing for Quality". That circular talks about the desirable minimum sizes of different types of school. It was never intended for that minimum size level to be interpreted as narrowly prescriptive. The circular makes it clear that a true assessment of the viability of an individual school must take account not only of its size but of the ethos of the school, the quality, balance and expertise of its teachers and, of course, its non-teacher support, as well as links with neighbouring schools and the community.
    Mr. McCrindle: In secondary education, is it not a fact that comprehensive schools in rural areas, such as Ongar comprehensive school in my constituency, can survive on an entirely different basis of form entry than that which applies to schools in urban areas? As the alternative can frequently be extensive bussing of children from these rural areas, will my hon. Friend give some consideration to altering the basis upon which closures of rural schools are agreed or disagreed?
    Mr. Dunn: I am happy to take that on board. I remind my hon. Friends that our policy allows each set of proposals to be made on its merits. The policies of the Opposition parties would require closure, the elimination of any form of variety and a move to an 11 to 16 comprehensive system with tertiary colleges at their head. We draw back from any embrace of such a restrictive policy.
    Mr. Willie W. Hamilton: Does the Under-Secretary recognise that I gained the distinct impression, after a meeting with the parents of children of the South Brent primary school in Devon, that they would like to see that 110-year-old school closed and a new one provided? Will he ensure that the local authority gets adequate financial assistance to enable it to provide that new school?
    Mr. Dunn: On these matters and on all other matters relating to the South Hams constituency, I advise the hon. Gentleman to see my hon. Friend the Member for South Hams (Mr. Steen).

    Schools (Governing Bodies)
    Mr. Sternasked the Secretary of State for Education and Science when he expects to publish proposals for the transfer of greater financial responsibilities to the governing bodies of schools; and if he will make a statement.
    Mr. Kenneth Baker: I intend to bring forward legislation in the next Parliament to give all secondary and bigger primary schools control over their own budgets.
    Mr. Stern: Has my right hon. Friend seen the excellent article by the chief master of King Edward's school, Birmingham, in The Times this morning, which pointed out that independent schools for many years have benefited from the sort of governing body that my right hon. Friend is now proposing for state schools? Does he agree that state schools have nothing to fear from a system that has benefited independent schools, while at the same time enabled them to retain the benefit of good local authority management?
    Mr. Baker: Yes, Sir. Good schools have nothing to fear from delegation. In fact, delegation will give schools the power to get things done. The article in The Times this morning points the way forward. Where this is already happening in local authorities, head teachers and deputy heads are finding an enormous improvement in the quality of management of the school. I see no reason why, in the course of the next five years, every secondary school and all the large primary schools should not have control of their own budgets — and by that I mean the total amount of money.
    Mr. Corbett: Should the Secretary of State be in a position to influence these matters after the coming election, will he assure the House that before he tinkers
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    with budgetary control he will give a guarantee from the Dispatch Box that every school will have sufficient resources to carry out its responsibilities to our children?
    Mr. Baker: I certainly give that assurance. The hon. Gentleman must appreciate that I have increased education expenditure this year by 19 per cent., which is the largest increase from one year to another. My hon. Friends might well have an early opportunity to put our education policy to a wider test.
    Mr. Raison: Will my right hon. Friend confirm that at the same time as he provides greater financial decentralisation for schools, there will still be an important role for local education authorities to provide educational back-up to schools, particularly weak ones, in most parts of the country?
    Mr. Baker: I certainly agree with my hon. Friend. Local education authorities have the duty of managing the system of education at the local level. They have responsibilities and will continue to have them — for example, for the provision of the school premises, for the salaries of school staff, which delegation schemes have recognised, for special training, for in-service training and generally to help those schools that are not so well managed. I agree with that.
    Mr. Andrew F. Bennett: What is the average level of discounts offered by educational suppliers to local education authorities for the bulk purchase of books and materials? What discussions has the right hon. Gentleman had with educational suppliers as to whether those discounts would be available to individual schools if they were responsible themselves for purchase and payment? Could he also tell us what discussions he has had about the extra pay that might be necessary for head teachers to carry out these extra responsibilities and what extra staff schools will need if they are to have this purchasing and budgetary responsibility?
    Mr. Baker: I deplore the Opposition's negative approach to this proposal. There are 21 education authorities already experimenting along these lines, and where they have been implemented delegation schemes have invariably saved money at a local level. It would be up to the local headmaster, the deputy head and the governing body to make their own decisions about where they purchase, from whom they purchase and all the other matters concerning the running of the school.

    Student Grants (Parental Contributions)
    Mr. Simsasked the Secretary of State for Education and Science what guidance his Department offers as to the level of parental contributions expected from studens awarded maintenance grants.
    The Parliamentary Under-Secretary of State for Education and Science (Mr. George Walden): Parental contributions are assessed in accordance with the mandatory awards regulations. The scale of contributions is published early in the previous academic year and information about parental contributions is included in guidance which is published annually and is freely available.
    Mr. Sims: I am grateful to my hon. Friend for that reply. However, does he agree that the booklet of guidance to which he referred defines the grant as the sum needed

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    for the basic maintenance requirement of a student? Neither he nor our right hon. Friend the Secretary of State have disputed the evidence given by officials to the Select Committee that the total grant is now insufficient to meet the needs of a student. Surely it is misleading to imply that if parents are assessed for a contribution, that contribution together with such grant as is paid would be sufficient to meet a student's needs. Is that not unfair, both to the student and to the parent? Will my hon. Friend ensure that the next issue of the booklet of guidance makes the position much clearer?
    Mr. Walden: The Government have never claimed that the amount provided in grants is sufficient to meet all student needs. We have claimed on a number of occasions, quite rightly, that it must represent a balance between those needs and what the taxpayer can reasonably be called upon to pay for. My hon. Friend makes a fair point. The booklet is revised every year, and the wording is being re-examined.
    Mr. Foulkes: As the Minister has admitted that the total level of grant is not sufficient to meet a student's needs, from where does a student with poor parents get the rest of the money?
    Mr. Walden: The hon. Gentleman is clearly not very familiar with the grant system—
    Mr. Foulkes: Yes, I am.
    Mr. Walden: —because pupils with poor parents are the pupils who have the highest level of grant. Whether or not pupils have poor parents, they are able to use their spare time in holidays to earn other income. If we believed that the present system was fully satisfactory we would not be carrying out a review, the purpose of which is to improve the position of all students.
    Sir John Biggs-Davison: Since my hon. Friend last answered questions in the House, has there been any greater clarity attained or confusion reduced among the so-called alliance parties on the matter of student loans?
    Mr. Walden: I am now perfectly clear about the alliance's position. There are two policies. The first policy is that of the right hon. Member for Plymouth, Devonport (Dr. Owen), who is in favour of loans. The second policy is that of a more abstract entity that is known as the alliance, which claims to be against student loans. I should like to take this opportunity to commend the position of the right hon. Member for Devonport, who has a habit of reminding people of the importance of probity in politics. I am sure that the whole House will join me in commending the stand that he is taking on principle and not retracting the speech that he made on 14 February 1986 in favour of student loans.

    Teachers (Pay and Conditions)
    Mr. Greenwayasked the Secretary of State for Education and Science when he expects to appoint members of the interim advisory committee on teachers' pay and conditions; and if he will make a statement.
    Mr. Kenneth Baker: I shall appoint the committee this summer.
    Mr. Greenway: Will my right hon. Friend accept that it was the divisions between the teacher unions and the outdated majority voting system that killed stone dead the
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    Burnham committee on teachers' pay and conditions? Will he accept that there is an urgent need for a post-interim advisory committee on teachers' pay and conditions to he set up as soon as possible and that it will have to he different from the previous Burnham committee, for example, in not having a majority voting system?
    Mr. Baker: I have made it clear that the proposals that the Government have put forward are of an interim nature. We want to find a permanent machinery for the determination of teachers' pay and conditions. The proposals that I have seen, which are tentative so far, are in fact a revamped Burnham. The president of the Assistant Masters and Mistresses Association, Mr. Frank Groarke said in his address to the conference at Easter that some unions use the Burnham committee as a recruiting tent rather than as a negotiating body. I am not prepared to go back to a revamped Burnham. I want to find a way forward to determine a permanent machinery for the determination of teachers' pay and conditions, because I can assure the House that neither I nor any holder of my office wants to be the determiner of teachers' pay and conditions.
    Mr. Flannery: Does the right hon. Gentleman remember that, in response to a question from me last Thursday, the Prime Minister said that the Government would
    "use the coming years to secure a new negotiating arrangement"?—[Official Report, 23 April 1987; Vol. 114, c. 790.]
    The two major unions, which represent the vast majority of teachers, met because of that answer and were outraged at what the Prime Minister had said. I do not know whether the Prime Minister tells the right hon. Gentleman, but she must have received a joint letter from those two unions today, in which they say that if she will discuss—[Interruption.]
    Mr. Speaker: Order. The hon. Gentleman should ask a question, not make a statement.
    Mr. Flannery: I am asking a question Mr. Speaker. Does the right hon. Gentleman know that the Prime Minister has received a letter today in which those two unions make it clear that if she will agree to negotiate properly about next year's wage arrangements they will see her, but they want a promise first, and that is the only way in which our children can have an uninterrupted education?
    Mr. Baker: I am aware that a letter has been sent to my right hon. Friend the Prime Minister asking for a meeting between Mr Jarvis and Mr. Smithies and my right hon. Friend. I can see no reason why my right hon. Friend should see those two union leaders, because six weeks ago I invited them to see me and they declined to do so. Those are the only two union leaders who have not seen me. The other four union leaders have discussed with me the draft order before the House, which I understand might be debated quite soon. The other two leaders have refused to come in and make their views known. I have made it clear that I do not want to be the determiner of teachers' pay and conditions. All interested parties will find it difficult readily to agree on a permanent machinery, but there must be no going back to the form of negotiations under Burnham.
    Mr. Pawsey: Will my right hon. Friend confirm that the interim committee, as its name suggests, is of temporary

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    duration and that its maximum life will be until 1990? Will he further confirm that the committee is designed to provide a breathing space between the demise of the Burnham committee and the introduction of new negotiating machinery? Will he repeat to the House his invitation to union leaders to meet him to discuss new machinery for negotiating teachers' pay and conditions? Will he confirm that two and a half years is a long time and that that period should be reduced?
    Mr. Baker: There is no reason why the interim advisory committee should continue to operate until 1990. I wish to confirm that to the House. Later this year I want to meet the teachers unions, the local education authorities, churches and parent-teacher associations to try to find a permanent machinery. There are many models, ranging from a joint negotiating committee to a review body. Suggestions have been made that specific recognition should be given to the position of heads and deputy heads.
    Mr. Spearing: The Secretary of State has constantly asserted the importance of an interim measure. Does he agree that consent is an important element in all educational processes? Why did he not set up a tribunal of mutally acceptable persons to determine the interim procedure for negotiations? Would that not have produced a better atmosphere and been the most responsible thing for him to do?
    Mr. Baker: I did something rather better. I brought a Bill to the House, which was debated in this House, and in the House of Lords, without any guillotine or restriction on debate. All proposals were put forward during debates on that measure. As to the negotiating rights that are being claimed at the moment, one of the unions which is most strident in claiming those rights, the NAS/UWT, has for the past year sat on the sidelines and refused to take a constructive part in the negotiations, which were suspended, and organised disruptions while the negotiations were continuing.
    Mr. Patrick Thompson: Will my right hon. Friend accept that there is a world of difference between the appalling image of the teaching profession that is put across by the Easter conferences, or some of them, and the reality of the many good and moderate teachers who are doing good work in classrooms in Norwich and up and down the country? Will my right hon. Friend describe the ways in which he will help to restore the confidence of those good teachers in the way ahead in these negotiations and talks?
    Mr. Baker: I completely agree with my hon. Friend. At the Easter conferences we saw on our television screens a parade of militants. The majority of teachers are dedicated people. They are rightly held in high regard by the community. What we saw over the Easter weekend was a meeting of union activists. The disruption and chaos that are talked of should not be exaggerated. Before Easter, about 1 per cent. of schools were disrupted. Although that is small, it is unacceptable, because any disruption is unacceptable. Disruption is unjustified. Teachers will receive an increase of 16 per cent. this year and at the end of May will have substantial back-pay increases of several hundred pounds in their pay packets.
    Mr. Radice: Is it not the case that in their letter to the Prime Minister today the teacher unions offered a way out of the present impasse and showed the way to peace in our
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    schools? They made it clear that if the Government were prepared to agree to the restoration of negotiating rights for the 1988 pay round they would call off their action. Will the Secretary of State tell the House that either he or the Prime Minister will immediately arrange a meeting with the unions to discuss their constructive new initiative?
    Mr. Baker: Six weeks ago I invited the leaders of the two unions to see me, but they decided not to come in. I saw the leaders of the other unions and they expressed their views about the new negotiating machinery. I reiterate that I am willing later this year to meet the teacher unions and the local education authorities, which, I understand, are sending me proposals, because I wish to reconfirm that in no way do I or the holder of my office wish to be the determineor of teachers' pay and conditions. We need a new permanent machinery, but so far the proposals that have been put to me are nothing more than a revamped Burnham.
    Mr. Dykes: Contrary to the bluster and histrionics of the hon. Member for Durham, North (Mr. Radice) and the teacher union conferences, will my right hon. Friend confirm that his moderate approach is the best way to obtain peace again in our schools, which will be supported by the vast majority of moderate and sensible teachers, provided that there is a real commitment to the restoration of negotiating rights as soon as possible?
    Mr. Baker: I confirm that fewer than I per cent. of the profession are likely to disrupt schools this week. That is deplorable in view of the settlement that has been made. I confirm, as I said earlier, that we must find a more permanent machinery. That will be difficult in view of the different opinions of the various union leaders, but I shall persevere and try.
    Mr. Ashdown: Does the Secretary of State realise that, almost certainly, he has within his hands the power to end this disruption if he will stop mouthing words and take action—[Interruption.]
    Mr. Speaker: Order.
    Mr. Ashdown: With the permission of the public school Benches opposite—
    Mr. Speaker: Order. I look after that.
    Mr. Ashdown: —almost any action to begin to restore to teachers their rights to negotiate pay and conditions? Does he not realise that if he will not do that many in the country will draw the conclusion that he is cynically and deliberately playing into the hands of the militants for votes, scarificing peace in our schools for Tory advantage in the ballot box.
    Mr. Baker: The hon. Gentleman could not have heard me. I have invited these two union leaders to come in and they have declined to do so. I want to find a permanent machinery as soon as possible, but the hon. Gentleman should not disguise from himself the great difficulty when the different unions have different interests and different views on what such machinery should be.
    Mr. Spencer: Is my right hon. Friend aware that the NUT in Leicestershire has called for the reinstatement of the teacher who was sent to prison for dangerous drug offences? Does that not display an attitude to teachers' conditions which no responsible parent would share?
    Mr. Baker: I read a report of that and I find that request quite deplorable. Those who have been convicted of dealing in drugs should not in future be allowed to be in charge of children.

    General Certificate of Secondary Education
    Mr. Pikeasked the Secretary of State for Education and Science if he will make a further statement on the progress of the GCSE examination.
    Mr. Dunn: Last September some 600,000 pupils started courses which will lead to the first GCSE examinations in the summer of 1988. These courses have got off to a satisfactory start. The vast majority of teachers are committed to making a success of the new examination and the majority of lessons are deemed to be of an adequate quality and standard.
    Mr. Pike: How can the Minister stand before the House and give such a complacent reply, which is so obviously at variance with the views of the majority of people in education, who believe that there has been insufficient preparation for the GCSE and that insufficient resources are available for the examination? How does he equate the £100 per student figure which the Secretary of State claims is the figure, with Lancashire county council's figure, which is nearer £30?
    Mr. Dunn: Opposition Members ought to behave better than that. Continually to run down a major and successful change in the examination structure of this country simply will not do.

  PRIME MINISTER

    Engagements
    Mr. Budgenasked the Prime Minister if she will list her official engagements for Tuesday 28 April.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Budgen: Will my right hon. Friend find time to come to Wolverhampton and explain that strict control of immigration is essential to any improvement in race relations? Will she stress that the number of people coming to this country for settlement from the New Commonwealth and Pakistan has dropped from 34,000 in 1980 to 22,500 in 1986? Will she, further, allow the Opposition parties the opportunity to explain how their proposed repeal of the present system of immigration control, and its relaxation, is likely to improve race relations?
    The Prime Minister: I agree with my hon. Friend that the numbers coming to this country through immigration have dropped. It is our intention to remain firm on immigration control. I agree with my hon. Friend that we should question the Opposition about their proposals to repeal the Immigration Act 1971 and the British Nationality Act 1981, which are the heart of our immigration control.
    Mr. Kinnock: Will the Prime Minister tell us whether she is actively opposed to any increase in the rate of VAT or any extension in its scope?
    The Prime Minister: There is no way in which a Government of any political colour can say that they will never increase either value added tax or income tax. It was a Labour Government who extended the standard rate of VAT to petrol and snack foods. In November 1974 that Government put a new value added tax of 25 per cent. on petrol, and later extended the higher 25 per cent. rate to television sets, radios, electric domestic appliances, cameras, jewellery, boats and caravans. There is no way in which a responsible Government can say that there will be no increase whatsoever in any particular tax.
    Mr. Kinnock: I did not ask the Prime Minister to make guesses. I asked her whether she is opposed to an increase in the rate of value added tax, yes or no? Is she opposed to an extension in the base of VAT? Does the Prime Minister accept that as she said in 1979 that the Government had no intention of raising VAT and then increased it by 87 per cent., the people of this country are rightly concerned when she dodges in the way that she does?
    The Prime Minister: I call the right hon. Gentleman's attention to the entire record on value added tax. — [Interruption.]
    Mr. Speaker: Order. The Prime Minister is entitled to a hearing.
    The Prime Minister: VAT was introduced at the standard rate of 10 per cent. The zero rate covered food, fuel, new housing, public transport, young children's clothing, and so on. On 1 April 1974 the Labour Government extended the base of VAT to petrol and snack foods. Just before the next election they cut the standard rate to 8 per cent. Following that election they raised the rate to 25 per cent. on petrol. Following that, they raised the rate to 25 per cent. on television sets, radios, electric domestic appliances, cameras, jewellery, boats and caravans.
    The right hon. Gentleman is trying to distract attention from his party's colossal public expenditure, and it was the Labour Government who put up value added tax.
    Sir Trevor Skeet: Is my right hon. Friend aware of the bogus election propoganda—[Interruption.]
    Mr. Speaker: Order. There is so much noise that I cannot hear whether the question is in order. I hope that it is.
    Sir Trevor Skeet: Is the Prime Minister aware of the bogus manifesto on the Conservative—
    Mr. Speaker: Yes, but it is not the Prime Minister's responsibility.
    Sir Trevor Skeet: Is my right hon. Friend not aware, too, that the Labour party has put forward this manifesto as it has no policies of its own?
    The Prime Minister: We are used to smears and scares.[Interruption.]
    Mr. Speaker: Order.
    The Prime Minister: We are used to smears and scares from the party in opposition. May I give the House an example? During the last election campaign the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said that if the Tories were allowed to win the election they would within five years put an end to the National Health Service—[Interruption.]
    Mr. Speaker: Order. I sense an electioneering atmosphere.
    The Prime Minister: Since 1978 expenditure on the National Health Service has increased from £7·5 billion to nearly £20 billion this year, an increase of 31 per cent. after allowing for inflation. We have had the VAT scare before, when it has been alleged that we were going to put VAT on food. I gave an undertaking in 1984 that we would not put VAT on food. It was the party that is now in opposition that did that.
    Mr. Steel: Will the Prime Minister agree that there can be no cover-up of treason and that the secret services cannot be allowed to operate as a state within a state? Would it not be healthier if, instead of spending time and effort trying to stuff various cats back into their bags, the Government were to make a frank statement to the House and set up a new inquiry into the operation of the secret services?
    The Prime Minister: As the right hon. Gentleman is aware, I have no ministerial responsibility for events before this Government came to office. There is nothing that I can add to the statement made by the right hon. Member for Cardiff, South and Penarth (Sir J. Callaghan) in 1977, and Lord Wilson associated himself at that time with that statement. I believe that there was a Lib/Lab pact at the time, too.
    Sir William Clark: Does my right hon. Friend agree that if only half the promises of the Labour party were implemented there would be not only a massive increase in VAT but a massive increase in the standard rate of income tax?
    The Prime Minister: I agree totally with my hon. Friend. The fact is that we are the party that reduces taxation, and the Opposition are the party that increases public expenditure and votes against the reduction of income tax.
    Mr. Dubsasked the Prime Minister if she will list her official engagements for Tuesday 28 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Dubs: Is the Prime Minister aware that when Lazard Brothers was advising Westland at the time of the takeover, a closely associated Swiss bank, Fils Dreyfus, took part in an illegal concert party to buy Westland shares? Is she further aware that that conspiracy to achieve her policy objectives looks even worse when one considers that her former Defence Secretary, Sir John Nott, is chairman of Lazards, and that one of her advisers, Mr. Gordon Reece, is a public relations adviser with that bank? In view of the nasty smell arising from that, does the Prime Minister agree that a Companies Act investigation should be set in motion urgently?
    The Prime Minister: The hon. Gentleman knows that a decision was taken not to do that because there was insufficient evidence at the appropriate time. If the hon. Gentleman has any evidence, which, I suspect, he does not, perhaps he will give it to the proper authorities.
    Mrs. Ann Wintertonasked the Prime Minister if she will list her official engagements for Tuesday 28 April.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mrs. Winterton: Is my right hon. Friend aware that the National Society for the Prevention of Cruelty to Children holds its annual general meeting tomorrow? Will she join me in paying tribute to that organisation for the important and sensitive work that it undertakes on behalf of children? Furthermore, will she approach our right hon. Friend the Home Secretary and give him every support and encouragement in introducing new ways to enable abused children to give evidence without added trauma?
    The Prime Minister: I gladly join my hon. Friend in paying tribute to the NSPCC, which many hon. Members on both sides of the House have supported for many years. My right hon. Friend the Home Secretary will issue a paper next month on the use of video and other evidence to enable children better to give evidence about what happened in their case.
    Mr. Nicholas Brown: Has the Prime Minister had an opportunity to read yesterday's edition of The Independent and the serious allegations that are contained therein? Can she give the House an explanation of why the Government are trying to cover up those matters rather than trying to investigate them, as they should do? Does the Prime Minister not realise that—
    Mr. Speaker: The hon. Gentleman must bear in mind the sub judice rule in this case.
    Mr. Brown: I am trying carefully to do that, Mr. Speaker. Does the Prime Minister not realise that she is giving the country the impression that the Government regard themselves as the beneficiaries of past MI5 mistakes?
    The Prime Minister: The hon. Gentleman will be aware, in spite of his attempt to get round it, that I have no ministerial responsibility for things that happened before I came to office. He will also be aware that there was a statement in the House that those events had been inquired into at the time, and that the previous Prime Minister, Lord Wilson associated himself at that time with the statement. He will be further aware that I have been the first to make statements on specific security matters when I have thought it proper to do so.
    Mr. Sternasked the Prime Minister if she will list her official engagements for Tuesday 28 April.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Stern: Will my right hon. Friend reassure my constituents and the many other people who live around the Severn estuary by saying that, at least as far as she is concerned, the substantial risks that are posed to the environment, industry, ports and public health from the threat of the Severn barrage will be overridden only if there is a clear and overwhelming national need for such a barrage?
    The Prime Minister: The studies of the barrage by the Severn Tidal Power Group are supported by the Central Electricity Generating Board and the Department of Energy. Those studies include environmental and regional issues and they will be discussed with all interested parties. Any future decision on the barrage will include consideration of all the relevant factors, including those two important factors.
    Mr. Mason: The Prime Minister is undoubtedly aware of the turbulence and unease in the Province of Northern

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    Ireland due to the increased terrorist activity of the Provisional IRA. She will now also be aware of the conclusions of the security conference that was held in Stormont castle last night. What new measures does she intend to introduce to combat the increased activity of the terrorists in the Province?
    The Prime Minister: I am sure that the right hon. Gentleman would and probably did join yesterday in
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    condemning the vile and cowardly acts that took place against Lord Justice and Lady Gibson and other members of the security forces. I have been in touch with my right hon. Friend the Secretary of State for Northern Ireland, and will continue to be in touch with him later this week. I am sure that the right hon. Gentleman will understand that we do not make statements about extra security measures.

State Security
3.31 pm
Mr. Speaker: I have a brief statement to make, which may be helpful to the House.
It might be helpful if I expand on the ruling that I gave last night in response to a point of order from the hon. Member for Linlithgow (Mr. Dalyell) about the extent to which issues connected with the publication of a book by Mr. Peter Wright are at present sub judice.
What may not now be discussed are the Attorney-General's decisions to bring proceedings against certain British newspapers and the action of the newspapers in publishing what they did. The content of the newspaper articles and the information they reveal are not sub judice, and hon. Members may continue to refer to those matters in debate and at Question Time.
In this context there is a further point to be made clear to the House. There are today no new developments by way of further details from Mr. Wright's book which would allow me to consider the exercise of my discretionary power to grant an emergency debate under Standing Order No. 20. I am bound by the requirement in that Standing Order as to the time by which applications must be made, and such an application was made yesterday. Hon. Members are familiar with the many opportunities open to them as individuals, as well as to the official Opposition and the other Opposition parties, to raise matters of their choice. We have an example of an Opposition Day today. It is important that hon. Members should pursue their wish to raise these matters with Ministers through the opportunities made available to them, and not seek to debate them with me through thinly disguised points of order when I am in no position to help.
3.32 pm
Mr. David Steel: On a point of order arising from your statement, Mr. Speaker. Yesterday morning I tabled an early-day motion calling on the Prime Minister to stop hiding behind the statements of 1977 and to deal with the new revelations of Mr. Peter Wright. That motion was accepted in the Table Office and, accordingly, in the afternoon was released to the press.
At about 6 o'clock you were informed that the Attorney-General had taken new proceedings against The Independent and other newspapers and accordingly you ruled that my motion had become sub judice. I have absolutely no quarrel with that ruling. However, the motion is open for members of the public and, indeed, hon. Members to read in this morning's newspapers. The one place they cannot read it is on the Order Paper of the House of Commons. Is that not symptomatic of what is happening to us during all these discussions? There can be widespread discussion in editorials and articles in newspapers, but the one place we cannot adequately discuss the matter is here in the House.
Is it open to you, Mr. Speaker, as our Speaker, to put it to the Government that continued recourse to the courts is hindering us in one of our most fundamental duties, which is the protection of the very democracy that we are here to represent?
Mr. Speaker: The right hon. Gentleman gave me notice that he would raise this matter. It is correct that he tabled
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a motion yesterday morning. At that time no action had been taken by the Law Officers regarding the newspaper article on the alleged events of 1977 relating to intelligence matters. The motion was in order, so was sent to the printers. However, later in the day action was announced by the Law Officers and, as the House knows, I ruled that that brought the sub judice rule into play. This meant that the right hon. Gentleman's motion could no longer go ahead. He was so informed, but I understand that it was not until today that the relevant message reached him. It will, of course, be open to the right hon. Gentleman to decide, after any court proceedings are concluded, whether he wishes to renew that motion in its original or some other form.
Mr. Neil Kinnock: On a point of order, Mr. Speaker. The whole House, naturally, will accept your ruling and indeed applaud the way in which you have been good enough to set out in the form of a statement the thoughts that guide you and the way in which you intend to conduct affairs.
Could I refer to part of that statement—notably the following short sentence:
"What may not now be discussed are the Attorney-General's decisions to bring proceedings against certain British newspapers and the action of the newspapers in publishing what they did"
and address myself to what I believe to be a point of order which is fundamental to the conduct of order in this House.
First, while everyone can see the validity of what we consider to be the sub judice rule, because it ensures that not even proceedings in this House can influence the conduct of a case before the courts, when it is also the case that every newspaper in the world outside Britain, and indeed English language newspapers some editions of which are published in Britain, can to their heart's content refer to and examine the issues thrown up by the case in point, I wonder whether there is a case for a reappraisal of the traditions of the House in order to establish exactly where our boundaries of the sub judice rule are drawn in this age of very easy international communication, an age for which it is possible that — in some respects — our proceedings are not properly equipped.
Secondly, can I also put the point to you, Mr. Speaker, that it certainly is the case, as the right hon. Gentleman the leader of the Liberal party earlier said, that security is indivisible and that security and its requirements must command the general support of hon. Members on all sides of the House, elected as they are by the people of this country. There is, however, a profound question when an issue relates to security and has remained outside the public domain, and when an issue has received such breadth of coverage as to give the impression that it is the Government's political interests that are being safeguarded rather than the interests of security.
I raise these matters because they are fundamental to the relationship between this democratic House and a democratic and free press and the conduct of Government in our country. I would certainly be more than prepared to ask you to reflect further, and to have time to reflect, upon the issues raised in this particular case, since the last thing that any democrat could want is the creation of a precedent in this case that would effectively blanket out free expression in this country in the way that the Government so clearly want.
Mr. Speaker: The Leader of the Opposition has raised a point of order with me and I must say to him and to the whole House that I am bound by the sub judice rule as it is operated in this House. If the House wishes to the resolutions on sub judice, it is open to it to raise that matter with the Select Committee on Procedure and no doubt this important matter will receive fresh consideration. But it might be for the advantage of the House if I were to set out the sub judice rule as referred to in "Erskine May" on page 429. It is this:
"matters awaiting or under adjudication in all courts exercising a criminal jurisdiction … should not be referred to (a) in any motion (including a motion for leave to bring in a Bill), or (b) in debate, or (c) in any question to a Minister including a supplementary question:"
The case brought by the Attorney-General is of a criminal character and it was set in motion by the Attorney-General's application yesterday. I am bound by that rule.
Mr. Tony Benn: As you know, Mr. Speaker, I am seeking to move Standing Order No. 20 today in a way that does not either breach the sub judice rule or breach the rule that new material is required for urgency to be attracted to the motion. I have listened very carefully to your ruling, Mr. Speaker, but it relates to action by the Government against The Independent, and the general ruling about Standing Order No. 20 is that there should be new material. Accordingly, in the light of the Prime Minister's statement today that she would make no statement, I have sought to base my Standing Order No. 20 on that fact. The allegations that have been made and that are now in the public domain and noted in the pages of Hansard—I placed them there yesterday—are very serious in character—
Mr. Speaker: I can help the right hon. Gentleman. I have received from the right hon. Gentleman an application under Standing Order No. 20 which is in different terms from the application that he made yesterday. I am quite prepared to hear it, but is the right hon. Gentleman seeking to make it now? If he is, I will hear it.
Mr. Benn: I was seeking your advice as to whether you would hear it, Mr. Speaker.
Mr. Speaker: I have said I will.
Mr. Benn: I beg to ask leave to move the Adjournment of the House under Standing Order No. 20 for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the refusal of the Prime Minister to answer a question about the new situation in relation to statements made by a former MI5 officer that he and others attempted to subvert an elected Government".
This application arises directly from the Prime Minister's refusal to make a statement about those allegations, which are now in the public domain and are quoted in yesterday's Hansard, about illegal acts by the security services, and, therefore, that information was not available yesterday. Secondly, this does not relate to the court case against—[Interruption.]the—
Mr. Speaker: Order. A submission is being made to me. I cannot hear it — [Interruption.] I call for order on both sides of the House.
Mr. Benn: This does not relate to the court case. Indeed, the application goes to the root of the matter, that an MI5 officer has stated that he and other MI5 officers attempted
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to subvert Her Majesty's Government in 1974. Today the Prime Minister made a most remarkable statement that the Law Officers have no responsibility for enforcing the law where breaches occurred before they came into office. That is an unprecedented statement for a Prime Minister to make.
Since the allegations relate to members of all three parties, to my right hon. Friends who, along with me, sat in Government, to others, including the leader of the alliance party, who was then in that Government—and indeed some of the allegations relate to the right hon. Member for Old Bexley and Sidcup (Mr. Heath), who was the Leader of the Conservative Government—it is not a party but a constitutional matter. Given its constitutional importance and its obvious urgency, I submit that this is a matter that is uniquely appropriate for Standing Order No. 20 application and that it would be quite wrong to ask Members who raise this matter to seek a remedy through the use of Supply days.
Finally, Mr. Speaker, I appeal to you most earnestly to use your discretion under our Standing Order, to allow a hearing of these grave allegations of subversion and sedition against an elected Government, which the Prime Minister herself has an obligation to undertake, arising from her office and the oath that she has taken as a Privy Councillor.
It is on that constitutional and House of Commons basis, Mr. Speaker, that I ask you, now—or later, if you want to give it further consideration—to afford this matter the urgency that it deserves and not to push it off to what may be the party interest of those parties that have access to Supply days.
Mr. Speaker: The right hon. Member for Chesterfield (Mr. Benn) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the refusal of the Prime Minister to answer a question about the new situation in relation to statements mady by a former MI5 officer that he and others attempted to subvert an elected Government".
I have listened with great attention to what the right hon. Gentleman said, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 20. I cannot therefore, submit his application to the House.
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker.
Mr. Martin Flannery: On a point of order, Mr. Speaker.
Mr. Speaker: Not to challenge that ruling. I will take Mr. Campbell-Savours first.
Mr. Campbell-Savours: In your ruling on the sub judice aspect of this matter, Mr. Speaker, you quoted from "Erskine May". I notice that you quoted the second half of the sentence. The first half of that sentence says:
"Subject to the discretion of the Chair".
Therefore, I put it to you that you have some discretion according to "Erskine May" as to whether these matters should be taken as sub judice in the House. It is on that basis that I raise my point of order.
We are informed that the sub judice ruling relates to a contempt by The Independent and others about proceedings brought by the Attorney-General against The

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Observer and The Guardian which will be heard in the House of Lords in June. The proceedings will be before the Law Lords. The question is: do the proceedings in the Lords deserve the protection of sub judice? Could the Law Lords truly be influenced in their judgment by public debate on these matters? Of course, your ruling would preclude debate in this Chamber—[Interruption.]
This point of order is utterly legitimate and genuine. Hon. Gentlemen would do well to listen and learn.
I put it to you, Mr. Speaker, that whereas there is good reason to believe that juries can be influenced and that, therefore, sub judice considerations should determine what Parliament can be free to debate, there is equally good reason to believe that judges and Law Lords could never be influenced by public debate. This case was made during the judgment in the Attorney-General v Times Newspapers Ltd in 1974. That judgment followed upon publication of an article by The Sunday Times. The noble Lord Reid said:
"But I must add to prevent misunderstanding that comment where a case is under appeal is a very different matter. For one thing it is scarcely possible to imagine a case where comment could influence judges in the Court of Appeal or noble and learned Lords in this House. And it would be wrong and contrary to existing practice to limit proper criticism of judgments already given but under appeal."
I put it to you Mr. Speaker, that the Law Lords clearly do not need or require the protection of sub judice. It is their case that they would not be influenced by wider debate. Therefore, in considering these matters, if you made your judgment on the basis that the Law Lords need protection when they examine these matters in June or July, I put it to you that you might care to reconsider the matter because they themselves clearly do not subscribe to that view. If they are correct, it would not be necessary for you to apply the sub judice rule to our proceedings on these matters.
Several Hon. Members rose—
Mr. Speaker: May I deal one at a time on this matter? I read comment to this effect in a newspaper this morning so I have had an opportunity to look into the matter in great depth, which I have done. The sub judice rule is a self-denying ordinance made by the House to avoid the appearance of the Legislature seeking to influence the courts. Whether they would be influenced is a different matter. I must say to the House and to the hon. Gentleman that I have already explained the large area that remains open to debate, unaffected by the new case. I am not prepared to allow references to this case itself.
Mr. Andrew Faulds rose—
Mr. Flannery rose—
Mr. Dennis Skinner rose—
Mr. Anthony Nelson rose—
Mr. Speaker: I will take Mr. Nelson first.
Mr. Nelson: Further to that point of order, Mr. Speaker, arising out of your statement and the points on Standing Orders which were made by Opposition Members. What the House has been treated to this afternoon is not just an abuse but a series of bogus and mischievous points from Opposition Members. Will you be good enough, Mr. Speaker, to advise them that what is wrong is not the rules and conventions of the House but
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the way in which they seek to table mischievous motions and raise mischievous, misleading and irresponsible points during Question Time? If they were to exercise a self-denying ordinance, no problem would arise.
Several Hon. Members rose—
Mr. Speaker: Order. In the interests of the Opposition day debate, in which there is a great demand to speak, I shall take all points of order at once.
Mr. Flannery: Further to that point of order, Mr. Speaker. My point of order will be brief, and it springs from the fact that the answers given so far have caused a great deal of confusion among us. I want to try to get at the realities. I know that you are bound by what has happened but, having said that, surely it is obvious—at least, it is to me in probably a simplistic way — that contempt of the House is anything that brings the House into contempt. When the entire world can discuss a matter and the House cannot, I think that the rest of the world has a right to be contemptuous of the House. Therefore, I am seeking some way in which a cause of intense and massive public concern can be dealt with in the House, and I am concerned that outside the House millions of people will think, rightly or wrongly, that a device has been used to prevent the House discussing something which is of public concern.
Mr. Edward Leigh: Further to that point of order, Mr. Speaker. You have often said that you wish to protect the rights of Back-Bench Members. Many Back-Benchers may want to take part in the important debate on housing, which affects people, and not listen to bogus points of order about an issue which was dealt with fully by the right hon. Member for Cardiff, South and Penarth (Sir J. Callaghan) many years ago. We all know that the only person who has successfully destabilised the Labour party has been the right hon. Member for Chesterfield (Mr. Benn).
Mr. Faulds: Further to that point of order, Sir. It is quite clear that the Government consider that considerations of confidentiality are more important than any examination of attempts to subvert a previous Administration. The Prime Minister is being somewhat disingenuous in saying that she can do nothing about examining these matters.
Is it not the case, however, that criminal events in the historic past can certainly be raised and enquired into by the Law Officers of any subsequent Government? And is it also not the case that if the Prime Minister really wanted to clear the air about this matter and look at the many misdemeanours of MI5 over the last few years she could establish a Royal Commission perfectly easily to examine all these issues, including the attempt to subvert a previous Government?
Mr. Richard Holt: Further to that point of order, Mr. Speaker. Would it not have been in order for the Opposition, any time until early this morning, to have altered the business? If the Opposition Front Bench was so concerned to have this matter debated publicly, its spokesmen could have done so within the confines of sub judice laws if they were skilful enough at debating and oratory in the House. The fact that the Opposition Front Bench spokesmen have failed to do shows clearly that they do not want the subject debated.
Mr. John McWilliam: Further to that point of order, Mr. Speaker. What concerns me are your own words. It is quite right that "Erskine May" has the sub judice rule in it to dissuade the Administration from undue influence on the courts of this country. But there are two points here. First, "Erskine May" is not part of the Standing Orders of the House; it never has been and never will be. Secondly, although the sub judice rule is part of the resolutions of the House, I do not believe that it was ever intended to prevent the House from debating something which was more important than the role for which it was implemented.
In other words, why are we now prevented from debating a problem where someone has made serious allegations concerning the high crime of treason on the basis that a case has been brought under section 2 of the Official Secrets Act, which bears a much lower penalty in a lower court? That is the difficulty in which the House finds itself, and it is the high crime of treason allegedly perpetrated by the security services to which the House wishes to address itself, but has been prevented from doing so by the actions of the Executive.
Mr. Tony Marlow: Further to that point of order, Mr. Speaker. I think that in these circumstances hon. Members should try to help. If I may, I have got a helpful suggestion. The events that are referred to happened many years ago at the time of a Labour Government. They concerned a Labour Prime Minister. Some 10 years ago, another Labour Prime Minister made a full statement to the House saying what the circumstances were, and the whole matter was then cleared. It seems now that allegations are being made about the security services. The possibility is that the security services behaved improperly, but I would put it to you also, Mr. Speaker, that it is quite possible that the security services behaved properly and that the noble lord, Lord Wilson had some questions that should be answered. I would be grateful—
Mr. Speaker: Order. The hon. Gentleman said he was going to be helpful. I do not think that is very helpful.
Mr. Marlow: In fairness to the noble Lord, Mr. Speaker, can you advise the House as to whether there is any organisation or institution within the House which the noble Lord Wilson could address to clear his name?
Mr. David Winnick: Further to that point of order, Mr. Speaker. The Prime Minister said that she had no responsibility because these events took place before she took office. That is not in dispute, yet in November 1979 the Prime Minister made a statement about Blunt. If she was willing to make a statement about Blunt and his treachery, and events that certainly occurred before she became Prime Minister, what possible excuse can there be for denying us a statement about the allegations that have been made? I put this point to you Mr. Speaker, because it is the essence of this debate.
We live in a parliamentary democracy. Everyone who comes here is apparently committed to the maintenance of our democracy. Allegations have been made, that not one or two but 30 officials in the security service during the 1970s were deeply involved in treachery and subversion. It may be that the allegations are just lies. It may be that Mr. Wright is not telling the truth, but, if Mr. Wright is telling the truth, if these allegations have a great deal of
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substance about them, how is it that the House of Commons can be denied the opportunity of any debate on the flimsy grounds that the events happened to occur before the Government took office? Are we going to be in a position that we cannot have a debate unless it is in Opposition time?
Mr. Peter Shore: Further to that point of order, Mr. Speaker. It is perfectly clear to every hon. Member that you are not responsible for the failure of the Prime Minister to answer perfectly legitimate — indeed, more than legitimate — questions of major importance affecting the government of this country. If I am right, and if I am interpreting correctly your ruling, delivered some half an hour ago, Mr. Speaker, what you did deny to the Prime Minister was the possibility of her failure to answer such questions on the ground that it would be a breach of the sub judice rule. You told us clearly that the content of the newspaper articles, the information that they reveal, are not sub judice and Members can question them and they can be the subject of debate.
Several Hon. Members rose—
Mr. Speaker: I remind the House that this is an Opposition day. I am prepared to take all these points of order and deal with them together, but we should have regard to our colleagues. I cannot help hon. Members much further.
Mr. Churchill: Further to that point of order, Mr. Speaker. Is it not clear that at least the hon. Member for Workington (Mr. Campbell-Savours) has little confidence in the veracity of Mr. Peter Wright's writings? No fewer than four months have now passed since the hon. Gentleman made his false and malicious accusations in the House under the cloak of parliamentary privilege, against Sir Stephen Hastings and myself, and he still has not found the guts to repeat them outside the House.
Mr. Skinner: Further to that point of order, Mr. Speaker—
Mr. Flannery: The hon. Member for Davyhulme (Mr. Churchill) would not be here but for his grandad.[Interruption.]
Mr. Speaker: I do not know whether that was something I should or should not have heard.
Mr. Skinner: Further to that point of order. Mr. Speaker.
One of the features of the British constitution and the compilation of "Erskine May" is that, because we do not have a written constitution, the game has always been—to put it in crude terms—made up as we go along. I would remind you, Mr. Speaker—I am sure that you have looked at the evidence — that on numerous occasions when matters of sub judice have been brought before the House there have been somewhat different interpretations, according to the matter in question.
For instance, if you, Mr. Speaker, were to study the remarks made in 1971 in relation to the Industrial Relations Bill going through at that time and the sub judice aspect relating to Lord Donaldson, who was to be in charge of the industrial relations court, you would see that variations upon the sub judice ruling were made by the Chair.

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I would also remind you, Mr. Speaker, that that flexibility was apparent when the Clay Cross question was brought before the courts over a period of more than 12 months—[HON. MEMBERS: "Oh"].. Oh, yes. However, because the Clay Cross issue was about working men and women, somehow or other the House of Commons was able, over that period of more than 12 months, to discuss—albeit with the so-called sub judice ruling appertaining—all the matters affecting the Clay Cross issue.
During the miners' strike the same thing applied. During that year-long strike several injunctions were issued and matters were brought before the courts, but I would suggest that that did not restrain many people in this House from speaking on that issue at great length. You yourself, Mr. Speaker, understood that matter. Recently the same applied to the Liverpool surcharge. I believe that it is within the recollection of most people in the House that, even though that matter went before the High Court and the Law Lords, there was never any attempt at any time by you, Mr. Speaker, or even by Tory spokesmen and women, to suggest that nobody should talk about the Liverpool issue.
What I am saying is that this flexibility has allowed the House of Commons to discuss many subjects when it has wanted to. I put it to you, Mr. Speaker, that this whole issue should be looked at again. It is a matter of prime importance. That flexibility that has applied thoughout our constitution should apply in this case.
Several Hon. Members rose—
Mr. Speaker: Order. I will take four more hon. Members then we must move on.
Mr. Neil Hamilton: Further to that point of order, Mr. Speaker. Are you aware, Mr. Speaker, that Conservative Members would like to show solidarity with the right hon. Member for Chesterfield (Mr. Benn)? It must be of some concern to the House, as a corporate entity, if the security services have been seeking to undermine and destabilise the Labour party or Her Majesty's Opposition. Bearing that in mind, and as the Leader of the Opposition is doing such a splendid job of destabilising and undermining the Labour party, should we not have an inquiry as to whether he is an MI5 agent?
Mr. Allan Rogers: Further to that point of order, Mr. Speaker. I am not a lawyer, so I cannot argue on constitutional points, but it does seem to me that what my hon. Friend the Member for Bolsover (Mr. Skinner) said has a great deal of validity. Certainly in my relatively short period in the House it seems to me that there is one set of rules that apply to the Labour side and another set that apply to the Tory side. Quite honestly, I think that that is extremely unfair. You, Mr. Speaker, should accept a valid argument.
For a period of a year there were members of my constituency—miners—who were in front of the courts for no crime—they were acquitted. However, time after time, day after day, Ministers and Tory Members condemned them and discussed the issues in the House when those men were in front of the courts. If there is one rule for the Conservatives what about a rule for us? I ask you, Mr. Speaker, to look very closely at what happened during the miners' strike. Then you must accept the argument of my hon. Friend the Member for Bolsover.
Mr. Spencer Batiste: Further to that point of order, Mr. Speaker. You, Mr. Speaker, have reminded us that you are bound by the rules and Standing Orders of the House in these matters. However, over a number of years, many of us have heard the Opposition raise many points of order concerning the sub judice rule, which they claim has prevented them from debating important matters before the House. If those points of order were anything other than bogus one would have expected requests to have been made to amend the Standing Orders of the House, to produce a rule that would be more amenable to what the House regards as important.
Can you tell us, Mr. Speaker, whether you have received any requests from the Opposition for a review of our Standing Orders on the question of sub judice? Could you also, Mr. Speaker, cast some important light on the point raised by my right hon. Friend the Prime Minister, when she said that these matters arose before she assumed responsibility? What is the role of the right hon. Member for Cardiff, South and Penarth (Sir J. Callaghan) in these matters? Is his consent required for any review of the papers during his Prime Ministership? Has he given such consent?
Mr. Eric Forth (Mid-Worcestershire)rose—
Mr. Speaker: Order. I said that I would only take four more points of order, but I will take the hon. Member for Mid-Worcestershire.
Mr. Forth: I am the fourth. On a point of order, Mr. Speaker. Following the point of order made by my hon. Friend the Member for Elmet (Mr. Batiste) the Opposition, if they wish to pursue this, are not only free, but would be advised to take the matter up initially with the right hon. Member for Cardiff, South and Penarth (Sir J. Callaghan) the Father of the House. They might be well advised to do so in the confidential atmosphere of the Tea Room, where they may well find that they will obtain much more information and advice.
If you, Mr. Speaker, give the Opposition that advice, they can then go to another place in this building and seek out another player in this drama, Lord Wilson, who played a major part. The Opposition can then satisfy themselves as to the factual background of this matter before coming to the House and trying your patience and trying as they have, to abuse order in the House.
Mr. Speaker: I think that we must now move on. I believe that I can deal with all these matters.
First of all, I am bound by the rules of the House. the sub judice rule is a resolution of the House and I have no—
Mr.. Campbell-Savours: You have discretion.
Mr. Speaker: I have no discretion other than the one I have already mentioned. May I say to the House, and to those who say that there are those outside who will not understand, that I am in no sense seeking to stifle this discussion. That is not the Chair's function. The House has the remedy in its hands. In my statement earlier this afternoon I said that there are many opportunities for hon. Members to raise this issue and remain in order. There was an opportunity to do so today and there are other opportunities — private Members' motions, or in Opposition time, if that arises, or at Question Time—within my ruling. I am in no sense seeking to stifle this debate.
Mr. Campbell-Savours: We want a Minister at the Box to answer the questions.
Mr. Speaker: Order. That is a matter for the Government. The questions that have been raised with me are matters of order and I can rule only on matters of order.
Mr. Mark Hughes: Further to that point of order. Mr. Speaker. I doubt whether I shall ever address the House again, but may I just say that the discussion that I have heard has brought the House into such disrepute that, after 17 years as a Member, I trust that your successor, Mr. Speaker, never has to rule that we are not able to discuss a matter of such importance in such circumstances.
Mr. Speaker: Order. I have specifically not ruled that we may not discuss this matter. I have ruled on how it may be discussed.

Pension Trusts
4.9 pm
Sir Brandon Rhys Williams: I beg to move,
That leave be given to bring in a Bill to define the duties of trustees of occupational pension schemes; to require the Occupational Pensions Board to issue guidelines for the conduct of such trustees; to give further protection to the rights of early leavers; to require employers to make minimum contributions for pension provision as deferred remuneration; and for related purposes.
I dealt with these points in an Adjournment debate on 19 March, but as is the practice, unfortunately, with such debates, the conclusions were somewhat nebulous. However, we have a matter here which is of sufficient importance to justify our proceeding by way of legislation.
The reasons why I consider that such a Bill is particularly needed now may be summarised as follows: the changes in the tax treatment of pension funds in last year's Budget and in this year's Budget, particularly the tax treatment of apparent surpluses; the reforms in the law which offer great new opportunities for employees and employers to accumulate capital to provide for retirement in different ways; the spate of recent takeovers and company amalgamations, in which pension funds are often conspicuously involved; and the very rapid growth in the value of the assets of the funds held in trust, coupled with the fall in current inflation and inflationary expectations. All those things are creating a new context for pension fund managers or, as I prefer to call them, pension fund trustees.
Obviously, in seeking to introduce a Bill on this subject, I am aiming particularly at the trustees of final salary schemes, because in the case of money-purchase schemes the obligations of the trustees are much simpler and there is not so much controversy about them. I have often wondered why the term "defined benefit" schemes is used by professionals in describing final salary schemes, because it seems to me that the benefits are not precisely defined either as at the date of retirement or after the retirement of the beneficiaries. I also dislike the final salary principle, because the final salary schemes tend to favour long stayers and high flyers at the expense of the early leavers and the humbler members. Pension funds should treat all the beneficiaries with equal fairness.
I mentioned the treatment of the beneficiaries at the date of retirement or after retirement. I should like to draw the attention of the House to a parliamentary answer that I received yesterday from the Department of Health and Social Security. Unfortunately, the figures are available only up to 1983, but I understand that of about 2,000 schemes only about 2 per cent. had then decided fully to uprate the benefits that they were paying to people who were already in retirement in accordance with the retail prices index. That is to say, while the funds had been rising at least in line with inflation—and in some cases rising very much more rapidly than inflation—the trustees did not think it necessary to give justice to the beneficiaries already in retirement.
As I said, those were the figures available up to 1983. Even if I have misinterpreted them, I think that we can certainly say that the great majority of occupational pension schemes in the private sector — but not, of course, in the public sector, where this aspect is totally protected—have not looked after those in retirement so

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as to maintain their purchasing power in accordance with the change in the value of money. This is one of the things that the House ought to bring home to the trustees—that it is indeed their responsibility.
Just now we are in the process of considering the return to the sponsoring employers of sometimes very substantial funds which are deemed to be in surplus in the hands of occupational pension fund trustees. I consider that the trustees are justified in returning money to the sponsoring employers only when all the other possible options have been exhausted. At present that is certainly by no means clear to the trustees of these schemes.
My second suggestion is that we should require the Occupational Pensions Board to issue guidelines about the conduct of such trustees. It should be clear to the trustees that they are acting, not for the sponsoring employers, but for the beneficiaries. That is where their duties lie, just as if they were trustees of any other settlement. The duties of trustees should be clearly set out in writing, if only to enable the trustees to resist improper pressures from sponsoring employers or other interested parties.
Thirdly, I suggest that we should give further protection to the rights of early leavers. This is a very long-standing campaign of mine. I made my maiden speech on the subject nearly 20 years ago. It is a disgrace to the private sector occupational pensions movement—and certainly a serious criticism—that it has not adopted this practice long ago in the interests of elementary justice and good employment practice.
This is, of course, a very technical matter, but if hon. Members are interested I believe that a satisfactory recommendation was made in the amendment that I proposed to the Finance Bill under new clause 34 on 17 July last year. I shall not weary the House by reading again the suggestion that I made at that time, except to say that it was drawn up with the help of some of the most prominent people in the actuarial profession.
Next, I should like to require employers to make minimum contributions for pension provision as deferred remuneration. That is because it needs to be made clear that a pension fund set up in the private sector is not some kind of frill, or a special privilege, or bonus for employees, but that a pension is a matter of entitlement resulting from their service in the course of their careers. Ideally, I should like employers' contributions to be specified at at least 10 per cent. Anything lower than that is unlikely to produce the sort of pension that most people would regard as reasonable continuity of spending power into retirement after a full career of service.
I understand that in the public sector the cost of providing the two-thirds schemes is between 17·5 and 20 per cent. on top of current remuneration. Of course, one cannot put this burden on employers in the private sector until we have had the wholesale reform of national insurance, which obviously has to come very soon. In the meantime, the employers' contribution to the occupational pension scheme should be recognised as deferred pay. Making this payment is a practice that cannot be
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discontinued or adjusted from time to time simply because of the size of the fund that has accumulated from previous years, or the chances of the way in which the trustees have invested the fund. The employers' contribution should be at a rate determined as part of the contract of employment and should be quite unrelated to the amount of the fund that has accumulated at any particular time.
I have asked the leave of the House to add certain measures as related purposes in the conclusion of my Bill. I should like to mention three. We should increase the margin that it is permissible for trustees to hold on top of their currently foreseeable obligations. I suggest that that margin should be raised to 10 per cent. from the current 5 per cent. I remember from our discussions in Standing Committee when this proposal was introduced that it was said that the 5 per cent. margin could be interpreted on a quite liberal basis. Nevertheless, the exceptional wealth of some of the occupational pension funds at the present time may be transitional and I feel it is therefore unfair to oblige them to run down their funds when more difficult times may lie ahead.
We should make private sector occupational pension schemes fully unisex, and should do that by the adoption of suitable provisions in respect of the entitlement of surviving spouses. The House had an interesting debate on this subject yesterday when we considered the pension provisions for the widow of one of our former Speakers. The public consensus is that pension schemes should give strictly unisex treatment. There is no reason why that should not be possible.
Finally, I should like to specify a limit to self-investment by the trustees of occupational pension schemes to a maximum of 1 per cent. in the sponsoring employer's shares. That is one of the recommendations that I included in the Bill that I introduced by leave of the House as long ago as 1969. I think that it is also one of the recommendations which the House would have found helpful if it had adopted it at that time. Unusually, in view of the great technicality of this subject, I have not invited any other hon. Member to join me in preparing and presenting the Bill. I should like, however, to take this opportunity to say that I believe my Bill is supported by many right hon. and hon. Members in all parts of the House.
Question put and agreed to.
Bill ordered to be brought in by Sir Brandon Rhys Williams.

Pension Trusts
  PENSION TRUSTS
  Sir Brandon Rhys Williams accordingly presented a Bill to define the duties of trustees of occupational pension schemes; to require the Occupational Pensions Board to issue guidelines for the conduct of such trustees; to give further protection to the rights of early leavers; to require employers to make minimum contributions for pension provision as deferred remuneration; and for related purposes. And the same was read the First time; and ordered to be read a Second time upon Friday 8 May and to be printed. [Bill 142.]
Opposition Day
[12TH ALLOTTED DAY]
Opposition Day

  Housing
  Mr. Speaker: Before I call the Front Bench Spokesman I advise the House that I have selected the amendment in the name of the Prime Minister.
  4.20 pm
  Mr. Jeff Rooker: I beg to move,
  That this House believes that every household should be able to occupy a dwelling of the size, type, standard and location suitable to its needs, free from nuisance, harassment, racial discrimination or arbitrary eviction, and should have a free choice of tenure, freehold, leasehold or other, without prejudicing its mobility or its right to financial aid, equality under the law, or status; and strongly condemns Her Majesty's Government for its failure to provide for the housing needs of the nation over the past eight years.
  I thought you were about to ask for brief speeches, Mr. Speaker, and I was about to say that I have not the slightest intention of curtailing my remarks, notwithstanding that we have lost a little time. I understand the needs and wishes of hon. Members, but this debate is important. Hon. Members on the Back Benches and the Front Benches ought to be entitled to make speeches on this vital issue of "Housing: A major cause for concern".
  My first protest is that last Thursday, when the Leader of the House read out the title of the debate as "Housing: A major cause for concern", that was the title the Opposition wanted. We resent deeply the archaic, juvenile, stupid, bureaucratic rules of this House that prevent the Opposition from having their own title on their own motion. I understand that that is something we have to live with, but we deeply resent the fact that we are not allowed to have our own titles on our own motions. I say that to the Minister because I understand the point raised in the Government's amendment.
  The first part of the motion is:
  "That this House believes that every household should be able to occupy a dwelling of the size, type, standard and location suitable to its needs, free from nuisance, harassment, racial discrimination or arbitrary eviction, and should have a free choice of tenure, freehold, leasehold or other, without prejudicing its mobility or its right to financial aid, equality under the law, or status".
  So far in the motion I can take with me the Association of County Councils which, if one talks about power structures, I understand is hung; the Association of District Councils, which is under Conservative control; the Association of Metropolitan Authorities, which is under Labour control; the Association of Municipal Engineers; CHAR, which is the Campaign for the Homeless and Rootless; the Convention of Scottish Local Authorities; the Housing Centre Trust; the Institute of Housing; the Institution of Environmental Health Officers; the National Federation of Housing Associations; the National House-Building Council; the National Housing and Town Planning Council; the Royal Institute of British Architects; the Royal Institution of Chartered Surveyors; the Royal Town Planning Institute; and Shelter. These organisations, which are clearly not Labour party organisations, subscribe to every word of that part of the
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  motion I have just read out. Together they form the National Housing Forum which has housing representatives from across the political and professional spectrum.
  I will put the aims of the National Housing Forum on the record because I think they are important. Its aims are to make the case for increased public awareness of our growing housing difficulties, to secure more widespread support by politicians of all parties for an increased emphasis on housing, and to ensure that greater human and financial resources are committed to ending the misery brought about by bad conditions and housing shortages. On behalf of the Labour party I endorse those aims and I invite the Minister to do the same.
  In a short debate of three hours or thereabouts, I do not propose to recite another description of the problems that have been catalogued in a mountain of reports sent to hon. Members in recent years. We should look at the causes, resources and possible prescriptions. A major cause for concern is the lack of a national strategic housing policy. New initiatives, welcome as many of them are, operate only at the margin of the problem.
  We have to recognise that housing has a significant impact upon the health of people and their families. We must accept that, without decent housing, the social ills of family break-up, vandalism and crime, racial prejudice and discrimination, loneliness, and physical and mental illness are all multiplied and magnified. We have to accept that it is a major economic and social responsibility of each generation to build, repair, maintain and improve the nation's homes so that unfair burdens are not passed from one generation to another. That leaves aside the creation of jobs and the development of skills and technologies involved in the task.
  If one accepts those self-evident truths, it should greatly concern us that in many areas people face problems of severe housing shortage and unsatisfactory housing conditions. Homelessness is on the increase. The number of homes for rent has declined by Government fiat in the past few years. The quality of the stock, notwithstanding bursts of improvement, has declined so that every home must now last more than 1,000 years. That is a quite ludicrous proposition.
  In absolute terms, the largest number of homes in serious disrepair are owner-occupied, many of them occupied by elderly people. The highest percentage of housing that is either unfit or in serious disrepair—31 per cent.—is in the private rented sector. Frankly, with its record, that is hardly surprising. We are all aware that not only is around £23 billion required to bring public sector council housing stock up to scratch, but the Audit Commission tells us that we fall behind on repairs by £900 million per year. It gets worse each year, notwithstanding the considerable sums that are spent.
  Mr. Peter Bruinvels: Will the hon. Gentleman give way?
  Mr. Rooker: I do not propose to give way. I want to speak on behalf of my hon. Friends without interruption. I do not want to crowd out any Back Bencher because of the time that has just been wasted on the points of order.
  Those are some of the factors that have led to the obscenity, to take one example, of the bed-and-breakfast hostels and hotels. Does it make sense for taxpayers to fork out £300 million to keep 160,000 families in bed-and-breakfast hostels and hotels? Examples of this kind of

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  waste are known by hon. Members on both sides of the House. I can cite the example of the Harrow millionaire mentioned in the Sunday Mirror who rakes in nearly £7,000 per week for cockroach-infested hotel rooms in London or the Edinburgh landlord who pulls in £45 per week for each of 20 beds and slices of bread in a house, as shown in a recent Channel 4 series on young homeless. These examples can he found up and down the country; I have given one from London and one from Edinburgh.
  Mr. Tony Marlow: Will the hon. Gentleman give way?
  Mr. Rooker: I have already said that I do not propose to give way.
  The Government do not appear interested in how the money is spent. Both the Department of the Environment and the Department of Health and Social Security refuse to check the quality of rooms or breakfasts, or to answer parliamentary questions about the waste and abuse in hon. Members' constituencies. The payment of two housing benefits for one bedsit is not unknown in the murky underworld created by housing shortages.
  The money involved is a vital public resource that is simply going to waste. Taxpayers and ratepayers cannot understand why this is allowed to happen. I will not accept that there are administrative or financial barriers that prevent this money from being switched to the Housing Corporation and local authorities, thus putting these landlords out of business. None of these landlords would he approved by Parliament under the assured tenancy provisions. They feed off the homeless and the taxpayer. We can stop them, and we should stop them.
  I make no apology for saying that my hon. Friends and I consider it our duty to put those characters out of business. They should not be allowed to exploit the homeless and the financial allowances granted to them by the taxpayer any longer than we can avoid.
  Although housing demands extra resources, we have to be extremely vigorous about the use of existing resources. No one must ever advance the case for extra resources without pointing out that we have to be careful how the money is to be spent. By way of example, I quote the two modest reports from the Audit Commission last year, on management and repairs in the public sector. They showed clearly how improvements could be made. While not everyone may agree with every proposal, it is to the credit of many local authorities that they are seeking to learn from and implement the recommendations in these reports. It is extremely irritating to tenants everywhere that, when so much needs to be done and when we know that we are falling behind in our repairs and our remodernisation programme, five or six — one of my hon. Friends quoted more—inspectors are looking at a problem but nobody ever does the job.
  I invite Ministers to go to one authority, Dudley. I do not know whether the Minister has been there. It is close to my area, and I have been there a couple of times in the past few years. He would then see how real, effective decentralisation and the new rapid multi-skill repair squads are giving greater satisfaction to the tenants. They are cutting the frustration and it is clear that they are saving nine by doing a stitch in time. That is an example that many other local authorities should follow. I pay tribute to what is happening in Dudley. A large proportion
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  of landlords have taken it to heart to try to implement better procedures to give satisfaction to tenants and, in my experience, the tenants greatly welcome that.
  Although we require a national commitment, we do not want a national "same everywhere" solution to the housing problem, because there is not one. Anybody who stands up and says there is, is doing a disservice to the homeless. There has to be balance and variety in housing, or there is no choice.
  Just before I came to the House for Prime Minister's Question Time I was on the telephone to one of my constituents. She is in serious trouble and cannot sell her home. It has been on the market for over 12 months. It is one of those refurbished maisonettes that we find in many of our cities. My constituent explained that six of her neighbours have been unable to sell their properties and have handed the keys in to the building society and gone elsewhere. They found it impossible. They did not wish to buy at the time, or to buy the property that they did, but they did not foresee the massive problems they have had in selling the property now that they want to move. Clearly, they had no choice. There must be genuine choice in housing. I have put that to the Minister throughout my remarks and over the past couple of years and my hon. Friends have also made the point. People should not be forced to rent or to buy because of particular circumstances of Government policy. That has been the case in many areas in the past few years.
  The national shortage of rented housing could be met by large-scale construction of single tenure council estates, using factory methods of building, coupled with lots of tower blocks and economies of scale. That would be a disaster and show we have learned nothing from the past. The Labour party rejects that approach. It was a system foisted upon local councils first by the post-war Conservative Government and later by Labour Governments. Thousands, if not millions, of today's tenants are, as a consequence, trapped in defective housing, which is badly planned and, for many of the local authorities, impossible to maintain. Those homes are less than 30 years old. The debt charges have not yet been paid on those homes. It would be impossible to correct many of them structurally, so they will have to come down. That has to be taken on board as a national policy and not left to individual local authorities because they simply cannot cope with the size of the financial commitment that would be involved.
  Some councils could and should build new family housing for rent, without any subsidy whatsoever. It is actually cheaper than subsidising the private sector. The chairman of housing in Gateshead made that clear to the Minister recently. Other local authorities want partnership with financial institutions and instead of putting barriers in their way the Government should positively encourage that.
  I know that the Minister made an announcement in February and that since then there has been some legislation. However, the institutions are not queueing up to say that that is the greatest thing since sliced bread or that it allows them to go into partnership. The bureaucratic rules that have been imposed by the Civil Service at the behest of Ministers, or the other way round, will not allow the scheme to operate in the way that it should and in the way that we would wish.
  Some local authorities are just plain old-fashioned. They just want to use the money they have obtained from

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  selling homes and land to replace and build homes for the elderly and refurbish their existing stock. However, the money is locked in the bank. Nobody can make a case, on either side of the House, for such a crazy policy. Nobody believes that it makes any sense that that money is not available to put hack into housing, whether in refurbishment or new build. It does not make any sense.
  In the same way as the public sector, in its traditional form, is not the only way forward, I invite the Minister to confirm—this is important—that he does not see the only way forward as being the private sector. He either agrees with balance, variety and choice or he does not. One cannot have it both ways. One cannot suggest that there is a single solution by saying that there will be only the private sector and that everything will be done to stamp out any aspect of the public sector. I do not make that claim from my side of the argument and I do not think that the Minister should continue to make it from his side.
  I invite the Minister to study the plans by COPEC, the second largest landlord in Birmingham, to build and rent family housing using institutional funding such as British workers' pension funds. That is better put into British homes than American hotels and fancy paintings. It uses institutional funding with the required rate of return and with rents set at fair rent levels.
  Mrs. Elaine Kellett-Bowman: Will the hon. Gentleman give way?
  Mr. Rooker: No.
  That imaginative scheme has been organised to build and rent family housing using institutional funding with the required rate of return, and rents set at no higher than fair rent level. The concept is simple. I cannot go into all the details, but it is based on the idea that the voluntary sector exists to provide homes to rent and not necessarily to build up a property portfolio. It rests on some equity surrender or withdrawal at some point during the period of the loan to ensure the required rate of return to the building society or pension fund. With a rolling programme of development and acquisition over the loan period, normal voids occur at no less than three times the rate required for the equity withdrawal. Therefore, there is no problem in respect of security of tenure. As ever, it was made in Birmingham. It is a good idea and the imaginative scheme of COPEC deserves all our support. I certainly hope that the Minister will look at the scheme. I know that the Housing Corporation supports it and that it finds favour with the institutions as well.
  Earlier this year I wrote to the Minister, following the claim in the public expenditure White Paper that there is generally speaking an adequate supply of housing overall in Britain. I pointed out, using everybody else's figures, not Labour party figures, that we appear to be about 1 million homes short rather than having 500,000 too many. I wrote to the Minister and told him that I had not taken account of the high rise blocks or the defective housing, much of which will have to be demolished or replaced, and I did not take account of the view of the Royal Institution of Chartered Surveyors, which is that we need about 2·5 per cent. —nearly 500,000 homes—empty at any one time to facilitate mobility. The professional view is that without that, the system will not work.
  After disputing the figures, which, incidentally, were repeated by the National Housing Forum in its note to party political leaders at the end of March, the Minister
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  went on to remind me that most people want to own their own home. I wrote to the Minister about total numbers of homes for people, irrespective of whether they are owned or rented. Unfortunately, the Minister picked up only one aspect. What he asserts is correct for the majority of people, but people want to decide for themselves when they want to buy.
  We now know of people being forced into purchases prematurely. The building societies are worried about that. The Minister's attention has been drawn by the building societies to the fact that we have the largest sector of young home owners anywhere in the advanced western world. They see some pluses in that but they also see some minuses. One has only to look at the high repossession rate, especially among the younger sector of the population. If there is a shortage, there is no choice. It is plain and simple.
  The Nationwide building society has said that prices for first-time buyers are outstripping rises in pay and that people are being forced to buy smaller and smaller homes. Hon. Members must know from their constituents that those homes are not easy to sell. A show house which is empty or has specially built furniture designed to create the illusion of more space, can look great. Those houses might be all right for Tom Thumb people, but not for ordinary people. [An hon. Member: "Shortisin."] I plead guilty to shortism. Builders are being forced to build smaller dwellings.
  People go to their Members of Parliament or local councillors and say: "Look, I bought this home in good faith. Now I can't sell it. What are you going to do about it?" We have to explain that this is the result of free market housing and that this Government over the past eight years have deliberately created a shortage of rental housing. Thousands of people are trapped in homes that they are finding it extremely difficult to dispose of.
  Only yesterday, the south-east director of Wimpey claimed that, due to the demand on new housing estates, he was tickling up the price of new houses, in some cases daily. My constituents have told me that they have difficulty keeping up with price rises every week, but prices being tickled up daily is news to me. The director of Wimpey was reported in the London Daily News as having said that that is the case. House price inflation in the south-east on this scale is in nobody's interests. It is not in the interests of owners or buyers, especially first-time buyers.
  I find it difficult to understand why some Ministers have said that some people want to remain tenants. Some people remain tenants because they cannot afford to buy a home, but some people genuinely want to remain tenants. They resent being forced into what they consider to be not very good quality housing; they would prefer to remain tenants. Tenants cannot see why rent structures are organised so that they have no share in the capital growth of the property, and they end up buying the homes for the landlords. That is the present rent structure in the public and private sectors.
  This issue ought to be tackled because many good things would come from such changes, such as flexible leases. That is not the only scheme which could be implemented. Tenants must feel that the rent they pay is not wasted money. Tenants often say, "I have boughs this house two or three times over with my rent," but neither the property nor the capital growth accrues to them. People do not necessarily want to buy houses, but they do

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  not want to feel that the rent is wasted money. Some changes which could improve the tenants' satisfaction are to increase the stock of rented housing and to provide better maintenance and above all, to assist in breaking the polarisation between tenants and owners, which has concerned hon. Members and our late colleague, Tony Crosland, in the 1977 housing policy review. We have never taken on board that concern as seriously as he intended.
  Some authorities, Labour and Conservative, have experimented, but at the margin of the present law. Parliament should assist by introducing these changes. No one course of action will solve the problem; many ideas could be implemented to give new rights to tenants and to convince them that money paid in rent is not money down the drain.
  We all know, because of the debates on pensions and the aged—we have just had a ten-minute Bill relating to the Occupational Pensions Board—that the aged population is changing and will do so in the first part of the next century, which will lead to a much higher proportion of elderly people. We have to adjust our housing policy to take account of this. A Conservative Member has said to me, "It is all these divorces causing more homeless and household formation growth," but no one says that we should change the law and stop people divorcing, or force people to live together as they used to have to do.
  Mr. Peter Bruinvels: That is a red herring.
  Mr. Rooker: It is not a red herring; it is dragged out by hon. Members from time to time. Changes in one aspect of policy must take account of changes in other aspects of policy. This applies to the age profile of the population. The elderly are not a single group who can be dealt with by a single solution. We know from reports produced in the past few years, particularly the inquiry into British housing, that there is an urgent and massive demand for sheltered housing for the elderly, for those who both rent and buy, at realistic figures, not at the figures which are deliberately inflated by property developers.
  Mixed investment could come about with a national policy—not a national direction—to take account of the change in population age. Mixed public and private investment would lead to the release of a substantial number of dwellings for renting and buying by families and the younger generation, thereby enabling the nation to make much better use of its existing housing stock. We all know of the grossly inefficient use of our existing housing stock.
  Nobody would advocate, as some councils have come close to doing, forcibly removing people due to under-occupation. I say "forcibly" because there are no alternatives; the choice is not there. A national policy could create new investment. This country is awash with money—I do not accept that we do not have the money.
  Sir Nicholas Bonsor: Will the hon. Gentleman give way?
  Mr. Rooker: I will not give way. I am coming to a conclusion. [Interruption.] It is no good hon. Members yelling at me from a sedentary position. I have clearly said
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  that I will not give way again. I have always freely given way in other housing debates—perhaps too often—but, because of what happened earlier, I do not propose to give way. We have nothing to be defensive about. If hon. Members have listened to me, they would appreciate that that is the case.
  As the National Housing Forum has made clear, we have never had answers to the three main questions posed by Mr. Crosland in 1977. Those questions are: how much housing is needed and how could the available resources best be used to get it; how much would people pay for their housing; and what are the wider social implications of how housing is organised? The National Housing Forum is right to remind us of the need for answers, because in finding them we might help our homeless fellow citizens and those who are badly housed. If we do not address the matter as a major cause for national concern, with a national assessment of what is required, most of the post-war gains in housing standards, the physical condition and reduction in shortages, will be thrown away by this generation. We are not prepared to see that happen. We are prepared to address the wider issue of housing policy. The Government, after eight years in office, have yet to show the concern for the young. I invite the Minister to rubbish the motion, if he can.
  4.48 pm
  The Minister for Housing, Urban Affairs and Construction (Mr. John Patten): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  'that as many households as possible should have the opportunity to benefit from owning their own home and that for those who are unable to buy or who do not wish to do so there should be a real choice of rented housing both in terms of type and location of dwelling and of landlord; and congratulates Her Majesty's Government for pursuing policies which give people not only the housing they need, but also the housing they want.'.
  Apart from a purple patch at the beginning and a deep purple patch in the last sentences, that was an extremely interesting speech, with many good points. There is considerable agreement about many of those points.
  Mr. Martin Flannery: Patronising.
  Mr. Patten: It is not patronising at all. It is right that when one agrees with someone, one should say so. I would be delighted if I could ever say that I agreed with the hon. Member.
  I welcome many of the things that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) said, but I do not think that he can have read our amendment. As my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) said on more than one occasion, the hon. Gentleman need only look at the amendment to see that the Government are striving for just the balanced approach that he wants, although we may not agree on matters of detail. It is a pity that he has not done so.
  I welcome the opportunity for another debate on housing. It is certainly right that housing should be high on the national agenda and I am delighted to see that it is. One reason for that is that over the past eight years the Government have helped to put it there. We have had some remarkable achievements in housing, particularly in owner-occupation, in the past, and, with the important reforms that we are proposing in the public and private rented sector, will have more in the future.
  Mr. Allan Roberts rose—
  Mr. Patten: If the hon. Gentleman, to whom I have given way on more occasions than I have had hot dinners, will forgive me, I intend to pursue the same policy towards Opposition Members as the hon. Member for Perry Barr pursued towards my hon. Friends.
  The motion talks of housing needs. There are legitimate housing needs, which we recognise, but I am concerned about a number of other so-called housing needs. First, I am concerned about claims that there is a need for more council and rented housing when 113,000 council houses and flats are standing empty. I am concerned about claims that there is a need for more money for repairs and maintenance of council stock when 20 authorities in England have over £100 million of rent owing to them. That is exactly the point that my hon. Friend the Member for Upminster (Sir N. Bonsor) attempted to raise earlier.
  Mr. Marlow rose—
  Mr. Patten: I am just getting going. I shall give way later.
  Thirdly, I am concerned that the Opposition still see a need for more council housing when all that that would do is to increase the grip of the local authority monopoly on rented housing. The hon. Member for Perry Barr is feeling his way towards more mixed solutions, and I welcome that, but, alas, that approach is not shared by many of his right hon. and hon. Friends.
  Fourthly, I am deeply concerned that Britain has allowed a situation to emerge where 540,000 privately owned flats and houses are empty which could he used to house people in need. If only Opposition parties would join us in searching for solutions to that issue we would be some way down the road to cracking the housing problem.
  Mr. Peter Bruinvels: Is my hon. Friend aware that in Leicester, contrary to what has been said, there are nearly 1,000 empty council houses? Is he further aware that about 24,000 council houses have not been repaired? Is it not a double standard for the Labour party to say that there is a great housing problem when it is the Labour-controlled authorities which do not give a damn about what is happening to council tenants in their areas?
  Mr. Patten: Just as the hon. Member for Perry Barr was right to draw attention to the generally good housing record of a Labour authority called Dudley, so it is right for my hon. Friend the Member for Leicester, East (Mr. Bruinvels) to bring home to the House Leicester's lamentable housing record. It is one of the worst housing authorities in the country.
  The essence of the Government's housing policy, as it has been developed in recent years and will be developed further, is choice. We have encouraged home ownership for the majority who want it and now we want to provide, for the first time in decades, a real choice in rented housing for these people whose needs are not met by home ownership, who cannot afford it, or who simply do not want it. That is what we intend to do. That is exactly what the hon. Member for Perry Barr asked for. However, we do not intend to do that just by council housing; nor do we intend to do it just by mixed developments with housing associations, important though both those areas are. We intend to move much further.
  The hon. Member for Perry Barr is halfway to the position that we intend to reach. He is in the position now
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  that the Labour party was in in 1979 over the right to buy and owner-occupation. One can see how much things have changed when owner-occupation is lauded and praised in Labour party political broadcasts, and I welcome that. The landscape of housing in Britain has changed over owner-occupation in the past eight years and we shall see the same change in rented housing in the immediate future.
  Choice is no empty slogan. Those who can choose their housing take it for granted, but those who cannot are stuck with problems that can pervade their whole lives. We have come a long way since 1979. At the beginning the right to buy was dismissed and opposed by most Opposition Members. It is now an established fact of our housing. The battle over the right to buy has been won, game, set and match. It is the consensus, except, of course, among the alliance who are not wholly in favour of the right to buy under all circumstances. Alliance Members wish to give a little local discretion to councils to have it here and not there. [Interruption.] We do not know what they are up to in extremist, loony Liberal Tower Hamlets. [Interruption.] I will break my self-denying ordinance not to give way to Opposition Members if an hon. Member wants to force me to give way over Tower Hamlets.
  Mr. Jack Straw: I could see how reluctant the hon. Gentleman was. I was simply saying from a sedentary position that we know exactly what is happening in Tower Hamlets. It is a mixture of inefficiency, incompetence, some mind-blowing decisions on homelessness which verge on racialism, and five, six or seven chief executives.
  Mr. Patten: It is indeed a remarkable local authority. I am grateful to the hon. Gentleman for setting the record straight.
  Most local authorities are now operating the right to buy fairly and efficiently, including most Labour authorities. They know that it is what their tenants—their customers—want. I do not know what the hon. Member for Perry Barr thinks, but I think that we should talk less about tenants and more about customers. That is how we should regard people who rent in the public sector.
  Most local authorities are operating the right to buy fairly and well and I pay tribute to them, but a handful of authorities are not doing so. The performance of a handful of authorities on the right to buy is lamentable. Tenants are being discouraged from applying and when they do apply cases are delayed interminably. I do not know whether the cause is incompetence or some sort of sullen rearguard foot-dragging by councillors in those particular constituencies, but we are monitoring the situation closely from month to month. We know where the matter is deteriorating, and it is not just in Leicester, but in Camden, Islington, Lewisham and Sheffield.
  Mr. Flannery: Will the Minister give way? That is not true.
  Mr. Patten: If the hon. Gentleman is lucky enough to catch your eye, Mr. Deputy Speaker, he will he able to make his point later.
  There is foot-dragging in Sheffield and in loony Liberal, extremist Tower Hamlets there are also considerable delays in processing right-to-buy applications.
  The Government have powers to intervene and we shall not hesitate to use them unless the performance of those

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  local authorities improves soon. We may need new legislation to protect the rights given to tenants by the House.
  My deepest wish is that we should not have to discuss this issue. The fault lies among a few Labour councils and I make it clear that I recognise that most local authorities of all political colours are operating the system fairly and well. It is the few who are bringing discredit on the many.
  Mr. Robin Squire: Is my hon. Friend aware that in the campaigns for the local government elections that are currently taking place in many parts of the country, a systematic scare campaign is being organised by the Labour party telling council tenants that they will lose their security of tenure under the Housing and Planning Act 1986? Will he join me in condemning that?
  Mr. Patten: I join my hon. Friend in utterly condemning those tactics. They have been used by only a few Labour councils such as Leicester, which seems to be on my lips a lot this afternoon, and Nottingham. Those leaflets are simply not telling the truth and they are being distributed at ratepayers' expense. The facts are set down in the Housing and Planning Act 1986.
  Choice is no empty slogan. In the same way as the right to rent will bring individual and corporate capital into the rented sector of housing again, where so much effort has been put into squeezing it out, choice in housing is directly related not just to the amounts of public money, but to the amount of private money that is put into it, as the hon. Member for Perry Barr recognised. Private expenditure on housing has already taken over the burden of most housing expenditure in this country. That means that most decisions on housing expenditure on new building and repairs and maintenance are taken by private individuals, not by central Government or local authorities.
  Mr. Marlow: Will my hon. Friend give way?
  Mr. Patten: There is one major exception—renting. We intend to put that right.
  Mr. Marlow: Although this does not affect me, despite what Opposition Members may say, does my hon. Friend accept that one reason why decisions are hard to come by is that in some of these areas, which are largely Labour-controlled authority areas, where the demand for housing is greatest it takes the longest time to get planning permission to build houses to satisfy that demand?
  Mr. Patten: That is very sad. The speedy granting of planning permission can speed up the provision of much needed houses.
  There is a need for an increased supply of permanent rented accommodation in London, other high pressure areas and elsewhere. We are all agreed that more rented accommodation is needed. That is common ground. However, I do not believe that the answer lies with wholesale council housing or wholesale municipalisation. But that is not to say that local authorities do not have a role. I do not say that. However, we must move away from the inevitable inefficiencies, rationing and queues that arise when we have a managed economy in rented housing.
  I do not believe that the managed economy has worked particularly well since the second world war. We must recreate a true and well-targeted market in rented housing.
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  That is one way of helping those people who are accepted as homeless under the homeless persons legislation and those who do not fall within the priority needs categories, such as the young, mobile people seeking jobs or those who simply do not want to buy a home, but rent. Who are we to deny them that choice? That is effectively what we are doing today.
  The right to rent will help. It means that there must be an adequate supply of rented housing for those who wish to be tenants rather than home owners. It means encouraging responsible landlords to enter or remain in the rented sectors to that those who wish to become tenants can choose the type of landlord that they want. Why should there be only one kind of landlord available — largely the local authority supported by housing associations? We must tackle the appalling contradiction of increasing homelessness at a time when there are 540,000 empty privately owned homes in this country.
  How is the right to rent to be achieved? First, new landlords must be able to charge rents that give an adequate rate of return on their investment. We have seen the effects of low rents on the investment in private housing. We have also seen that effect on the face of public housing. Those authorities that have set consistently low rents and failed to collect them have not had the resources to repair and maintain their housing stock.
  Private rented accommodation has shrunk to only 8 per cent. of housing and that is a uniquely low figure for the western world. Alas, much of that housing is in a poor state of repair. In Switzerland, 60 per cent. of people rent their homes privately. In West Germany the figure is 43 per cent., and in the United States, Canada and France it is around 30 per cent. or 35 per cent.
  Only in this country do we not have a viable independent private rented sector. It strikes me that when there is agreement between such newspapers as the Daily Telegraph and The Guardian about the need for change in this area, we are really in business. I do not point the finger just at today's editorial in the Daily Telegraph which states that we should move on this front. That is not surprising, but very welcome support. Opposition Members need only look at The Guardian and its editorial of 24 March. That was a very interesting editorial. First, it said things in my praise. When The Guardian says things in my praise, a slight tremor goes up my spine. It makes me worried. However, I was not worried when I read the phrase which I quote from memory, from the third leader in The Guardian on 24 March 1987 which stated:
  "The private rented sector has a vital role to play."
  When there is that kind of agreement between commentators with different political views, we are in business for the kind of social change that undoubtedly we are going to see during the next few years.
  We have made a start with assured tenancies. The hon. Member for Perry Barr referred to that. I am grateful for the support from the Opposition and I am pleased to tell the House that interest in assured tenancies is growing fast. I can announce that we have just approved, together with our colleagues in Wales—I am pleased that my hon. Friend the Under-Secretary of State for Wales, the hon. Member for Newport, West (Mr. Robinson) is here this afternoon — applications from another 41 bodies for approved landlord status. That brings the total to 270, with many more applications in the pipeline. I believe that the measures in the Housing and Planning Act 1986 and

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  the new 30 per cent. grant regime will provide a considerable further boost. We shall see great developments in that area.
  The hon. Member for Perry Barr was correct in his comments about the need for more mixed public and private sector funding. In some areas, landlords would need to charge very high rents simply to cover their costs. That might choke off the development of the private independent rented sector at an early stage and that sector would not get going. The new arrangements for mixed public and private sector funding which my right hon. Friend the Secretary of State for the Environment and I have introduced—often called the "30 per cent. grant schemes"—can bridge the gap between affordable rents — that is what we must be considering—and those necessary to give an adequate return to the landlord.
  The new funding arrangements for the Housing Corporation are very important. For the present financial year the corporation has been given an extra £20 million to which it has added £10 million from its existing programme for schemes that will raise between another £50 million to £60 million from the private sector. We shall be approaching £100 million of half to two thirds privately funded housing for the homeless, the young job seeker and the person moving from north to south. The rest of the money is being raised privately through index-linked mortgage loans and other ways.
  The Housing Corporation has not actually been overwhelmed, but it has an enormous number of schemes to consider. It has received about 300 applications from housing associations already this year to take up the funding. There are private institutions in the City of London with available funds queuing up to match their funds to the housing association funds. We shall see a great development in this form of mixed funding.
  In addition, at the last meeting of the Housing Consultative Council for England in November—a body which I have the privilege and honour to chair—the Labour-dominated Association of Metropolitan Authorities asked me specifically to give local authorities similar opportunities to carry out 30 per cent. grant schemes. I remember it was that nice Councillor Clive Betts who asked the question. I announced immediately a reaction on 5 February that local authorities would be given wider powers to assist privately let housing. We have included proposals to grant those powers in the Local Government Bill under consideration at the moment. I said that the use of the new and existing powers would be subject to the Secretary of State's consent, but that we would seek to give as wide a general consent as we could to such schemes. We have already issued five general consents and we intend to issue more.
  Of course, there must be some controls on capital expenditure in local government and I hope that the hon. Member for Perry Barr was not trying to leave the impression with the House that if a Labour Government came along there would be no more capital controls on local government.
  Mr. Rooker: No.
  Mr. Patten: I am glad to learn that that was not what he was saying. We are in exciting new territory here on the development of joint public and private sector funding. It is this joint approach to funding that will help to make the right to rent a very rapid reality.
  Mr. Richard Ottaway: When my hon. Friend talks about funding for housing associations, he must surely be aware that the Labour-controlled city council of Nottingham has just earmarked £2·5 million to build a new office block for its own housing department. That in itself may be all right, but is he aware that £1·8 million will come out of the housing investment programme, money which should be used to modernise my constituents' houses but which will instead be used to provide offices? The money is being taken from housing associations.
  Mr. Patten: I am absolutely appalled to hear that Nottingham city council, which is a Labour-controlled authority, I understand, should take £1·8 million from its housing investment programme. These resources could have been spent on providing better housing in Nottingham; instead, the council has tried to provide better offices for its own staff. It shows a very odd order of priorities indeed. Doubtless the people of Nottingham will seek the opportunity to make their own judgment on the council in the forthcoming local elections.
  The Government have in the past eight years brought about radical and irreversible changes, making the meeting of the wishes of the people the top priority. Many people want to own their own homes so we have made it possible for many more to do so. There are now 20 per cent. more owner-occupied dwellings than in 1979. Over a million public sector dwellings have been sold since that year, mostly to sitting tenants. Now we are turning to the rented sector. If only the hon. Member for Fulham (Mr. Raynsford) and his ideologically bound friends in the Labour party were more sensible about the Rent Acts, we would not have our present appalling homelessness figures. He and his friends are the guilty men.
  We have significantly increased tenants' rights through the tenants' charter and other measures since 1979, but I have to ask the House whether we should not give tenants a greater right to select their own landlords. Should we not give the public sector tenants, the customers of local authorities, more opportunity to choose their own landlords? That is why I questioned the assumption that new town housing should automatically be transferred to district councils when new town corporations were wound up. My hon. Friend the Under-Secretary of State announced on 25 March that the Government would consider proposals to transfer new town housing to other landlords.
  We have, for example, the situation in Telford, where a consortium of five housing associations, led by the Coventry Churches housing association, wishes to offer the tenants of the outgoing Telford development corporation the genuine choice, backed by building society money and with no call on public funds, between it and the Wrekin district council as landlords. I would not want to stand in the way of people being given that opportunity to express their own choice. That is why my hon. Friend made this very important announcement on 25 March.
  There is much food for thought in that approach. We are determined to give potential new tenants a choice, something that they have not had for many years. We have devised the methods that are needed to bring in private sector funding. Our efforts on behalf of the public sector customers, through the tenants' charter and other approaches, show that we really put our customers first.

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  Having brought owner-occupation to millions and having given the right to buy to the people of this country, we now intend to restore the right to rent to those who choose to use it. That will give us the balanced housing policy that the country needs for the 1990s.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. This is a very short debate, and very short speeches will be in order.
  5.14 pm
  Mr. Michael Meadowcroft: Unlike the two Front Bench speakers, I intend to reduce the speech that I was going to make, in the interests of giving others the chance to join in. I am happy to have interventions about Tower Hamlets, but they will be added to what I intend to say about housing in general.
  Since the Minister's translation from the Department of Health and Social Security to the Department of the Environment he has tried to rehabilitate himself from his old finger-wagging days, but, as we have seen today, he sometimes reverts to that "student union" kind of indulgence. He is dealing with the subject admirably, and then suddenly says that he will give way when it comes to something that he thinks may be of some assistance against the alliance in Tower Hamlets. It is the ultimate cynicism in dealing with Tower Hamlets not to tell the House that his Government rate-capped Tower Hamlets at £124 million, which is wholly inadequate, and the local authority has had to quadruple the amount spent on homelessness in the face of what the Select Committee on Home Affairs calls a national problem. It is the height of cynicism and it undermines the whole style of what the Minister is trying to tell the House.
  The whole question of empty houses is nothing like as simplistic as the Minister pretended. To begin with, many of the houses are incapable of repair, and some are unlettable when repaired, as I know, alas, in Leeds. Many of them are mismatched with the needs of the people in the locality. No local authority wants to keep one house empty for a moment longer than necessary, because it loses revenue by doing so. To pretend that one can solve the housing problem by re-renting a few rented houses is ludicrous.
  It is important to took at the terms of the motion. The aims of the motion are splendidly Utopian and wholly unobjectionable, but what the public demand of politicians is not simply a statement of what or why, but an explanation of how. This is the danger courted by the Labour Opposition. Its members tend to fall down when it comes to telling the House how they will achieve their aims. No one would object to the aims themselves.
  Let us look, first, at the resources available for housing. The first thing to point out is that the Government have made the most draconian cuts of all in housing. The reduction of some 60 per cent. in real terms since 1979 is one major reason for our current housing problem. When I first assumed my new role as housing spokesman, I believed that there was an overall shortage of cash for housing and that there would be a great problem in putting together the resources required to solve the problem of housing, but now I find differently. Resources do exist. The problem is how we put them together with the need.
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  I find, for instance, that the Halifax building society, one of the largest housing finance organisations in the world, is anxious to help alleviate the housing crisis in this country, to put money into local authorities and to seek to find a way of partnership and management that helps to do that. As recently as 27 March the Halifax building society put £29 million into a housing scheme in Notting Hill, which shows that resources are available if only we can bring them to the needs.
  We must also unlock the resources that exist in people's own houses. Like other hon. Members, I see many constituents, most of them elderly, who are desperately worried about a particular repair that is required, perhaps a new roof or something of that sort, for which they have no cash, but what they often have is resources in their own houses, for which, with good Yorkshire thrift, they paid many years ago. The question there is how we assist people to unlock some of the resources of their own housing to help them to do repairs. Ways did, of course, exist. One way was through the building societies but building societies are now prevented from making interest-only loans. That was one way of getting money because elderly people could cope with an interest-only loan, but it has now been stopped.
  The other question in terms of unlocking resources is that of tenure, of return on investment and of what guarantee can be given by local authorities to private finance. This is very important if we are to get away from the ideological straitjacket in which the parties have been locked for far too long. The political consensus on housing is growing, but it is doing so with certain hiccups, one of which is the question of the private rented sector. I accept what the Minister says, that the private rented sector has a role.
  Looking at the old properties and the terraced houses that have been so popular and beloved by so many people, one of the sad things in my city is that the houses that are in council ownership are, all too often, the dilapidated ones, not those that are privately rented or those that are owner-occupied. We do not necessarily have the bad landlords who are apparently so rife in areas where there is much more housing stress than there is in the north.
  The second crucial area is the assessment of need. I am puzzled by the Government's failure to meet their own assessment of housing need. On their own assessment, about £18 billion is required to cope with the backlog of maintenance work in public housing. Other estimates put the figure far higher, stating, for example, that about £50 billion is required in total. It is bizarre that, having tried to sell the concept of the right to buy to local authorities on the basis that those resources would be available for capital investment in housing, since imposing the right to buy the Government have limited that amount to 20 per cent. Therefore, the housing authorities are incapable of coping with their own needs because of the vast millions of pounds that are locked up in their balances under the 20 per cent. rule.
  I should like to illustrate my points by reference to my city. The Government commissioned private consultants to survey the housing stock in Leeds. Those Government-appointed consultants estimated that £600 million was needed for repairs and improvements to the public housing stock. The council estimates that perhaps another £340 million is required for the private sector, for the repair grants and the back-to-back refurbishments that are required for the unfit houses. Moreover, even when faced

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  with the evidence of the Government's own consultants, the housing investment programme for Leeds is £22·3 million in 1986–87, which, in real terms, is a third down over three years. The amount for 1987–88 is down still further to £19·86 million. There is no way in which local authorities can cope with the housing needs that have been identified and accepted in their areas.
  The motion has some curious wording. When it begins, it states in the names of those right hon. and hon. Opposition Members who have tabled it that they want every household
  "to occupy a dwelling of the size, type, standard and location suitable to its needs".
  It is only when the motion deals with tenure that it refers to a "choice". That seems reminiscent of the old paternalism that I thought the hon. Member for Birmingham, Perry Barr (Mr. Rooker) had got rid of in his thinking on housing. Therefore, there is a bizarre dichotomy in the motion, which refers to "needs" at the beginning and "choice" later. That is an important point.
  Mr. Rooker: Perhaps I can make it clear that I moved the motion, and when I stopped reading it out, I said that I carried with me a list of organisations. Those words in the motion came, word for word, from the Royal Institution of Chartered Surveyors. I am quite happy to have those words in the motion, as they are supported by all those other organisations.
  Mr. Meadowcroft: I was aware of what the hon. Gentleman had said. However, the words on the Order Paper are his, wherever they were taken from.
  It is important to note that the provision of housing is not an absolute right in the same way as is health. If a person has diabetes, he or she requires insulin in the proportion that is required by the disease. However, in housing there is a choice to be exercised, which is outwith the need for shelter. It is shelter that is the absolute need, not how it is provided. There are people—I know them in my city—who prefer to have a smaller and cheaper house so that they can have a car, holiday or caravan. That is their choice. Of course, one can still obtain housing cheaply in Leeds to enable that choice to be made. However, if one takes away that choice, or the possibility of it, as has happened so often because of clearance, one takes away the possibility of someone being able to have the other things that he wants. Once someone is forced into the rented sector, that person is invariably forced to live at the margin. No choice is left to that person, and such people cannot decide the type or size of house that they require.
  Mr. Jeremy Corbyn: Will the hon. Gentleman give way?
  Mr. Meadowcroft: I shall give way, but I should like to get on and enable other hon. Members to make their speeches in their own way.
  Mr. Corbyn: I thank the hon. Gentleman for giving way. I am interested in his remarks about choice. Would he care to tell the House what choice the 140 Bangladeshi families have, when the Liberal-controlled Tower Hamlets council proposes to throw them on the streets in the next two weeks?
  Mr. Meadowcroft: The hon. Gentleman has picked the wrong place. I started off by talking about the Tower Hamlets problem with Bangladeshis. If the hon. Gentleman is concerned about that, he might consider
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  how on earth one can afford to cope with that problem in Tower Hamlets, which is a national problem, rather than cynically using that issue as a bargaining point for votes in Tower Hamlets. That is monstrous.
  Mr. Corbyn: Answer the question.
  Mr. Meadowcroft: The same thing is happening in Camden, which is under the control of the hon. Gentleman's party. Camden is going down the same path as Tower Hamlets. On 20 March the policy and resources committee in Camden had to start re-assessing the offers that it made to people entering the borough for exactly the same reasons. It could not afford the generous implications of the policies of the past.
  The Minister's record on housing choice in local authorities has not been very good. When I first joined the Leeds city council, I recall that it was the Minister's party that was removing choice. His party went for a policy of clearance of the old properties in Leeds, which turned out to be disastrous. I hope that we can get away from the idea that one can have area clearance and still maintain housing choice. That cannot be done, because it blights entire areas, causes further demolition and further need for such clearance in the future.
  Sir Nicholas Bonsor: Will the hon. Gentleman give way?
  Mr. Meadowcroft: Yes, but if I give way that will take time from other speeches.
  Sir Nicholas Bonsor: If one takes the hon. Gentleman's point to its logical conclusion, there would be no clearance of absolutely intolerably poor housing in slum areas, and of course such clearance must be performed. It is a question of judgment.
  Mr. Meadowcroft: We are back to the question of choice. I do not see how it is possible for politicians to say to adults that they will decide whether those adults' houses should remain standing. One cannot say that. The previous policy should have been one of improvement, rather than of demolition. The fact is that we have demolished many houses that did not need to be demolished and, in their place, we have built houses that have turned out to be worse. Those houses are now the problem.
  I was told by Conservative Members that one could not take one house out of a terrace and replace it with another house. I was told that that was impossible. However, I was then sent to campaign at a by-election in the centre of Newcastle and went to canvass on a street where that had happened. A house had been taken out of the terrace and a new one had been put in. That was a splendid solution. It meant that older people could have a smaller flat inside that house, near to their friends, relatives and neighbours. However, we were told that such a solution was not possible. We have demolished and cleared too much and we should not have done so.
  We must, however, consider the problem of system building, and its demolition. The Housing Defects Act 1984 nowhere near covers the problems of pre-reinforced concrete housing. Nor does it deal with the problems of other types of system-built housing, for example, Caspon, Myton and Reema. We need to reconsider the way in which we cope with people being able to repair those houses, or have them bought back.

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  We need more dwellings of all types. Therefore, our predisposition should be against demolition where there is the possibility of improvement.
  We should reduce the immense pressure on the south-east, where house prices, or more accurately, land prices spiral upwards, way ahead of inflation. It seems to me that it is no longer possible for young people, as first-time buyers, in the south-east to have the type of housing which we, in the north, would regard as adequate or desirable. That will not do.
  Furthermore, the imposition of the Government's poll tax, the community charge, will put up house prices further, because it takes away the tax on property and puts in on to individuals. Therefore, house prices will be forced up.
  Money is available. The question for us, as politicians, is how we bring together need and resources. In the forthcoming election we shall be judged on whether we are seen to be able to achieve that key aim of bringing together resources and need.
  5.28 pm
  Sir George Young: I believe that the hon. Member for Leeds West (Mr. Meadowcroft) is a jazz musician, with skills on the clarinet. I am not an addict, but I understand that there is a time when recital takes place and the rest of the instruments fall quiet while the clarinettist plays on his own, uninhibited by the need to remain in harmony and unrestricted by beat, and when he can grab some themes, perhaps from old tunes, and continue until he is out of breath, when he signals that the time has come for his colleagues to come in. We have listened to a clarinet solo without the clarinet.
  During the speech of my hon. Friend the Minister for Housing, Urban Affairs and Construction we heard of many areas of success in housing. We heard of the buoyancy of the private sector, in which starts are at a record level and making a direct contribution to meeting housing needs. We heard also of the diversification of tenure, not just through the right to buy, but through other initiatives, such as the promotion of tenant co-coperatives, shared ownership, leasehold schemes for the elderly, and the rest.
  My hon. Friend also explained how we were breaking down barriers between the public and private sectors by encouraging joint ventures between local authorities, house builders, building societies and housing associations. He explained the choice for tenants, particularly those in new towns, of different types of landlord apart from the local authority.
  I shall speak briefly about the outstanding problem of homelessness, which I know concerns my hon. Friends on the Front Bench and which formed a large part of the speech of the hon. Member for Birmingham, Perry Barr (Mr. Rooker). As a London Member, I see at first hand the growing number of homeless people, reflected in the figures — people attracted to London by the buoyant economy, casualties of marital breakdown, and young people who have left home earlier than would otherwise have been the case. Naturally, hon. Members on both sides are worried about the numbers and the conditions in which many families now live in bed-and-breakfast hotels, often in Paddington. Both hon. Members and the public are worried about the cost.
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  I believe that it is possible to get every family in bed-and-breakfast accommodation in London out within six months without disadvantaging anyone else on the waiting lists, without an expensive public-sector programme of building for rent, as the Opposition advocated, and without sending families to areas where they do not want to go. I advocate a dramatic, imaginative expansion of a scheme which is already in operation in several boroughs under the control of various parties and which enables local authority tenants in areas of housing shortage to leave their home and buy a house outside London.
  Many tenants in London who have been given the right to buy do not want to buy the flat in which they live, but cannot afford to move out. The scheme gives them a capital sum in lieu of the discount to which they would have been entitled had they exercised the right to buy, to enable them to move out. It is targeted on those who do not have the resources to do so without that help. Local authorities then get a relet at a fraction of the cost of new build and quickly, and a homeless family is taken from bed-and-breakfast accommodation, saving taxpayers' and ratepayers' money.
  One could quickly get about 30,000 relets for families in bed-and-breakfast accommodation in London by promoting that scheme. Certainly, many tenants in my constituency who have retired and no longer have to live in London would like to move to be near friends and relatives elsewhere, but they need a grant of £8,000 or £10,000 to enable them to do so.
  Such a scheme is wholly consistent with the philosophy of the Conservative party, which is to concentrate resources of local authorities on people who need them, to encourage home ownership and to promote mobility within London. The Government have already put a similar scheme on the statute hook by giving tenants of charitable housing associations a right to a transferable discount. That scheme, which is operated by housing associations, has freed several properties in London and enabled more rapid progress to be made on the waiting lists.
  If one is to do something about homelessness in London, one must adopt such a scheme, whatever the potential inequities or problems. I submit it as a scheme, not to promote home ownership, but to tackle the growing problems of homelessness. That is the right way to tackle homelessness in London.
  The London borough of Ealing is tackling homelessness in the wrong way. It is underwriting the municipalisation of private housing estates in the borough. One flat being bought by a housing association, but being underwritten by Ealing council, is costing £180,000. That sort of deal does not add to the housing stock. It simply swaps the tenure from home ownership to rented accommodation. It denies that accommodation, which is being built by the private sector, to many people living in Ealing and Acton who were hoping to buy those flats. The flats are no longer available and the people must wait to find something else. If £180,000 is available merely for one unit, the council could find many better ways of using it, such as the scheme that I outlined.
  I do not propose to speak on any other subject. When my hon. Friend the Minister replies to the debate I hope that he will say how the review in the Department, which is evaluating the scheme in London, is progressing, what

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  the time scale is, and whether there is any chance of the Government taking action on homelessness by promoting more vigorously the initiative that I have described.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. I am grateful to the hon. Member for Ealing, Acton (Sir G. Young) for his brevity.
  5.34 pm
  Mr. Tony Lloyd: My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) made a sensible point when he said that it was vital that people understood there was no such thing as blanket solutions to the housing needs of different areas. Sadly, for all the Government's rhetoric about choice in the housing market, in reality they are trying to impose an ideological straitjacket which simply does not fit. That can be well illustrated by the abysmal failure of the Government's housing policies in Manchester and Greater Manchester.
  It is conceded by Labour politicians and our political opponents that at present Manchester has a housing crisis. More than one and a half times the national average of houses in the city of Manchester are considered to be overcrowded, and the position is getting worse, not better. There is a freezing of choice, even in Manchester which has a massively higher number of relets of local authority properties than other authorities. The Government's actions are inflicting human misery throughout the Manchester area because of the resulting housing conditions.
  There is a housing stock of nearly 100,000 and about 37,000 people are on the housing waiting list. Many hon. Members may wish to dismiss some of those people, but I do not because each person represents somebody who is badly housed. As everybody involved in housing in Manchester recognises, the housing transfer list will never offer any hope for many people, although their circumstances are intolerable.
  Recently a constituency case was brought to my attention of a family living in a three-bedroomed house. The married couple had one bedroom, their teenage son another and their four daughters shared the third. Because of the acute crisis in housing, their problem will not be resolved in the near future. Neither I, nor the chairman of the housing committee as a local councillor can offer them any hope. Such is the misery that is inflicted.
  Conservative Members say that the crisis is the fault of the wicked public sector. Sadly, Manchester is now a poor city. About 70 per cent. of its population is described as low-paid by well-established definitions, or as out of work. The proposed private sector solutions are not available to those people and are ridiculous. The same national builders whom my hon. Friend the Member for Perry Barr said were tickling up house prices in the south-east have approached the local authority in Manchester to ask whether it will buy the houses they have built for purchase because they cannot sell them at cost. Indeed, they cannot even sell the houses when the price is dropped below cost. Therefore, neither national builders nor local builders will build to sell when the housing market in the city simply does not exist.
  The pre-first world war terraced houses in Moss Side have been considerably improved, sometimes to a good standard, but those houses cannot be sold easily because the cost of modernisation is greater than their market
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  price. The hon. Member for Leeds, West (Mr. Meadowcroft) is right to say that such houses should not be demolished, but without a significant public sector contribution they will eventually have to he demolished. The public sector will have to take responsibility for that type of housing in our inner-city areas.
  Private rented accommodation simply does not exist. I was perplexed to hear the Minister say that after eight years of Conservative Government there was an awakening private sector about to unleash itself to solve my constituents' problems. Eight years is a long time for people to wait in appalling housing circumstances and it is a long time for a hypocritical Government to discover their compassion for those whose housing conditions are intolerable. It is about time that the Government came clean and said that their ideology is not relevant to areas such as my own.
  We can look across the border from the city of Manchester, which is labour-controlled, to the conservative-controlled borough of Trafford, which failed to build any houses for the general housing public sector market, except for a few of what my friends on the local authority called Noddy houses at the time, which the Government put on offer before the general election in 1979, when they said that all authorities that got houses up to the eaves by a certain date could have the money. Trafford Conservative council decided that, for the first time since reorganisation, it would go in for that. It did riot achieve its objective in terms of getting houses up to the required standard and had to pay the full whack itself. But we know that that was just an election ploy, similar to the election ploys that we are seeing now. Clearly, apart from the faint hope for the private sector, housing is riot something on which the Government feel emboldened to offer anything in terms of electoral bribes.
  One of the big criticisms by constituents concerns the number of voids in the ownership of both local authorities. This concerns me and must concern everybody. I would feel much better hearing hon. Gentlemen talk about voids in local authority housing stock if they would join us in pressing the Government on this point. On the Langley estate in Manchester some 600 houses are now vacant, which is a very large number; but the reason is that the concrete floors and the sulphate in the soil have made those houses uninhabitable. Yet, when the local authorities approach the Government for the money to repair the houses, that money is simply not available. Manchester is not repairing its housing stock, so it has to see its houses boarded up, vandalised and not let to families which could use them.
  The reason for the overwhelming majority of those voids is the underfunding of the capital budget for local authorities, and that is something for which central Government have to take direct responsibility. That situation applies throughout the land.
  Housing in this country is now severely underfunded, and this is true of both local authority housing and housing in the hands of owner-occupiers. In my own constituency owner-occupiers, who are very often on moderate incomes, find even the improvement grant system that exists no help to them. One of my unemployed constituents has been trying for some time now to get some assistance with his own home, but when it comes down realities and the funding of his portion of the grant he simply cannot afford to take on that kind of debt. More

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  to the point, he cannot find anybody who would lend it to him. So for many people there is an underfunding of housing.
  The private institutions do not cope with that kind of problem. The local authorities are not in a position to do so, not because they do not want to but because the Government will not let them. At the end of the day, the housing crisis in this country is a crisis inflicted by this Government which affects the way of life and the quality of life of the people of Britain.
  5.42 pm
  Mr. William Shelton: I must first say how much I agree with the suggestion by my hon. Friend the Member for Ealing, Acton (Sir G. Young) and I shall follow him by speaking briefly to one point only. Reference has already been made to the matter of empty properties on both the private side and the council side. I intend to talk about the council side because I think that the empty properties on the private side are empty through the fault of the House, because of the Rent Acts.
  In May of last year I was talking to a constituent in Hambalt road, in Clapham, about some problem she had, and she said that she wished that her daughter could move into the flat next door, which had been empty for 10 years and was owned by the council. I wrote to Lambeth council and asked if it was true that the flat had been empty for 10 years. I had no reply, but two weeks later a team moved in and put in central heating and did the flat up. I checked again last month, March, and the flat was still empty. The constituent who told me about it said that it had been empty for 10 years and the lady downstairs said that it had been empty for 8½ years. There was a slight difference there, but certainly it was empty for more than 9 years. Somebody has now moved in because I created such a row in the local press.
  I think that it must have fallen off the local council books in some way. I do not believe that even Lambeth council would have left it empty deliberately for so long. It bought it some 10 years ago and it remained empty all that time.
  I think that the Government must take some responsibility for collecting figures from local councils in a more co-ordinated and comprehensible way. I started looking to see what was available in terms of statistics on empty properties, waiting lists and so on, and here are a few of the figures. They come from different sources and they contradict each other. As I say, there is a need for some correlation.
  First, the council house waiting list in inner London, in March 1985, was 142,500. So there were very nearly 150,000 people waiting, of which it was said that 128,000 were "in need", whatever that definition may mean. That point has been raised already.
  Secondly, bed-and-breakfast homeless in inner London in March 1986 amounted to about 3,500 families, and the cost, according to the Association of London Authorities, had risen from £3 million in 1981–82 to £11 million in 1984–85. It also said that the number would be up to about 12,000 by 1989 unless the policies were changed. So everyone must agree that there is a massive problem here.
  Looking at the supply side, according to the same association, those councils, which are basically the inner London councils, have some 20,000 empty properties
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  between them. That is a far higher percentage than an average management estate would have. To be honest, I do not know what percentage it is, but it is very high. I could not, however, get a breakdown. Nowhere did it say how long the properties had been empty or why they were empty.
  I then looked at Lambeth and Wandsworth, where I had direct access to more specific figures. I need hardly tell the House that Wandsworth is Conservative-controlled and well managed and Lambeth is Labour-controlled and badly managed.
  Mr. John Fraser: Can the hon. Gentleman help me with a mystery, if that is the proposition? Why is it, then, that Wandsworth has more empty council houses than Lambeth?
  Mr. Shelton: If the hon. Gentleman will restrain himself for a moment, I will come to that precise point.
  Lambeth has 1,500 homeless, while Wandsworth has 750. The boroughs are more or less the same size. Lambeth has a waiting list of 13,000 and Wandsworth has a waiting list of 5,950. Lambeth has 865 squatted properties; Wandsworth has 11. Lambeth has a 26-week turnover in lettings; Wandsworth has a two-week to three-week turnover. But — this is the point which the hon. Gentleman raised—Lambeth claims to have only 1,388 empty properties, 2.7 per cent. of its stock, while Wandsworth has 1,071, 3.7 per cent. of its stock. That brings me back to the point, that these figures should be put forward in a comparable way. I will explain this anomaly.
  Lambeth excludes squatters from its voids. If we add the number of squatters to Lambeth's voids, we get 2,193, so 3.9 per cent. of its properties are either squatted in or void. On the other hand, in Wandsworth 935 houses on the waiting list are being renovated prior to sale. If we abstract those, it has only 136 waiting to be let, or 0.4 per cent., compared with Lambeth's 3.9 per cent.
  It really is nonsense that councils put forward figures in such extraordinarily different ways, misleading normally intelligent people such as the hon. Member for Norwood (Mr. Fraser), who is a Lambeth Member and was delighted by those figures, as I was until I looked into them. I found that, instead of Lambeth having fewer empty properties as a percentage than Wandsworth, it had 3·9 per cent. including squatting, whereas Wandsworth had only 0.4 per cent.
  In conclusion, we need more information about empty properties, squatters and the homeless. We need to avoid disgraces like the flat owned by Lambeth council that had been empty for 10 years. A year ago I told Lambeth council about it. It did it up, and put in central heating, but it was still empty 10 months later. If the hon. Member for Norwood approves of that, I shall be delighted to publish his approval in my local press.
  Mr. Nick Raynsford: What about those in Wandsworth?
  Mr. Shelton: I will suggest to my right hon. Friends on the Front Bench that the Government should designate certain local authorities which should be obliged to submit to the Department—and make public locally—lists of empty properties in their ownership, compiled on a like-for-like basis, including or excluding whether they are squatted, and how long they have been empty, if they have been empty for more than six months.

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  No property needs to be empty for more than six months, unless it is being rebuilt, in which case the local authority would say that it was being rebuilt. I accept that some work is involved, but the homeless and those who are poorly housed should demand that councils should not keep a good flat empty for 10 years because it happened to fall off the books.
  5.51 pm
  Mr. Eric S. Heffer: The hon. Member for Streatham (Mr. Shelton) is, like many of his colleagues, full of hypocrisy on these matters. Local authorities have been starved of money to meet the requirements of local people to repair their houses. Because of that, many problems have developed, particularly over the last eight years. The basic responsibility is with the Government and not with local authorities, but the local authorities are not entirely excused.
  I want to raise the question of choice. I am becoming worried about it because I hear about choice all the time, and to some extent I even read it in our own motion. I am not certain what is meant by choice. People have choice if they have money. Anybody who has money can buy a house where they want to buy one. That has always been so. Some people have always had that choice.
  But the ordinary mass of working people, who have no money and cannot afford to raise cash so that they can get a mortgage, have no choice. Those are the people that I am worried about. The Labour movement must be concerned about them because those are the people we really represent. We represent them; no one else will.
  John Wheatley, the first Housing Minister in a Labour Government, was a man of fine character. Five hundred thousand houses arose out of the Wheatley Act. Incidentally, he was always referred to, when alive, as one of the loony Left—and he was a Roman Catholic, so one can be a Roman Catholic and a member of the loony Left. People like Wheatley were doing that job for those in need.
  Masses of people are in need now and require help. They cannot get accommodation unless they are assisted by local authorities. It is only through local authorities that the housing needs of these people can be met and necessary repairs made. I am all in favour of choice. Those who have money and who do not want to live in a local authority house can move out and buy some other accommodation.
  My local council—and its 47 members—has been disqualified. What did they do? They built almost 5,000 houses in three years. I know of a private estate in Liverpool, next to which the council has built council houses similar to the ones that were built for sale by the Liberals and Tories. Those council properties are full because the occupiers have been moved into them from slum housing. Other parts of the estate have sale signs up because people cannot afford the mortgage payments.
  A couple in my constituency—perhaps an example of many other couples — could not afford to pay the mortgage payments and had been negotiating for some time with a building society. One evening they went home and discovered that the building society, which already had the keys, had moved in and had changed all the locks on their house. I can happily give the names and details of that couple. All over Liverpool, the sale signs are going up not only on houses that were built by or through the
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  local authority but also on older properties that people have bought. That is happening because workers have been thrown out of work. They cannot afford the mortgage payments, and many of them are being evicted from their homes.
  They are our people and they require more assistance than anyone else. We in the Labour party have to give them that help. It is our responsibility to ensure that those people are assisted, because this Government will not help them. This Government have made the position far worse since attaining office.
  Statistics from the National Council of Building Material Producers—that body is certainly not an adjunct or affiliate of the Labour party—show that in 1979, in the public sector, 145,000 houses were being built, and that in 1986 46,200 were being built. In the private sector, for the same period, the number of houses being built increased, but not dramatically. Taking both private and public sectors together, the number of houses being built has gone down, although there has been an increase in the private sector as against the public sector.
  How do people find somewhere to live? I will give an example of the homeless. I am a member of the Union of Construction, Allied Trades and Technicians. Many of the membership have had to move to different parts of the country to seek employment. Many of them have come to London. The February issue of the union paper, UCATT Viewpoint, gives examples. Any hon. Member who has been round London at night will have seen what is happening; if hon. Members have not been, I urge them to go. In winter just round the back of Covent garden one could see people trying to get some warmth from cardboard boxes. The Minister should have a look. My-union paper has photographs but hon. Members should go and see for themselves what conditions are like. A disgraceful position has developed. The Government are bringing us back to the days described by Jack London in his book, "The People of the Abyss". They do not give a damn about the ordinary people who are suffering without a shelter over their heads.
  We must care. We must build houses, basically through the local authorities. We must stop talking about choice and make sure that people have a shelter over their heads. I shall support the motion but I hope that we will be more positive in what we put before the people at the general election. The Labour party must say that it is the only party that is concerned about meeting the needs of the people for shelter.
  6.1 pm
  Mr. Robin Squire: The hon. Member for Liverpool, Walton (Mr. Heffer) is always listened to with respect even if most of us on this side of the House reject his remedies. In particular we reject his belief that the future can lie only in council housing, but he is entitled to that view.
  For some five years I have been a board member of Shelter and in that role have spent not a little time considering the problems of homelessness and bad housing, on which I shall concentrate now. In Shelter's view, a definition of a successful housing policy has three criteria: first, does everyone who needs an adequate home have one; secondly, is society meeting its responsibility to keep in reasonable repair the housing stock which is held in trust for future generations: thirdly, are Government ensuring that housing policies do not discriminate against

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  particular sections of society or affect their ability to lead full and satisfying lives? I would need to make a long speech to cover each of those principles, but I certainly endorse that broad approach.
  In the International Year of Shelter for the Homeless, there is broad agreement across the Chamber that bad housing creates conditions for increased crime, bad health, stress, family breakdown, vandalism and all the other problems which we know only too well. Last year, £26 million was spent on the increased use of bed-and-breakfast accommodation. Goodness knows what the figure will be for the year to March 1987, but it will obviously be higher. That is indefensible on financial or social grounds. Such accommodation is provided at twice the cost of other accommodation.
  The survey of houses in multiple occupation published at the beginning of the year showed that only a quarter of the estimated 200,000 homes concerned were adequate. There are now 100,000 homeless families. As I suspect most hon. Members are aware, that is the number accepted as homeless by local authorities. If we throw in those who are single or couples without children, we have to add another 203,000 people or families who are not accepted as homeless. The majority of the 100,000 accepted as homeless may have been unfortunate enough to be put out of work or may have suffered industrial injury which led to them being out of work. We must not think of them as a separate category.
  I have long believed that we must continue to make use of housing associations. I welcome the increase of 21 per cent. in funding announced for the Housing Corporation for 1987–88. In high stress areas, housing associations have a major role to play. I am concerned that some recent changes may reduce that role. Housing associations will no longer be offered first refusal when public property is being disposed of. I regret that particularly, as I also understand that housing associations cannot buy at the outstanding historic debt. When those provisions are combined, it will be very difficult for housing associatons, particularly in areas such as central London, to buy property that would be suitable for people paying fair rents.
  I wish godspeed to the Minister's latest initiative involving 30 per cent. housing association grants—or HAGs as they are quaintly termed. I hope that they are successful. He should remember that housing associations have a major role to play and that they should not be restricted in carrying out that role.
  Mr. John Patten: I ask my hon. Friend to accept that in the near future we wish to see growth in the number of homes built by housing associations in partnership both with central Government and privately funded institutions. We see housing associations playing a particularly important role. I welcome the vigorous way in which housing associations are rising to the challenge.
  Mr. Squire: I welcome my hon. Friend's comments. We shall all note them and shall expect to see the growth of which he has spoken.
  I should like to refer specifically to mixed user grants, or MUGs. With MUGs and HAGs, it sounds a bit like pre-Wolfenden Paddington, but I am talking of 1980s housing. Mixed user grants apply when there is a prospect of a housing association acquiring property above a
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  disused retail or industrial outlet. The rules do not allow housing associations to be responsible for the lower property. In rundown inner-city areas, this is denying activity to housing associations. St. Pancras housing association has been discussing the problem with my hon. Friend the Member for Surbiton (Mr. Tracey). In his reply to the debate he may be able to tell us what progress is being made.
  On better use of empty property and potential empty property, I have been advocating for some time that the Chancellor of the Exchequer should find funds to encourage people to bring empty rooms in their property into use, particularly in inner cities. If the first £500 of rent thus received was free of tax, it would create a new source of supply of accommodation, particularly for young people aged 18 to 25 who gravitate to the cities, who cannot find anywhere to live and who end up living rough or in conditions of which we should be ashamed. Many elderly people would be only too pleased to have the extra income from the use of spare rooms. It would be a much more flexible way of dealing with mobile young people than requiring local authorities to provide accommodation for them. We should be looking closely at ways of finding the funds that would enable that to take place.
  Mr. Charles Irving: As to flexibility—as my hon. Friend knows, I have had a long relationship with housing associations—does my hon. Friend feel that the Department and the Minister should be giving local authorities and housing associations two or three-year programmes rather than a one-year programme? A one-year programme is extremely difficult to plan and often impossible to fulfil. If it were extended, there would be a better chance of using the available resources. In some authorities, such as Cheltenham, those funds are not used because it has been impossible to complete the programme.
  Mr. Squire: The Minister will have heard my hon. Friend's interjection, which I would endorse.
  One sector which needs not legislation but exhortation is the political encouragement of local authorities to make use of empty properties. not just their own—I do not have the time to develop what might be termed the expected line on council properties—but empty property which is lying unused within their boundaries. Currently, a number of authorities are doing that, so they do not need legislation. I shall quote an example which might not be expected of me—the London borough of Brent. Brent is working with local housing associations and over the past year it has leased 200 empty properties. Landlords are guaranteed vacant possession at the end of the lease, and the borough pays them a rent. It is a particularly good deal for owners who may otherwise have left the property to rot.
  I know that what has happened in that area of high stress has happened elsewhere. I should like to see such schemes grow, because if they do not and if we continue to see a growth in company lets in central London side by side with the pressures for low-rent accommodation, we will face great problems in the future.
  6.11 pm
  Mr. David Winnick: Despite all the ministerial denials, there is an acute housing crisis in many parts of the country, as my hon. Friends have pointed out in this short debate.

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  I am glad that the hon. Member for Hornchurch (Mr. Squire) has spoken because he is one of the few Conservative Members who recognises that there is a real housing problem in this country.
  It must be sickening to all those who are in desperate need of adequate accommodation to read and listen to Tory Housing Ministers denying that there is a problem. It is bad enough for a family to be forced to live in bed-and-breakfast accommodation and not know how much longer they must put up with such miseries, or to live, as so many of my constituents do, in a high-rise block of flats with two children and be told that the chances of being allocated a house are remote.
  How many young married couples, often with a child, who come to our surgeries or write to us, have no alternative but to live in one rented room, or in cramped conditions with parents or in-laws with all the accompanying domestic strain? Surely it aggravates such miseries to be told time and time again by Government Ministers that there is simply no housing problem at all. That is the sort of 1984 Orwellian position the Government adopt.
  Tory Members of Parliament, and many others who are involved in that party at local level, have always deeply resented public sector rented housing. Indeed, some would go so far as to say that there has almost been a vendetta over the years against council dwellings. Since 1979 the Government have given effect to that resentment or vendetta. They have virtually made it financially impossible for many local authorities to build at all.
  Reference has often been made previously by Ministers to the decline in council house building under the Labour Government, but in the last full year of that Administration over 100,000 new council houses and flats were being built. We know that in the last few years, and certainly in the current year, the figure is 30,000 new houses or flats or just under.
  First and foremost, we need a substantial national house building programme in the public sector. Building houses and low-rise flats, as my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said, is the most effective way of tackling the housing crisis.
  It is no good those people who are on low incomes or unemployed being told that they can buy. What should I tell my constituents when they come to my surgery? Should I tell them that they should get a mortgage? They have no more chance of getting a mortgage than of going to Mars. The only way to resolve their housing crisis is for them to be housed by the local authority or a genuine housing association.
  We must ensure that local authorities have the means to modernise and carry out large-scale repair work to old and structurally defective council properties. I shall refer briefly to what is happening in the borough of Walsall. Since 1979, no council properties have been built at all. Of course properties have been sold off, and I would just make this comment: much reference has been made by the Minister to the privately rented sector. The question that I and my hon. Friends have asked on many occasions is a simple one. The Government tell us that it is right in law for public sector tenants to be able to buy. Why should that not apply to private tenants? Why should there be a distinction? Why is it that private tenants are not given that right in law? the explanation is pretty obvious—no Tory Government would dream of giving private tenants the right to buy.
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  In Walsall too many pre-1939 properties have yet to be included in the modernisation programme. The explanation for that is known to the Minister because I have written to him on a number of occasions. There simply are not enough funds. Since the Minister is here, can I refer to the fact that a number of tenants in my constituency live in what are known as the "Wimpey no fines" properties. They are very concerned indeed that their properties are not to he modernised in the forthcoming financial year. I have written to the director of housing and I have been informed that there are not sufficient funds for the work to be carried out in 1987–88. I then wrote to the Housing Minister. Altogether in the borough, not just in my constituency, it would cost about £3·5 million to bring that type of concrete-built but not pre-cast dwelling up to scratch. That is about £3,500 per property.
  Understandably, the tenants are up in arms at the state of these properties. I have already described them by their name—Wimpey no fines—and they were built just after the war. The problems with those dwellings include acute dampness, much condensation, rotting window frames, and so on.
  When I have received deputations from the residents concerned, they say, "Well, Mr. Winnick, are we to spend another winter in such conditions?" As I have just mentioned, when I received a reply from the director of housing I immediately wrote to the Housing Minister and asked him whether he would be willing to receive a deputation as requested by the residents. The answer was in the negative, I am afraid. I understand that the tenants are not satisfied with the Minister's reply to me and that they intend to come to London. If they come to Marsham street I shall do my best to see that they are seen by a Minister or at least by a senior civil servant. It would be very discourteous of the Minister to tell my constituents that, having travelled over 100 miles to London, they cannot be seen when they arrive at the Department of the Environment.
  What is required in this sector is a sufficient housing investment programme allocation to my local council and other housing authorities so that they can carry out their housing responsibilities of building, modernising and maintenance. The question which immediately arises is how much more it will cost if all the work that I have described is further delayed and not carried out in the next two or three years. It will certainly cost more, yet it is estimated that about 25 per cent. of those who are involved in the building trade are unemployed. Would it not be much more sensible for those people, instead of being jobless and having to rely on unemployment or supplementary benefit, to be building and modernising the properties so urgently required in the public sector?
  Again, I am sure that this problem too is shared by a number of hon. Members.
  In my constituency a number of elderly owner-occupiers are living in old properties. They cannot get an improvement grant. In some cases, they are unable to afford a new roof, for example. When I took these cases up with the local authority, I was told that there was no way in which any discretionary improvement grants could be made because of the lack of sufficient funding in the next financial year. I have been told that a large number of people in the borough—nearly 2,000—have been waiting for over four years for such grants. Unless the money is forthcoming, my constituents will not be able to carry out the work because they cannot afford to do it

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  themselves. When the Minister boasts about owner-occupation, he should think about these owner-occupiers as well. It is not too much to ask that they should be given the necessary funding to put on a new roof and other such essential work.
  There is no future for the private rented sector. I take the point made by the hon. Member for Hornchurch that there is no reason why an owner-occupier should not let out a room. Labour Members would be the last to say that that would be wrong. However, the idea that the private rented sector can somehow be revived and provide accommodation at a reasonable rent is sheer moonshine. The Government are trying to bring back the legislation of 30 years ago—the notorious Rent Act 1957. On a previous occasion, I reminded the House that when that Act was in operation, I was a councillor in a borough in London. The Minister can smile about this if he wants, but I saw for myself the numbers of people who were evicted quite legally, and not as a result of Rachmanism. Why is it that, with a majority of 140, the Government have not legislated to do away with the Rent Acts? The simple reason is that they have been frightened to do so before a general election. We must warn the country and private tenants of what is likely to happen if the Government were to be re-elected. Rachmanism would come back with a vengeance.
  The debate once again demonstrates the need for ample funding for the public sector and the need to ensure that improvement grants are made, so that, at the end of the day, all our people can be housed properly, whether they are owner-occupiers or council tenants. We need adequate accommodation for all our people, through the state or the voluntary housing sector.
  6.21 pm
  Mr. Ian Gow: No doubt, Mr. Deputy Speaker, at your bedside there is a copy of this month's edition of "Roof' which is the magazine for Shelter. In that document you will find an interview given by the hon. Member for Leeds, West (Mr. Meadowcroft). It is a breathtaking interview. With that flamboyance that is characteristic of the Liberal party there are 10 photographs of the hon. Gentleman in different poses. It starts in the way that one might expect. It says:
  "Meadowcroft didn't want to become the Alliance spokesman on housing and local government when the Liberals and SDP merged their parliamentary posts in January."
  That will come as no surprise to you, Mr. Deputy Speaker, if you read the Official Report tomorrow and see the speech of the hon. Member for Leeds, West.
  It is an astonishing interview, because it shows that the hon. Gentleman is way to the Left of the hon. Member for Birmingham, Perry Barr (Mr. Rooker). I shall give one or two quotations to illustrate this point. I emphasise that these words are not mine, but those of the official spokesman for the Liberal party. He said:
  "right to buy discounts should be concentrated on less desirable properties. There would be no 'blanket discounts' if he had his way".
  I shall be issuing a copy of this interview to my electorate, and I know that many of my hon. Friends will be doing the same. The hon. Gentleman does not appear to understand that those properties that he describes as less desirable have had an abated price by reason of the
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  fact that the open market value of less desirable houses is lower than the open market value of more desirable houses. However, that truth has not dawned on the hon. Gentleman.
  The hon. Gentleman went on to say:
  "Measures such as requiring owners of homes sold under the right to buy to sell back to the council if they move, however, could be used to ameliorate some of the worst effects of sales."
  At the last general election the Labour party proposed that, where a person who had bought his house or flat under the right to buy wanted to sell, he should be under an obligation to offer it back to the council first. That was an obligation to remunicipalise. It was denying persons who had bought under the right to buy the same freedom as those who had not bought under the right to buy. In certain circumstances, that may still be the policy of the Labour party, but I am dealing with the Liberal party. We now have the official spokesman of the Liberal party saying that those who have bought under the right to buy—more than 1 million of them, including many of the hon. Gentleman's constituents—will, when they wish to sell, be denied the freedom to choose the purchaser and will have to sell it back to the council, if the hon. Gentleman gets his way.
  That is not the only matter. Another short quotation shows the way in which the Liberal party never likes to offend anybody and always takes two sides simultaneously. I have further evidence for that proposition. The interviewer said:
  "He doesn't go so far as to approve of Tower Hamlets' policy of selling tenanted blocks of flats, but he won't condemn it outright either."
  As always, the Liberals are trying to have it both ways. No wonder that the person interviewing the hon. Gentleman reached this conclusion:
  "Having thus nailed his colours to the mast, Michael Meadowcroft immediately begins to pull them down again."
  I could not have put it better myself.
  Mr. Meadowcroft: I am grateful to the hon. Gentleman, who is under severe attack from the Liberals in Eastbourne. Is the hon. Gentleman aware that the selling of council houses was first instituted in Leeds in 1974, when there was an agreement between his party and mine, to do it on the terms set out in that article and that this was very successful? That is an important point.
  Mr. Gow: The hon. Gentleman would find it instructive to look up the record of how his party voted on what is now the Housing Act 1980, which gave the right to buy.
  I find myself in respectful disagreement with my hon. Friend the Minister on only one aspect of his remarks. He said that he thought the hon. Member for Perry Barr had made a good speech, but I disagree. I thought that it was a muddled speech and that some of his supporters, who had been hoping that there would be a real strategy on housing from the Labour party, were disappointed. The speech bore all the hallmarks of a shadow Minister who knows that he will never hold office. That is part of the trouble with the Labour party.
  I welcome the partial conversion of the hon. Member for Perry Barr to the policies enunciated and developed by my hon. Friend the Minister, and in the few minutes that remain to me I shall concentrate on one or two aspects of my hon. Friend's speech. He told the House that there were more than 100,000 houses and flats empty in the public sector, and more than 540,000 houses and flats

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  empty in the private sector. We may not know with total precision how accurate those figures are. We may not know precisely in what areas of the country they are, but we know one thing. If, as is the case, those figures are approximately accurate, and if, alongside those figures, we have the continuing scandal of homelessness and the continuing scandal—I hope that the hon. Member for Walsall, North (Mr. Winnick) has noted my choice of language — of some of the bed-and-breakfast accommodation, we cannot allow that number of empty houses and flats to continue.
  With regard to the public sector, I commend to my hon. Friend the Minister the suggestion put forward by my hon. Friend the Member for Ealing, Acton (Sir G. Young). I am particularly anxious that we should bring into use those houses and flats in the private sector that are presently under-used or unused. We must also consider the task of bringing into use that accommodation that exists in houses and flats where the owners would be willing to make a room or part of a house available for those who are presently homeless, but are discouraged from doing so. My hon. Friend the Minister rightly discussed the right to rent. However, he did not spell out—I appreciate why he did not—the specific proposals that we should adopt. We shall need more information than we received this afternoon when we come to write our manifesto.
  There has been a transformation in the private rented sector. When the Rent Acts were first introduced 75 years ago, 10 per cent. of our housing stock was held by owner-occupiers and 90 per cent. by the private rented sector. My hon. Friend the Minister has already said that the private rented sector has fallen in those 75 years from 90 to 8 per cent. in 1987.
  Mr. John Patten: Is my hon. Friend aware that, such is the loss of units of accommodation and homes in the private rented sector—presently running at 70,000 a year—that. unless we act, within 10 or 15 years there will be no private rented sector left?
  Mr. Gow: If there is an increase in owner-occupation—now approaching 64 per cent. in England—it is self-evident that there will be a diminution in renting. We want that figure of 64 per cent. to go on rising. Indeed, I am sure that it will.
  I believe that we need a radical policy to bring into use unused and under-used accommodation. We also need a radical policy to attract new investment to the private rented sector. I congratulate the Minister on his announcement of the increase in the number of approved landlords under the assured tenancy scheme. However, the truth is that, apart from that scheme, there is practically nobody in Britain building houses or flats for renting in the private sector.
  Mr. Winnick: It has been the same for 30 years.
  Mr. Gow: Exactly. The hon. Gentleman and I agree. My right hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley) made a start with assured tenancies, and my hon. Friend the Minister is continuing that good work.
  In respect of all new lettings, I believe that the rent to be paid by the tenant should be that rent that is agreed between tenant and landlord.
  Mr. Winnick: Freely negotiated.
  Mr. Gow: Yes, the hon. Gentleman is correct. If the landlord asks too high a rent, he will not get a tenant. That practice would bring more accommodation into use.
  In respect of all future lettings, I believe that the terms of the tenancy should be those agreed between the landlord and tenant. In our future policies for lettings there should be no place for the rent officer, and no place for the tenant to have the right to extend the terms of his tenancy beyond that term agreed between himself and landlord.
  The tragedy of the Rent Acts is that they have injured the people whom they were designed to protect. We have succeeded in drying up the supply of privately rented accommodation, to the great injury of potential tenants. That has meant a great loss of housing for our people. I believe that the radical poliy that I have suggested would, in the medium term, reduce rents in many parts of the country. [Interruption.] It is quite extraordinary how the Opposition have still not learnt elementary economics. If one increases the supply of eggs, the price of eggs will diminish. If the supply of privately rented accommodation is increased, rents will come down.
  The Labour party believes that the moment one removes price controls there is a price rise. Some Opposition Members still do not accept that the free market is able to provide a better service to our people than is provided by the controls so beloved by the Opposition. I hope that my hon. Friend will have the courage to include in our manifesto radical proposals for the encouragement and revival of the private rented sector.
  6.34 pm
  Mr. Nick Raynsford: In many ways we have heard a rather depressing debate this afternoon. We have heard the backward attitudes of the hon. Member for Eastbourne (Mr. Gow), a former Minister for Housing, whose comments have gone a long way to explain his abject failure in office.
  We have also heard the sensitive comments of the hon. Member for Ealing, Acton (Sir G. Young) who advocated a scheme that was put to him by me—in a former guise before elected to the House—and others some two years ago when he was a Minister. Sadly, his sensitive approach towards this issue probably led to his departure from the present Government. He is now advocating a scheme that could have been put into practice two years ago if the Government had had the will to do so. We have heard the Minister's comments. He has presided over one of the most appalling housing crises since the war and he displayed insensitivity, complacency and arrogance that would make most people feel depressed.
  Any Minister who has witnessed this record rise in homelessness, together with the scandal of bed-and-breakfast accommodation, should come to the House with a touch of humility and a willingness to admit that things are not all that they should be. Instead, we have been treated to arrogance, insensitivity and complacency of an extraordinary scale.
  We now have the worst figures for homelessness since records began in 1947. It is ironic that, in the International Year of Shelter for the Homeless, we have the worst homeless figure since records began. We also have the worst figures yet recorded for bed-and-breakfast accommodation. That accommodation represents squalid, overcrowded conditions, imposing on families circumstances that destroy family life. Those conditions have

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  been achieved at an appalling financial and human cost. It is costing the Government more to keep families in bed-and-breakfast squalor than to build new homes. Such are the policies of the loony Right who govern our country at the moment. The Government are squandering money on keeping people in squalid hovels rather than building the homes that they need. What a disgraceful record. Any Minister worth his salt would apologise for that this afternoon, rather than hardly mentioning the issue of bed and breakfast.
  The Minister should not express surprise about the increase in bed-and-breakfast accommodation. It is not something that has mysteriously emerged, for no apparent reason. Bed-and-breakfast accommodation fills a gap left by the lack of an adequate house building programme and the lack of adequate homes available to rent. In a time of shortage, the private sector — beloved of the Conservatives—moves in to make a killing. The hon. Member for Eastbourne (Mr. Gow) should consider what life would be like were the Tories to change the Rent Acts to remove all controls on new lettings and thus allow such lettings to be freely negotiated.
  There are freely negotiated conditions of occupation for bed-and-breakfast accommodation. A landlord buys a property, but will not let it on decent terms, and states that he will take homeless people. He will charge the earth for squalid conditions. Such are the freely negotiated conditions that are presently being imposed by exploitative landlords. The Conservatives, to their eternal discredit, subsidise this exercise to a massive extent through the Department of Health and Social Security. They are subsidising those landlords who keep people in squalor rather than providing the necessary homes for people in need. Such is the basic economics that the hon. Member for Eastbourne should consider. It is the basic economics of exploitation — when the opportunity is available, in times of shortage, the private sector is rapacious.
  The Minister has given excuses for the present problems. He has discussed empty properties and once again has shown extraordinary hypocrisy. He turned his attack on local authorities for leaving properties empty. I join him in condemning those authorities, including Wandsworth, which leave masses of properties empty in order to sell them. Such properties are needlessly empty. However, I also condemn those Government Departments that have empty properties. The percentage of empty properties owned by Government Departments is far greater than those owned by any local authority. Government Department empties are 6·5 per cent. of their lettings.
  What is the Minister of Housing doing about that? Is he talking to his right hon. and hon. Friends and urging them to bring those properties into use? Has he talked to the Home Secretary about the 18 per cent. of Metropolitan police residential accommodation in London that is currently vacant? What about that scandal of empty property? Why are some of those homes not being used for the homeless? Why is nothing being done about those? The Minister is simply playing party politics in order to make cheap attacks on local authorities, but he will not apply the same logic to his own hon. Friends who have far more empty residential properties in their Departments. That is hypocrisy, and the Minister knows it.
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  The Minister knows that there is support in principle, on the Opposition side as well as on the Government side, for assured tenancies. He knows very well that this is only a small-scale operation and not a replacement for mainstream programmes. That is the tragedy of the Government's present policy. They are fiddling with palliatives and talking about small-scale schemes rather than providing mainstream programmes.
  The Government cry crocodile tears about the housing association movement, but they ought to be reminded of their record. In 1979, housing associations completed just over 16,000 lettings for people in need in England. That was the record that the Government inherited from the Labour Government. In the last 12 months, housing associations completed only 9,000 homes for letting. The Government like to be seen as a friend of the housing association movement but they have cut the housing associations' programme and associations that are desperately keen to provide rented homes for people in need are being prevented from doing so by Government policies. The Government are fiddling rather than dealing with the mainstream needs of our time. It is certainly not good enough for the Government to hide behind such palliatives.
  The Government's talk about the right to rent is perhaps the greatest hypocrisy of all. In the eight years during which they have been responsible for housing policy, they have presided over the worst ever decline in rented housing in Britain. Some 1 million homes for rent have gone from the market. About half of those were in the private rented sector and the other half were council homes. That is the legacy of this Government. Never before has there been such a loss of rented accommodation in so short a period. That is the record of the Government and therein lies the explanation for the alarming rise in homelessness and the bed-and-breakfast crisis.
  The shortage of rented housing needs to be tackled. The two parties that will fight the forthcoming election will put fundamentally different policies to the electorate. We will put policies of hope about building homes for people in need and the Conservatives will put a record of failure, disaster, homelessness and misery. On that record, the Government will be judged and found wanting.
  6.43 pm
  Mr. Richard Ottaway: I should like quickly to make a few points. My first is about the importance of improving the quality of housing estates like those in my constituency. We all know that there is a shortage of decent homes. There always has been and there always will be. This is primarily because expectations always exceed demand. However, building more council houses is not the whole answer. That results in large council estates, and we have found by painful experience that such estates are difficult to manage.
  We need smaller estates, either privately owned or in management, and the management should be carried out by housing associations or by tenants themselves. I believe in that concept primarily because it leads to greater involvement by those who live on the estates. We all know that, when people occupy their own houses and are involved in the running of their estates, that results in a cleaner, better and tidier estate. In Nottingham, my party is advocating for the local elections greater local

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  management in the running of the council estates. We should not fear going beyond that and should ask tenants how they want their estates to be managed.
  Anyone who takes an interest in housing will be aware of the Thamesmead experiment, in which tenants were asked whether they wanted to be run by Greenwich borough council or by a local trust. They voted to be run by a local trust. We should break up the large estates, give their tenants more choice, and encourage more localised management.
  My second point is about the need to deregulate the private rented sector. In Nottingham, both private and council houses are very cheap—indeed, it is almost as cheap to buy as to rent — but buying does not suit everybody. Britain needs mobility of labour. People going from the north to the south can get jobs but they cannot find somewhere to live. But it is not just that; people going from the north to the midlands have the same problem, and it affects young people who may not be high on a council's waiting list and have difficulty in finding somewhere to live.
  I am pleased to see that the hon. Member for Walsall, North (Mr. Winnick) has just returned to the Chamber. He said that, in the short term, rents may go up. However, as more property comes on to the market, rents will begin to drop, we will see them coming down to an acceptable level and more property will be available. It is important that we have adequate protection for the tenants in order to prevent the harassment and the Rachmanism that used to go on.
  My final point is that, in improving the quality of existing stock, we must look at estates such as those in Nottingham on which there are pre-war and post-war houses. They are largely unmodernised. Some of them still have outside toilets, and modernisation is slow. I complained to the local authority about this and it said that it was short of funds. If I were a councillor and the local Tory MP complained to me, that is what I would say to him. However, we see there the hypocrisy that I spoke about in my intervention, because while complaining that is has a shortage of funds, the council is relocating its housing services department in a brand new luxury block of flats which cost £2·5 million.
  I have no objection to such relocation, but to do it the council is taking £1·8 million out of the housing investment programme. Some £1·4 million of that was targeted for a housing association in Nottingham, but it will not now receive that money. A further £400,000 is being taken from housing receipts.
  I do not mind the council complaining to me about a shortage of funds, but I object to the approach of offices before homes, at the same time as the Opposition Front Bench spokesman complains that the Government are not giving the councils more money. We are hearing the smooth words of the Opposition spokesman and they are covering up for the iron fist of the activists in the country. The Opposition motion is hypocritical and I ask all hon. Members to resist it.
  6.48 pm
  Mr. George Howarth: In debates over the last few months, I have listened with interest to the Minister and I have read some of the articles that h: has had published about the emerging consensus about housing that exists in the House. I concede that, in terms of some ideas, there is an emerging consensus and to some
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  extent that is welcome. In this debate we have heard a catalogue of problems for which no resolution seems to be in sight. It is questionable whether the emerging consensus of ideas is a consensus of action. We need a consensus of ideas that leads to action.
  I shall not talk about homelessness or waiting lists, because those things have been well covered. One of the issues to which we must address our minds if we are to build up such a consensus is what to do about mortgage tax relief. We must ask ourselves what purpose it serves and how it can be used as an instrument of housing policy. The Minister quoted from today's leader in The Daily Telegraph. He omitted to quote from the leader a section that dealt with this very question. Speaking about the results of housing mortgage tax relief, the editorial said:
  "This expression of sturdy individualism has been encouraged by mortgage tax relief; but the latter has had the unintended effect of driving up house prices and so, in the long run, the proportion of the nation's wealth invested in bricks and mortar, as opposed to more productive options."
  Clearly I am not going to try to work out the solutions to that problem in my contribution this afternoon, but we have to address it. The Minister was perhaps a little disingenuous in quoting only part of that leader.
  In the time that is available to me, I want to discuss one type of housing provision which needs more attention and support. If we are to expand rented housing—I think there is a consensus that that needs to be done—how do we do so without repeating the mistakes of the past? A major part of the answer to that question is to involve the prospective tenants in the construction, design and thinking about housing. One way of doing that which I have been involved in that I think needs greater attention is the use of new build housing co-operatives that give people a say in where they live, the layout of the estate, the internal design of the houses and, more importantly, how those houses are managed and maintained.
  For some years I was fortunate to work in the housing co-operative movement on Merseyside. My conclusion is that, with motivation, in many respects these schemes are visibly better than other forms of rented housing and some forms of owner-occupied housing. The results of tenants in co-operative control warrant some thought and attention.
  At the moment on Merseyside there are some 24 new build housing co-operatives, and a further six which will be municipalised. I am pleased that some eight of those new build co-operatives are in my constituency. New build co-operatives prove that ordinary people — 800 on Merseyside—when given the opportunity, are capable of taking control of their housing and making a good job of it. They can control the development process and do something useful with it. It also shows that ordinary people can use professionals in a way that enriches their own lives and produces better schemes. The results are visibly better than other types of schemes both in overall effect and in detail.
  It is important that housing co-operatives are essentially, although not always, a local phenomenon. They tend to use local sites, providing hope to the area and a demonstrable belief in the area that is important. That also has important local consequences. It is quite a sight to see the Southdene or Cherryfield housing co-operatives in my constituency. They took over demolition sites and

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  new houses have sprouted like the phoenix from the ashes. In this local context, it is important that it keeps communities together and cements them.
  Another important point in the community context is that the skills that ordinary people develop while working in those schemes can be used to do other things. A small but important example is that there are several members of the Southdene housing co-operative in my constituency who, by employing those same skills, have formed the Southdene credit union. Those people have drawn the same sorts of conclusions about local control. Many other initiatives can spin off from housing co-operatives.
  I began by talking about the emerging consensus in housing. It is small, embryonic and tentative, and I do believe it is yet complete. But if we are not to repeat the mistakes we made in the past with rented houses, housing co-operatives should form a mainstream part of that consensus. It is the logical consequence of the involvement of tenants. It delivers good housing through co-operatives and it strengthens and controls local communities.
  There are many more things that I could say on the subject and had planned to, but time does not permit. The Government must recognise that, if they want the co-operative system to do a job for them, in turn they have to do a job for the co-operative movement.
  6.54 pm
  Mr. Jeremy Corbyn: It is a shame that this is such a short debate, because housing is the issue that affects people most. The speeches by the Minister and the former Minister were an absolute disgrace in complacency, especially the assumption that market forces will solve the housing problem. If that is so, why is it that there are record numbers of homeless people? Why is it that tonight, as on every night of the year, people will be sleeping under the national theatre, in Covent Garden, around the tube stations in London and alongside the main roads? The Government, in their obsession with market forces and the triumph of the rich over the poor, are creating a hobo society. That is all they are trying to do with their housing policies.
  Mr. Christopher Hawkins: Will the hon. Member give way?
  Mr. Corbyn: No, I will not give way.
  My own borough suffers from the contrasts of the type of society that the Government would like to create—the very expensive privately developed properties, often badly developed and badly built by incompetent property developers. Contrast that with the problems faced by the council in my borough. On the general waiting list of Islington council are some 9,500 people, of which 80 per cent. require bed-sit or one-bedroom accommodation. There are 10,000 people on the housing transfer list, mainly those who require family accommodation.
  Those people who come to see me, councillors or my colleague the hon. Member for Islington, South and Finsbury (Mr. Smith) know perfectly well that the policy of sale of council houses means that the possibility of elderly people or families with small children moving out of tower blocks is very limited. Yet the Government have the arrogance to talk about housing choice. There is no choice for those people.
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  The Government also talk about homelessness. In 1986, 2,812 people applied to my borough council as homeless people. Of those, 887 were single people, many of them extremely vulnerable. No answer for those people has come from the Tory Government or the Tory party in the past, none come now or will come in the coming election. They know it full well.
  Mr. Christopher Hawkins: Try the Rent Acts.
  Mr. Corbyn: The hon. Gentleman says, "Try the Rent Acts." Speaker after speaker from the Tory Benches proposed freedom for landlords to exploit people to the nth degree. They are proposing a return to Rachmanism. They are proposing all the horrors of the Rent Act 1957: nothing but homelessness and exploitation for the unemployed, the poor and the homeless.
  I also want to talk about the house-building costs that the Government impose on local authorities. To build a four-bedroomed two-person property in my borough costs approximately £52,000. If one adds to that the gross debt charges over 30 years that the council has to incur, we are talking of a cost of over £150,000 for that property. If the Government are serious about getting council houses built—I very much doubt that they are—they should look at the debts forced on local authorities by the system of local authority finance.
  The Government say they are concerned about housing, so I will give a couple of figures about the housing investment programme bid and the amount allocated to the borough of Islington to deal with its housing problem. In 1980–81, the council bid £60 million and was granted £47 million, or 79 per cent. of the bid. In 1983 it was granted the same percentage. In 1985–86, the council bid £81 million and was allocated £29 million. For the current year it has been allocated only 24 per cent. of its bid. The Government have the impertinence to describe the council as not meeting the housing needs of the people of the borough. It is they who are responsible for policy towards local government and for the levels of homelessness in this country.
  The investment bid application for 1987–88 stated:
  "Islington's housing is dominated by two contrasting realities. On the one side, there are the Council's attempts to maintain, improve and expand the housing stock in its ownership. This is an over-riding priority if Islington is to meet the ever-increasing and desperate demand for decent homes from existing tenants".
  That is quite correct. It is good stuff and it is correctly put. Then I look at the property pages of the local newspaper. I listen to what the Tory party says about the choice of housing and the choice of buying. An example on one of those property pages is a newly converted top floor, one-bedroom flat in Bryantwood road N.7, which is offered at £55,000. On the second page of the paper, a former council house in the borough of Haringey sold under the right to buy is now on sale for £86,000. That is way beyond the reach of people in housing need.
  In London, £45 million is being spent this year on bed-and-breakfast accommodation for the homeless—the very people who are now being expelled from those bed-and-breakfast hotels to make way for the tourist season. This night and every night, people will continue to sleep on the streets. The police will threaten street sleepers with the Public Order Act 1986, telling them they must move out of the way because they look untidy. I wish that the House could be lobbied by all those people who are completely homeless. The complacency and arrogant

  217
  smug smile of the Minister would be removed by the sight of those people demanding their rights: a roof over their heads.
  7.1 pm
  Mr. John Fraser: As we say in our motion, the supply of good quality, affordable housing is one of the indispensable conditions for a full, happy and healthy life. That is as true for the old-age pensioner looking for decent sheltered accommodation as it is for a young child growing up and taking his first opportunities in life. That understanding of a basic need is endorsed by all the organisations that subscribe to most of the motion before the House, from the Association of Metropolitan Authorities to the Royal Institution of Chartered Surveyors. It is a proposition endorsed by almost everybody in the country, apart from the people who occupy the Conservative Benches. By their words and actions, they have demonstrated that they regard the Government and their agencies as no longer being involved, except in the margins, in the provision of housing accommodation generally for the people of this country. That policy was announced by the right hon. Member for Wanstead and Woodford (Mr. Jenkins), when he was Secretary of State for the Environment, to the Housing Consultative Council when he said that it should concentrate on the provision of housing only for people in special need.
  Every Government since the war, and many before the war, accepted the general duty of the state to provide and encourage housing of good quality — except this one. The facts, as well as the words, speak for themselves. For instance, in 1978–79, local authorities spent a modest 0·63 per cent. of gross domestic product on providing new council housing to rent. Yet under this Government, by 1985–86 the same authorities had been reduced to spending a miserable 0·16 per cent. of GDP on new investment in housing. An almost imperceptible part of the wealth of the country is devoted to people in housing need.
  Last year, the number of homes built to rent for people in need was the lowest peacetime figure since 1924. It was the lowest figure since John Wheatley was Minister of Housing. Just to emphasise the switch in philosophy on housing among the Conservative party, one can put the figures another way. Last year, the Government built one house for every 10 council homes provided by Harold Macmillan when he was Minister of Housing and Local Government. In 1978, the last full year of Labour government, we were completing about 2,500 council homes for rent every week. By 1986 that number, under restrictions of subsidy and capital expenditure, had fallen to 600 a week.
  What we got from the Minister was the Tory housing GT model. I call it the GT model because it is just gimmicks and tokens. For the loss of almost 2,000 homes a week to rent—100,000 homes a year—we have had talk of a right to rent. But when the Minister talks about a right to rent, he is talking about a fantasy, using a phrase he stole from the Labour housing group. The Government have had eight years in office, but what are the achievements of the new initiatives?
  The Minister talked about the number of organisations that could build homes for assured tenancies. We have not been against assured tenancies, but I have to tell the Minister and the House that the Government have provided an average of about two homes per week under
  218
  the assured tenancy scheme—enough to count on two fingers—to try to make up for the loss of 2,000 homes a week as a result of cuts in public expenditure and restrictions on local authorities. Quite deliberately, through the withdrawal of subsidy, the amount of housing available to rent has been reduced. It is no answer to tell those people that they can either go out and buy or look for housing on the private market.
  The Labour party supports the desire and the right of people to own their own homes. We always have done and we always will. However, for some people—about one third of our population—that will never be practical or possible, particularly for the 3 million people on the dole. Those people are equally entitled to housing of good quality.
  Our charge against the Government is not just that they have failed to discharge their duty to provide housing; it is even more serious. They no longer regard themselves as having a general duty to house at all. That was certainly confirmed by the Minister this afternoon.
  That dereliction of duty led to 100,000 families being accepted as homeless in 1986. It led to 275,000 families applying to be treated as homeless last year. In our capital city and booming financial centre it has led to a contrast in housing standards that is more akin to the big cities of Latin America than to the London we love.
  Penthouses are selling on the River Thames for figures measured in millions of pounds, but 25,000 people in London have to live rough or in grossly unsatisfactory accommodation. Sometimes they have river accommodation as well but it is usually a cardboard box or a bench. That is the contrast that has been brought about. In London, it has led to 6,000 families in bed-and-breakfast accommodation nightly at a cost of £26 million a year. That is enough to pay the running, maintenance and building costs of 5,000 new homes. That is a policy of sheer economic lunacy, as well as inhumanity.
  If one wants to glimpse Tory housing policy for those in need one does not need to look any further in London than Westminster city council—the Tories' aristocratic jewel of local authorities—and to those who operate the policy of the lunatic raving Right. On the Elgin and Walterton estates in Westminster, there are 700 council homes for rent, in an area of acute shortage of housing to rent. Yesterday I met Mr. William Rae. He is aged 83 and has lived on that estate for over 50 years. For 48 of those years, he lived at 50, Walterton road, first as tenant of a private landlord but later with the council as his landlord. Not many years ago, he moved to another property in the same road, just a few doors away. He now faces eviction by Westminster city council as a direct result of central Tory housing policy, carried on by the enthusiastic practitioners in Westminster.
  Mr. Rae has been told that 150 council tenants will be evicted from the Walterton estate into other accommodation so that their homes can be sold to the private sector. On the Elgin estate, about 100 people will be dealt with in a similar way. People such as Mr. Rae, who fought in two world wars, will be forced to move out of their homes to make way for private development. In the city of Westminster, where the sale of bedsits is booming, those council homes could be sold for about £70,000 for bedsits and about £87,000 for single-bedroom accommodation.

  219
  Never again in Westminster, in the centre of the bed-and-breakfast industry, will people be able to rent at affordable prices. As a result of Tory policies, those homes will be lost for ever and the need for housing will increase in London.
  The reason is that the raving Right of Westminster are carrying out the raving policies of Whitehall, although Westminster has the capital receipts which have been frozen. It has been forced to cannibalise its council accommodation in order to keep it going. Mr. Rae, this 83-year-old gentleman who would like to stay where he is, went to a Westminster council meeting to protest. One of the leading Tory councillors on Westminster council described Mr. Rae as "one of a ragbag of extremists". His extremism is that he fought in two world wars and he has lived in the same road for almost half a century. He likes living there, he likes his neighbours and the close-knit community; but to the lunatic Right of the Westminster city council he is apparently an extremist.
  Mr. Rae, at the age of 83, does not want to exercise the right of which the Government amendment speaks, to buy his own home. If Mr. Rae wants to stay put and fight against the Tory council in Westminster and not exercise his right to buy, the committee of Westminster city council has got him. At the meeting to which Mr. Rae went, the committee approved the following resolution:
  "That proceedings for recovery of possession be taken where necessary in respect of tenants on the Walterton and Elgin estates submitting right-to-buy applications after 1 April 1987 in accordance with paragraph 5.6 of this report."
  The ultimate in Tory housing policy is that, in the centre of a city where people are clamouring for homes to rent or buy at prices that they can afford, in a city where bed-and-breakfast hotels are booming, where people sleep in cardboard boxes, Westminster city council, in the central stream of Tory housing policy — the policy of privatisation—is about to evict 250 tenants to sell off parts of its estates in order to keep the council going, not to provide affordable housing, but to raise the money to maintain the rest of the estate.
  We in the Labour party say that the party which believes that the Government should get out of housing is the party that should get out of government.
  7.13 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Richard Tracey): The Government welcome an opportunity for debate on housing, because housing is important, at both the local and the national level, and it is only right that it is debated regularly. My hon. Friend the Minister for Housing, Urban Affairs and Construction has been listening closely to all that has been said in the debate, as I have, and we shall study closely the points that have been made.
  One would imagine, from some of the remarks of Members of the Opposition, that the Government's housing policies would be very unpopular. We had the archetype of that kind of speech from the hon. Member for Walsall, North (Mr. Winnick), but we have become accustomed to hearing that speech from him. As Government Members know, our policies are not unpopular. Our housing policies are very popular; so popular that the Opposition parties, particularly the Labour party, are busy trying to adopt parts of them.
  The hon. Member for Fulham (Mr. Raynsford) nods. He claimed to have to played a part in the conception of
  220
  one of our policies. He said that before he came to this House he had had discussions with my hon. Friend the Member for Ealing, Acton (Sir G. Young). Our policies are popular because the Conservative party believes in giving people the sort of housing that they want, rather than imposing on them some centrally dictated type and tenure of housing.
  The main priority over the first years of this Government was to widen the opportunities for home ownership, because that is what most people want, and we have been outstandingly successful. Public sector tenants were given the right to buy their homes, and since 1979 over 1 million council, new town and housing association houses and flats have been sold. I am sure that the electors will be grateful to my hon. Friend the Member for Eastbourne for pointing out so clearly this afternoon the policies of the Liberal party, as stated by the hon. Member for Leeds, West (Mr. Meadowcroft), the housing spokesman for the so-called alliance.
  A series of low-cost home ownership initiatives have made it possible for more young people to become home owners. Since 1979, 4 million households have become owner-occupied for the first time. About 65 per cent. of dwellings are now owner-occupied, compared with 57 per cent. in 1979 when the Labour party left government.
  It would be wrong, as some have done, to represent our housing policies as being concerned exclusively with the promotion of home ownership. As my hon. Friend the Minister said, we have been working hard to improve the lot of the tenant. We have developed, and recently extended, the concept of assured tenancies. New mechanisms have been devised to allow much greater input of private sector resources into the public sector. In the Housing Act 1980, the Government introduced the first statutory charter of rights for public sector tenants. Through the priority estates project and Estate Action we have encouraged improved local management of tenanted estates. We intend to go further.
  The Housing and Planning Act 1986, which I was pleased to pilot through the House with my hon. Friend the Minister for Housing, Local Government and Construction, encouraged further innovations in forms of tenure and management. The hon. Member for Fulham talked about housing associations, which the Government rate very highly. The Government have provided resources in 1987–88 to allow for 22,000 new association houses to be rented or bought.
  Many Labour Members have talked about the problems of homelessness. I should correct two common misconceptions about homelessness. The first is that the much-quoted figure of over 100,000 households with no roofs over their heads is not correct. Those people have been accepted by local authorities under the homeless persons legislation and they have been housed mostly in permanent accommodation.
  The second misconception is that the rise in the number of households accepted as homeless by local authorities is a direct result of cuts in public sector resources. That is certainly not true. The causes of homelessness are complex. It has to do with the supply of housing, especially the decline of private renting, as my hon. Friend the Member for Eastbourne said today, as he has on many other occasions.
  Private renting flourishes in every other part of the free world, helping the homeless, as much as the young and the job seeker. Homelessness is the extreme development of

  221
  the monopoly of public housing, which inevitably creates—[Interruption.] I advise Opposition Members to listen and they might learn—rationing and queues.
  But the reasons for homelessness go wider than that. It has much to do with social factors, such as the increasing incidence of divorce. Britain has the highest divorce rate in Europe, except for Denmark. Young people are leaving home earlier. Today's patterns of migration and the general loosening of the structure and cohesion of family life are also causes. [Interruption.]
  The Opposition may dispute my reasons for homelessness, but the fact that homelessness is caused by social factors does not mean that the Government have any intention of washing their hands of the consequences. We have launched a major study by the University of Birmingham's centre for urban and regional studies. We need to improve our information about the homeless if we are to deal seriously with the problem.
  The supply of housing in Britain has increased significantly. Since 1979 the total number of dwellings in England has increased by 7·5 per cent., from 17·5 million to 18·9 million. Private sector house building completions in England in 1986 were 142,000, the highest level since 1973, when, incidentally, we last had a Conservative Government.
  We recognise that the overall increase in supply does not mean that there are not shortages of particular types of accommodation in son-le areas, but those shortages could be eased drastically if better use were made of existing dwellings in the public and private sectors.
  I commend to the House what has been said this afternoon by my hon. Friend the Member for Ealing, Acton. He talked about monitoring schemes being run by the London borough of Bromley and others. Under those schemes tenants may receive cash to help them to buy a home in the private sector and so create a vacancy for the council. I am happy to tell the House that the Department has commissioned research into that matter which is progressing well, but it is a little early to give its initial results.
  My hon. Friend the Member for Streatham (Mr. Shelton) talked about the anomalies that seem to exist in the account given by various boroughs of empty dwellings. Local authorities are asked to provide details of their empty council dwellings on their housing investment programme submissions. They are asked to show those that are vacant for more than six months, one year or two years. This year we shall ask local authorities to show separately their squatted dwellings, and that should help to resolve the problem that was identified so clearly and graphically, particularly in the London borough of Lambeth, by my hon. Friend.
  This afternoon we have heard something about the condition of the housing stock. This was raised at an early stage by the hon. Member for Leeds, West. Over recent years we have recognised that more money needed to be spent on maintaining the existing housing stock, and more money is being spent. Spending on home improvement grants, although lower than in 1983 and 1984, was still £400 million last year, about five times the level of the last year of the previous Labour Administration. Let us not forget that that was also the year when the Liberal party kept the Labour Government in power.
  Total expenditure on maintaining the private sector stock is running at about £10,000 million a year. Similarly, local authorities are, rightly, spending more of their
  222
  resources on the repair and maintenance of their stock — over £2·5 billion out of capital and revenue in 1985–86. The number of local authority and new town dwellings renovated each year has increased by 120 per cent. since 1978, to 135,000 in 1986.
  As is inevitable in a housing debate, we have heard complaints from the Opposition of cuts in public sector resources on housing, particularly resources for capital investment. Let me draw attention to the local authority areas of three hon. Members who have spoken. I must point out to the hon. Member for Islington, North (Mr. Corbyn) that 18 per cent. arrears of the rent roll exists in the borough of Islington—£6·17 million. Let us hear no more about a lack of resources from him.
  The hon. Member for Liverpool, Walton (Mr. Heffer) talked of a lack of resources. In Liverpool the arrears amount to 13 per cent. of the rent roll—£7·67 million—and 11 per cent. of the housing stock is unoccupied. The hon. Member for Stretford (Mr. Lloyd) said that his authority was short of resources, but Manchester is 9 per cent. in arrears on its rent roll.
  This has been an interesting debate. There is clearly a measure of agreement between us and some Opposition Members on some issues, but on others there is no meeting of minds. We do not underestimate the problems that exist, but our policies are designed to create a housing market with real choices in all sectors, to make the most effective use of public sector funds and to unlock the huge resources in the private sector. That is the best way forward. I commend to the House the amendment in the name of my right hon. Friend the Prime Minister.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 179, Noes 240.

  Division No. 147]

  [7.28 pm

  AYES

  Adams, Allen (Paisley N)

  Cocks, Rt Hon M. (Bristol S)

  Alton, David

  Cohen, Harry

  Archer, Rt Hon Peter

  Conlan, Bernard

  Ashdown, Paddy

  Cook, Frank (Stockton North)

  Atkinson, N. (Tottenham)

  Cook, Robin F. (Livingston)

  Bagier, Gordon A. T.

  Corbett, Robin

  Barnes, Mrs Rosemary

  Corbyn, Jeremy

  Barron, Kevin

  Craigen, J. M.

  Beckett, Mrs Margaret

  Crowther, Stan

  Bell, Stuart

  Cunliffe, Lawrence

  Benn, Rt Hon Tony

  Cunningham, Dr John

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

  Dalyell, Tarn

  Bermingham, Gerald

  Davies, Rt Hon Denzil (L'lli)

  Bidwell, Sydney

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

  Blair, Anthony

  Deakins, Eric

  Bray, Dr Jeremy

  Dewar, Donald

  Brown, Hugh D. (Provan)

  Dixon, Donald

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

  Dobson, Frank

  Brown, Ron (E'burgh, Leith)

  Dormand, Jack

  Bruce, Malcolm

  Douglas, Dick

  Buchan, Norman

  Dubs, Alfred

  Caborn, Richard

  Duffy, A. E. P.

  Callaghan, Rt Hon J.

  Dunwoody, Hon Mrs G.

  Callaghan, Jim (Heyw'd & M)

  Eadie, Alex

  Campbell, Ian

  Eastham, Ken

  Campbell-Savours, Dale

  Evans, John (St. Helens N)

  Canavan, Dennis

  Fatchett, Derek

  Carlile, Alexander (Montg'y)

  Faulds, Andrew

  Carter-Jones, Lewis

  Fields, T. (L'pool Broad Gn)

  Cartwright, John

  Fisher, Mark

  Clark, Dr David (S Shields)

  Flannery, Martin

  Clarke, Thomas

  Forrester, John

  Clay, Robert

  Foster, Derek

  Clelland, David Gordon

  Foulkes, George

  Clwyd, Mrs Ann

  Fraser, J. (Norwood)

  223

  George, Bruce

  O' Neill, Martin

  Gilbert, Rt Hon Dr John

  Park, George

  Golding, Mrs Llin

  Patchett, Terry

  Hamilton, James (M'well N)

  Pendry, Tom

  Hamilton, W. W. (Fife Central)

  Pike, Peter

  Harrison, Rt Hon Walter

  Prescott, John

  Healey, Rt Hon Denis

  Radice, Giles

  Heffer, Eric S.

  Randall, Stuart

  Hogg, N. (C'nauld & Kilsyth)

  Raynsford, Nick

  Holland, Stuart (Vauxhall)

  Redmond, Martin

  Home Robertson, John

  Rees, Rt Hon M. (Leeds S)

  Howarth, George (Knowsley, N)

  Richardson, Ms Jo

  Howell, Rt Hon D. (S'heath)

  Roberts, Allan (Bootle)

  Howells, Geraint

  Roberts, Ernest (Hackney N)

  Hoyle, Douglas

  Robertson, George

  Hughes, Robert (Aberdeen N)

  Robinson, G. (Coventry NW)

  Hughes, Roy (Newport East)

  Rogers, Allan

  Hughes, Sean (Knowsley S)

  Rooker, J. W.

  Hughes, Simon (Southwark)

  Ross, Ernest (Dundee W)

  Janner, Hon Greville

  Rowlands, Ted

  Jenkins, Rt Hon Roy (Hillh'd)

  Sedgemore, Brian

  John, Brynmor

  Sheerman, Barry

  Johnston, Sir Russell

  Sheldon, Rt Hon R.

  Kennedy, Charles

  Shore, Rt Hon Peter

  Kirkwood, Archy

  Short, Ms Clare (Ladywood)

  Lambie, David

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

  Lamond, James

  Skinner, Dennis

  Leadbitter, Ted

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

  Leighton, Ronald

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

  Lewis, Ron (Carlisle)

  Snape, Peter

  Lewis, Terence (Worsley)

  Soley, Clive

  Litherland, Robert

  Spearing, Nigel

  Lloyd, Tony (Stretford)

  Steel, Rt Hon David

  Lofthouse, Geoffrey

  Strang, Gavin

  Loyden, Edward

  Straw, Jack

  McCartney, Hugh

  Taylor, Matthew

  McGuire, Michael

  Thomas, Dafydd (Merioneth)

  McKay, Allen (Penistone)

  Thomas, Dr R. (Carmarthen)

  MacKenzie, Rt Hon Gregor

  Thompson, J. (Wansbeck)

  McNamara, Kevin

  Thorne, Stan (Preston)

  McTaggart, Robert

  Tinn, James

  McWilliam, John

  Wainwright, R.

  Madden, Max

  Wallace, James

  Marshall, David (Shettleston)

  Warden, Gareth (Gower)

  Martin, Michael

  Weetch, Ken

  Mason, Rt Hon Roy

  Welsh, Michael

  Maxton, John

  White, James

  Maynard, Miss Joan

  Wigley, Dafydd

  Meacher, Michael

  Wilson, Gordon

  Meadowcroft, Michael

  Winnick, David

  Michie, William

  Wrigglesworth, Ian

  Mikardo, Ian

  Young, David (Bolton SE)

  Millan, Rt Hon Bruce

  Morris, Rt Hon A. (W'shawe)

  Tellers for the Ayes:

  Morris, Rt Hon J. (Aberavon)

  Mr. Frank Haynes and

  Nellist, David

  Mr. Ron Davies.

  Oakes, Rt Hon Gordon

  NOES

  Aitken, Jonathan

  Blackburn, John

  Amess, David

  Body, Sir Richard

  Ancram, Michael

  Bonsor, Sir Nicholas

  Arnold, Tom

  Boscawen, Hon Robert

  Ashby, David

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

  Aspinwall, Jack

  Bowden, Gerald (Dulwich)

  Atkins, Rt Hon Sir H.

  Boyson, Dr Rhodes

  Atkins, Robert (South Ribble)

  Braine, Rt Hon Sir Bernard

  Atkinson, David (B'm'th E)

  Brandon-Bravo, Martin

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

  Bright, Graham

  Baker, Nicholas (Dorset N)

  Brittan, Rt Hon Leon

  Baldry, Tony

  Browne, John

  Banks, Robert (Harrogate)

  Bryan, Sir Paul

  Batiste, Spencer

  Budgen, Nick

  Beaumont-Dark, Anthony

  Bulmer, Esmond

  Bellingham, Henry

  Burt, Alistair

  Bendall, Vivian

  Butcher, John

  Benyon, William

  Butler, Rt Hon Sir Adam

  Bevan, David Gilroy

  Butterfill, John

  Biffen, Rt Hon John

  Carlisle, John (Luton N)

  Biggs-Davison, Sir John

  Carlisle, Kenneth (Lincoln)

  224

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

  Jessel, Toby

  Cash, William

  Johnson Smith, Sir Geoffrey

  Channon, Rt Hon Paul

  Jones, Gwilym (Cardiff N)

  Chapman, Sydney

  Jones, Robert (Herts W)

  Chope, Christopher

  Kellett-Bowman, Mrs Elaine

  Churchill, W. S.

  Kershaw, Sir Anthony

  Clark, Dr Michael (Rochford)

  King, Roger (B'ham N'field)

  Clark, Sir W. (Croydon S)

  Knight, Greg (Derby N)

  Clarke, Rt Hon K. (Rushcliffe)

  Knox, David

  Clegg, Sir Walter

  Lang, Ian

  Cockeram, Eric

  Lawrence, Ivan

  Conway, Derek

  Lee, John (Pendle)

  Coombs, Simon

  Leigh, Edward (Gainsbor'gh)

  Cope, John

  Lennox-Boyd, Hon Mark

  Cormack, Patrick

  Lester, Jim

  Couchman, James

  Lightbown, David

  Critchley, Julian

  Lilley, Peter

  Dickens, Geoffrey

  Lloyd, Sir Ian (Havant)

  Dicks, Terry

  Lloyd, Peter (Fareham)

  Dorrell, Stephen

  McCrindle, Robert

  Douglas-Hamilton, Lord J.

  MacKay, John (Argyll & Bute)

  Dover, Den

  McLoughlin, Patrick

  du Cann, Rt Hon Sir Edward

  Major, John

  Dunn, Robert

  Malone, Gerald

  Dykes, Hugh

  Maples, John

  Emery, Sir Peter

  Mates, Michael

  Evennett, David

  Mather, Sir Carol

  Fallon, Michael

  Maude, Hon Francis

  Farr, Sir John

  Mitchell, David (Hants NW)

  Fenner, Dame Peggy

  Monro, Sir Hector

  Fletcher, Sir Alexander

  Moore, Rt Hon John

  Forman, Nigel

  Morrison, Hon C. (Devizes)

  Forsyth, Michael (Stirling)

  Moynihan, Hon C.

  Forth, Eric

  Neubert, Michael

  Fowler, Rt Hon Norman

  Norris, Steven

  Fraser, Peter (Angus East)

  Onslow, Cranley

  Fry, Peter

  Oppenheim, Phillip

  Gale, Roger

  Osborn, Sir John

  Galley, Roy

  Ottaway, Richard

  Gardner, Sir Edward (Fylde)

  Parkinson, Rt Hon Cecil

  Garel-Jones, Tristan

  Patten, J. (Oxf W & Abgdn)

  Gilmour, Rt Hon Sir Ian

  Pattie, Rt Hon Geoffrey

  Glyn, Dr Alan

  Pawsey, James

  Goodhart, Sir Philip

  Peacock, Mrs Elizabeth

  Gorst, John

  Pollock, Alexander

  Gow, Ian

  Porter, Barry

  Gower, Sir Raymond

  Portillo, Michael

  Grant, Sir Anthony

  Powley, John

  Greenway, Harry

  Proctor, K. Harvey

  Gregory, Conal

  Pym, Rt Hon Francis

  Griffiths, Sir Eldon

  Raison, Rt Hon Timothy

  Griffiths, Peter (Portsm'th N)

  Rees, Rt Hon Peter (Dover)

  Ground, Patrick

  Renton, Tim

  Grylls, Michael

  Rhodes James, Robert

  Hamilton, Hon A. (Epsom)

  Rhys Williams, Sir Brandon

  Hamilton, Neil (Tatton)

  Ridley, Rt Hon Nicholas

  Hampson, Dr Keith

  Ridsdale, Sir Julian

  Hannam, John

  Rippon, Rt Hon Geoffrey

  Harris, David

  Roberts, Wyn (Conwy)

  Harvey, Robert

  Robinson, Mark (N'port W)

  Haselhurst, Alan

  Roe, Mrs Marion

  Hawkins, C. (High Peak)

  Rossi, Sir Hugh

  Hawksley, Warren

  Sainsbury, Hon Timothy

  Hayes, J.

  St. John-Stevas, Rt Hon N.

  Hayward, Robert

  Shaw, Giles (Pudsey)

  Heathcoat-Amory, David

  Shaw, Sir Michael (Scarb')

  Heddle, John

  Shelton, William (Streatham)

  Henderson, Barry

  Shepherd, Colin (Hereford)

  Hickmet, Richard

  Shepherd, Richard (Aldridge)

  Higgins, Rt Hon Terence L.

  Silvester, Fred

  Hogg, Hon Douglas (Gr'th'm)

  Sims, Roger

  Holland, Sir Philip (Gedling)

  Skeet, Sir Trevor

  Howard, Michael

  Speed, Keith

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

  Speller, Tony

  Howarth, Gerald (Cannock)

  Spencer, Derek

  Howell, Ralph (Norfolk, N)

  Spicer, Jim (Dorset W)

  Hubbard-Miles, Peter

  Squire, Robin

  Hunter, Andrew

  Steen, Anthony

  Irving, Charles

  Stern, Michael

  Jenkin, Rt Hon Patrick

  Stevens, Lewis (Nuneaton)

  225

  Stewart, Allan (Eastwood)

  Waldegrave, Hon William

  Stewart, Andrew (Sherwood)

  Wall, Sir Patrick

  Stewart, Ian (Hertf'dshire N)

  Waller, Gary

  Stradling Thomas, Sir John

  Walters, Dennis

  Sumberg, David

  Wardle, C. (Bexhill)

  Tapsell, Sir Peter

  Watson, John

  Taylor, Teddy (S'end E)

  Watts, John

  Thomas, Rt Hon Peter

  Wells, Bowen (Hertford)

  Thompson, Patrick (N'ich N)

  Wells, Sir John (Maidstone)

  Thorne, Neil (Ilford S)

  Whitfield, John

  Thornton, Malcolm

  Winterton, Mrs Ann

  Townend, John (Bridlington)

  Winterton, Nicholas

  Townsend, Cyril D. (B'heath)

  Wolfson, Mark

  Tracey, Richard

  Woodcock, Michael

  Trippier, David

  Yeo, Tim

  Trotter, Neville

  Young, Sir George (Acton)

  Twinn, Dr Ian

  Younger, Rt Hon George

  van Straubenzee, Sir W.

  Vaughan, Sir Gerard

  Tellers for the Noes:

  Waddington, Rt Hon David

  Mr. Tony Durant and

  Wakeham, Rt Hon John

  Mr. Richard Ryder.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
  Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House believes that as many households as possible should have the opportunity to benefit from owning their own home and that for those who are unable to buy or who do not wish to do so there should he a real choice of rented housing both in terms of type and location of dwelling and of landlord; and congratulates Her Majesty's Government for pursuing policies which give people not only the housing they need, but also the housing they want.

Rolls-Royce
Mr. Deputy Speaker (Mr. Ernest Armstrong): We now come to the second motion in the name of the Leader of the Opposition. I have to announce to the House that Mr. Speaker has not selected the amendment.
7.41 pm
Mr. John Smith: I beg to move,
That this House deplores the proposed privatisation of Rolls-Royce and the way in which it would be sold off at well below its proper value; and believes that the company should remain in public ownership in order to secure British ownership, adequate capital investment, research and development, and job security. as well as a proper return for the taxpayer on the massive public investment which, together with the commitment of all its employees, secured the recovery of a company which is crucial to this country's aerospace and engineering industries.
May I first observe that this is a debate that should have taken place in Government time. The proposal to privatise Rolls-Royce comes from the Government, and the Government alone. Were it not for a technical matter, the way in which Rolls-Royce was taken into the public sector, they would in other circumstances have had to come here with a piece of legislation and we could have had the adequate and thorough debate that an issue of this importance demands. It is not for want of trying. We have repeatedly approached the Government, insisting that the debate should be held, but all our requests have been turned down. So the duty that properly lay with the Government has on this occasion been accepted by the Labour party. That is why we put the motion down tonight.
Our case is that the proposed privatisation of Rolls-Royce is motivated by dogma, pure and simple. There is no case whatever on grounds of competition or of an industrial, financial or technical kind for privatising Rolls-Royce. It is simply another—yet another—expression of the Government view that all successful enterprises in the public sector must be moved to the private sector. We know that Rolls-Royce has been in the public sector since the tragic collapse in 1971, when it was acquired by a former Conservative Government who, on that occasion at least, rose to their responsibilities. Since then, the company has, as a result of massive public investment, been turned round. It is a major achievement by the company, and I pay tribute to all who work in it for their success in doing this. It now has a turnover of £1·8 billion, and last year it declared profits of £120 million.
Apart from the efforts of everyone who works there, this could not, of course, have been achieved without the very strong and sustained financial support provided by successive Administrations. One would have thought that the sensible thing, having recited this period of recovery and being on the verge of years of profitability, would be to keep it in the public sector and to obtain a return for the public on the investment made on its behalf; but that is not what has happened.
It would be instructive just to look for a minute or two at the financial proposals behind the privatisation scheme. We know that the Government supplied equity capital to the extent of £508 million. My right hon. Friend the member for Glasgow, Govan (Mr. Milian) has been pursuing these matters relentlessly by questions. In an answer that he received from the Minister for Information Technology, the Minister confirmed that, at today's prices, the equity capital was valued at £1,063 million.

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We know also that because of expenditure on the RB211–22B project £537 million was supplied by the Government, with £334 million recovered. That has been confirmed in correspondence from the Minister. So we know that another £203 million went in on that account. We also know from the pathfinder prospectus that the Government propose effectively to wipe out £283 million by the way in which the shares are to be sold.
Adding that up, we reach a figure well in excess of £1·5 billion. That is without taking into account the substantial amount of money advanced by the Department of Trade and Industry through the advanced engineering programme which, between 1982 and 1986 alone, amounted to £162 million, and the money for development contracts from the Ministry of Defence which, after allowing for repayments over the same small period, amounted to £241 million. So we know that more than £1·5 billion has gone into Rolls-Royce from the public coffers, a figure which, if we take account of launch aid and research and development support, is much nearer £2 billion and may even be higher than that.
Then we look at the prospectus and at the price at which the Government propose to sell the company. They announced the figure this morning. It is likely to raise £1·3 billion. So why on earth are we selling one of Britain's most prestigious companies, in which we have invested probably more than £2 billion, for £1·3 billion? Why are we handing it over, now that it is making a profit of £120 million, and effectively telling those who will purchase it that, although they did not put in any investment over all those years, and although they did not take the risk of turning the company round, we are handing over to them more than £100 million of profit for as far ahead as we can see?
Even worse, we know, again from the prospectus, that there are £600 million-worth of unabsorbed tax losses with the company and that the company will get the benefit of that. So we know that for years ahead the privatised Rolls-Royce will not pay any corporation tax whatever. The more one looks at this, the more one sees that the privatisation of Rolls-Royce is a one-way street — burdens and losses for the taxpayers, profits for the private sector. It is an appalling example of the stewardship of our public funds by the Government.
I note also with alarm that in today's Evening Standard one of the brokers for the company at Hoare Govett, Peter Deighton, talking about who would invest in the company, said:
"The public will subscribe in force and the US and Japanese investors are likely to pile in."
It will not be beyond the Government's knowledge that the Japanese are not exactly allowing British investors to "pile in" to take shares in Japanese companies at present.
I can think of no example in the recent history of our public finances when a more irresponsible exercise has been conducted than on this occasion. That is why we argue with force that there is no financial justification whatsoever for this move. There is not even on this occasion the notion of piling up an election fund for the Conservative party.
The matter is, of course, serious because, as we stress in our motion, it is important that British ownership should be secured for one of Britain's most important companies.
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No doubt the Secretary of State will say that he has once again produced a golden share in the company's articles of association and that, for the £1 share that he buys, but that he can never use in a voting capacity, he can block any change in the articles of association that might allow foreign ownership to predominate in the company. That is all very well, but it is an untried and untested mechanism. It is one thing to take a power, but another thing to exercise it.
We should consider the way in which the Government behaved over another important aerospace company, Westland, in allowing that company's fate to be decided by people whose interests are, as yet, unknown even to the Government, never mind to the British public or the employees and management of the Westland company. In all probability a concert party took place on that occasion and was designed to manipulate the ownership of the company. Surely we can never contemplate Rolls-Royce being made the victim of such circumstances, or its future being decided by anonymous foreign owners.
Therefore, I ask the Secretary of State to give us categorical assurances about the maintenance of a predominantly British ownership in the company. We know that if the company were to stay in the public sector there would not be a problem about that. We know that it would remain British because we would continue to own it on behalf of the British people. The risk is created only by the privatisation exercise upon which the Government have embarked.
We know also that Rolls-Royce is a crucial national asset. The Financial Times recently observed:
"Virtually the whole of the RAF and important elements of the other two services, depend on the company."
Its importance in civil aerospace cannot be overestimated.
One of the difficulties faced by a high technology company such as Rolls-Royce is the enormous cost of modern development. The research and development contribution is necessarily high as the company operates on the frontiers of new technology. We are fortunate to have such an excellent company operating in that way.
However, Rolls-Royce is not a large competitor in a competitive game. The turnover of Rolls-Royce is £1·8 billion, whereas the turnover of General Electric Corporation is $30 billion and that of Pratt and Whitney is $16 billion. Both those companies form parts of large and diversified groups. Therefore, Rolls-Royce always has a difficult time competing against such formidable and well-financed competitors.
Mr. Phillip Oppenheim: I thank the right hon. and learned Gentleman for giving way. He is quoting slightly misleading figures when he states that the turnover of General Electric Corporation is $30 billion and that of Pratt and Whitney $16 billion. He must know that General Electric Corporation is a large and diversified engineering company and that its engine-making side is only a small part of that. Likewise, United Technology has a turnover of $16 billion, and not Pratt and Whitney.
Mr. Smith: It might help us all if the hon. Gentleman listened to what was said in the Chamber. Just before he got to his feet, I was making the point that General Electric is a large and diversified company. Of course that gives it added economic strength. It can cross-subsidise from one activity to another and can call upon the resources of the entire conglomerate.

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As we know, the United States Government make sure that such companies are supported through the Department of Defence. The notion that the United States Government do not involve themselves in subventions to industry is one of the great myths of our time. It is done in a different way. It is not done through a Department of Industry. It is wrapped up in the flag, put in defence appropriation and is then voted through. Throughout the entire aerospace industry, never mind the aero-engine industry, we know that that happens with large amounts of money. Other countries take care to secure the national interests that are represented by important companies in their economies.
That is why, over the years, Governments have assisted Rolls-Royce with important research and development. That is why we know, again from the prospectus, that the company intends to come hack to the Government for more money for research and development. The company will be right to do so.
However, where is such research and development in the private sector? What is the point of privatising a profitable asset if one must meet the bills that it cannot face on its own in the private sector? Why do we not use the profits that we would make from maintaining it in the public sector to finance its research in the future, instead of asking for further subventions from the taxpayer?
Mr. Ernie Ross: That is too simple.
Mr. Smith: As my hon. Friend has said, that proposition is probably too simple to be grasped by Conservative Members. If they showed just one glimmering of the sense of propriety that they exhibit in attending to their own personal financial affairs in respect of our public financial affairs, we should make much more progress in this country. [Interruption.] The hon. Member for South Ribble (Mr. Atkins) should not engage in naming those people who have acted improperly when it comes to the acquisition of shares in privatisation exercises. If he selects that as as weapon, he may find that it is a boomerang.
Mr. Robert Atkins rose—
Mr. Smith: I shall give way to the hon. Gentleman if he wishes, but I do not think that it will help.
If I can try to get the debate hack to the important issues that we were discussing, the truth is that the future of Rolls-Royce will be dependent upon the City of London. It is not as if we can look at the City of London with any confidence so far as the financing of high technology and long-term projects are concerned. We know that the City is in the grip of a woeful short-termism and that would be wholly inadequate for Rolls-Royce. Indeed, we have seen that British Aerospace has had to come to the Government to ask for launch aid for airbus. We were told that it would be marvellous when British Aerospace was privatised and that there would not be any interference by Ministers. However, we learned something different during the Westland affair, when there seemed to be some odd interference by Ministers. British Aerospace is knocking at the Government's door. However, I am sorry to say that so far it has not received any positive response for the funding of the airbus project. Those projects are so great and demanding in financial terms that they cannot be faced by private sector companies alone.
Why on earth do we want to privatise Rolls-Royce? Why do we put at risk the interests of the company's
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160,000 employees? About 160,000 people work in supply industries or for sub-contractors who work in association with Rolls-Royce. They are scattered all round the United Kingdom. There is hardly a part of Britain that will not be affected by the future of Rolls-Royce. From the north of Scotland right down to the south of England, there are factories that make an important contribution to Rolls-Royce efforts. The future of communities all over our country is tied to the future success of the company.
There is planning to be done by the company, but it could be done equally well within the public sector. During the past few years the company has shown that can be done. There is no reason to suppose that that success could not be maintained. Indeed, the notion that somehow there is chronic Government interference has been denied by chairman after chairman of the company. However, if the company stays in the public sector we know, purely and simply, that it will not risk another collapse such as happened in 1971. Many people still working in the company remember that dreadful day, when it looked not only as if their jobs would go but as if one of Britain's crucial industries would disappear. If that had been allowed to happen, what an episode of criminal neglect that would have been.
We know that the private sector was totally incapable of rescuing the company when it was in that position. The company needed public sector intervention. That public sector intervention probably went against the grain of the Conservative Government of the day but, to their credit, they knew that in the national interest they had to do that.
Mr. Dave Nellis: I was one of those who worked for the company—at least, I attended the Rolls-Royce technical college — on that day in February 1971 when it collapsed because of the overstretching of the financing of the RB211 project. Is it not a fact that, despite the complacency of Government spokesmen and Tory Back Benchers, the stretching on the Superfan of $3,000 million, the problems of the V2500 engine, the loss of the A340 airbus contract, together with Rolls-Royce in the private sector could mean the same thing happening again on the same scale as at the beginning of 1971, with 200,000 workers finding their jobs at risk?
Mr. Smith: I know that my hon. Friend, not only on the basis of his personal experience, but also because he represents many people who work in the company, is expressing a deeply held fear that is felt through many parts of the company. There is little else but apprehension about what lies ahead for the company because such people know that crucial research and development and capital investment is totally dependent on what one can only call the caprice of the City of London.
We also know that the management of the company will inevitably always have to look over its shoulder at the reactions and interests of the City of London.
Under public ownership, with the Government backing the company through to success, the management and workers can get on with the crucial job of ensuring that Rolls-Royce remains a world leader. Why must we add this complication, knowing the way in which the City behaves on these occasions?
For research and development, capital investment and for maintaining Rolls-Royce in its position of excellence in the world there is every reason to keep it in the public

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sector and none for privatisation. That is why we argue the importance of public sector participation and why after the general election we shall secure a strategic public stake in Rolls-Royce so that the public interest can be maintained. [Interruption.]
The reaction displayed by Conservative Members shows an overweening confidence on their part about a decision which the electorate has yet to make. The look on some of their faces will change when they see the results coming in. Indeed, I hope their look will change. This will be an important issue in the general election campaign and some of them will be called to account for the votes that they cast at the end of this debate.
This is nothing more or less than a scandalous exercise which betrays all the chronic weaknesses of the Government. First, it shows their desire to mix public obligation and private profit in ways which always favour private profit. Secondly, it shows a failure to appreciate the vital role of Government in high technology industries and a belief that responsibility for our industrial future, let alone our defence needs, can be shuffled off on to some shoulders other than those of the Government. Thirdly, it displays the narrow dogmatic prejudice that lies behind most of the privatisations, but which in this case can be uniquely demonstrated to rest on dogma alone.
That is why we shall vote with conviction for our motion tonight. If for one moment hon. Members in other parties were to allow a glimpse of the national interest to peek through their dogmatic prejudice, they should in all honesty join us in the Lobby tonight.
8.1 pm
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): The Opposition's motion is wrong on virtually every count. I note that the motion which states that Rolls-Royce is being sold off at well below its proper value was tabled before the Opposition knew the price at which the shares were on offer. That is all too typical of the way in which the Opposition do not let facts get in the way of their prejudices and over the years we have learnt to accept it. The amendment in the name of the right hon. Member for Plymouth, Devonport (Dr. Owen) is not much better.
The House will be aware of the constraints under which I and other Ministers are placed during the run-up to privatisation. As owners of the shares to be sold, the Government may make no predictions or forecasts about the future of the company or the issue. Therefore, I intend to restrict my remarks purely to the facts.
Rolls-Royce has a special place in British industry. It is a symbol of excellence and, more than that, a symbol of British excellence. The name itself has a unique place in the British manufacturing tradition and it is recognised the world over. [Interruption.] Whatever the differences may be between the two sides of the House, it must at least be common ground that we wish the employees and all those who work in Rolls-Royce a successful and prosperous future.
Rolls-Royce is not only a company with a proud tradition, but one with a strong presence and a future full of opportunities. It competes extensively in world markets—270 of the world airlines use its engines, as do more than 110 of the world's defence forces. It employs 42,000 people throughout the world and helps secure the
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employment of many thousands more through its suppliers. Rolls-Royce is also a profitable company. In 1984, it made pre-tax profits of £26 million, in 1985 the figure was £81 million and in 1986 it made record profits of £120 million.
Since 1973, the company has operated on the basis of assurances that the Government would meet its debts in the extremely unlikely event of liquidation. As part of the arrangements for the sale, the company will receive an injection of new capital amounting to £283 million, a major proportion of which will be used to repay most of the company's borrowings. The prospectus notes that the board considers that, taking into account available facilities and the injection of new capital, the company will have sufficient working capital to meet present requirements. The Government assurances referred to will thus be withdrawn on completion of the offer for sale.
I cannot make any predictions tonight for the future. Investors must make up their own minds, based on the prospectus issued today, whether they wish to invest in the company; I am not allowed to, and must not, say anything which would suggest anything other than that investors read the prospectus carefully before making their decision. However, I can say that the Government are confident that there will be considerable interest in the shares, both from institutional investors and the general public.
Mr. Nellist: Parasites.
Mr. Channon: More than 500,000 members of the public—I do not imagine that all of them are parasites—have registered with the share information office and both the directors of the company and the Government—
Mr. Nellist: People who live off other people's work.
Mr. Channon: I am sorry that the hon. Gentleman keeps interrupting on this point. I am talking about 500,000 members of the general public who have registered their interest in the issue with the share information office. Both the directors of the company and the Government welcome its return to the private sector.
The right hon. and learned Member for Monklands, East (Mr. Smith) has already made several criticisms of the Government's privatisation programme, but he has not spoken of the advantages of privatisation and why we believe that to date the privatisation programme has been a great success.
When the Conservative Government first came to power in 1979, state-owned industries accounted for about one tenth of the United Kingdom's gross national product. they dominated the transport, energy, communications, steel and shipbuilding sectors of the economy. But the Government have now sold about one third of those businesses, including, with Rolls-Royce, 15 major companies. More than 600,000 jobs have been transferred to the private sector and following the sale of Rolls-Royce and later this year the BAA, the state-owned sector of industry will have been cut by about 40 per cent.
There are two main lessons from this programme of privatisation. First, privatisation has enabled large numbers of people who had never previously owned shares to hold shares in British industry and for a great number to hold shares in the company in which they work. Instead of public ownership, which in practice means ownership by a Minister and control by bureaucrats, we have ownership by many thousands of private investors.
Mr. Nellist: Parasites.
Mr. Channon: Moreover, despite the claims of Opposition Members about industrial democracy, which has too often meant democracy for a small number of trade unions, many thousands of people have experienced real industrial democracy through a direct stake in the company for which they work.
Secondly, the experience to date has been for privatisation to be of direct benefit to the companies concerned. There is no great secret about why that should be the case. For far too long, too many of our key companies have had their operating flexibility constrained by Government ownership. They have had to refer investment decisions to Government to justify their plans and proposals to Ministers and officials, and on occasion they have faced the conflict between commercial decisions and transient Government policies.
Mr. Ian Wrigglesworth. If the Government wish to encourage wider share ownership in this particular case, why has not greater incentive been given to smaller investors, as was done in other cases?
Mr. Channon: I shall deal with that in a moment. I note with astonishment that the alliance thinks that the company should not be privatised and that the Government should retain a 51 per cent. holding. We note that policy with considerable interest.
That does not mean that some companies have not been successful. Indeed, Rolls-Royce has been an extremely successful publicly owned company. But state control has undoubtedly been a real constraint on the company, which it can well do without. It is operating on an international scale and cannot easily fit its decision making into the necessary requirements of Government financial planning and funding. Of course, Rolls-Royce will continue to work extremely closely with Government, not least because of its position as a defence supplier, but also because of the Government's support through launch aid for certain of its civil aero engine projects. The relationship with Government will continue but the requirement to have commercial decision second-guessed by the Government will cease.
This morning the offer for sale of ordinary shares in Rolls-Royce was fully underwritten at a price of £1·70 a share. The shares have now been sub-underwritten at that price. This represents—
Mr. John Smith rose—
Mr. Channon: The right hon. and learned Gentleman will understand that I express no opinion on merits, apart from what is in the prospectus of this company.
Mr. Smith: Before the Secretary of State leaves the question of second-guessing commercial decisions, can he please tell us which commercial decision by Rolls-Royce since 1979 has been second-guessed by this Government?
Mr. Channon: I am not going to answer that ridiculous question. The House knows perfectly well that, with any company under Government control, there are controls and procedures which have to be gone through. The right hon. and learned Gentleman, who has served in government, knows that to be absolutely true, absolutely inevitable and absolutely a fact. It is very important to have commercial decisions taken by commercial people in the private sector.
Mr. Nellist rose—
Mr. Channon: I am not going to answer that ridiculous question. The House knows perfectly well that, with any company under Government control, there are controls and procedures which have to be gone through. The right hon. and learned Gentleman, who has served in government, knows that to be absolutely true, absolutely inevitable and absolutely a fact. It is very important to have commercial decisions taken by commercial people in the private sector.
Mr. Nellist rose—
Mr. Channon: No, I must get on. We have under an hour and three quarters and many hon. Members wish to speak.
Mr. Nellist rose—
Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman knows that, if the Member addressing the House does riot give way, he must not persist.
Mr. Channon: Approximately 320 million shares are initially being offered to the general public, including Rolls-Royce employees and pensioners. If the offer is at least twice subscribed, this number will be increased to 400 million shares, some 50 per cent. of the total. The remainder of the shares will be placed with financial institutions in the United Kingdom. There is no overseas offering.
A number of special offers have been made to employees and pensioners of the company. Employees with at least 12 months' full-time service will receive approximately £70-worth of free shares plus a further £2-worth of shares for every year that they have worked for the company. Such employees will also receive two free shares for every one which they buy, up to a limit of £150 for each employee. All eligible employees of the company will also receive a 10 per cent. discount on all shares bought, to a maximum of £2,000 per employee, and will be entitled to apply for a further £10,000-worth of shares on a priority basis. Pensioners of the company will also be able to apply for up to £10,000 worth of shares on a similar priority basis and at lower minimum application bands than members of the general public.
The prospectus will be published on Thursday 30 April. all who have registered with the Rolls-Royce share information office will be sent a prospectus, including a public application form. Application forms must he received by 10 am on Thursday 7 May. Copies of the prospectus have been placed in the Library of the House
It is not for me to make forecasts about Rolls-Royce's financial and commercial prospects. Hon. Members, together with prospective investors, must look at the prospectus and make their own judgments on the basis of the information it contains.
Mr. Nellist rose—
Mr. Channon: I am not going to give way. I want to get on and what I want to say must be said to the House. It is not my fault that the debate was fixed for today. The Opposition have a Supply day practically every week, and have not sought to choose this subject until today.
Mr. Doug Hoyle: On a point of order, Mr. Deputy Speaker. Is it not true that this debate would not he taking place at all but for the Opposition's making time for it?
Mr. Deputy Speaker: That is a matter for argument; it is not a matter for me. I must say to the House that a number of Members with very strong constituency interests are anxious to catch my eye and it is a very short debate. Interruptions of this kind only make it less possible for me to call those who want to be called.
Mr. Channon: I should like to refer to some of the key information in the prospectus and to what the board has to say about the company's prospects. I have already told the House the figure of profit before taxation of £120 million in 1986. The turnover of Rolls-Royce was then £1,800 million, of which £757 million was attributable to civil aero sales, £740 million to military aero sales and the balance to industrial and marine and other activities. It invested £132 million of its own funds in research and development. The total value of the company's order book at 20 March 1987 was £3.1 billion.
The prospectus says that the company has substantial order books for a number of its existing military aero engine products and good prospects for further sales. The company considers that its current Ministry of Defence and company-funded military development programmes give it a broad base of techology to explore new opportunities in the overseas military commercial market as they may arise.
There is no truth in the suggestion that Rolls-Royce is vulnerable to foreign control. Under the company's articles, no more than 15 per cent. of the company's shares can be foreign-held. This restriction applies to shares held by nominees on behalf of foreign interests. Anyone wishing to register a share must sign a declaration whether the share will be foreign-held. The provisions in the articles are similar to those that have operated successfully in the case of British Aerospace for no less than the last six years.
Nor is it possible for the articles to be changed in the future without the consent of the Government, who have a special share which enables them to prevent any change to the articles dealing with foreign ownership—a special share which continues indefinitely. There is no justification whatsoever for claims that these provisions will not be effective in ensuring domestic control of the company.
It is nonsense to state, as does the amendment tabled by the alliance, that this or any other privatisation is ideologically motivated and determined by the Government's excessive desire to reduce the public sector borrowing requirement. The Government are committed to privatisation because it works. The list of companies whose performance has been transformed once they have been liberated from state ownership grows ever longer. As far as the Opposition are concerned, it is very much a matter of sour grapes.
I would remind the House that, since being returned to the private sector, Amersham International has seen its profits double, British Aerospace's profits have tripled, Cable and Wireless has quadrupled its profits and the National Freight Consortium, 82·5 per cent. of which is owned by its employees, has increased its profits sevenfold. The Jaguar car company is now producing more cars than ever before and has created 2,000 new jobs since privatisation. Those are the facts, which the Opposition wilfully ignore.
All over the world, Governments are following the example that is being set in this country. In France, the Government have announced their intention to return 65 companies to the private sector. In Sweden, the state
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holding company has already sold 15 companies. Only the Opposition, blinkered by their ideological obsession with the past — clause 4 and all the rest of it — believe in public ownership and nationalisation. Even they, however, recognise the gulf between them and the British people, and we shall see who wins the argument at the end of the day. They dare not describe their policy by its proper name: "renationalisation" has become "social ownership". I do not believe that the British people will be so easily fooled.
Rolls-Royce will shortly become the 15th major business transferred to private sector ownership under this Government. The British Airports Authority will follow shortly. We intend to carry on with our programme of privatisation in this Parliament and in the next — [Interruption.]
Mr. Nellist rose—
Mr. Deputy Speaker: Order. It must be obvious to the hon. Member for Coventry, South-East (Mr. Nellist) that the Minister is not giving way.
Mr. Nellist: Why not?
Mr. Channon: As I have told the House, and the Opposition do not like it, we shall continue with our programme of privatisation in this Parliament and in the next because it has been clearly shown to succeed. That will be the message not just from the House tonight but from the electorate when the time comes.
Several Hon. Members rose—
Mr. Deputy Speaker: In view of the pressure of time, I appeal for extreme brevity by all those who now catch my eye.
8.20 pm
Mr. Bruce Milan: The speech of the Secretary of State in no way answered the case that was put by my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). Indeed, many of the remarks of the Secretary of State had no relevance at all to Rolls-Royce. His speech will be of no comfort to my constituents who are employed by Rolls-Royce in Hillington and East Kilbride, or to Rolls-Royce employees in any part of the country, who are deeply worried about the threat of privatisation. This concern extends beyond the employees to the local authorities, as was demonstrated by the lobby in the House a few weeks ago from lord mayors, mayors, lord provosts and others. The right hon. Gentleman could not be more mistaken if he thinks that the concerns of employees will be bought off by the special employee share offers that he mentioned in his speech.
There is good reason for those concerns. In recent years Rolls-Royce has had a tough time and lost about 20,000 jobs. In my own factory at Hillington, the number of employees, 2,700 is less than half what it was three of four years ago. Many sacrifices have been made by Rolls-Royce employees to bring the company into its present profitable position. The reward from the Government is to create this new uncertainty of privatisation, with real fears in many parts of the country that units of Rolls-Royce will be closed down completely after privatisation.
The right hon. Gentleman gave no assurances about that and made it a virtue that he could not give promises for the future. The people working in Rolls-Royce are

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concerned about the future. They remember the history of the 1971 bankruptcy. It is an open secret that there have always been people within the management of Rolls-Royce who have considered that Rolls-Royce works on too many different sites all over the country.
A former chairman of Rolls-Royce told me that if those concerned were starting Rolls-Royce today they would not have their operations spread over 14 different locations in the United Kingdom. A number of these locations are very vulnerable to closure after privatisation. I can say with a good deal of authority, having been involved with the company for many years, that some of those sites would have been closed by now if Rolls-Royce had not been a publicly owned company.
Nothing that the right hon. Gentleman said will assuage the concerns of the employees, who have sacrificed jobs and have worked very hard to bring the company to its present position. The rewards are going, not to the employees, but to private shareholders. The share price was announced today. The initial reaction in the evening papers—The London Evening Standard and the London Daily News—was that when the shares eventually go on the market they will probably open at perhaps 20p premium on the first instalment of 85p of the price of 170p. On those expectations there will be a considerable killing. The rewards will go not to those who built up the company to what it is today, but to those who will invest in the company on the basis of the prospectus, and these will largely be financial institutions.
The Secretary of State confirmed that no less than 60 per cent. of the shares on offer have been placed with financial institutions. What have they to do with the past or future success of Rolls-Royce? The Secretary of State mentioned a profit of £120 million. If the extra £283 million that the Government are now putting in had been put in at the beginning of last year, the profit would have been £148 million. The taxpayer is not likely to get much from the future profitability of Rolls-Royce, because the prospectus says that £675 million-worth of unabsorbed tax losses are being carried forward, and no corporate tax will be paid for many years. The irony is that these tax losses have been allowed to accumulate only because the Government have been putting in money to cover the losses during earlier years when the company was recovering from its bankruptcy.
As my right hon. and learned Friend pointed out, there is no way in which the proceeds from the issue and sale of shares will in any compensate the taxpayer and the Government for the vast sums of money that have been put into Rolls-Royce since 1981. The gross proceeds that are allowed for in today's announcement are £1·36 billion. The net figure, deducting the £283 million that the Government put in, is just over £1 billion, which is roughly what the Government, on present-day prices, have already put into the company in share capital. Therefore, none of the launch-aid money—£400 million since 1971—the money that went into rescuing the RB211–22B, which brought down the company in 1971 and cost the Government £200 million, and the money that has gone into MOD contracts and into advanced engineering development, and so on, will be recovered from the sale of shares that has been announced today.
Over recent years this company has received £120 million net per year on average from the Government in launch-aid and in other ways, yet its directors have the impertinence to support privatisation, because they want
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the Government off their backs. Many other companies in the United Kingdom would be delighted to have the Government on their backs to the tune of £120 million a year. The same is true of British Aerospace. Sir Austin Pearce, in the recently published 1986 report, talks about the virtues of privatisation and not having to deal with the Government. British Aerospace has made an application to the Government for £750 million for development of the A330 and A340 Airbus. British Aerospace—and Rolls-Royce is exactly the same—will depend on Government money and cannot survive without it.
I am cynical about the attitude of the directors of Rolls-Royce when I read in the prospectus that they will all receive substantial increases in their salaries immediately after privatisation. I hope that it is some comfort to the employees of the company to know that the directors will do well out of privatisation.
Money has gone into this company. That is acceptable, because it is not just another private company, but a national asset. Rolls-Royce would not have been nationalised if it had not been a national asset. These so-called safeguards would not be needed, even under this privatisation, if the company was not considered, even by this Government, to be a national asset.
The safeguards apply only so long as the Government of the day want them to apply. We do not have the slightest confidence that the Government will continue to apply these safeguards by a restriction on foreign shareholding or in any other way. What will happen if the company gets into trouble again? I shall not talk down the company by mentioning the problems with the V2500 project, which only went ahead with Government launch aid, or the decision not to go ahead with V2500 Superfan, which could proceed only with launch aid. The Superfan project, if it proceeds, will go ahead—and I hope it will—only with launch aid. Some of these developments have not improved the prospects for Rolls-Royce in the years ahead.
What happens if at some time in the future—God forbid that it should happen, even under privatization— Rolls-Royce gets into difficulty once more? The decision of the Government of the day will be to save the company, as in 1971, or see it go into foreign hands. Pratt and Whitney, and General Electric, would be delighted to buy up Rolls-Royce, which is their only competitor in the world. There are only three major aero-engine companies in the world. Two are in America and the other one is here, in this country—Rolls-Royce. Perhaps at some time the Japanese would be delighted to get their hands on it, because they are involved in the V2500 joint project.
All these are real risks that are causing genuine concern to my constituents who are employed in Rolls-Royce. They see the action of the Government in putting this major company at risk again as completely irresponsible. It is now enjoying success after an extremely difficult period following bankruptcy. My constituents support overwhelmingly the view of the Labour party that this privatisation should not happen. A Labour Government will reverse it at the earliest opportunity.
8.30 pm
Mr. Phillip Oppenheim: The main consideration in the privatisation of Rolls-Royce should not be what is good for the Government or what is good for the trade unions, but what is best for the company and its work force. Privatised companies almost always do

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better than companies in the public sector. The reason for this unassailable fact is that companies in the private sector are largely unshackled from Government interference and meddling. One of the main reasons why Rolls-Royce has done well over the last few years — management will attest to this—is that the Government have had a rigorous hands-off attitude towards the running of the company.
Unfortunately, there is no guarantee that another Government which, heaven forbid, might be elected at some time, would pursue such an enlightened policy. We only have to go back to the 1970s to see the tremendous damage that Government intervention and meddling wrought on British industry. Managers in British Steel who suffered in the 1970s say that it was not the market place that decided what products and how many British Steel should produce, and that it was not management who decided on productivity and investment, but that it was the Government, the bureaucrats and politicians, who dictated what management should do. The damage that those policies caused to British Steel is still being felt today. Towards the end of their period of office, the Labour Government had to back-track rapidly on those policies. Almost brand new plants were mothballed or closed. That is the damage that Government interference and meddling can do to state-run industries.
I can understand the legitimate fears of people working for Rolls-Royce, who can remember well the traumas and problems when the company collapsed in 1971. I respect those fears, but the people should remember that Rolls-Royce is a very different company from what it was in 1971. It has a substantially better management. It has better manufacturing technology and more of it. It has a far bigger product spread, including co-operative deals with manufacturers all over the world. It is far less dependent on one leading technological product, which caused it so much trouble previously. Above all, it is a far more efficient company. In short, Rolls-Royce is better able to compete now than it was, admittedly under a bad management, in 1971.
Opposition Members show remarkably little faith in the management and work force of Rolls-Royce if they believe that it cannot survive and prosper in the private sector. The majority of the work force and management do not share the view of the Opposition; far from it. I do not want to imply disrespect towards the campaign against privatisation that has been waged by the trade unions, but the Strangers Gallery is hardly packed this evening. Only a few weeks ago there was an Adjournment debate about the proposed closure of a school in Derby; at 3 o'clock in the morning the Strangers Gallery was packed with 400 people.
Mr. Deputy Speaker: Order. The hon. Gentleman should not refer to places outside the Chamber.
Mr. Oppenheim: I fully accept your ruling, Mr. Deputy Speaker, and apologise.
When other high technology companies were privatised we heard exactly the same fears as are being expressed legitimately by the opponents of privatisation. The trade unions, some of the work force, and Opposition Members said, for example, that British Aerospace would not be able to compete in the private sector. They said that research and development would suffer, that the company
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would go down the tube, that product development and investment would suffer, and that the company would rapidly go bankrupt. In fact, in the private sector British Aerospace has a record order book; it is spending record amounts on R and D; its profits are at a record level and its turnover is booming.
Exactly the same has happened to British Telecom. I remember well sitting through more than 100 hours in Standing Committee dealing with the privatisation of British Telecom when we were told by Opposition Members that after privatisation country areas would be cut off, that people would be electrocuted by their telephone apparatus, and that the whole system would collapse. British Telecom still has problems and it is not as efficient as it should be but it provides a much better service at a lower cost in real terms than it did in the public sector, when just to order a piece of equipment was like trying to get an interview with the Pope.
Another scare propagated by Opposition Members and put about by the right hon. and learned Member for Monklands, East (Mr. Smith) when he visited Derby recently was that Rolls-Royce in the private sector would be prey to foreign takeover bids. Opposition Members know that that is total nonsense. They know that the Government have proposed a golden share which will give them a veto on a foreign takeover. They know that under the privatisation proposals foreign share ownership will be limited to 15 per cent. or less and that 75 per cent. of the board, including the chairman and the managing director, will by law have to be British citizens. I can understand ordinary people being worried about such things but Opposition Members should not stoop to running a scare campaign when they know that the Government have made ample provision to prevent foreign takeover. Opposition Members are preying unfairly on people's fears.
Far from the taxpayer doing badly out of privatisation of Rolls-Royce, he will do amazingly well. Opposition Members say that we should keep this asset but if we did, when would we get a return? When would the Opposition propose selling it — in one year, in two years? If the Opposition say that the Government should never sell shares in Rolls-Royce that would mean that the taxpayer would never get a return on his investment. By selling the shares now the Government will get a double return. First, there will be more than £1 billion from the proceeds of the share sale; secondly, we will eventually get a substantial tax take on the profits of Rolls-Royce.
The profits of privatised industries have almost always been much larger than the profits when the companies were in the public sector. The profits of British Telecom and British Aerospace are more than twice what they were when in the public sector. The Government tax take is substantially larger. Surely it must he better for these large sums of money to be deployed where they are needed in health and education, rather than being locked up in a spurious, out-dated 1930s concept of public ownership.
Opposition Members have also claimed that the Government will not back Rolls-Royce in large strategic research and development projects, but the Government backed British Aerospace on the A320 and they have backed other companies on technological projects. The Government have backed projects which may not be commercially viable but which none the less are in the national interest. The Oppostion mentioned that the Government have been reluctant to put the full amount

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into the A330 and the A340 which British Aerospace wanted. The reason is that the Government and many experts have a strong feeling that the A330 and the A340 projects may not be viable. Whereas the A320 had no real rivals when it was conceived, unfortunately the A330 and the A340 have pitched against them the Boeing 757, which uses Rolls-Royce engines, the Boeing 767, which also uses Rolls-Royce engines, proposed smaller versions of the long-serving Boeing 747 and the MD11 of McDonnell Douglas, which is selling extremely well.
Perhaps Opposition Members feel that they know better than the experts whether the A330 or the A340 are viable. If Opposition Members think that they know better they should ensure that these projects are viable before proposing that hundreds of millions of pounds are taken in tax from successful industries to put into those dubious projects. If they take that money away from our successful areas of manufacturing they will leave those successful industries with less money to invest in producing their products and jobs.
I am astonished that Opposition Members have not realised that privatisation is a positive policy. It works and it is good for companies and their work forces. Opposition Members are out on a limb on this matter. Socialist Government all over the world are busy privatizing almost anything that moves. Recently in Spain, a strongly Socialist Government privatised its car industry. They are even proposing to privatise the motorways in Spain. Recently a Socialist-led coalition in Italy privatised Alfa Romeo, its state-owned car company. Recently in Australia, the Socialist Prime Minister proposed the privatisation of its state-owned internal airline, Australian Airlines.
Opposition Members are no strangers to privatisation. Was it not the Labour Government in 1977 who sold off huge chunks of the Government's holding in British Petroleum to get out of the financial mess that they had dug themselves into as a result of their irresponsible promises in 1974? I do not remember many Labour Members of Parliament objecting to that privatisation. Perhaps we shall hear something about that from Opposition Members later on.
If Rolls-Royce remains a well-managed company with a good work force it will succeed. Without a good management and strong work force, first-class products and without marketing those products positively and successfully, Rolls-Royce will not survive in the private or public sector. It is as simple as that. It has a better chance of surviving, prospering and contributing to the economy in the private sector.
8.41 pm
Mr. Ian Wrigglesworth: The hon. Member for Amber Valley (Mr. Oppenheim) began with one of the most self-contradictory arguments that I have heard in favour of the Government's policy. First, he argued that the interference of Government inevitably led to the downfall of companies, and that that did not happen if the Government did not interfere. Yet we are debating a company that got into severe difficulties, not as a result of Government interference but while it was in the private sector, and like many companies in the private sector it came to grief because of bad management. That had nothing to do with Government interference. The hon. Gentleman said that in all the time that Rolls-Royce has been in the public sector the Government have not
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interfered in its activities and that it has been an enormous success, so now it can go to the market. If it has been an enormous success—undoubtedly it has and we should pay tribute to the management and staff for the success that they have achieved in recent years—that seems to prove that companies in the public sector can also succeed without Government interference. The hon. Gentleman cannot have it both ways.
The future of Rolls-Royce must be secured, in the interests of the country. I am sorry that the Secretary of State did not respond to the compelling arguments for securing the future of Rolls-Royce. We believe that the only way in which that security can be given to the company—I shall come to the reasons why it is necessary—is by retaining a majority shareholding in the company.
Why is it necessary to secure the interests and future of Rolls-Royce? It has a strategic role in the defence and industrial life of this country. A substantial public investment has been made in the company and there is a strong argument for ensuring a continuing return to the public from the profitable activities of the company now that it has been given support from the public purse. Any profitable company is giving tax returns in corporation tax to the country and the Exchequer.
The substantial Government stake in British Petroleum, to which the hon. Member for Amber Valley referred, did not inhibit its success. Indeed, it helped to sustain that company and make it the successful British multinational that it now is.
We believe that there is an overwhelming reason for giving the employees an opportunity to participate in the ownership of shares in Rolls-Royce, and I welcome the incentives that have been given to employees to participate in that. I am sure that that is a development which will be widely welcomed in the company.
I am sorry that the Secretary of State did not respond to my intervention and tell us why the Government are not ensuring the wider share ownership of smaller shareholders. Perhaps the Minister for Information Technology will tell us why that is the case when he responds to the debate.
The alliance strongly believes in wider share ownership and we are sorry that the inducements that have been given to small shareholders on previous occasions have not been given this time.
Why must the position of Rolls-Royce be protected? Defence orders amount to £1·46 billion of Rolls-Royce's total order book of £3·1 billion. A substantial amount of its output is going straight into the armed services. As has been pointed in the debate, it is unlikely that the Air Force and many other parts of the armed services could operate without Rolls-Royce products. That does not merely relate to the provision of initial products. It also relates—as I was able to see with my own eyes in the Royal Navy spare parts depot in my constituency—to the spares which are necessary, particularly during times of crisis such as the Falklands. to ensure that there is continuity of supply and that that supply is sustained to defend the country.
That is why there is a major strategic defence interest for sustaining Rolls-Royce. It plays a vital role in industrial activities of Britain. It is one of the major contributors to United Kingdom research and development, and on average it has contributed £220 million a year over the past five years. As a percentage of turnover,

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gross research and development expenditure was £255 million in 1986, or 14 per cent. That substantial research and development activity is a key part of the country's research and development work. It applies to materials and high technologies and involves highly skilled, highly educated and experienced people who are a prime asset not only to Rolls-Royce but to other companies and the country. It is vital that our presence in the technological sector in which Rolls-Royce operates is maintained.
The total launch aid that the Government have provided since 1982 for research and development, tooling and learner costs is £199 million. The Government have made an enormous contribution to that research and development work. The Government have made a contribution of £162 million to advanced engineering programmes and since 1982 Rolls-Royce has received £287 million in development contracts from the Ministry of Defence.
The role that the company plays in engineering and high technology is substantially funded by the Government and is of strategic importance in the industrial sector. The figures have already been given for the substantial investments in the company since 1971. It is right and proper that the taxpayer should expect a continued return on that investment.
Inevitably, after the events that led to Rolls-Royce coming into the private sector, doubts must be raised about whether the same problems could arise again in the future. The cost of developing aero engines is quite enormous. New engines such as the prop fan cost at least £500 million, and bigger ones cost more, up to £1 billion in development. I was interested to read in The Economist two weeks ago its estimate that on today's costs, developing a novel engine design such as the prop fan may be as difficult and as expensive as it was for Rolls-Royce to give birth to the RB211. The danger is that another development could have the same debilitating effect on the company's fortunes.
I do not believe that anybody in the House or in the country wants to see Rolls-Royce in that predicament again. We believe that the way in which that can be safeguarded against, and in which Rolls-Royce's position in the defence and industrial spheres can be secured for the future, is by the Government retaining a majority stake while having the benefit of private funds to buy some of the shares, and above all by allowing employees to have a stake in their own enterprise. That would ensure that the company could succeed, have a secure future and continue to play the role that is so important in this nation's life. We very much regret that the Government have not gone down that path.
To sustain the argument for total state ownership, the Labour Opposition have had to exclude any possibility of the employees having any stake in their own enterprise. We do not believe that that is necessary. The future of the company can be secured without total state ownership and we very much regret that the Labour party, despite its new ideas about social ownership, has not been prepared to go down the road of seeing the importance of giving employees a share in the company, even if it does not want to give the public a share.
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We believe that the future of the company can be secured by the Government having a majority stake, and we regret that neither the Conservative nor the Labour party is prepared to accept that alternative.
8.52 pm
Mr. Stephen Dorrell: The hon. Member for Stockton, South (Mr. Wrigglesworth) made an interesting speech because, not for the first time, the alliance spokesman chose his path by referring to the two major parties in British politics and simply splitting the difference. It was also interesting that he devoted most of his speech to arguing that there is an important national interest in having Rolls-Royce in British hands. That is not controversial. My right hon. Friend the Secretary of State has put forward a procedure that will ensure precisely that. All my hon. Friends agree with the hon. Member for Stockton, South on that point.
What the hon. Member did not do is explain either why my right hon. Friend's scheme is inadequate or how, in detail, his preferred alternative would work. If one is to adopt the alternative of a 51 per cent. shareholding in the company, it is incumbent on one to explain whether one proposes to use those shares to get involved in the company, in which case there will be some difficulty in persuading others to buy the other 49 per cent.; or whether one would stand apart from the company and not use the right that a 51 per cent. holding gives, in which case the obvious question is, "What is the point of the alliance policy?"
Like, I believe, the large majority of my constituents who work at the Rolls-Royce plant at Mountsorrel in my constituency, I support the privatisation that my right hon. Friend has introduced. I hasten on to say that I would also, if I had been a Member of the House then, have supported the nationalisation of Rolls-Royce in 1971. I see nothing inconsistent in my position. Quite the contrary — I think the fact that some Labour Members have sought to suggest that there is some inconsistency there reflects the extent to which the Labour party is still a prisoner of the political philosophy written by an obscure German philosopher in the middle of the last century. The history of the state's involvement in Rolls-Royce is an important example of how the Government and industry, working together, can produce benefits to society as a whole which neither on their own would have been capable of producing.
In 1971, Rolls-Royce went bust, as my hon. Friend the Member for Amber Valley (Mr. Oppenheim) rightly said, purely because it was badly run, and the top management and investors paid the price of failure. The investors lost their investment and the top management lost their jobs, and rightly so. We do not need to waste much sympathy on them. If Rolls-Royce had been a minor engineering company, that would have been the end of the story, but it is not a minor engineering company. It is, as the hon. Member for Stockton, South, said, a vital strategic company and the Government led by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) quite rightly stepped in, recognising the vital national interest that existed then and still exists, and ensured that both the industrial peace and the defence interest represented by Rolls-Royce were safeguarded.
It is also worth mentioning that the thought would probably have occurred to my right hon. Friend that Rolls-Royce represented a vital industrial and defence

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interest not only for this country but for the continent of Europe as a whole. It is the only significant European aero engine producer. Therefore, the Government of the day were right to take the view, both as a British Parliament and as Europeans, that they could not allow Rolls-Royce to disappear.
That position is now totally transformed. The bulk of the progress since 1971 has happened since 1979. The improved performance of the company occurred between 1979 and 1987 and not between 1971 and 1979. We now have a company with a product range that can stand alongside that of Pratt and Whitney and General Electric and can offer a product across the whole range of aero engines, and, even more importantly, a product range the production of which is supported by competitive manufacturing costs.
Mountsorrel plant is one among many in Rolls-Royce that have lost jobs as a result of the slimming-down process, but the chairman of Rolls-Royce, contrary to the scare tactics adopted by the Opposition suggesting that the future of the plants is insecure, wrote to my hon. Friend the Member for Rutland and Melton (Mr. Latham) making this clear. He said:
"I do not think your constituents need to worry about the vulnerability of Mountsorrel. Its productivity is much improved, and we arc currently working on plans for future investment."
The company has pursued a strategy of making production costs competitive and then investing in success. That is the record of success of Rolls-Royce over the past few years.
Why should we change the position that has endured since 1971? I make no apology for my belief that it should be the norm in a mixed economy for successful firms to be in the private sector. I believe that private sector management is right in theory as it devolves decision making through society and works in practice, as it produces faster growth, better job prospects and higher living standards for those operating under that system. Therefore, I believe that my right hon. Friend is right to introduce a change to Rolls-Royce.
The effect of that change is to maximise the responsibility and involvement of those in the company, whether they are managers, shop-floor workers or investors. All those people should have a stake in the consequences of decisions taken. If the company is successful, those people should participate in that success. When they make decisions they should recognise that, if those decisions are wrong, they are expected to accept responsibility. They cannot expect to shuffle responsibility on to some obscure Whitehall committee. Because of that commitment to a sharpened sense of responsibility, I particularly welcome the employee share ownership incentives that my right hon. Friend discussed today.
Those provisions may lie behind the fact that, although the shop stewards committee of the Confederation of Shipbuilding and Engineering Unions put out propaganda opposing the Rolls-Royce privatisation, all the evidence suggests that a large number—
Mr. Nellist: What evidence?
Mr. Dorrell: The evidence I have obtained from people who have visited my surgery. The evidence I have received from people I have stopped in the street and the people who talked to me when I went round the Rolls-Royce
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plant a week ago. That evidence suggests that many Rolls-Royce employees want to buy shares in the company and want to participate in an important and successful company.
I believe that the privatisation route is exactly right for Rolls-Royce. It is also important that we do not overstate the extent to which privatisation cuts the umbilical cord between the Government and Rolls-Royce. We are all aware that, in the market place in which Rolls-Royce operates — as the right hon and learned Member for Monklands, East (Mr. Smith) rightly said — it will be competing against Pratt and Whitney and General Electric. Those companies are involved in a sophisticated support operation with the American Government. The American Government give considerable support to the companies that compete against Rolls-Royce.
My right hon. Friend has made it abundantly clear that Rolls-Royce will receive the same level of support as its competitors within the market. Although the Government are privatising Rolls-Royce, they are far from neutral about whether Rolls-Royce succeeds. The Government, like any patriotic British person, want Rolls-Royce to succeed.
In the months ahead, I hope that my right hon. Friend will follow up the commitments that he has given to ensure that public purchasing in Britain is clearly attuned to the needs of Rolls-Royce. We should copy the public purchasing practice of the United States. I hope that my right hon. Friend will ensure that launch aid will be available so that Rolls-Royce can compete with American competitors. Moreover, in the European Council of Ministers, I hope that my right hon. Friend will take steps to encourage the European dimension of the Rolls-Royce market. It will be easier for my right hon. Friend to do that when Rolls-Royce is a privatised company rather than part of the United Kingdom's public sector. Rolls-Royce is part of the European fight back in the aerospace industry. In recent years that industry has been dominated by American competitors.
I support privatisation because I believe it gives greater incentives and responsibility to the people in the company. I believe that it paves the way to a more mature relationship between Rolls-Royce and the Government.
9.2 pm
Mr. George Park: The hon. Member for Loughborough (Mr. Dorrell) confirmed what my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) said—private enterprise is happy to take the profits when they are going, but reserves the right, when the going gets rough, to go back to the taxpayer to bail it out. Apparently, the hon. Member for Loughborough wants it both ways.
We are all aware that the Government do not like public enterprises — the Secretary of State underlined that in his speech. This dislike seems to increase in proportion to the success of the enterprise. If ever there was a case of dogma defying logic it is the privatisation of Rolls-Royce. Everything that a newly privatised Rolls-Royce might wish to do can be done now by the publicly owned enterprise. The Government are not allowing the facts to get in the way of their prejudice.
In 1976 the then chairman of Rolls-Royce, Sir Kenneth Keith, a self-confessed private enterprise man through and through, said that he had a high degree of autonomy in the company and that the Government did not interfere with

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the running of the business. Three years later a Conservative Government were elected who never had an industrial strategy. They failed to acknowledge that national interests required Rolls-Royce to stay in the forefront of world technology. Even more significantly, the Government started to interfere because of their political beliefs. I think that that sparked off the comment today by the current chairman, who says that Governments do not know how to run businesses. That is true in the case of this Government.
Since 1971, when private ownership failed and the company had to be brought into the public sector by the Government of the right hon. Member for Old Bexley and Sidcup (Mr. Heath), there has been an unremitting struggle by the work force and the management to bring the company to its present successful position. Large-scale redundancies took place in 1971, both in the company and in its outside suppliers. Redundancies have continued at intervals up to the present time and in the last few weeks there have been several hundred redundancies at the Ansty plant near Coventry. Let me remind the House that those redundancies were on top of 1,000 redundancies in Massey-Ferguson. At a time when the work force, as a result of its efforts, is entitled to look forward to more secure and better-paid jobs, the whole enterprise is to be thrown back into the melting pot.
The effects of the privatisation proposals are already being felt. The collaborative venture on Superfan has been abandoned and the Government are again dragging their feet on repayable support for the airbus 330 and 340. More orders for Rolls-Royce worth £1·2 billion would have been secured if Superfan had been available. The collaboration with General Electric has collapsed, leaving Rolls-Royce with a bill of about £100 million for tooling.
This situation highlights one of the principal concerns about the privatisation proposals—the continuing need for high levels of research and development. It is a dilemma that faces all the principal engine makers — General Electric and Pratt and Whitney as well as Rolls-Royce. The first one that eases off on research and development faces the prospect of losing its position on radical technology and consequent sales.
Prospective investors will not have forgotten that it was the pursuit of high technology on the RB211 that contributed to the Rolls-Royce bankruptcy in 1971, when the company was recovered only by Government intervention. It could happen again and employees and communities around the plants could once more face the traumas of the early 1970s. At the same time there would be the further erosion of the technological base of British industry. There is some faint recognition of this possibility in the privatisation proposals, with the emphasis on institutional investors rather than small shareholders, despite the claims of the Government to be creating a nation of shareholders.
The limitations on no more than 15 per cent. for a single shareholder and no overseas offers are only delays to take the issue safely beyond the date of the next election and to allay fears that Rolls-Royce could find itself in the same position as Jaguar, with over half its shares in American hands. The vital difference between the two companies is the implications for Britain's national security, yet the Government know that they have no control once shares are freely traded.
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Financial pundits are forecasting that profits will soar after privatisation. However, it was only in 1984 that, for the first time in years, Rolls-Royce made a small profit of £20 million, rising to £120 million in 1986 on a turnover of £1,802 million. Creditable though these efforts are, they are hardly likely to be the sort of returns looked for by the City and must put at risk the levels of expenditure on research and development running at the rate of £255 million in 1986. That has the consequences that I outlined earlier, given the track record of most of British industry on investment in research and development.
According to the 1986 annual report of Rolls-Royce, military sales remained static. Industrial and marine sales rose by 7 per cent. due to the depressed state of the power generation and oil and gas markets. It was really the increase of 31 per cent. in the civil sector which led to the present healthy order books. But the airlines are in some difficulty, as the 140 airline members of the International Air Transport Association made a total profit of only $100 million in 1985. If Rolls-Royce is to maintain its share of that market, it must also retain its lead in technology through R and D. Private enterprise has shown once before that it cannot take the strain. Why should it be any different second time round? What sort of interest and commitment would be shown in longer-term projects such as HOTOL?
Experience shows that what is more likely is a maximising of profits irrespective of the consequences, since short-term returns are the be-all and end-all. Complaints are being heard today that the share issue price will not yield a big enough killing. Private investors would not be prepared to wait 15 to 20 years for a good-selling engine to progress from development to break-even cost.
To make the forecasts of soaring profits come true more quickly after privatisation, there is the likelihood of moves to hive off the repair and overhaul activities at East Kilbride, the industrial and marine division at Ansty, plus the sale of Leavesden to property developers. At present, when Rolls-Royce collaborates with other partners on a project, its expertise is safeguarded by strict rules about technology transfer. But in the future the company's rivals may own part of it. Here the brokers of Hoare Govett disagree with the Secretary of State because they are quoted as having said that they look forward to American and Japanese investors piling in, to use their words. It will be entirely different from what we have seen in other privatisations such as Coventry Climax referred to by my hon. Friend for Coventry, South-East (Mr. Nellist).
The proposals before us this evening will plunge Rolls-Royce back into doubt and uncertainty. What profits there are will not go to the taxpayer or the work force whose money and whose dedication brought it to its present position. Why should this highly skilled work force be asked to re-enact the struggles of the 1970s? Why should the nation's security be put in jeopardy? Why should we agree to further erosion of the technological base of British industry? Why should we put Rolls-Royce at risk to satisfy dogma and greed?
9.13 pm
Mr. Lewis Stevens: The attitude of Opposition Members is always one of trying to ensure that as much fear and distrust is generated on almost anything that takes place. That is again happening with Rolls-Royce. There is uncertainty in the minds of many

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employees. Any major change brings about uncertainty. As the hon. Member for Coventry, North-East (Mr. Park) said, the Ansty factory in my constituency has lost jobs again recently. That also breeds an uncertainty, but that uncertainty within Rolls-Royce has been going on for many years.
Rolls-Royce is a profitable business now, and it should be a profitable business in the future. From that base, one of the things that privatisation is likely to do is to develop the company in a way that is likely to remove the uncertainty. People will be able to see with confidence what the future holds. Whatever may be said, it is hard to believe that Governments who try to control or interfere with any company that is nationalised do not have a major effect on how that company develops.
One of the compensations for the people in Rolls-Royce is that as it moves forward it will need to diversify considerably. No company is static. The Opposition seem to suggest that it is static industry that develops only one technology. They seem to be suggesting that we just took over in 1971 and that it has carried on in the old way, but with support from the Government. The position is entirely different from that. Since 1971 there has been the construction of a company that is distinctly more efficient. It is no longer reliant on such a small base for its production, profit and success. Its technological developments and international collaboration are bringing about a progressive view of the industry that was not there in the past.
I pay tribute to the management and workers of Rolls-Royce for what they have had to suffer. What they saw in 1971 must be at the back of minds. However, the way to give confidence in the future is not to suggest that the company may or may not be subsidised to some extent, but to look forward with vision, believing that the diversification and flexibility that private enterprise can bring will serve the company better than the dependence that it has had in the past. That does not mean that research and development, defence contracts and other interests in development and technology will not receive help or encouragement from the Government in different ways. Of course they will. The important thing is that there will be flexibility, which will give confidence.
The pay back to the Government and the taxpayer is the possibility of increased profits from a company that is free to go forward. It will possibly generate more profit than could ever have been expected if it had remained in Government control.
It has been said that the Government cannot run industry. The hon. Member for Coventry, North-East said that this Government cannot run industry. I would suggest that no Government can. It is wrong to rely on the Civil Service or the House for the successful running of a major technological industry. We can help, as we helped Rolls-Royce from its delicate and harmed state of 1971. That company has now been rebuilt so that it is strong enough to go where it properly belongs—in the private sector, where it can hold its own against global competition. More and more the competition has not been European or British, it has become global, and Rolls-Royce is beginning to live with that successfully.
That situation will be developed in the private sector, with a proper return to the investor and the work force, because the work force will own part of the company. I am sure that many of them will take up the shares that are being offered to them. That is the success of a company
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developing; a company with the interests of the work force and the country at heart. Rolls-Royce should have a much better time in the future than it has had in the past 16 years.
9.18 pm
Mr. Bob Clay: I wish to make a few brief remarks about my concern and the concern of the work force at the Rolls-Royce plant in Sunderland. I have heard some remarkable things about the success of private enterprise, and I want to put the debate in a Sunderland context.
Private enterprise led to more than just the collapse of Rolls-Royce in 1971. Around the same period, we remember in Sunderland the Court Line disaster. Had the shipbuilding part of that company not been nationalised by my hon. Friend the Member for Chesterfield (Mr. Benn), the few remaining shipyards in Sunderland would no longer be there. That is a tale of the failure of private enterprise. There are other examples of that failure. Plessey, a multinational private company, pulled out of Sunderland. Joplings Forge, which is privately owned, recently pulled out of Sunderland. Some smaller parts of British Shipbuilders have already privatised, such as Sunderland Forge. What happened to that company is a scandal. The conduct of its owner, Mr. Brian Masterson, ought to merit a full debate in the House. There is a sorry story of private enterprise and privatisation under the Government.
We know that Rolls-Royce in Sunderland is highly successful, but it is one of the few employers left in Sunderland; one of the few that is expanding and which still has training and apprenticeships. The fear is that it is a peripheral plant. When the Secretary of State opened this debate he dismissed the notion of the Government, as; he put it, second-guessing and interfering. That shows the deep division of philosophy between him and Labour Members.
The one assurance that we in Sunderland want is that Rolls-Royce will come tinder public ownership, so that in times of competition and intense and ruthless multinational market forces, if there were an attempt to rationalise the plant, close it down, move it elsewhere, contract the work out, diversify or whatever, there would be the possibility of state intervention to prevent that happening. State control is one of the reasons why we still have some small shipbuilding and coal mining in Sunderland, pathetic as it is and much as it has declined, whereas private industry has failed on almost every front.
In a constituency which has the 12th highest unemployment in the country—two thirds of our school leavers are unemployed and long-term unemployment is getting worse—one of the few signs of hope and the only connection we have left with high technology engineering is Rolls-Royce. The danger is that under private ownership, because of market forces or rationalisation, the plant may close. Apart from the strong objection on principle, I know from my experience that the Rolls-Royce work force in Sunderland—whatever Tory Members have said about workers in other parts of the country—are overwhelmingly opposed to privatisation.
With all the talk about the success of private enterprise and the assurances I have been given by Rolls-Royce management, recent events have put a question mark over it all. For instance, a multinational company ruthlessly decided to close the Caterpillar plant at Uddingston—a

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profitable plant which had a full order book. No one could stop that plant closing, just as there is no assurance that Rolls-Royce in Sunderland, which is successful, profitable and expanding, will survive outside public ownership.
I would like the Minister to state in his reply not only that the plant will remain open and continue to expand, but that the East Kilbride and other plants will do so as well. Unless the Minister can speak confidently in that respect, our fears will remain. He cannot speak confidently, because this Government are washing their hands of any responsibility for people in the work force in a town of high unemployment such as Sunderland.
9.23 pm
Mr. Gerald Howarth: I rise to speak because of the comments of the hon. Member for Sunderland, North (Mr. Clay). Everything that is negative and gloomy has been brought out. We are debating tonight one of the greatest success stories of British manufacturing industry, because Rolls-Royce epitomises all that is excellent. It stands for craftsmanship and reliability throughout the world. It has emerged from that 1971 disaster, which has been referred to many times, to become a world-beating company at the forefront of high technology, exporting no less than 28 per cent. of its output to the competitive market in North America. It has set a first-class example to the rest of British industry on how best to co-operate, not only with our friends in Europe but with our partners in North America and Japan.
It is a great tribute that we have seen today, on impact day, the launch of this magnificent company on the runway to a highly successful privatisation.
I understand the concern of the Rolls-Royce employees. I have met representatives of the unions and discussed those concerns with them. But they should take heart from the success of the privatisation policy in many other spheres. It has been an overwhelming success and has returned industries into the hands of genuine public ownership; into the hands of the people and out of the day-to-day control of politicians. I am convinced that the people of Britain would feel that our country was safer were such a strategic industry to be in the hands of shareholders rather than in the hands of a Government in which the hon. Member for Coventry, South-East (Mr. Nellist) and some of his wilder friends had some control. Britain now has 8·5 million shareholders. That is genuine public ownership, and evidence of the enormous popularity of the policy.
It is offensive to suggest that somehow a privatised Rolls-Royce will not be able to look after Britain's defence needs. That is a disgraceful statement to make. I know that the unions feel strongly about it, but I urge them to hold back on that one, because it does not help their case. The Rolls-Royce success has been built in the private sector. It is worth reminding the House that it was due to the judgment of Rolls-Royce that R. J. Mitchell and others produced the Spitfire, initially as a private venture operation, which saved Britain from defeat. It was despite the misjudgments of pre-war politicians that the second world war was not the disastrous defeat for Britain which it might have been.
That is a salutary point for some of those who argue that Rolls-Royce should remain a nationalised industry in
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order to provide for the defence needs of the nation. That never was the case until 1971. Indeed, our defence needs have, for the major part of the century, and at our most critical hour, been provided by the private sector.
I pay tribute to the management and work force of Rolly-Royce who have brought about this magnificent transformation and enabled the company to return to its rightful place in the private sector. I do not represent Rolls-Royce workers, but I am proud to have visited several of its factories in Britain and to have seen the excellent work that has been done and the new technology that has been put in. That is a great tribute to British manufacturing industry.
The tribute that I can pay to the management and work force of Rolls-Royce is best summed up in the splendid stained glass window which is to be seen at Derby which is a tribute to the Battle of Britain pilots. An inscription at the bottom says
"Dedicated to the pilots of the Battle of Britain who turned the work of our hands into the salvation of our country."
In the work that they have done at Rolls-Royce in peacetime they have turned the work of their hands into the economic salvation of our country, and I warmly commend privatisation.
9.28 pm
Mrs. Margaret Beckett: I have listened with fascination to the debate, and I particularly note the observation just made by the hon. Member for Cannock and Burntwood (Mr. Howarth) about the stained glass window in Rolls-Royce in Derby, which, like all the rest of the Derby Rolls-Royce plant, is in my constituency, where many thousands of my constituents work.
I do not know how many constituents the hon. Members for Amber Valley (Mr. Oppenheim) or for Loughborough (Mr. Dorrell) have heard from who have spoken in favour of the privatisation of Rolls-Royce, but I wish that they had attended the open-air meeting at which I spoke which was attended by thousands of the Derby work force—it did not quite pour with rain but it looked very much as though it was about to — who came to protest at the way in which the Government are putting their jobs at risk.
As has often been mentioned during the debate, Rolls-Royce is a wonderful company. Rolls-Royce is a world-beating company. Conservative Members cannot stand the fact that that world-beating company became a world-beating company again in the public sector. That is why they are insisting on putting the jobs of our constituents at risk. The fact of the matter is that Rolls-Royce failed in private hands. It has been restored to prosperity in public hands.
I object strongly to the impertinence of those favouring privatisation who suggest that those hon. Members and their constituents who oppose privatisation lack faith in Rolls-Royce. Of course they have faith in the company. They have faith in the company and the sales force. They have faith in Rolls-Royce to make good, particularly if it operates and competes fairly with other companies in the world. However, they have no faith in the Government and their friends in the City. They are convinced that the City, which would have let Rolls-Royce go under and which was quite prepared to let Ferranti go under — another company operating in a high-tech area where there is a long lead time for a return on capital and where large sums are needed for research and development—

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and particularly after the Government's encouragement of shareholding as easy and a certain get-rich-quick operation, will not support and sustain Rolls-Royce in the way that is needed, and so provide the only way to secure jobs for our constituents.
Our constituents have no faith in the Government's golden share mechanism. No one knows who was behind the Westland operation, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) mentioned earlier. What faith can we possibly have in the Government's assurances that they will know who is behind the shareholdings in Rolls-Royce? Our constituents have no faith in the Government to protect them with regard to shareholding and share ownership. They have no faith in the Government's willingness to put money into Rolls-Royce as the Government are now being asked to do for British Aerospace to continue to support the projects that are so desperately needed.
Many of my constituents fear that Rolls-Royce is coming full circle and that the Government are experimenting with Rolls-Royce because of their hatred of success in the public sector. Unfortunately they are justified in fearing that their jobs are being put at risk by the Government's dogma. I trust that when they go to the polls, they will remember that in considering the jobs of Conservative Members.
9.31 pm
Mr. Peter Pike: In the few minutes that are available to me, I want to make a few references to the Rolls-Royce plant at Barnoldswick in the constituency of Pendle. A number of workers in that factory come from my constituency and several factories in Burnley are dependent on the success, viability and future of Rolls-Royce. Lucas Aerospace and BEP are two of the larger companies involved, but a number of other industries in Pendle, Burnley and north-east Lancashire as a whole are vitally dependent upon the success of Rolls-Royce. Bearing in mind what happened in February 1971, there is a great fear among the employees in Rolls-Royce and employees in the other industries involved in north-east Lancashire and in the community at large.
One worry of the people in north-east Lancashire and a worry especially felt in Barnoldswick can be summed up in the words of the Minister for Information Technology, who visited Barnoldswick last year. He referred to the factory at Barnoldswick as being "a bit off the beaten track". Many people in north-east Lancashire believe that, because they are not on the main railway network or linked to the main motorway network, they are a "bit off the beaten track". Therefore, we are afraid that, if there are to be any cuts or factory closures, they may well unfortunately take place in north-east Lancashire.
For many years, our traditional industries have declined and the people of north-east Lancashire have entered other industries. Indeed, Rolls-Royce and Lucas Aerospace were relocated in north-east Lancashire during the war and played a vital part in the early work of the development of the jet engine. At the moment, one of the important development sections of Rolls-Royce is at Barnoldswick. However, there is talk of closing that section. When we refer to rationalisation and diversification — to which Conservative Members have referred tonight—we all know that that frequently means factory closures and redundancies, most often in areas where there is little alternative employment for the people affected.
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This is a genuine fear of ours. I must again stress that it would affect not only Rolls-Royce but the other-industries as well. We recognise that the present position has been achieved largely because of Government support given to the industry and also because of the sacrifices made by many of the workers, who have been determined to make a success of the company. What a tragedy it would be if, having reached the present position, we were to throw the company's prosperity away because of the dogma of a Government who are determined to privatise everything that it is possible to dispose of as speedily as they can.
We must recognise that private ownership is greedy for quick profits. The Secretary of State himself, when speaking earlier this evening of the success of the privatised industries, summarised that success by speaking in terms of the massive growth in profit of those companies. The one big difference between the two sides of the House is that Opposition Members do not judge everything in terms of profit. We judge in terms of service to the nation as a whole, to the consumer and to the employees of an industry. These aspects cannot be ignored.
The future of the industry, in the interests of both the nation as a whole and the employees, would be far better served if this company, whose name enjoys worldwide renown, remained in the public sector rather than being privatised in accordance with the Tory party's dogma.
9.36 pm
Mr. Terry Davis: On behalf of the Labour party, I should like to make it clear at the outset that we very much hope that Rolls-Royce will be successful and profitable and that we expect it to be so, at least in the short term. That is the whole point of the debate. Rolls-Royce is engaged in a high-risk business, which needs long-term investment and a long-term view of its projects, product developments and prospects. After all, that is why Rolls-Royce was taken into public ownership in the first place.
Rolls-Royce went bankrupt under private ownership and was rescued, with all-party support, by a Conservative Government. The Secretary of State tells us, by implication at least, that in the past 16 years of public ownership Rolls-Royce has improved its management, its efficiency and its sales and has now begun to make a profit. But the world outside the company has not changed. The design, manufacture and sale of aeroengines is still a high-risk and competitive business. Nor have Britain's financial institutions changed. The City of London still takes a short-term view and wants short-term profits. So a Rolls-Royce dependent on the City of London for investment, however profitable the investment in the long term, will always have a question mark over its long-term future. Rolls-Royce will inevitably suffer from that uncertainty. Uncertainty is the real enemy of industrial success. That is why the Government's insistence on privatising Rolls-Royce is bad for the company.
It is also bad for the people who work for Rolls-Royce. The hon. Member for Loughborough (Mr. Dorrell) tells us that the work force want a stake in a successful and profitable company. But what they want above all is the certainty, the security, the stability of knowing that they have a job, a real job and a job for the future. They do not want any unnecessary uncertainty about that future. That

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is why privatisaton and a privately owned Rolls-Royce, which is dependent on the City of London for its funds, is bad for the work force.
Mr. Patrick McLoughlin rose—
Mr. Davis: Although I am pressed for time, if the hon. Gentleman wishes to intervene, I shall certainly give way.
Mr. McLoughlin: What happened to Jaguar when it was privatised? The hon. Gentleman comes from the west midlands and he knows what happened to that company.
Mr. Davis: I am delighted that that has been raised. I was about to come to Jaguar in my speech. In fact, I shall refer not only to Jaguar but to other companies in the west midlands.
However, it is because privatisation is bad for the work force that so many local authorities have expressed concern, and why so many mayors, lord mayors and lord provosts and leaders of all political parties, including Conservatives, came to the House of Commons to lobby against the Government's policy.
The uncertainty is also bad for a group of people who have hardly been mentioned this evening. They are the suppliers of Rolls-Royce and their employees. The people who work for the suppliers must rightly be concerned about competition from other suppliers who can provide components of higher quality, or more cheaply. They do not need any additional uncertainty about the long-term future of their principal customers.
The Government's insistence on privatisation is bad for the taxpayer. My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) explained how the Government's total investment in Rolls-Royce is now somewhere between £1·5 billion and £2 billion. However, that investment is to be sold for £1·3 billion. It is to be sold at a loss, at the very time when the company has become profitable. The taxpayer took the risk, but private shareholders will take the profits. However, it will not stop there. Everyone agrees that after privatisation Rolls-Royce will still need Government funds for research and development and launch aid. In good years, the shareholders will take the profits, but in bad years, when the company needs money to launch new products, the taxpayer will foot the bill.
The only argument that has been advanced by the Secretary of State and his hon. Friends is to tell us that, in some mysterious way, privatisation leads, inevitably, to even greater success. The Secretary of State listed five companies, the performance of which has improved since privatisation. The hon. Member for Derbyshire, West (Mr. McLoughlin) referred to one of those companies, Jaguar. However, to say that the performance of those companies has improved since privatisation, is not to say that their performance has improved as a result of privatisation. That ignores completely, as the hon. Gentleman ignored — [Interruption.] The Secretary of State was totally unable to answer a direct question from my right hon. and learned Friend the Member for Monklands, East who asked him to tell us on what occasion even this Government second-guessed the management of Rolls-Royce. We have it on record from the former chairman of Rolls-Royce that the previous Labour Government did not intervene.
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Let us deal with the mysterious way in which privatisation improves the performance of companies. The hon. Member for Derbyshire, West ignored the fact that there are many companies which, like Rolls-Royce, have flourished under public ownership. We have had debates on other industries, such as the motor industry. Sections of the Rover Group are profitable and have improved their performance.
Mr. Gerald Howarth: At last.
Mr. Davis: Those sections have done that as a result of investment under public ownership. To give just one example, Freight-Rover was losing money under private ownership. Conservative Members also wish to ignore those companies that have been privatised, and then have failed. [Interruption.] The hon. Member for Derbyshire, West, referred to Jaguar — [Interruption.] The hon. Member for Amber Valley (Mr. Oppenheim) should listen. I have already identified one such section in my own constituency. I am now dealing with his hon. Friend who claims to know Coventry and who referred to Jaguar.
Coventry also has Rolls-Royce. Right next to Rolls-Royce is Coventry Climax, which was privatised in 1981. At the time of privatisation, Coventry Climax had 3,000 men and women working there. They were told that their jobs were secure, just as the Rolls-Royce workers have been told that their jobs are secure now. Their jobs were secure for five years, past a general election. However in 1986, the work force at Coventry Climax was reduced from 3,000 to 600. Conservative Members ignore that also. I am not saying that that was necessarily the result of privatisation. However, I think it was because of the people who bought Coventry Climax and who took over the company, milked it, stripped it and ran it down. But the point is that privatisation is not some mysterious, magic formula which produces job security or increases profits. It can lead to failure as well as success.
We all know that the Government are determined to privatise everything they can, not because it is in the industrial interests of companies, nor because they are interested in industrial success; they are interested in dogma. For 40 years we have had a consensus between the main political parties that there should he a mixed economy. The Labour party still believes in it, but the Conservative Government have rejected it. By voting for the motion tonight the Labour party will affirm its belief in the mixed economy and reject the views of the extremists on the Governments Benches.
9.45 pm
The Minister for Information Technology (Mr. Geoffrey Pattie): The hon. Member for Birmingham, Hodge Hill (Mr. Davis) and I agreed to restrict the time that we would take in the debate to allow the maximum number of hon. Members to participate, so I hope that that will be borne in mind in interventions.
The hon. Gentleman spoke about Government interference, and I should like to observe immediately that the present administration between Rolls-Royce and the Government operates on the basis of an annual report and frequent consultations between the company and the Government. It is a question whether that is interference. The plain fact is that it is not possible for the company to embark on major investment programmes, or even to decide on matters such as the salaries of the chief executive

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and top people in the company, without consulting the Government. If that is not interference, I do not know what is.
For some time the right hon. Member for Glasgow, Goven (Mr. Millan) has been asking, and I have been attempting to answer, questions about the extent of the launch aid given on the RB211 programme. He will have seen from my answers that it totals £537 million. He seems to want to import launch aid into the present privatisation process, when the capital structure is completely different. I tried to understand from his speech whether he was suggesting that Rolls-Royce should not be eligible for launch aid. I have already told him about the levies of £340 million that we receive from that programme, but he wants the company in future to continue to be eligible for research and development programmes. Indeed, my hon. Friend the Member for Loughborough (Mr. Dorrell) urged that the company should be so eligible.
Tonight many hon. Members have voiced their anxiety on behalf of their constituents about the future of employment in the industry. In particular, they have referred to 1971, when Rolls-Royce was heavily exposed to the development costs of a single engine. In 1987 the company's strategy is somewhat different. The prospectus, which is available today, makes it clear that the
"principal objective in the civil aero-engine market is to be able to offer, either alone or in collaboration with other manufacturers, an engine to compete within each principal market sector."
There is no suggestion of over-reliance on a single development and the importance of collaboration is well recognised.
I must tell all hon. Members who spoke of anxiety about the future that the only guarantee that any commercial enterprise can have is of the success of its product through marketing, design and the ability to collaborate and to sell that product in international markets. There can be no guarantees, and there never have been any guarantees. Indeed, during public ownership 22,000 jobs have been lost from Rolls-Royce, so, far from there being any guarantees in the public sector, there appears to have been none. The reality has been that in the last 17 years Rolls-Royce has had to reduce its work force in order to remain competitive.
I wish that when the right hon. Member for Govan and his hon. Friend the Member for Coventry, North-East (Mr. Park) make points about certain individual programmes, such as the V2500 engine and the Superfan, they would get their facts right. To describe the V2500 as the media did, and as some Members of the House have done, as a troubled programme is untrue. It is a development programme, which means that the engine has to be run and run until it gets to the point of destruction. It is not right to describe a programme such as that in those terms, and to say, as the right hon. Gentleman and his hon. Friend did, that the Superfan programme has stopped, is not true. The programme has not stopped. What happened was that the international consortium IAE decided that it could not give a guarantee to have the Superfan engine available at a particular time, which meant that A340 airbus would be disadvantaged.
It is also not true for the hon. Member for Coventry, North-East, who I see is in his place now, to describe the Government's response to those two programmes, the A330 and A340, as miserly, or niggardly, or some such word, when it is widely known and recognised that the
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Government have already discussed with British Aerospace a sum of £400 million. I would not have thought that that was either a miserly or a niggardly figure, and the description is not deserved.
Mr. Nellist rose—
Mr. Pattie: As the hon. Gentleman has not been able to make a contribution to the debate, I shall give way.
Mr. Nellist: I am grateful to the right hon. Gentleman. If the V2500 is doing so well, why has Pratt and Whitney taken over engineering control? If privatisation means that the company will be successful in the future, why have the Government had to write off £645 million of company debt? Finally, if privatisation is so attractive to the work force, why, over the last 12 months, has the company banned any discussion of privatisation issues by the workers and their unions inside the plant, while it spends a fortune on videos and luxurious surroundings to launch the programme? If privatisation is so wonderful, let us have answers to those three questions.
Mr. Pattie: I hope the hon. Gentleman realises that I have been generous to him. First, Pratt and Whitney has not taken over control of the V2500 programme. There have been some compressor problems, but Pratt and Whitney has not taken over control of the programme. No debt has been written off. If we had more time I would be able to explain to the hen. Gentleman the reasons for the mechanisms that have been used.
The videos are part of a process that I would have thought the hon. Gentleman would welcome. If nothing of that sort had been produced, the criticism would now be levelled that the management was not telling the work force anything. Indeed, that criticism was made at one time, but on asking the company what it was doing I discovered that there were regular weekly briefings in all the various plants to make the work force aware of exactly what was going on.
Mr. Terry Davis: The were one-sided.
Mr. Pattie: The hon. Gentleman says that they were one-sided. Is a briefing riot normally one-sided?
Mr. Davis: The right hon. Gentleman has missed the point. If it is such an obvious case and it will persuade all the work force, why will the management not allow the work force to discuss it?
Mr. Pattie: I am talking about the ability of the management to inform the workers in the company of exactly what its plans are. At such meetings it is surely open to the work force to make their views known.
We shall have to wait and see, as several of my hon. Friends have said in this debate, how interesting the share offer is to the employees of Rolls-Royce. We have seen this situation before. I well remember the British Aerospace flotation, when the trade unions campaigned, as they are perfectly entitled to do, and said, in my constituency among others, that they hoped that their comrades would not be taking up the awful offer. Of course, when the time came the comrades took up the offer, as they were free to do. We know from the whole of the privatisation programme, going back to 1980, that there are now more than 480,000 employee shareholders. I should have thought that that was extremely good news. That surely is genuine public involvement and public ownership worthy of the name.
Mr. Park: My hon. Friend the Member for Eccles (Mr. Carter-Jones) and I, with hon. Members from other parties, accompanied a whole series of delegations to Ministers—when the Minister was in the MOD—about providing help for the A320—repayable help, I might add. The offer that has been made on the A330/340 is less than half what British Aerospace reckons it needs. The danger is that the work will go to other Governments in Europe who are prepared to be more forthcoming.
Mr. Pattie: The amount that the Government advanced on the A320 was £250 million. Now we are talking about figures that are considerably in excess of that sum. Tonight we have not heard what the Opposition have to offer Rolls-Royce. We know that it is something called social ownership—a nice, modern, red-rose term for nothing less than renationalisation. Nobody will be fooled by that. Nationalisation means bureaucratic and political interference, over-manning, inefficiency, huge losses, and poor services to the customer. Privatisation, on the other hand, has extended share ownership and real employee participation, as was welcomed by my hon. Friend the Member for Nuneaton (Mr. Stevens).
My hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) paid tribute to the excellence of the Rolls-Royce management and work force. The efficiency and service to customers of newly privatised companies have increased enormously. The comments of my right hon. Friend are proof of that pudding. The hon. Member for Burnley (Mr. Pike) said that all we seem to talk about are profits. The hon. Gentleman did not seem to realise that profits are a way of leading towards jobs. Without profits, there are no jobs.
Jaguar has produced 2,000 more jobs, 96 per cent. of BT employees own shares in that company, and the pressure of competition on British Telecom has meant that its prices have come down by 8·5 per cent. in real terms. That is the power of competition. My hon. Friend the Member for Amber Valley (Mr. Oppenheim) reminded the House of the excellence of, and new-found pressure on, British Telecom. The fundamental proposition is: why should we not allow men and women in the country to own shares in major British companies? If we can do this and promote improved efficiency, competition and better services in these companies, the whole process will be successful.
The problem for the Opposition is that privatisation is a roaring success. They are stuck with their opposition to it. They know that wider share ownership will be to the 1987 election what wider home ownership was to the 1983 election. Unfortunately, they are stuck on the rock of that hard-left dogmatic Labour position. They cannot get off it. They know that they are on to a loser, but they cannot move. They are looking at privatisation, which the customer wants and which the management, the work force and the shareholding public also want. They look at all these things and say, "We know we are on a loser." I urge the House to throw out the motion.
Question put: —
The House divided: Ayes 157, Noes 236.

Division No. 148]

[10 pm

AYES

Adams, Allen (Paisley N)

Bagier, Gordon A. T.

Archer, Rt Hon Peter

Barron, Kevin

Ashley, Rt Hon Jack

Beckett, Mrs Margaret

Atkinson, N. (Tottenham)

Bell, Stuart

260

Benn, Rt Hon Tony

Lambie, David

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

Lamond, James

Bermingham, Gerald

Leadbitter, Ted

Bidwell, Sydney

Leighton, Ronald

Blair, Anthony

Lewis, Ron (Carlisle)

Bray, Dr Jeremy

Lewis, Terence (Worsley)

Brown, Hugh D. (Provan)

Litherland, Robert

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

Lofthouse, Geoffrey

Brown, Ron (E'burgh, Leith)

Loyden, Edward

Buchan, Norman

McCartney, Hugh

Caborn, Richard

McGuire, Michael

Callaghan, Jim (Heyw'd & M)

McKay, Allen (Penistone)

Campbell, Ian

MacKenzie, Rt Hon Gregor

Campbell-Savours, Dale

McNamara, Kevin

Canavan, Dennis

McTaggart, Robert

Carter-Jones, Lewis

Madden, Max

Clark, Dr David (S Shields)

Marshall, David (Shettleston)

Clarke, Thomas

Martin, Michael

Clay, Robert

Mason, Rt Hon Roy

Clelland, David Gordon

Maxton, John

Clwyd, Mrs Ann

Maynard, Miss Joan

Cocks, Rt Hon M. (Bristol S)

Meacher, Michael

Cohen, Harry

Michie, William

Conlan, Bernard

Mikardo, Ian

Cook, Frank (Stockton North)

Millan, Rt Hon Bruce

Cook, Robin F. (Livingston)

Morris, Rt Hon A. (W'shawe)

Corbett, Robin

Nellist, David

Corbyn, Jeremy

Oakes, Rt Hon Gordon

Craigen, J. M.

O'Neill, Martin

Crowther, Stan

Park, George

Cunliffe, Lawrence

Patchett, Terry

Cunningham, Dr John

Pendry, Tom

Dalyell, Tam

Pike, Peter

Davies, Ronald (Caerphilly)

Prescott, John

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

Randall, Stuart

Deakins, Eric

Raynsford, Nick

Dewar, Donald

Redmond, Martin

Dixon, Donald

Rees, Rt Hon M. (Leeds S)

Dobson, Frank

Richardson, Ms Jo

Dormand, Jack

Roberts, Allan (Bootle)

Douglas, Dick

Roberts, Ernest (Hackney N)

Dubs, Alfred

Robertson, George

Duffy, A. E. P.

Robinson, G. (Coventry NW)

Dunwoody, Hon Mrs G.

Rogers, Allan

Eadie, Alex

Rooker, J. W.

Eastham, Ken

Ross, Ernest (Dundee W)

Evans, John (St. Helens N)

Rowlands, Ted

Fatchett, Derek

Sedgemore, Brian

Faulds, Andrew

Sheldon, Rt Hon R.

Fields, T. (L'pool Broad Gn)

Shore, Rt Hon Peter

Fisher, Mark

Short, Ms Clare (Ladywood)

Flannery, Martin

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

Foot, Rt Hon Michael

Skinner, Dennis

Forrester, John

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

Foster, Derek

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

Foulkes, George

Snape, Peter

Fraser, J. (Norwood)

Soley, Clive

George, Bruce

Spearing, Nigel

Gilbert, Rt Hon Dr John

Strang, Gavin

Golding, Mrs Llin

Straw, Jack

Gould, Bryan

Thomas, Dr R. (Carmarthen)

Hamilton, James (M'well N)

Thompson, J. (Wansbeck)

Hamilton, W. W. (Fife Central)

Thorne, Stan (Preston)

Harrison, Rt Hon Walter

Tinn, James

Haynes, Frank

Warden, Gareth (Gower)

Healey, Rt Hon Denis

Weetch, Ken

Heffer, Eric S.

Welsh, Michael

Hogg, N. (C'nauld & Kilsyth)

White, James

Holland, Stuart (Vauxhall)

Wigley, Dafydd

Home Robertson, John

Wilson, Gordon

Howarth, George (Knowsley, N)

Winnick, David

Howell, Rt Hon D. (S'heath)

Young, David (Bolton SE)

Hoyle, Douglas

Hughes, Robert (Aberdeen N)

Tellers for the Ayes:

Hughes, Roy (Newport East)

Mr. John McWilliam and Mr. Tony Lloyd.

Hughes, Sean (Knowsley S)

John, Brynmor

261

NOES

Aitken, Jonathan

Coombs, Simon

Alexander, Richard

Cope, John

Alton, David

Cormack, Patrick

Amess, David

Currie, Mrs Edwina

Ancram, Michael

Dickens, Geoffrey

Arnold, Tom

Dicks, Terry

Ashby, David

Dorrell, Stephen

Ashdown, Paddy

Douglas-Hamilton, Lord J.

Aspinwall, Jack

du Cann, Rt Hon Sir Edward

Atkins, Rt Hon Sir H.

Dunn, Robert

Atkins, Robert (South Ribble)

Durant, Tony

Atkinson, David (B'm'th E)

Dykes, Hugh

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

Evennett, David

Baker, Nicholas (Dorset N)

Fallon, Michael

Baldry, Tony

Farr, Sir John

Banks, Robert (Harrogate)

Fenner, Dame Peggy

Barnes, Mrs Rosemary

Fletcher, Sir Alexander

Batiste, Spencer

Forman, Nigel

Beaumont-Dark, Anthony

Forsyth, Michael (Stirling)

Bellingham, Henry

Forth, Eric

Bendall, Vivian

Fox, Sir Marcus

Benyon, William

Fraser, Peter (Angus East)

Bevan, David Gilroy

Freeman, Roger

Biffen, Rt Hon John

Freud, Clement

Biggs-Davison, Sir John

Fry, Peter

Blackburn, John

Gale, Roger

Body, Sir Richard

Galley, Roy

Bonsor, Sir Nicholas

Gardner, Sir Edward (Fylde)

Boscawen, Hon Robert

Garel-Jones, Tristan

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

Gilmour, Rt Hon Sir Ian

Bowden, Gerald (Dulwich)

Glyn, Dr Alan

Boyson, Dr Rhodes

Goodhart, Sir Philip

Braine, Rt Hon Sir Bernard

Gorst, John

Bright, Graham

Gow, Ian

Brittan, Rt Hon Leon

Gower, Sir Raymond

Browne, John

Grant, Sir Anthony

Bruce, Malcolm

Greenway, Harry

Bryan, Sir Paul

Gregory, Conal

Buck, Sir Antony

Griffiths, Sir Eldon

Budgen, Nick

Griffiths, Peter (Portsm'th N)

Bulmer, Esmond

Ground, Patrick

Burt, Alistair

Grylls, Michael

Butcher, John

Hamilton, Hon A. (Epsom)

Butler, Rt Hon Sir Adam

Hamilton, Neil (Tatton)

Butterfill, John

Hampson, Dr Keith

Carlisle, John (Luton N)

Hancock, Michael

Carlisle, Kenneth (Lincoln)

Hannam, John

Carttiss, Michael

Harris, David

Cartwright, John

Harvey, Robert

Cash, William

Haselhurst, Alan

Channon, Rt Hon Paul

Hawkins, C. (High Peak)

Chapman, Sydney

Hawksley, Warren

Chope, Christopher

Hayes, J.

Churchill, W. S.

Hayward, Robert

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

Heathcoat-Amory, David

Clark, Dr Michael (Rochford)

Heddle, John

Clark, Sir W. (Croydon S)

Henderson, Barry

Clarke, Rt Hon K. (Rushcliffe)

Hickmet, Richard

Clegg, Sir Walter

Hirst, Michael

Cockeram, Eric

Holland, Sir Philip (Gedling)

Conway, Derek

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

262

Howarth, Gerald (Cannock)

St. John-Stevas, Rt Hon N.

Howell, Ralph (Norfolk, N)

Sayeed, Jonathan

Howells, Geraint

Shaw, Giles (Pudsey)

Hubbard-Miles, Peter

Shaw, Sir Michael (Scarb')

Hunter, Andrew

Shelton, William (Streatham)

Hurd, Rt Hon Douglas

Shepherd, Colin (Hereford)

Irving, Charles

Shepherd, Richard (Aldridge)

Jackson, Robert

Silvester, Fred

Jenkin, Rt Hon Patrick

Sims, Roger

Johnson Smith, Sir Geoffrey

Skeet, Sir Trevor

Johnston, Sir Russell

Speed, Keith

Jones, Gwilym (Cardiff N)

Speller, Tony

Jones, Robert (Herts W)

Spencer, Derek

Kellett-Bowman, Mrs Elaine

Spicer, Jim (Dorset W)

Kershaw, Sir Anthony

Steen, Anthony

King, Roger (B'ham N'field)

Stern, Michael

Kirkwood, Archy

Stevens, Lewis (Nuneaton)

Knight, Greg (Derby N)

Stewart, Allan (Eastwood)

Knight, Dame Jill (Edgbaston)

Stewart, Andrew (Sherwood)

Lawrence, Ivan

Stewart, Ian (Hertf'dshire N)

Lee, John (Pendle)

Stradling Thomas, Sir John

Lennox-Boyd, Hon Mark

Sumberg, David

Lester, Jim

Taylor, Matthew

Lilley, Peter

Taylor, Teddy (S'end E)

Livsey, Richard

Thomas, Rt Hon Peter

Lloyd, Sir Ian (Havant)

Thompson, Patrick (N'ich N)

Lloyd, Peter (Fareham)

Thorne, Neil (Ilford S)

Lyell, Nicholas

Thornton, Malcolm

McCrindle, Robert

Townend, John (Bridlington)

MacKay, John (Argyll & Bute)

Townsend, Cyril D. (B'heath)

Maclean, David John

Tracey, Richard

McLoughlin, Patrick

Trippier, David

Major, John

Trotter, Neville

Malone, Gerald

van Straubenzee, Sir W.

Maples, John

Vaughan, Sir Gerard

Meadowcroft, Michael

Waddington, Rt Hon David

Mitchell, David (Hants NW)

Wakeham, Rt Hon John

Monro, Sir Hector

Waldegrave, Hon William

Neubert, Michael

Wall, Sir Patrick

Norris, Steven

Wallace, James

Oppenheim, Phillip

Waller, Gary

Page, Sir John (Harrow W)

Wardle, C. (Bexhill)

Pattie, Rt Hon Geoffrey

Watson, John

Peacock, Mrs Elizabeth

Watts, John

Pollock, Alexander

Wells, Bowen (Hertford)

Porter, Barry

Wells, Sir John (Maidstone)

Portillo, Michael

Whitfield, John

Powley, John

Winterton, Mrs Ann

Raison, Rt Hon Timothy

Winterton, Nicholas

Rhodes James, Robert

Wolfson, Mark

Ridley, Rt Hon Nicholas

Woodcock, Michael

Ridsdale, Sir Julian

Wrigglesworth, Ian

Rippon, Rt Hon Geoffrey

Yeo, Tim

Roberts, Wyn (Conwy)

Young, Sir George (Acton)

Robinson, Mark (N'port W)

Younger, Rt Hon George

Roe, Mrs Marion

Rossi, Sir Hugh

Tellers for the Noes:

Ryder, Richard

Mr. David Lightbown and

Sainsbury, Hon Timothy

Mr. Francis Maude.

Question accordingly negatived.

Stansted Airport
10.12 pm
The Minister of State, Department of Transport (Mr. David Mitchell): I beg to move,
That the draft Stansted Airport Aircraft Movement Limit Order 1987, which was laid before this House on 7th April, be approved.
In introducing the draft order, I think it worth remarking that this must be one of the most predictable, most unsurprising measures which could be brought before the House for its approval. The Government's intention to make an air transport movement—ATM—limit order for Stansted airport was signalled in June 1985, when we first gave the go-ahead to expansion there. The Government now seek to implement their intention and, in so doing, to fulfil the promise we made about phasing the development at Stansted.
The 1985 airports policy White paper expressed the Government's awareness of the genuine and understandable concern which had been expressed by local residents and Members of Parliament in the Stansted area about the scale and extent of development at the airport and about the environmental effects. The Government therefore promised that development of Stansted airport would be phased with the first stage of development limited to about 7 million to 8 million passengers per annum. A condition of the planning permission for Stansted airport to grow from current levels to about 15 million passengers per annum was that construction of the development would be so phased.
To underpin the planning condition we decided that the relatively blunt, unsophisticated instrument of an ATM limit could provide an additional means of regulating airport development, with the object of controlling the impact of that development on local infrastructure. We therefore undertook to seek the necessary powers to enable the Government to set ATM limits subject to the approval of Parliament. We made it clear that we would use such powers at Stansted to impose an ATM limit sufficient only to enable effective utilisation of the first phase of development, that is to say, about 7 million to 8 million passengers per annum.
The Government sought the necessary powers in last year's Airports Bill, and they now exist as section 32 of the Airports Act 1986. Section 32 restricts the use of ATM limit powers to airports where runway capacity is significantly underused. An airport whose runway capacity is already saturated has a naturally imposed limit. Section 32 also required the Secretary of State to consult within the civil aviation industry and among local authorities that are likely to be affected before setting a limit. That local authority interests are required to be consulted on the face of the legislation bears testamount to the efforts of my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) and we are indebted to him. I am glad to see him in his place, as is usual when anything affects his constituency is debated.
The necessary powers came into force late last year. The Government are now keen to keep their promise for a first-phase ATM limit at Stansted—a promise that they gave when planning permission for Stansted development was given, in the 1985 airports policy White Paper, and during the passage of the Bill, both here and in another place.
The White Paper commitment to an ATM limit went beyond the reassurance of local interests—important
264
though those interests may be. The White Paper said that decisions on a Stansted ATM limit should be for Parliament. The Government have again been faithful to their intention in bringing before this House tonight a draft order that is subject to affirmative resolution.
The order proposes a limit of 78,000 air transport movements. That figure is designed to correspond to a passenger throughput at the Stansted development of no more than about 7 million to 8 million passengers per annum. This is consistent with the planning condition and with the Government's subsequent investment approval for a terminal capable of handling 8 million passengers per annum. The figure, which has been calculated on my Department's most recent air passenger traffic forecasts, has been determined by two factors. The first of those is the relative mix of types of traffic that we expect to serve Stansted when passenger throughput approaches 8 million passengers per annum; and secondly, the average aircraft passenger loading — the number of passengers per air transport movement—at that time.
The figure of 78,000 ATMs assumes that all categories of traffic at Stansted will experience significant growth. The assumptions which underlie the calculation of the limit suggest that 8 million passengers per annum at Stansted would be composed of about 10 per cent. domestic passengers, 37 per cent. short-haul charter passengers, about 19 per cent. short-haul scheduled passengers and the balance — about 35 per cent. — of long-haul passengers.
The second element of the calculation, passenger loading, has been predicted by comparison with Gatwick. Given the similarities of Stansted now and Gatwick in its early years, it is not unreasonable to draw a parallel between the passenger loadings that might operate at Stansted when the airport development is handling 8 million passengers per annum and the passenger loadings at Gatwick when that airport had an identical passenger volume. Of course, the analogy is not precise. I have already been pressed on this matter by my hon. Friend the Member for Saffron Walden, who represents this locality. I have no doubt that he will wish to have further discussions with me about that. The analogy is not precise and corrections have had to be made to allow for higher passenger loadings as a result of improvements in aircraft technology, and to eliminate any distortion from the passenger loadings on the Gatwick-Heathrow helicopter link which was in operation, when Gatwick was at 8 million passengers per annum.
In determining the quantum of the limit, we have tested the robustness of the figure against differing assumptions about both traffic mix and passenger loading. In particular, the limit has been tested against two scenarios, one of which puts forward rapid growth in short-haul scheduled services — reflecting extensive liberalisation and deregulation of air services—and a quite different scenario in which there is pre-eminent growth in the charter market — with short/medium haul charter passengers forming a much larger proportion of the 8 million passengers per annum. In both cases there was no significant difference from the 78,000 air transport movement figure of the central assumptions. Indeed, the agreement was within 1 per cent. This gives me great confidence to commend to the House the figure in the draft order.
The draft order is in five articles. The first two define the numerical value of the limit and its period of operation.

265
Although the limit would apply annually from 1 March of each year, it is proposed that the order should come into effect from 1 June this year. This will mean that one quarter of the first year of operation of the limit will have passed, but this loss will have no material effect. The current level of ATM usage of Stansted is less than 20 per cent. of the proposed limit and the existing terminal capacity will not allow traffic to approach the limit even distantly between now and February 1988.
Article 3 of the order describes those classes of aircraft movement that the Government propose to exclude from counting against the limit. In the 1985 White Paper the Government set out their undertaking to impose a limit expressly on ATMs at Stansted. During the passage of the legislation, we explained what an ATM limit would and would not cover, setting out explicitly that the limit would exclude diversion, repositioning, air-taxi and general aviation movements. The proposal reflects our White Paper undertaking about seeking to constrain passenger volume. It follows that the limit should bear on passenger air transport movements only.
I opened this debate by suggesting that this was an unsurprising measure for the Government to bring forward. I hope that I have now explained why. Our 1985 White Paper promised a limit on ATMs at Stansted so that the first phase of development should not handle beyond about 7 million to 8 million passengers per year. We promised to seek the necessary powers and did so in the Airports Bill. During the passage of the Bill we described in detail how a limit would operate and what it should and should not include. The Airports Act 1986 and the necessary powers are now in force and tonight we are fulfilling our promise to seek the House's approval to an appropriate limit. I commend the order to the House.
10.22 pm
Mr. Peter Snape: The Minister opened the debate by saying that the order was both predictable and unsurprising. Predictable it may be, but I am not so sure about the second part of the Minister's description. It would probably be far beyond my limited capabilities as an orator to arouse the House to great heights of passion about this order, but I should like to mention one or two points. [Interruption] "Heights of passion" would be the wrong phrase to describe some of the Conservative Members present for the debate. I should like to ask the Minister one or two questions, especially about the press release that was issued in conjunction with the order. Presumably that press release was issued in the name of the Minister. It says that "extensive consultation" was undertaken prior to the order being laid. The House would be grateful to know what sort of consultation the Minister regards as extensive. Certainly there are other aviation interests and other regional airports which feel that no such consultation has taken place. They rightly feel a good deal of concern that this order has been laid. Far from the consultation being extensive, it appears to have been localised to the area of Stansted airport.
Mr. Alfred Morris: This is a deeply sensitive matter for Manchester airport, as my hon. Friend will appreciate, and for other airports outside the south-east of England. Would he agree that it is at once surprising and indeed culpable that the North of England Regional Consortium was not consulted on such an important matter?
Mr. Snape: In reply to my right hon. Friend, and to use the Minister's own words, it is predictable and unsurprising that the sort of interests that my right hon. Friend has outlined were not consulted. In view of the controversy that has surrounded the proposed development at Stansted airport, to say the least it is somewhat insensitive that the interests about which my right hon. Friend spoke have not been consulted. I have heard him speak many times about this in the Chamber so I know that he is aware of the concern of provincial airports such as Manchester about the proposed Stansted development.
Being aware of those concerns, one would have thought that the Minister would have consulted, as my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) said, such bodies as the North of England Regional Consortium or the Joint Airports Committee of Local Authorities—JACOLA.
If the Minister wants to use the description "predictable and unsurprising" about orders such as this, one would have thought that he would have first sought extensive consultation with aviation and airport interests represented by both bodies to which my right hon. Friend and I have just referred. The Minister might well say that there is no statutory duty for a Secretary of State to consult regional interests, but, given the controversy that has surrounded this development, I repeat that one would have thought that, for the sake of peace and tranquillity in aviation, these consultations would have taken place. If they had taken place, there might well have been suggestions from bodies such as the North of England Regional consortium and JACOLA and there might well have been a slightly different approach to limiting ATMs at Stansted.
The Minister referred in his speech to section 32 of the Airports Act 1986, but the Act should be used not only to facilitate environmental objectives but to reinforce other policies such as traffic realloation. The bodies to which I have referred and the Opposition believe that Stansted's limit need not be based on the maximum throughput of its new terminal but perhaps could be laid on a gradual buildup of traffic reflecting the Government's traffic reallocation policy generally.
The Minister referred to the fact that Stansted's current capacity is less than 20 per cent., I think he said, of the proposed limit. If that is the case, why set the limit in this order tonight? It would be better gradually to step up the limit so that regional interests could express points of view over the next few months or even the next few years. That would be a more conciliatory and consultative approach than setting a limit in the order that allows the enormous development of which Stansted is currently not capable.
The order does have particular significance for controlling the incidence of long-haul traffic at Stansted. As I understand it, the order allows for up to 2·75 million passengers per annum of this type of traffic. I trust I speak for hon. Members on both sides of th House when I say that we would appreciate some indication from the Minister as to where this demand will originate and, if necessary, from what airports those 2·75 million passengers per annum will be transferred. As I am sure the Minister will concede, the output at Stansted since the announcement of its development has been growing modestly.
Opposition Members favour a limit on ATMs at Stansted which reflects the reality at present and which can be subject to review on a regular basis. That is not to say

267
that we want an enormously controversial debate, whether late at night or in prime parliamentary time, but I hope that the Minister will appreciate that these matters are fairly sensitive on the regions. While I understand that the Government's aviation policy appears to be devoted to solving the London problem at everybody's else's expense, surely it is not beyond the wit or inclination of the Department of Transport to appreciate the genuine concerns that are felt in areas outside London.
The Minister referred to positioning movements at Stansted. These movements are normally associated with inclusive tour operations which again, as he has indicated from the projected figures he has given, make up a high proportion of movements at Stansted. As the ATM limit excludes those positioning movements, as the Minister has rightly said, we can anticipate that about 5 to 10 per cent. more movements will be allowed over and above the limit. It is not for me to spend too long on the environmental implications for the residents in the Stansted area of the 5 to 10 per cent. increase over the proposed limit. I have no doubt that the hon. Member for Saffron Walden (Mr Haselhurst) will do that himself — if not tonight,
268
certainly at some time in the future. However, the question of positioning movements appears to be somewhat incompatible with the Minister's declared objective of protecting environmental interests in and around the airport.
I hope that the comments that will come from Opposition Members, despite the Minister's description of the order as "predictable and unsurprising" are, at least in his eyes and the eyes of those who advise him, unpredictable and surprising.
The proposed development at Stansted has been and is a controversial matter. There are legitimate concerns at Manchester, Birmingham, Glasgow and other airports in the United Kingdom. The Minister's comments so far, far from allaying those concerns, enhanced them. I hope that, in the same spirit as I have replied to the order, he will do something this evening to show that we can expect future debates on these matters so that those legitimate concerns to which I have referred can be expressed in the House and satisfactorily answered by a Department which, as I said earlier, somtimes appears to be more concerned with solving what it sees as the problems of London's airports than looking at aviation as the great national industry that it is.
10.32 pm
Mr. Alan Haselhurst: Despite the controversy to which the hon. Member for West Bromwich, East (Mr. Snape) referred and in which I have been fully involved in the past, I want to make it clear that I extend a warm welcome to the order. It is somewhat ironic that I should do so because, as some of my hon. Friends and Opposition Members may remember, I spoke in a forthright sense on the question of the utility of a power to limit air transport movements when it was first raised in the Civil Aviation Bill which was introduced in 1984. Those arguments seemed to prevail at the time. Therefore, I accept that it is a quirk of fate that I now grasp the more specific power, agreed by the House in the Airports Act 1986, from which this order devolves. We were able to confine the power given in the Act in such a way that it is tailored to the specific case of Stansted.
The order is very specific. It is intended to deliver the Government's promise on the limitation of the development of Stansted in terms of size. As the hon. Member for West Bromwich, East surmised, the environmental quality around Stansted is of concern to me for the sake of my constituents and neighbouring constituencies. However, the order is aimed simply at the question of size rather than environment.
The Government made two suggestions to limit the size of the development of Stansted. The first was to say that the terminal to be built should not exceed 50,000 sq m and the second was to allow the House, by means of an air transport movement limit, to determine whether Stansted should be allowed to proceed beyond an approximate limit of 7 million to 8 million passengers per annum throughput. I accept entirely the Government's good faith in responding in that way and I accept the nature of the order tonight.
The House could exercise influence over the future of Stansted only through this type of order since the Government had chosen to use planning law to determine whether Stansted should be expanded. This was because they could say either yes or no to the plans presented to them. There was apparently no planning half-way house that the Government could opt for. Therefore, having given the legal planning permission for 15 million passengers per annum throughput, this device is needed to give the House the power to limit the number of passengers per annum to 7 million or 8 million. That is welcomed by my constituents and I trust that it is welcomed generally in the House.
Mr. Alfred Morris: The hon. Member has played a distinguished part in this long-running debate on the expansion of Stansted. He has talked about size, but how does he feel about the Government's ultimate objective of increasing the number of passengers through the airport to 25 million per year?
Mr. Haselhurst: It is not fair to suggest that the Government have an ultimate objective of increasing the number of passengers through Stansted airport to 25 million per annum. All that has been agreed to date is that planning permission exists for 15 million passengers per annum. The House will determine whether it proceeds beyond 7 million or 8 million passengers per annum. Any question of Stansted increasing to 25 million passengers, Gatwick increasing beyond 25 million or Heathrow
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increasing beyond the present 38 million or 40 million passengers will be debated in the wider context of airports generally. The Government do not have a stated policy on increasing passenger numbers but recognise that perhaps they will need to determine where further capacity is located. That would be a very wide debate.
I ask my hon. Friend to elaborate on the figure of 78,000 air traffic movements. When Gatwick reached approximately 8 million passengers per annum about eight years ago, that involved slightly over 100,000 ATMs. One accepts that some allowance must be made for increased load factors in the imervening years, and therefore is plausible that the figure of 78,000 equates with 7 million to 8 million per annum.
However, I notice that the press notice published by the Department, to which the hon. Gentleman for West Bromwich, East referred, says that the order would apply to about 16,000 movements per annum at Stansted at present. If one looks at the mathematics in another way, if that figure of 16,000 is correct now and if the present figure of approximately 550,000 passengers per annum is to be multiplied by only five, that would not take the figure very near to 7 million to 8 million passengers per annum. There is clearly much guesswork, and many alternative theories can be offered, in arriving at that figure of 78,000.
That difference between Gatwick in 1979, from over 100,000 down to 78,000, has interesting implications—I do not wish to cause palpitations to my hon. and learned Friend the Member for Feltham and Heston (Mr. Ground)—not least for the capacity of the terminals at Heathrow, if fewer movements are required to carry a larger number of people. We must look at this carefully. I accept that an honest attempt has been made on the breakdown of the figures to produce the figure of 78,000, but how will it work in practice? This is an untried device and the airport operators may be concerned if the calculations that have been made, albeit with full input from themselves, prove, in the event, to be wide of the mark.
One could envisage a situation arising within the course of the 12 months, when, after a particularly busy burst of traffic, which may be of rather small aircraft with low passenger load factors, pressure suddenly builds up and one runs out of movements. How often will my hon. Friend have to come back to the House to seek an amendment to this statutory instrument in order to deal with an unfortunate failure to predict the exact pattern of the build-up of development at Stansted?
We must be fairly cautious about this instrument. It is untried and untested and may lead to some difficulties in practice. The variables are considerable, as my hon. Friend has been honest enough to admit. I must tell the hon. Member for West Bromwich, East that, if, instead of fixing a figure for the intended maximum throughput at Stansted, a smaller figure should be chosen on a graduated basis, it would only compound the difficulties because the more one admits that the variables are suspect, the more trouble one would be it. If my hon. Friend came to the House and suggested a limit of only 20,000 or 25,000, we would soon be in considerable trouble. I understand the hon. Gentlemen's point, but that is not realistic. One must go for the maximum figure, as my hon. Friend has done, as long as one accepts that it may not be perfectly right. None of us can be sure how air traffic will build up. The

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House may be asked to amend this statutory instrument ahead of the time when it is asked to consider it in the light of the expansion of Stansted terminal, if that time comes.
The Government have decided to exclude general aviation movements from the calculation. I realise that the Government still have the power to include general aviation in the order if they wish, but have chosen not to do so. It is worrying to my constituents that general avaiation is not counted, particularly in the light of the obvious interest of Stansted Airport Ltd. in attracting its own good share of such general aviation business that is going. My constituents' fears in that respect may be exaggerated. I say that with some humility. General aviation movements tend to be of quieter aircraft which do not operate at anti-social hours, and while at the moment they represent a fairly significant proportion of the total number of movements at Stansted, I recognise that that proportion is likely to decline in future.
Nevertheless, I hope that my hon. Friend will give an undertaking to look at the position. It may be helpful and reassuring to people living in the area to have an early idea of the Government's proposals regarding noise limitation and sound-proofing schemes. It may be through that avenue that one can provide the environmental protection that would cover general aviation movements rather than through the mechanism of the statutory instrument that we are discussing. I hope that my hon. Friend will consider that and realise that to some people aircraft movements are still aircraft movements even if they are not ATMs in the technical sense that we are discussing.
I appreciate the indulgence of the House while I have been making my points. If and when the time comes that the House is asked to consider raising the limit from 78,000, I hope that it will be recognised that that should not be confined to an hour-and-a-half's debate on a statutory instrument after 10 o'clock. If we reach that point, we shall be discussing the wider implications of Britain's airport policy and many hon. Members will wish to discuss that. I hope that my hon. Friend will ensure that my right hon. Friend the Leader of the House will bear in mind the desire of hon. Members on both sides of the House from wide geographical areas to contribute to such a debate and that would not be possible in a debate such as we are having tonight. Having said that, I thank my hon. Friend the Minister for the prompt manner in which the Government's promise has been fulfilled. I hope that the Minister's calculations are proved to be right in practice and that we can underline the protection and limitation for my constituents that the Government have promised all along.
10.45 pm
Mr. James Wallace: The hon. Member for Saffron Walden (Mr. Haselhurst) said that the order is the only way in which the House can influence, restrict or have some control over future developments at Stansted airport. On that basis, we should consider just how effective this order is. In previous debates on airports, during debates on airports legislation and during more general debates on airport policy, my hon. Friend the Member for Isle of Wight (Mr. Ross) has said that the appropriate level of passenger throughput at Stansted would be 5 million. The throughput implicit in the level of ATMs suggested in the order is between 7 million and 8
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million. That exceeds my hon. Friend's figure. However, the figure in the order is substantially—almost 50 per cent. — lower than the approved planning permission figure that Parliament might be expected to approve in future to allow for such expansion. It is therefore important that we should have this opportunity to debate whether such expansion is desirable.
We must first consider whether such expansion is environmentally desirable. That matter must be of considerable interest to the constituents of the hon. Member for Saffron Walden. They have to bear the brunt of the aircraft noise generated by 78,000 movements in addition to the other movements not included in that figure. I agree with the hon. Member for Saffron Walden about the need to look for other ways — apart from limiting aircraft movements—to minimise the environmental impact on those who have to live under the flight paths into and out of Stansted and other airports.
My second point was hinted at by the hon. Member for West Bromwich, East (Mr. Snape), who said that we must consider how the aircraft movements and the passengers involved have a consequence for the general development of airport policy, not least for the importance that we and the hon. Member for West Bromwich, East attach to the development of airports in the regions in England and Scotland. Manchester airport has already been singled out as having considerable potential for attracting more traffic, and it has generated considerable support for its case for more traffic. It would be surprising if I did not put in a plea for the considerable future role that many Scottish airports have for international flights and in that regard I want to mention particularly the further marketing and development of Prestwick airport.
It is important that Parliament should have this opportunity to put some control over future developments at Stansted because, so many other consequences will follow from those developments with general regard to airport policy. It would also be fair to ask to what extent the order is effective in achieving that objective. The hon. Member for Saffron Walden rightly explained that there are a number of possible variables in this matter. The Minister referred to a number of ways in which the 78,000 air traffic movements relate to the level of expected passenger throughput.
What level of future development of domestic passenger transport does the Minister foresee for Stansted? It has often been suggested that, if Stansted airport is to secure its long-term future, one of our domestic airlines should have a base at the airport. Does the Minister share that view? Domestic airlines have fewer passengers, and if the expected passenger throughput is to be reached in the longer term, that would imply many more air traffic movements. That would obviously have environmental consequences, so it is something on which we would wish to have his views.
Mr. Haselhurst: One ought to put on record the fact that Air UK is a domestic airline that is trying to make Stansted its heart, and while at the moment its services are undertaken by fairly small-sized aircraft, it is expanding its network, so that point is met.
Mr. Wallace: I was just echoing a view that has been expressed in a number of places, that it is important for the development of the airport that at least one of our airlines—Air UK is not an insignificant one; it provides

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a very valuable service in many parts of the United Kingdom—should have an important part at Stansted. It is a concern that has been expressed.
Dan-Air was very successful in the campaign that it mounted 12 months or more ago to maintain its service from Heathrow, because it felt that its services from other parts of the country—from Inverness airport, for the business and commercial interests of the highlands and islands of Scotland — should form the link with Heathrow and the important function of interlining that Heathrow provides. It would be a very serious loss if, through the auspices of the Civil Aviation Authority, some of these services were routed to other airports and that valuable interlining service was lost.
Dan-Air rightly won the argument. If that is a consideration, one may find that domestic services are not a common feature at Stansted and that, its growth area might be in charter traffic, with a much higher throughput of passengers. With 78,000 air traffic movements, if the number of passengers per movement was higher, would we then reach the situation where the Government were overshooting the current cut-off point of 7 million to 8 million passengers, with no further need to come back for an increase?
We do not know the answers to those questions, because there are so may variables, but, bearing in mind the importance attached to the procedure within the 1986 Act to give Parliament some control, we would like to hear more from the Minister. Without that, one could defeat one object of that Act — an object to which many speakers in the debate have subscribed—which was that Parliament should have some further control, because of the wider implications for other airports in the United Kingdom. If the Minister feels that there is a potential for the passenger ceiling to be significantly exceeded within 78,000 movements, that is something that hon. Members would, rightly, wish to know about, because it would have longer-term consequences for influence of the House on future airports policy.
10.52 pm
Mr. Fred Silvester: My hon. Friend said that the order was predictable and unsurprising, but perhaps the speech of the hon. Member for West Bromwich, East (Mr. Snape) was even more predictable and unsurprising. He took us through the letter from the North of England Regional Consortium and demonstrated that, even though he is very good at spreading these things out, it was just as thin an argument when he spoke about it as it is in the letter.
I do, however, agree with the hon. Gentleman on one point. It is a pity, but of no great significance in the event, that consultations were not wider and it would have been tactful if they had been. A lot of people put a lot of effort into the development of Stansted and made many representations. It would have been sensible to make the Government inquiries wider.
In effect, it does not seem to have made much difference because, as regards Manchester airport and the regional airports, the central issue is whether or not the limit imposed by this order is too large for the comfort of the regional airports. The consortium has not suggested in its letter or briefing that 78,000 ATMs are dangerous to the development of those airports. We are suggesting an order which will cover the period into the mid-1990s. Unlike the hon. Member for West Bromwich, East, I pay tribute to
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the Government for making great efforts to develop the regional airports, especially Manchester, and that should be put on the record. Moreover, they continue to do so.
The order is part of a package of measures put together at the time of approval of Stansted and designed to protect the interests of regional airports and to develop them. The order meets that promise and I thank the Government for properly and promptly introducing an order which meets that promise.
To take up the point of the hon. Member for Orkney and Shetland (Mr. Wallace), the order provides the House with a new and greater opportunity to control this area than it has ever had before. As I understand it, the control of the size of Stansted or any other airport does not come before the House, but the order and further additions to it give us an opportunity to keep some control over what happens in future.
The Government are to be congratulated on introducing the order. We shall keep a close eye on this and I make it perfectly clear to my hon. Friend the Minister that if there is any attempt to go beyond the 7 million to 8 million passengers on which the order is based, he had better not try to do so by an order late at night.
10.56 pm
Mr. Robert McCrindle: My constituency interest is considerably less acute than that of my hon. Friend the Member for Saffron Walden (Mr. Haselhurst)—
Mr. Bowen Wells: And that of his hon. Friend the Member for Hertford and Stortford.
Mr. McCrindle: —and no doubt that of my hon. Friend the Member for Hertford and Stortford (Mr. Wells). The House will know that in the northern parts of my constituency a good deal of apprehension has been expressed about the prospective development of Stansted. Indeed, if one is honest, one has to say that the dissipation of that apprehension is a relatively slow process.
I seek the indulgence of the House for a brief period to express my approval of the order, but also to express some concern about the likely progress of this matter as we begin to move towards the true expansion of Stansted airport.
I approve of the order for two reasons. First, it confirms Government policy on the expansion of Stansted. Secondly, and more important, it reminds us that Stansted is not, and has no prospect of becoming in the immediate future, the full-blown, third London airport, for which many wished and for which pressure continues to exist.
I can say with some certainty that most of my constituents principally concerned with Stansted are coming to terms with some expansion, perhaps of the order proposed this evening, but the quickest way to recreate their suspicion and concern would be to move too quickly. Therefore, I draw to the attention of the House the proposals of a pressure group, the National Policy for Britain's Airports. It is perfectly understandable that this pressure group, comprising as it does local authorities which tend to repose particularly in areas immediately around Heathrow and Gatwick airports, should take the view that Stansted is the principal airport for the expansion of traffic in the London area. It is not expansion of the order that we are considering this evening, nor expansion up to 15 million, which would be the second

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tranche of what may be called existing Government policy, but expansion to enable Stansted to handle 25 million passengers by the turn of the century.
I think that it would be appropriate for me to utter a word of warning to people such as the members of the National Policy for Britain's Airports, remembering, of course, how easy it is to suggest that airport expansion should take place in someone else's backyard, and that Stansted is not the only possible site for further runway expansion. I think that it would also be appropriate for me to remind that body that the maximum degree of expansion to which we are agreeing to this evening is 7 million to 8 million passengers. Even if we go forward to the second tranche, subject to parliamentary approval, we shall then be in the region of 15 million passengers. To envisage the possibility of 25 million to 30 million passengers is to contemplate airport developments around London to an extent that the Government have not yet undertaken. It really would be wise for bodies such as the National Policy for Britain's Airports to bear that very firmly in mind.
It may be that by 1995 the runway capacity in the London area will be inadequate, and a good case can be made for assuming that that will be so, but to assume the enormous growth at Stansted to which our attention has recently been drawn, involving not only 25 million passengers per annum but a second terminal, and quite possibly a second runway, is way outside the range of existing Government policy. To assume that this would be the easy solution to the problem of the expansion of airports in the London area would be quite wrong.
I do not deny that additional runway capacity may well become necessary, but I wonder whether sufficient consideration has been given to the possibility that instead of immediately assuming that that means that we must have an additional runway at Gatwick, Stansted or Heathrow — recognising, of course, the difficulty at Gatwick — there might be an argument along the following lines. If air traffic control in the United States, particularly around the Chicago and Los Angeles airports, can have an interval between landings and take-offs considerably shorter than that necessary around the London airports, consideration should be given to whether the Civil Aviation Authority could, with perfect safety, be persuaded to approve of rather more landings and take-offs at these London airports, so as to prolong the period at the end of which no doubt we would have to consider the possibility of further runway capacity around the London area.
It seems to me that those are considerations that should at least be given some thought, and I hope that the Minister will be prepared to turn his attention to that and possibly even say something about it when he responds to the debate this evening.
In essence, I rise this evening to express approval of the gradual expansion of Stansted. I have always accepted that there is a case for such expansion, but I believe that to go too far and too fast would be to risk reversing the growing approval, or at least acceptance, of this development, which I sense is now the state of play in the area immediately around Stansted.
I would very much welcome the development of more scheduled services from Stansted. If we are to have greater utilisation of that airport, I should like to think that many
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of my constituents would be able to use scheduled services from Stansted when travelling on business or otherwise, rather than, as is necessary at the moment, have to go to Heathrow or Gatwick. I am bound to say, however, that so far there is singularly little indication that scheduled services are developing at Stansted to anything like the degree that some of us might wish. I recognise that perhaps the most likely immediate use of Stansted is increasingly for charters. This may be necessitated by the growing difficulty of finding spots for charter airlines at Gatwick.
For whatever reason Stansted is expanded, I believe that there has to be a recognition of the fact that we can move only as far and as fast as will enable us to take local opinion with us. To go at this stage much beyond the proposal that is before the House in the order would he, in my opinion, to risk once again building up that state of opposition which my hon. Friends the Members for Saffron Walden and for Hertford and Stortford will readily recall was one of the principal difficulties during the many years in which Stansted was a major heartache for all three of us in relation to our constituency opinion.
The order is acceptable in that it is a reaffirmation of Government policy as we know it to be. If we can adhere to that parameter, we can carry public opinion with us. However, if the Government were tempted to go further and faster, we could open up the opposition which it has taken many of us a good number of years to play down, at least to some degree. I hope that my hon. Friend the Minister will say that the order sets out the extent to which we are able and interested in proceeding at present, and that if we plan to proceed further as time passes that movement will be subject to the procedures within the House as laid down when the Government's policy on Stansted was intimated some time ago.
11.6 pm
Mr. Bowen Wells: I welcome the order because it keeps a promise that the Government made to those who live around Stansted to limit the number of passengers who use the airport to 8 million per annum. It is, as my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) has said, a feeble instrument, especially when it falls to be considered in an hour and a half's debate after 10 o'clock. I ask the Minister for an undertaking that any future increase of the limit will receive a full-scale debate in the House in prime time. That would be in line with the nature of the promise that the Minister and the Government gave to those whom I represent. Anything less would be a subterfuge, because the promise was that the Government would limit the number of passengers using Stansted to 8 million a year in the first phase, and that that phase would not be exceeded until and unless the House had given its approval. In my view that promise would be fulfilled only in the light of a full debate. That would give the opportunity for those who represent other airport areas, including Manchester, to raise the contentious argument why Stansted should be used for chartered aircraft. There is no reason why chartered aircraft movements could not take place at Birmingham, Manchester or Scottish airports. There is no need to fill Stansted with such movements.
I remind the Minister of other promises that have been given to the House on the expansion of Stansted. First, the

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Government undertook that there would be no cross-subsidisation of Stansted by other London airports such as Heathrow and Gatwick. It seems that the promise has not yet been fulfilled because cross-subsidisation can take place under the umbrella of the British Airports Authority, which is to be privatised in July. In other words, Stansted will continue to lose money for many years hence. I am not certain that it will be making money even when it has 8 million passengers per annum. When it makes losses, they will have to be met by the profits declared by the authority's umbrella holding company. Thus cross-subsidisation will, in my view, be taking place. I should like an assurance from my hon. Friend the Minister that he will fulfill the Government's promise by some means.
We in Bishop Stortford have been promised that the Minister will limit the number of houses generated by the airport's expansion to 8 million passengers per annum to a proportion of that which was forecast in the public inquiry, which preceded the announcement of the Government's policy. Already Bishop Stortford has received applications from developers for more than 15,000 houses, which would double the size of the town within months of the new policy outlined by the Government. We are having extreme difficulty in resisting the pressure for development. Indeed, the Department of Environment is considering the means by which the Government will be enabled to fulfil their promise of a green belt round Bishop Stortford. That is the only means by which we could control the housing development resulting from the expansion in this order. So there are two more promises which I am looking to the Government to fulfil in the near future.
I am grateful that the Government have kept their pledge. I pay tribute to my hon. Friend the Member for Saffron Walden, who has put much effort into making certain that the Government did keep their promise both in the Civil Aviation Bill that did not become law and in the Airports Act 1986. So I ask the Minister to ensure that his colleagues address these difficult questions, continue to fulfil the promises they have made and honour their good faith to the people of Bishop Stortford and my constituency.
11.11 pm
Mr. Alistair Burt: This is a comparatively small country. Consequently, the activities of Stansted or any other south-eastern airport have an impact far beyond their own immediate environment. That is why the development and growth of Stansted up to and including this order have been of interest to, and have led to controversy for, northern Members and their constituents. My constituency of Bury, North is no exception.
I speak, therefore, as a man of Manchester airport, proud, like colleagues on both sides of the House, of the achievements of that airport over the past few years in enormous growth, more routes and more facilities. We have just seen the completion of a marvellous new hotel and the airport has a continually growing number of passengers. We all pay tribute to the excellent management of Mr. Gill Thompson and his team who perform such wonderful feats against a difficult and restrictive background such as the nonsense of international air travel, hedged around as it is by so many agreements, preventing the free commercial enterprise and development of airports and of airlines and their routes.
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What effect, therefore, do restrictions and limitations on air traffic movements have beyond Stansted for airports such as Manchester? In so far as air traffic is geographically mobile, the limit at Stansted is to be welcomed by all who support regional airports, including Manchester. There is some such air traffic, but not much. Of much greater significance is the Government's responsible and supportive attitude to regional airports summed up in the most recent White Paper, about which Mr. Gill Thompson said that it put regional airport development policy where it should have been under the Labour Government when they published their White Paper. The order stems specifically from that policy. Therefore, the north will be grateful to the extent that its case has been recognised. To the extent that the limit acknowledges that, its voice has been heard.
But much more remains to be done, I caution the Minister that Manchester continues to watch carefully Stansted's growth and the performance of the Government and BAA. I said earlier that there was some mobility in air traffic movement, but not much. Most of the mobility is exercised by my poor constituents who have to climb into cars or buses to travel to different parts of the country to get flights that they would like to get from Manchester. That is the mobility that concerns them most. We used to see much more of that than we do today. The developments at Manchester under the general umbrella of the Government's regional policy have helped to improve the position. We are all most grateful for that.
That will change, not because of any relationship with the Government but because of the changes that are already taking place in the north. I believe that people will see the south-east for what it is—over-congested, overdeveloped and over-priced—and will realise that there is more to the north of England than they ever thought. As they move their businesses north, they will find a perfect vehicle for their international transactions on their doorstep, and in Manchester airport they will find the place that they need to help them to expand their businesses further. Those factors will determine the growth of regional airports in the future. I hope that we will find that the fears of Conservative Members about the expansion of Stansted and future orders will not need to be realised.
Mr. Alfred Morris: The hon. Member has spoken with high regard for Manchester airport. Does he not agree that the essential point is that the Government, by allowing a massive expansion of Stansted airport, are choosing the prosperous south-east against the claims of other regions, particularly those of the north-west?
Mr. Burt: I do not accept the hon. Gentleman's argument. As I mentioned earlier, there is some geographically mobile air transport, but generally not very much. I do not believe that the argument that the southeast is suffering from a lack of air capacity and that therefore Stansted should not have been developed because traffic would have moved elsewhere outweighs the arguments for Stansted.
Our difficulty in the north is that at the moment many people want their businesses located in the south and need the extra air capacity of the south. Were that not so, it would please the right hon. Member for Manchester, Wythenshawe (Mr. Morris) and myself, but it is a fact of

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life and to have denied them that legitimate expansion and to have tried to hope or pretend that air traffic would have come to Manchester would be wrong.
I know that my hon. Friends are anxious to proclaim that we should tell people about the advantages of the north so that there will be a natural growth. As I was saying before the right hon. Gentleman intervened, in future, that natural growth will be stimulated by what is happening in the north of England. Thus, the fears of my hon. Friends about the expansion of Stansted and the possibility of orders coming to the south and raising air traffic movements will not be realised; the north will have grown sufficiently to counter any thought that Stansted must develop over-much. The answer to the problems of the north lies not in what is happening elsewhere but in a genuine boost to what is occurring in the north and a determination to tell people about it.
The future of Manchester airport is bright, not because of the Government or any control but because it is the right place and it will develop at the right time with the right people at the helm.
11.18 pm
Mr. David Mitchell: The hon. Member for West Bromwich, East (Mr. Snape) asked me about the extent of consultation. In addition to the Civil Aviation Authority and the airport operators concerned, the Secretary of State consulted all aircraft operators that are presently flying out of Stansted and all the local authorities that are affected by the development of Stansted. Altogether, some 31 bodies were consulted.
The hon. Member for West Bromwich, East seemed attracted by the argument that we should seek to force users to go further north by imposing an artificially low limitation. I shall come back to that argument, if that is what the hon. Gentleman was trying to say, because I do not believe that it is in the interests of Manchester or anywhere else that operators should be driven there rather than attracted.
Mr. Snape: That is not what I was implying. I agree whole-heartedly that operators should be attracted rather than driven to airports such as Manchester or Birmingham. I was seeking to make a point that was made rather effectively by the hon. Member for Bury, North (Mr. Burt) which is that all too often, provincial passengers are driven to London because of the Government's general airports policy. I was seeking to redress that balance. I also made a point about consultation, which did not refer to operators of provincial airports. I hope that, in the spirit in which I made my speech, the Minister and his Department will give some consideration to seeing that those authorities are consulted in future.
Mr. Mitchell: The hon. Gentleman is making a valid point when he speaks about the extent of consultation. It should stretch somewhat more widely and that is a fact that I have taken on board.
The hon. Gentleman also asked about not including other movements than passengers; this point was made rather more extensively by my hon. Friend the Member for Saffron Walden (Mr. Haselhurst). I will reply to that point when I deal with his speech.
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The hon. Member for Orkney and Shetland (Mr. Wallace) asked whether one of our domestic airlines would be based at Stansted, and whether this was desirable. I understand that Air UK is developing there, and I hope that it will be successful in doing so. He also asked me what percentage of air traffic movements were domestic flights. The figure is approximately 10 per cent. The Government showed their belief in regional aviation when they decided to reject the CAA advice last year to displace some domestic regional flights from Heathrow, including the Inverness route. In calculating the limit, we took account of the growth of domestic regional services and we found the limit of 78,000 insensitive to especially rapid growth in such services. I hope that I have reassured the hon. Gentleman.
The right hon. Member for Manchester, Wythenshawe (Mr. Morris) made a number of interjections, and I thought, if he will forgive me for saying so, that he was being slightly mischievous in suggesting that there was a plan to put in a 25 million passenger movement per annum limitation before long. The fact is that there is a 15 million passengers per annum limitation and we should recognise that.
Mr. Alfred Morris: I appreciate that there is a 15 million passengers a year limitation. Is it not the ultimate objective to go to 25 million passengers a year?
Mr. Mitchell: Such things are so far off that I doubt whether we shall be sitting across the Chamber arguing the toss when they become reality. It is not realistic to try to forecast that far ahead at what point there will be any need to exceed even the 8 million passengers that we expect to get from the 78,000 ATMs limitation. We then get the further stage of limitation imposed by the initial planning consent for 15 million passengers a year. The right hon. Gentleman is, it is not wholly unreasonable to say, being a bit mischievous.
Mr. Alfred Morris: According to the inspector's report is it not totally reasonable to suspect that the ultimate will be 25 million passengers a year?
Mr. Mitchell: I believe that it is unreasonable for the right hon. Gentleman to talk about the ultimate when we are talking today about a limitation of 7 million to 8 million passengers and the prospect, in the far future, of a total limitation of 15 million. The right hon. Gentleman and I will be older and have greyer hair before that latter limitation is reached.
My hon. Friend the Member for Manchester, Withington (Mr. Silvester) called for wider consultation. I believe that that is a valid point, and we shall take it on board. My hon. Friend recorded the extent of Government direct encouragement to regional airports, especially Manchester. It may be helpful if I demonstrate the validity of that argument.
Since 1979, the Government have authorised no less than £220 million of capital expenditure at local authority airports. That should be compared with the previous Labour Government's authorisation of £16 million. The contrast between those figures gives a pretty good definition of the extent to which this Government have supported the regional airports when compared to the support offered by the previous Labour Government. My hon. Friend asked whether this order is unique in that it gives the House of Commons an on-going control. I understand that my hon. Friend's assumption is correct.

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My hon. Friend the Member for Bury, North recognised that the Government have remained true to their support for the regional airports. The growth of Manchester international airport is a success story. Manchester is attracting more traffic because of its location and its services. Those features, rather than the refusal to sanction growth elsewhere, are the determinants of growth.
My hon. Friend the Member for Hertford and Stortford (Mr. Wells) supported the request made by my hon. Friend the Member for Saffron Walden for a full debate if there is any change in the position and there comes a point when we move nearer the figure of 15 million passengers per year; consent for that figure has initially been given. The time for debates in the House is a matter for the Leader of the House and the usual channels. I am sure that, in years hence, my hon. Friend the Member for Hertford and Stortford will be sitting in his place at Business questions—perhaps a little older and with less hair—to ask the Leader of the House to ensure that he gets the time that he want for a debate.
My hon. Friend the Member for Hertford and Stortford asked for an assurance that the no-subsidisation undertaking will he carried out. Cross-subsidy is not entirely outlawed. Stansted, though a sound business in the long term, is expected to make losses in the early stages of its capital development parallel to the regional airports. The key point is that the Civil Aviation Authority has powers under the Airports Act 1986 to prevent any cross-subsidy leading to pricing policies that harm or are intended to harm another airport's business—predators pricing. In addition, the accounts conditions applying to British Airports Authority airports under the Act require any type of cross-subsidy to be made transparent in the airport's company accounts.
Mr. Snape: The Minister will be aware that what he has just said has particular significance for airport development. In some ways his remarks conflict with the assurances that were given during the passage of the Airports Act 1986. Although it is rather late in the day to reconsider this matter, we, and I suspect some Conservative Members, will wish to study carefully the Minister's remarks tonight to judge whether they equate or conflict with the specific pledges given by Ministers during the passage of the Airports Act.
Mr. Mitchell: I can assure the hon. Gentleman that I phrased my remarks carefully. He will find that there is no conflict between what I have said and what my colleagues have said at the appropriate times.
My hon. Friend the Member for Hertford and Stortford raised the matter of housing. I understand his point, but it is more a matter for the planning authorities who have control over these matters than it is for the Department of Transport. My hon. Friend the Member for Saffron Walden welcomed the instrument and recognised that it was the fulfilment of a Government promise. He asked me a number of penetrating questions and I shall do my best to answer them.
First, my hon. Friend asked how it was that at Gatwick there were 102,000 air traffic movements to provide for 7 million to 8 million passengers a year, while at Stansted the same number of passengers appear to be provided for by only 78,000 air traffic movements. He asked if I could explain that quite remarkable difference, and I can. At the
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time when Gatwick was developing some years ago, aircraft were much smaller than they are now. Therefore, more aircraft were required to carry the same number of passengers. The larger aircraft in service today compared to the aircraft in use at the opening of Gatwick are a major reason for the difference. At Stansted, more passengers can be carried per aircraft.
The other significant factor is that there was a helicopter link between Gatwick and Heathrow. That helicopter counted as an air traffic movement, but it might have carried only four or five people at a time. Therefore, it accounted for a significant number of air traffic movements for very few people. I hope that that clarification helps my hon. Friend.
My hon. Friend also asked me what about what would happen if, during the course of a year, it suddenly appeared that the number of air traffic movements will exceed the limitation before the year was out. In that case I am quite sure that I or my successors in the Department of Transport will find the operator from Stansted knocking on the door and asking for parliamentary time for the passage of an order similar to the one that we are debating.
My hon. Friend asked whether the exclusion of general aviation would leave a big loophole in the system. I can tell him that that will not happen. Last year there were 4,337 all-cargo movements at Stansted, including mail flights, but of those only 584, or less than 14 per cent.. were jet aircraft. The vast majcrity. over 86 per cent., were small and relatively quiet aircraft. Therefore, he need not feel unduly worried about that point. I give him the undertaking that I will, as he asked, keep this matter under review.
My hon. Friend asked about noise limitation. In the general sense, noise standards have recently been considerably developed by the International Civil Aviation Organisation, in which the United Kingdom plays a leading role. From 1 January 1986, British registered subsonic jets unable to meet basic standards, that is to say, non-noise-certified aircraft, have been banned from United Kingdom airports. From 1 January 1988, foreign registered subsonic jets unable to meet the basic noise standards will also be banned. That means that the noisiest aircraft will not be around; that will be a great relief to people living in the vicinity of our airports.
My hon. Friend's next question was about insulation. He is perceptively feeling around the area of ways in which his constituents may be affected by the increasing use of the airport. A noise insulation grant scheme will he in place by the time the passenger throughput reaches 2 million per year, and that is a long way down on the limitation that we have before us. Noise limits will be fixed for aircraft departing by clay and by night, the noise level standards for night departures will be lower and the noise levels will be monitored. The new night restrictions for Stansted will reflect the outcome of the present review of night restrictions at Heathrow and Gatwick, taking into account local circumstances.
Hon. Members asked about a full day's debate, should a revision of this instrument be necessary. My answer must be the answer I gave earlier to another question: that hon. Members are likely to be a little greyer, perhaps a lot greyer, by the time that situation arises.
Mr. Snape: If greyness of hair is any criterion in these matters, may I ask the Minister to say how many of these instruments he has dealt with over the years?
Mr. Mitchell: The hon. Gentleman need not feel any anxiety in that direction. Perhaps a little thinning may be the cause of his concern.
My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) raised a number of wider and important issues about the distribution of scheduled services. I will draw his comments to the attention of the Under-Secretary with responsibility for aviation and ask him to write to my hon. Friend on the subject.
I agree strongly with my hon. Friend about the need to carry local opinion, and I trust that the order succeeds in doing that. It fulfils promises made to the people in the Stansted area to impose a strict limit, and I hope that my hon. Friend will feel content about that.
We have sought to fulfil the undertakings and promises given at earlier stages when this matter was very controversial, and we have done that in two ways. The first is by a condition in the planning consent that the terminal should be of such a size that it could handle only 7 million to 8 million passengers a year. The second is by the ATM limit, as a further reassurance to local residents and to the House. For those reasons, I hope the House will now feel able to agree to the order.
Question put and agreed to,
Resolved,
That the draft Stansted Airport Aircraft Movement Limit Order 1987, which was laid before this House on 7th April, be approved.

PETITION

  Whales
  Lord James Douglas-Hamilton: I beg to present a petition for a worldwide limit on the number of whales being killed to prevent them from becoming extinct.
  The petition comes from nine and 10-year-old schoolchildren of Davidson's Mains primary school and it is the petition of Michael Williams on behalf of the school. It has been signed by 240 schoolchildren.
  They are horrified by the brutality associated with commercial whaling and feel that the present protection afforded to whales does not yet go far enough.
  This is a commendable cause, and I am sending copies of the petition to the ambassadors of Japan, the Soviet Union and Norway, so that they may give it serious consideration.
  I am glad to be associated with this enlightened conservationist campaign, which I wish every success.
  To lie upon the table.

Senior Colman Engineering Ltd., Cheshire
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ryder.]
Mr. Ken Eastham: I am grateful for this opportunity to refer to the Senior Colman Engineering company in Sale, Manchester, which is not a large engineering firm. While this dispute involves only 112 workers, those people are important, as is the issue involved. Indeed, the issue is as important as that facing any large factory, such as a Ford plant in the motor car industry.
First and foremost, I will explain my involvement. I am the secretary of the Amalgamated Engineering Union parliamentary A group. I have been requested by our national secretary and by the district committee to expose some of the disgraceful details appertaining to this district.
The dispute commenced on 16 January and it developed into a serious confrontation because of the sheer arrogance and unreasonableness of the company. Also, I should add, the company did not follow the agreed procedure that is laid down. The Government often tell workers to act responsibly but we very rarely hear them telling managements to act responsibly and to behave themselves in respect of the terms and conditions of their workers. It is interesting to be talking about industrial relations because I read a report in The Times dated 23 April about a speech by Lord Young on industrial relations in which it was said:
"the Government was on the right lines with its industrial relations policy …
He told a CBI conference in London that no Government could legislate good industrial relations into being but since 1980 there had been extensive consultation and a step-by-step approach towards a legal framework which, he said, was fair, realistic and suitable for both the economy and society.
Lord Young said proposals in the Green Paper 'Trade Unions and their Members' shared a common central theme: Promotion and protection of the democratic rights of trade unionists as Members of their trade unions."
This policy falls far short when we examine the circumstances of this dispute. All kinds of measures to control trade unions are advocated by Government Ministers but it is noticeable that there are no penalties when we experience what I term rotten companies. We often talk about training courses and I think that it would be money well spent if we introduced training courses for good company management, because it is recognised that there are failures in this area.
The dispute arose because the management victimised four workers. There was an immediate factory mass meeting. Arising from the meeting a secret ballot was taken at which 110 workers voted for immediate strike action and two workers voted against. The Government are supposed to favour secret ballots and responsible trade unions. I think the Minister would agree that this was an overwhelming determination that there was a grievance. An AEU official went to the company and appealed for some reasonableness and asked it to observe agreed procedures. But, following discussions, he finally registered a failure to agree.
There have been further attempts to conciliate in this matter and my right hon. Friend the Member for Salford, East (Mr. Orme), who is the chairman of the AEU parliamentary group, wrote two letters. He wrote to Senior Colman and the Paymaster General. From the management of Senior Colman there was a rather curt reply, little better than one paragraph, which said:
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"It was kind of you to write to offer your assistance in trying to bring about an end to the dispute in Sale. The matter is being handled by the local management and I have passed your letter on to them."
That is the concern and response from the management.
The Paymaster General also replied to my right hon. Friend. I shall take one or two brief extracts from the letter. He referred to the Advisory, Conciliation and Arbitration Service. He said:
"ACAS has been in touch with both parties and remains available to help them reach a settlement."
He went on to talk about jobcentres. I hope that the Minister will take note of one paragraph in which the Paymaster General said that Jobcentres
"must … be seen to be neutral … and must not take action that might make matters worse."
He went on to say that on 22 January the employer had informed the jobcentre that the strikers had been dismissed and that the AEU district secretary had informed the jobcentre that the dispute was declared official. The letter goes on to admit that a Mr. Yendley, the regional manager for the employment service in the north-west, decided only four days later, on 26 January, to resume advertisement of the vacancies.
It is our contention that the Manpower Services Commission should not in any way act on behalf of companies to recruit scab labour. I am sure that there was a contradiction when the Paymaster General said that jobcentres must remain neutral. If they were to remain neutral they would not have taken any part in the recruiting of labour.
I shall now deal with the real dirty work that has been carried out by the company. I think that hon. Members will say that it is practically beyond belief in the 20th century. Four of the strikers happen to be deaf and dumb. The management arrogantly proceeded to attempt to intimidate them. They gave an ultimatum by telephone to the homes of those four handicapped people saying that unless they returned to work within one hour they would be sacked. It also told them that because of their disability they would probably never work again. In addition to that there is a management scoundrel who visited a home to see the wife of one of the dear and dumb strikers while he was on picket duty.
It is obvious that the management was trying to use the handicap as a weapon. In view of all that, I think that the management representative is worse than a scroundel; he is nothing less than a management leper. What about equal opportunities for the handicapped? If those people had been black or women they would have been able to take proceedings, and lines would have been imposed on the company. It appears that because they are handicapped there are no penalties that can be imposed on the company.
My right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) reflected on that problem and said that he would try to introduce some legislation to encompass protection for such people. However, at the time the Government said that there was no need for any further legislation and that it was their belief that there should be a process of education and exhortation of the management to encourage it to behave in a responsible way. It has hardly been acting responsibly. It is obvious that we need legislation. In view of the management's conduct we should label all the products of Senior Colman Ltd. in Manchester with the words "industrial lepers",

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because that is what the firm and management are. They are prepared to go to any limit to intimidate the workers to go back to work.
It would be useful tonight for the Government to remind employers of some of their social responsibilities. I wonder how it is that companies from countries such as Japan can come over here and make a success of managing and co-operating with the work force, yet British employers—this employer is not isolated—can wreak havoc and go mad without any sanctions for pursuing ruthless policies. I ask the Minister whether he approves of this and whether the Government support it. I plead with the Minister to give an assurance that he will instruct the MSC not to interfere in a legitimate dispute which has arisen because of the sheer incompetence and arrogance of the management of this factory.
I ask the Minister to condemn the management for its conduct and to give a lead by requesting the company to go to ACAS. We, as trade unionists, encourage the workers to respond responsibly; to go to ACAS, get around the table and resolve this unnecessary and hurtful dispute which is a disgrace and is causing concern in the north-west. I assure the Minister that this dispute will not go away; it will fester for some time. The whole trade union movement in greater Manchester is appalled and up in arms about what is going on. The north-west is asking for some lead from the Minister. I appeal to the Minister to co-operate. If he will co-operate, we shall certainly co-operate in reaching a satisfactory resolution. I appeal to companies to introduce new thinking and new policies for resolving disputes between management and workers.
11.52 pm
Mr. Churchill rose—
Mr. Deputy Speaker (Sir Paul Dean): Does the hon. Gentleman have the agreement of the hon. Member for Manchester, Blackley (Mr. Eastham) to intervene in the debate?
Mr. Eastham: Yes.
Mr. Churchill: I am much obliged to the hon. Member for Manchester, Blackley (Mr. Eastham). The company in question is in my constituency. In this case, as in many others, there are two sides to the dispute. I am quoting from a document, which states:
"The factory became unionised three years ago and has maintained a stable workforce. The Company in its long history has never witnessed a strike. Never that is until now. It is with genuine regret that that record has now been blemished."
Mr. George Howarth: From what document is the hon. Gentleman quoting?
Mr. Churchill: I understand that it bears the stamp "AUEW Manchester".
My understanding is that the company decided that it was time to computerise its production records and, in consequence of that, it approached the senior shop stewards' committee and discussed its proposals for a new form of time sheet so that it would meet the requirements of the computer software. After several requests, the company dismissed four of its employees for misconduct — failure to comply with what it regarded as a
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reasonable instruction. Therefore, the employees went on strike and after three or four official warnings the strikers were dismissed.
Mr. Tony Lloyd: What was the instruction?
Mr. Churchill: The instruction was that they should complete the new time sheets instead of the old time sheets, not an onerous imposition. It is about time that the trade union movement, including that in the Manchester area, started living in the modern age of computers and working to co-operate with management to maximise production instead of objecting at every turn.
Mr. Lloyd rose—
Mr. Churchill: I am sorry, but I have been granted only a couple of minutes. The hon. Gentleman may catch your eye, Mr. Deputy Speaker.
The company then proceeded, having warned the strikers and given them official notice, to recruit a new labour force.
I do not accept the criticism of the hon. Member for Blackley of the MSC manager, Mr. Yendley —
Mr. Ron Brown: Will the hon. Gentleman give way?
Mr. Churchill: The hon. Member for Blackley had his full chance to deploy the union case. I would be obliged if the hon. Member for Edinburgh, Leith (Mr. Brown) would allow me to make what I hope will be only a brief intervention.
On 12 February the hon. Member for Blackley quoted a letter from the right hon. Member for Salford, East (Mr. Orme), which said that Mr. Yendley had been actively assisting the company—
Mr. George Howarth rose—
Mr. Churchill: The hon. Gentleman is not on the picket line now.
—in recruiting workers while an official dispute was taking place. However, my understanding is that once the dispute was made official no more recruiting took place. The union took a considerable time to make the dispute official and by that time the company had already recruited through the MSC.
Mr. Ron Brown rose—
Mr. Churchill: The hon. Member for Blackley referred to the four deaf and dumb employees, about whom great play has been made and who, it is said, were treated disgracefully. Let me quote from a letter from the mother of one of those deaf workers. I shall not identify her by name, but she said:
"I am writing on behalf of my son who is deaf…he left home at 6.45"—
this is once the strike had started and he wanted to attend the factory to keep his job—
"to pick up"—
his friend—
"on his motorbike to get to work but they could not get through. Thursday morning I got up at six o'clock to make him a flask of tea and a sandwich in case he couldn't get anything while at work. He left home at quarter to seven, as he said he was walking … but still didn't get in and was told to stop outside."
It is clear that at least that individual wanted to get to his place of work and it was the union picket that prevented him from doing so. When he was dismissed, the AUEW was responsible—[Interruption.]
Mr. Deputy Speaker: Order. There should be no sedentary interventions.
Mr. Churchill: The AUEW was responsible, and he did not lose his job of his own volition.
I hope that my hon. Friend the Minister, when he replies to the debate, will bear in mind that the account presented by the hon. Member for Blackley was very much an ex-parte affair. As he made clear, in the House he is a distinguished representative of the AUEW, and he is entitled to that. However, several members of the work force certainly wanted to attend for work, but were prevented from doing so by pickets from the hon. Gentleman's union.
12 midnight
The Parliamentary Under-Secretary of State for Employment (Mr. John Lee): We have perhaps had the liveliest debate of the day during this Adjournment debate. First let me congratulate the hon. Member for Manchester, Blackley (Mr. Eastham) on his speech and acknowledge the patently sincere and deeply felt concern which led to his wish that this matter sho:uld be debated in the House. We have also heard the comments of my hon. Friend the Member for Davyhulme (Mr. Churchill) who put the case for the other side of the dispute.
I must say straight away that it is, of course, always sad to see people lose their jobs — but in any individual situation the question whether to take industrial action is entirely a matter for the employees to decide. Holding a ballot before industrial action gives union members the opportunity to think about the possible consequences and decide for themselves whether they are willing to take the risks involved. Strikes invariably put jobs at risk—either immediately, as in this case, or as a result of the longer-term damage that they can do to the company concerned.
There may be some confusion over the question of immunity and the protective effect of a ballot before strike action. Let me try to clarify the point. The Trade Union Act 1984 made it a condition of immunity that before calling a strike or other industrial action, a trade union must obtain the support of its members through a secret and properly conducted ballot. Trade union immunities, however, protect those who persuade others to break their contracts. not those who, by going on strike, break their own contracts.
The law has never protected people's jobs when they breach their contracts by going on strike. In those circumstances, the employer has always had the right to regard the employment contract as terminated. However, it protects strikers against selective dismissal and victimisation. The basic principles of the legislation governing dismissal in a strike have remained unchanged since 1971. When statutory protection was first introduced — they are to allow the dismissal of all workers on strike, but to give protection to those selectively dismissed, and to those not re-engaged when others are. That is the position on unfair dismissal in relation to industrial disputes.
With regard to the conduct and resolution of disputes, it is not the Government's job to intervene in individual disputes, but rather to establish a sound legal framework in which employers and employees can shoulder their own responsibilities. The resolution of disputes is essentially a matter for employers and employees themselves, with the assistance, if they wish to have it, of the independent
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Advisory, Conciliation and Arbitration Service, which always stands ready to provide any help it can to the parties in any dispute. I understand that ACAS has been in touch with both parties in this dispute and remains available to help them reach a settlement. In addition, if any of the employees dismissed feel that they have a legitimate claim of unfair dismissal against their employer, they have the right to apply to an industrial tribunal—though it will, of course, be for the tribunal to interpret the law in each particular case.
I now want to consider the involvement of the Manpower Services Commission's jobcentres in recruitment for certain jobs at Senior Colman Ltd. following the dispute which I think is the central point of concern for the hon. Member for Blackley.
I think that it is important—
Mr. John Evans: Will the Minister answer one question? Will he confirm that my hon. Friend's point that 110 members voted in favour—
Mr. Deputy Speaker: Order. We cannot have two hon. Members on their feet at the same time.
Mr. Lee: With great respect, I am operating on a very tight deadline because I have given a proportion of my time to my hon. Friend the Member for Davyhulme. It was up to the hon. Member for Blackley to give his colleague the hon. Member for St. Helens, North (Mr. Evans) a proportion of his time. I shall use my time in my own way.
What happened in this case, I understand, is that Senior Colman Ltd. asked the jobcentre at Altrincham to service vacancies for the jobs of the four workers initially dismissed, and the employer told the jobcentre manager privately that there was a possibility that he might need her help to fill a further 106 vacancies if the rest of the work force did not respond to an ultimatum to return to work or be dismissed. On 22 January the employer told the jobcentre that those still on strike had been dismissed, and asked the jobcentre to fill the resulting vacancies.
Mr. George Howarth: Answer the question.
Mr. Lee: Perhaps when the hon. Member has been in the House a little longer he may understand how Adjournment debates are conducted.
MSC staff, following standing guidance, waited a few days to provide a cooling-off period and then sent about 140 people to the firm for interview, after warning them about the industrial dispute. After interviewing, about 90 were placed. On 28 January the employer informed the jobcentre that all vacancies were filled. Since then. the jobcentre has had no contact with the firm.
All the action taken by the jobcentre in question, and its regional management, was entirely in line with the tried and tested procedures that have governed the employment service's handling of job vacancies during a trade dispute for many years now. It may help if I explain what these procedures are, and what are the principles underlying them.
Jobcentres have a general duty to provide a service for employers and people looking for work. Under the Employment and Training Act 1973 the Manpower Services Commission is charged with an equal responsibility to employers and Job seekers. This means that it must be neutral in all matters relating to the provision of services. This stance must apply to industrial disputes. even though in practice it is difficult for the employment

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service to appear to all concerned to be acting in a neutral way. If jobcentres service vacancies for an establishment affected by a dispute, unions often take the view that help is being given to the employer. If jobcentres refrain from servicing these vacancies then employers may well complain that the jobcentre is supporting the employees.
The policy is therefore to treat such job vacancies as normally as possible, but with the important distinction that intending applicants are informed that a dispute is in progress so they can decide for themselves whether to apply for employment. If the vacancies have arisen directly because of a withdrawal of labour, action to fill the jobs may be suspended for two days, or longer in exceptional circumstances, to allow a cooling-off period to see whether the dispute may be resolved in the meantime and a confrontation avoided, and to make sure that there are real vacancies on offer rather than just the threat of dismissals as a negotiating ploy. This is exactly what happened with the Senior Colman vacancies at Altrincham jobcentre.
One very important aim of these carefully considered procedures is to try to ensure as far as possible that the Manpower Services Commission does nothing which could be regarded as exacerbating a dispute, or worsening industrial relations within the firm involved. Another
292
important concern is, of course, the practical question of personal risk to job seekers who apply for vacancies and have to cross picket lines. The procedures are designed with these factors very much in mind, and have been looked at again very recently to ensure that we, and the MSC, still regard them as the best way to deal with what can be very delicate situations.
I hope that what I have said will reassure the Member for Blackley that the procedures that the Manpower Services Commission puts into practice in these sorts of circumstances are long-standing, fair and sensible, and that they were operated reasonably in the case of this particular dispute at Senior Colman Ltd.
Let me sum up then what the jobcentre did and why it did it. It was notified of around 100 vacancies in a company where the employer was threatening to dismiss all those who were on strike. The jobcentre staff concerned, following their standing guidance, decided to take no action on the vacancies for a few days, during which ACAS was consulted as to the genuineness of the vacancies and the prospects for a settlement. When it became clear that there—
The Motion having been made after Ten o'clock and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at eight minutes past Twelve o'clock.

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  Capital Allocation (Lancashire)
  School Closures
  School Closures
  AIDS (Research)
  AIDS (Research)
  Fire Precautions
  Fire Precautions
  First-aid
  First-aid
  Tourism
  Tourism
  Dystrophic Epidermolysis Bullosa
  Dystrophic Epidermolysis Bullosa
  University Grants Committee
  University Grants Committee
  Radioactive Waste
  Radioactive Waste
  Education Support Grant
  Education Support Grant
  Technical and Vocational Education Initiative
  Technical and Vocational Education Initiative
SOCIAL SERVICES
  Cervical Screening
  Cervical Screening
  Mentally Ill and Mentally Handicapped People
  Mentally Ill and Mentally Handicapped People
  Hospital Construction
  Hospital Construction
  Nurses
  Nurses
  NHS (Pay)
  NHS (Pay)
  NHS (Staff)
  NHS (Staff)
  Doctors' Lists
  Doctors' Lists
  Nursing and Residential Homes
  Nursing and Residential Homes
  Drug Addicts
  Drug Addicts
  Waiting Lists
  Waiting Lists
  Junior Hospital Doctors
  Junior Hospital Doctors
  Dystrophic Epidermolysis Bullosa
  Dystrophic Epidermolysis Bullosa
  Pensioners
  Pensioners
  Chiropody
  Chiropody
  Familial Hyperlipidaemia
  Familial Hyperlipidaemia
  Sexually Transmitted Diseases
  Sexually Transmitted Diseases
  Mortality Statistics
  Mortality Statistics

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

Lord Plumb
Sir Charles Henry Plumb, Knight, having been created Baron Plumb, of Coleshill in the County of Warwickshire, for life—Was, in his robes, introduced between the Lord Bethell and the Lord Stodart of Leaston.

Nuclear Disarmament: Soviet Proposals
2.48 p.m.
Lord Hatch of Lusby: 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 was their response to the report of Secretary of State Shultz on Soviet proposals for nuclear disarmament in Europe.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, we are currently considering our response in consultation with our NATO partners.
Lord Hatch of Lusby: My Lords, will the noble Baroness give the Answer to the Question? What was the British Government's response at the time that Mr. Shultz met NATO governments following his visit to Moscow? Does the noble Baroness agree that the offer made by Mr. Gorbachev of the Soviet Union not only satisfied every condition that the West had laid down for removing nuclear armaments from Europe but went much further than NATO had previously requested?
Baroness Young: My Lords, I can assure the noble Lord that the visit to Moscow of my right honourable friend the Prime Minister confirmed to Mr. Gorbachev that we support the zero-zero option in Europe, though we should still prefer a global ban. That is conditional on agreement on vital details, including verification and short-range intermediate nuclear missiles. The main remaining areas of disagreement are over the Western right to match Soviet systems.
Lord Cledwyn of Penrhos: My Lords, the House has noted with great interest what the noble Baroness has said. Will she confirm that the proposals have been, and are being, discussed not only bilaterally but at WEU and in NATO itself? Will the noble Baroness be good enough to say when Her Majesty's Government think that a unified response can be expected? Can she also confirm that Her Majesty's Government's response will be a positive one?
Baroness Young: My Lords, I can confirm to the noble Lord, Lord Cledwyn, that, as he would expect, discussions are continuing among our NATO allies and partners. It is important that there should be cohesion in the West and that we should achieve the right answer. As I have already answered in part to the noble Lord, Lord Hatch of Lusby, the Soviet proposals to extend the zero option further down the scale to shorter-range missiles of approximately 300 to 600 miles are being studied by NATO at present. It seems clear that NATO's security will continue to require land-based nuclear weapons in Europe as part of our response to the Soviet Union's superiority in chemical and conventional forces. There is no question of our negotiating these weapons away.
Lord Gladwyn: My Lords, would the Government not agree that if they should accept, in principle, the proposed East-West deal on intermediate nuclear weapons, the risk, as suggested by some, of ultimately putting Western Europe at the mercy of the Russians is quite unreal, always supposing that the American army remains in Europe and that the West retains sufficient protected nuclear capability to attack both the Russians armies, when and if they invade, and the Soviet Union itself?
Baroness Young: My Lords, I think from what the noble Lord, Lord Gladwyn, has said that the points he makes are in many respects similar to the point I was making in answer to the earlier questions. I would only add that we hope that agreement can be reached in this area of arms control in the near future. If so, it will be an historic achievement for the western governments and for our own people. But it must be an agreement which enhances our security. We therefore attach great importance to a number of conditions, including, of course, verification.
Lord Mellish: My Lords, the noble Baroness will be aware that many of us—in fact, I am sure the whole House—will welcome the new efforts that have come from Mr. Gorbachev. We dream of the day when there will be no nuclear weapons of any kind anywhere in the world. But is it not a fact that there are two big problems facing Britain as a member of NATO? First, there is the whole question of the danger of short-range missiles. Unless these are completely and utterly eradicated there is no sensible meaning to "peace". Secondly, and most important, if one gets rid of all nuclear weapons, as we all pray will happen, one is left with a Russian superiority of something like three to one in conventional arms. What will be done about that?
Baroness Young: Yes, my Lords. the noble Lord Lord Mellish, makes a very important point both about conventional weapons and, of course, about chemical weapons, in which the Soviet Union has a clear superiority. That is why I said in the course of my remarks that there must be agreements on these matters as well.
Lord Kennet: My Lords, given that we are talking about the removal of American and Russian weapons from the soil of Europe, will the Government take an early opportunity, possibly tomorrow at the WEU, to

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work out a way in which West European countries can take part in these negotiations which affect their future existence and thereafter can take part in whatever verification machinery is set up to ensure the carrying out of the agreements which we all hope will be reached?
Baroness Young: My Lords, what is very important is that the cohesion of the alliance should be maintained throughout these negotiations and of course afterwards. On the specific point about the WEU, it has of course an important role in strengthening the European component of the US Atlantic alliance and will have a chance to discuss arms control issues.
Lord Jenkins of Putney: My Lords, is the noble Baroness aware that the Government's professed devotion to multilateral nuclear disarmament is not borne out by their reactions to this proposal? Is she further aware that if the public become convinced that the Government want no nuclear disarmament of any sort, under any circumstances, the consequences of that may well be that they lose the coming election?
A noble Lord: You must be joking.
Baroness Young: My Lords, the noble Lord, Lord Jenkins, will not be surprised to hear that I do not accept his statement. Nor, I think, would my noble friends accept what he has to say. We have made a very positive response to the proposals that have been made. What is, of course, very important is that the conclusions are right.
Lord Chalfont: My Lords, following upon the question of the noble Lord, Lord Jenkins, will the Government continue to point out in the discussions that if all nuclear weapons are, by these negotiations, removed from Europe, the only deterrent then to aggression will be strategic nuclear weapons? We shall therefore have returned to the dangerous doctrine of massive retaliation. I do not know whether that is what the nuclear disarmers want. Will the noble Baroness also assure the House that we shall stick to one of the basic principles of all arms control and disarmament negotiations, which is to treat nuclear weapons and conventional weapons together and in phase and not to concentrate on one or the other?
Baroness Young: Yes, my Lords. As always, the noble Lord, Lord Chalfont, makes very important points. I agree in particular about the importance of arms control both in conventional and in chemical weapons.
Lord Hatch of Lusby: My Lords, would the noble Baroness answer the first supplementary question which I asked? Is it the case that the Soviet offer more than satisfies every condition that has been put down by the West for the removal of nuclear weapons from Europe? Is she aware that this is the first time that the British Government have linked the removal of nuclear weapons to the balance of conventional weapons? Would it not be more sincere, if the Government believe in disarmament, for them now to be putting their whole weight behind the historic
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opportunity to abolish nuclear weapons throughout Western Europe rather than, as has been seen recently, the Prime Minister and her Government trying to obstruct even the United States' Administration in their response to the move that has been made unilaterally by the Soviet Union?
Baroness Young: Absolutely not, my Lords. My right honourable friend the Prime Minister has taken very seriously, as do the Government, the offer of Mr. Gorbachev, which, as I indicated in my first Answer, we are studying closely along with our NATO allies. As I should have thought the noble Lord, Lord Hatch, must be aware from the other points that have arisen during this Question, we need also to consider NATO's overall deterrence requirements in the light of the totality of the threat that faces us; that is to say, from conventional as well as from chemical and nuclear weapons.
Lord Irving of Dartford: My Lords, does the Minister accept that the right response in all matters of disarmament is to test the sincerity of Mr. Gorbachev and his willingness to change? The Prime Minister expressed a great deal of confidence in him when she was in Moscow and afterwards. While seeking safeguards, we must make sure that we do not allow the past to prevent us from building a constructive and peaceful future together.
Baroness Young: My Lords, I do not think that there is any doubt about that. The conversations between my right honourable friend the Prime Minister and Mr. Gorbachev were a very full and frank expression of views by both sides, each contributing to the task of building greater trust and confidence between our two countries and between the East and the West, which was in itself valuable. As I said earlier, we are taking the proposals that are before us very seriously indeed. It is of course for the Americans and the Russians to negotiate those matters. However, it is important that the cohesion of the allies remains and that we consult fully with our allies.
Lord Paget of Northampton: My Lords, does the Minister agree that if we were to accept those terms we should be accepting a position in which we placed ourselves totally at the mercy of Mr. Gorbachev's good will? That might turn out to be very fortunate. However, that is the situation. We have a very good army but we will have no thanks and no allies.
Baroness Young: Yes, my Lords. We have accepted the zero-zero option on longer-range intermediate nuclear weapons. The two matters which now concern us are verification and short-range weapons.

Sand Eel Stocks
3.4 p.m.
Viscount Massereene and Ferrard: My Lords, I beg leave to ask the first Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will take steps to prevent adverse effects on the

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population of sea birds and sea trout caused by the overharvesting of sand eels along the north and west coasts of Scotland.
The Minister of State, Scottish Office (Lord Glenarthur): My Lords, there is no evidence that the sand eel stocks to the north and west of Scotland are being overfished or that exploitation of the stocks is having an adverse effect on the natural predators of sand eels.
Viscount Massereene and Ferrard: My Lords, I thank my noble friend for that Answer. Is he aware that the sand eel is the staple food of the sea trout while he is in salt water? When the sea trout comes into fresh water in his migrations, which is usually three times within his lifetime, he is the poor man's salmon. The sea trout is a first cousin of the salmon but he is stronger pound for pound. Would not my noble friend agree that if there is overharvesting of the sand eel, as I believe there is, the sea trout will be in decline? If that decline continued, the tourist trade with regard to fishing would suffer badly since the sea trout is the pride of the freshwater angler. Is the Minister aware that there are many hundreds of fishing hotels which will suffer in that case?
Lord Glenarthur: My Lords, I certainly agree with my noble friend that we must do all that we can to preserve the stocks of sea trout. However, it is unlikely that the availability of marine food supplies such as sand eels is a major limiting factor in what is known as the recruitment of sea trout in this way, although there is some evidence that a shortage of sand eels could affect the rate of growth in adult sea trout. Perhaps I may explain to my noble friend that sea trout eat other things and are known as opportunistic feeders.
Baroness Nicol: My Lords, is the Minister aware that so far as I can discover DAFS has not done any research on the sand eel? There is a chance that we may do irreversible damage unless we can find out what its place is in the food chain. Does the Minister not feel that such research should be undertaken?
Lord Glenarthur: My Lords, I assure the noble Baroness that much research has been done and is now going on. We are continuing to monitor the sand eel population and the fisheries. Our scientists are further collaborating with sea bird research workers on factors regulating sea bird populations, which is the other part of my noble friend's Question.
Lord Kimball: My Lords, will my noble friend bear in mind that the major predator upon sand eels is the grey seal? That is a factor which should be taken into account when we consider the management of the exploding grey seal population around our coasts.
Lord Glenarthur: My Lords, I am sure that my noble friend is correct and I am sure that the scientists have taken that factor into account.
Baroness Nicol: My Lords, is the Minister also aware that sand eels are harvested, taken to Denmark and Norway, turned into pig food and sold back to this
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country at great cost? Does he not think that while research is going on some research into making better use of our resources should be carried out?
Lord Glenarthur: My Lords, I think that that is another question.

Salmon Farm Licensing
3.7 p.m.
Viscount Massereene and Ferrard: My Lords, I beg leave to ask the Second Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will ensure that the Crown Commissioners' Office, Edinburgh, in licensing salmon farms on the sea lochs of the western Highlands takes into account the suitability of sites of applicants or the existing netting rights.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, the Crown Estate Commissioners already take account of these questions. Under arrangements introduced last October the commissioners advertise all applications and consult directly with relevant interests before deciding whether to issue site leases.
Viscount Massereene and Ferrard: My Lords, I thank my noble friend for that Answer, which I had already guessed. Does he agree that it would save a lot of time in such hearings if the Crown Commissioners initiated research into the areas in which they give licences for sea cages? Does he further agree that they should carry out research into where salmon feed and the salmon routes into sea lochs, where they come in to spawn in the rivers? They should also carry out research into whether the foreshore has suitable places for jetties and sheds where such salmon farms can be serviced. The most important point—
Noble Lords: Question!
Viscount Massereene and Ferrard:—is pollution, which will spread disease. Where there are several thousand salmon in fish cages which are being fed several tonnes of food daily, pollution and disease will result.
Lord Brabazon of Tara: My Lords, since last October the commissioners have consulted on each application. As well as consulting local people and depositing notices in local post offices, they have also consulted the Department of Agriculture and Fisheries for Scotland, the Department of Transport, local authorities, the Crofters Commission, the National Farmers Union of Scotland and Crown tenants who may be affected. I am sure that the points which my noble friend has made will be taken into account.
Lord Taylor of Gryfe: My Lords, will the Minister make some assessment of the value of this industry to the Scottish economy? Will he keep in mind that it is bringing the consumption of salmon within the reach of many more people than could previously afford to buy it?
Lord Brabazon of Tara: My Lords, the noble Lord is absolutely right. This type of business is of immense value to the Scottish economy, with an expected production of 16,000 tonnes this year, going up to 25,000 tonnes next year, with values of £60 million and £100 million respectively. In addition, it provides direct jobs for over 1,100 people. That does not include jobs in the service industries such as processing and feedstuffs, which are ancillary. It is very important to the Scottish economy.
Lord Mowbray and Stourton: My Lords, will my noble friend clarify whether those figures related totally to fish farm salmon or did they relate to wild salmon as well?
Lord Brabazon of Tara: My Lords, the figures related to salmon farming.
Lord Burton: My Lords, is my noble friend aware that, although the various bodies which he has mentioned must be consulted, they have very little power and there is much apprehension among fishery boards and pollution boards, as well as among other people, at the proliferation of salmon farming?
Lord Brabazon of Tara: My Lords, since October 1986, 100 applications have been received. By 9th April 1987, 30 applications had been approved or partly approved, 20 applications were unsuccessful and 14 had been withdrawn. I therefore think that the point which my noble friend has made is being taken into consideration.
Viscount Massereene and Ferrard: My Lords, I should like to ask my noble friend whether the Crown Commissioners when granting these licences take into account for research purposes whether old established salmon rights in the sea are lost?
Lord Brabazon of Tara: My Lords, the right to fish for salmon is a separate heritable right under Scottish law. The right of the Crown as owner of the sea bed exists concurrently with the right to fish for salmon in the waters above. I hope that that answers my noble friend's point.
Lord Elwyn-Jones: My Lords, have the salmon not had a good run by now?

Betting Industry: Future
3.10 p.m.
Lord Dean of Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have received any representations expressing concern over the future of the betting industry.
The Minister of State, Home Office (The Earl of Caithness): Yes, my Lords, we have received a number of representations about satellite television in betting offices, a levy for greyhound racing, Sunday racing and the on-course betting duty.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that Answer. However, the noble Earl must be aware of the grave concern which has been shown by a series of questions from all corners of another place which expressed deep concern at the formation of satellite information services which have been set up by the four largest bookmaking companies in the country. This has been almost to the exclusion of the independent and longstanding information services. Is the Minister aware that this can eventually develop into a monopoly situation with very grave detrimental effects on the independence of the betting industry and the punters, certainly in the greyhound sector?
The Earl of Caithness: My Lords, not only are the Government aware of the fears expressed by the noble Lord, but indeed the Office of Fair Trading is considering that very matter at the moment. Therefore it would be wrong for me to comment further.
Lord Dean of Beswick: My Lords, as the problem has been with the Office of Fair Trading for some time, a decision should be reached rather hurriedly in order to deal with the situation. Can the Minister say how far the Office of Fair Trading have progressed in dealing with this situation?
The Earl of Caithness: My Lords, we hope that the decision will be made soon.
Lord Wyatt of Weeford: My Lords, perhaps I may declare an interest. I am chairman of the Tote and a director of Satellite Information Services. Is the Minister aware that there is by no means a monopoly situation in that we do not have an exclusive contract with the racecourse association, and Extel or anyone else is at liberty to apply for the contract if they wish to do so. Secondly, the big four bookmakers do not dominate the SIS. First of all, the Tote has a 5 per cent. vote, and they have less than 50 per cent. of the total shareholding. The other shares are widely dispersed. Is the Minister aware that the whole of the horse racing industry is delighted with the arrangements that are being made because they are going to get a bonanza out of it? Is he also aware that as far as concerns the Office of Fair Trading it is a small technical matter, and the reason that we have not yet had an answer is that we are told that the officer dealing with it is ill.
The Earl of Caithness: My Lords, I was aware, as was my right honourable friend the Home Secretary, of the points the noble Lord has made, and I look forward to debating with him at greater length when we come to the Unstarred Question which will be on the Order Paper shortly.
Lord Mishcon: My Lords, did the Minister hear his noble friend Lord Glenarthur refer to sea trout as "opportunistic feeders"? Would he care to adopt that definition as regards the betting industry?

Business
3.13 p.m.
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the

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Report stage of the Abolition of Domestic Rates Etc. (Scotland) Bill will be adjourned at approximately 7.30 p.m. for approximately one hour and that during this adjournment the Second Reading of the Irish Sailors and Soldiers Land Trust Bill and the Second Reading of the Register of Sasines Bill will be taken.

Conveyancing Services Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to introduce a Bill to consolidate part of Section 22 of the Solicitors Act 1974, Part II of the Administration of Justice Act 1985 and Section 124 of, and Schedule 21 to, the Building Societies Act 1986. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

Business of the House
The Lord President of the Council (Viscount Whitelaw): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord McIntosh of Haringey set down for 6th May shall be limited to 5 hours and that Standing Order No. 35 and paragraphs 10, 11, 12 and 13 of the Rules for the Conduct of Short Debates shall apply to the debate with the substitution of "5 hours" for "2½ hours" and 25 minutes" for "20 minutes".—(Viscount Whitelaw.)
On Question, Motion agreed to.

Housing (Scotland) Bill [H.L.]
The Lord Advocate (Lord Cameron of Lochbroom): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill. In so doing, I should apologise to the House for not having tabled a Motion to discharge the order of recommitment which, as no amendments have been tabled, would have saved the necessity of the Committee stage altogether.
Moved, That the House do now resolve itself into Committee.—(Lord Cameron of Lochbroom.)
On Question, Motion agreed to.
House in Committee accordingly.
The Chairman of Committees (Lord Aberdare): My Lords, I understand that no amendments have been put down to this Bill this afternoon. With the agreement of the Committee therefore, I shall now report the Bill to the House without amendment.
House resumed: Bill reported without amendment; Report received.

Abolition of Domestic Rates Etc. (Scotland) Bill
3.17 p.m.
Report received.
Clause 1 [Abolition of domestic rates]:
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 1:
Page 1, line 7, at beginning insert ("Provided that similar legislation has been enacted for England and Wales,").
The noble Lord said: I beg to move Amendment No. 1. We are now at the penultimate stage of this Bill. As it has gone through its Second Reading and the laborious path through Committee stage, one of the things that we have certainly discovered is the complexity of the Bill and how radical it is. Indeed, there were some misgivings about many of the provisions, especially in relation to the whole question of registration, administration and collection, and there is grave danger of there being more than a slight element of chaos in respect of something that has been described by the Government as the most radical restructuring of local government finance this century.
I have the glossy magazine here. If this had been prepared by a local authority I can imagine that many noble Lords would be demanding that the councillors be surcharged in respect of the cost of it, for the sheer propaganda that is in it. There are approximately 126 pages, 17 of which relate to Scotland particularly and specifically. Yet, here we have the three Secretaries of State for the Environment, Wales and Scotland—two of whom are relatively new, Mr. Kenneth Baker quickly moved from the Department of the Environment to Education—and I bet he was glad of that. Mr. George Younger was quickly removed to the Ministry of Defence, having sustained the heat and the trials and tribulations of a Tory Party conference in Perth in May 1985. Mr. Malcolm Rifkind arrived in time just to sign his name to this report.
The report is signed by three people, but it does not apply purely to Scotland: Kenneth Baker, Secretary of State for the Environment, Nicholas Edwards, Secretary of State for Wales, and Malcolm Rifkind, Secretary of State for Scotland. However, the Bill applies only to Scotland. It makes fundamental changes which will affect Scotland alone from 1st April 1989 until such time as we eventually get legislation for England and Wales, which we are assured is coming.
However, when we read what is said about England and Wales, we get a certain measure of the time-scale and this gap when Scotland will stand alone. First there has to be revaluation in England and Wales in 1990. Let us hope that all goes well and that the same kind of outburst of anger does not take place in England and Wales as certainly took place in Scotland at Perth as a result of the revaluation for Scotland in 1985. That must then be followed by a similar Bill and also legislation in respect of the changes of valuation to bring the countries together, because the present Bill is for Scotland and deals only with domestic rates.
Is it fair that this Bill should be visited upon Scotland, bearing in mind what it really means? It will take from 1989 when we start paying these community charges in Scotland until, I suggest, 1995

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at the earliest before this Bill is operating throughout the whole country and we get some measure of equality, because even when we have the legislation we must allow time—as this Bill is doing from now until 1st April 1989—before it comes into force. Therefore, I ask again, is it right that it should be visited upon Scotland?
There is no pledge to do this. In fact, the only pledge in the Tory Party manifesto in regard to valuation in Scotland was this:
"We will take steps to bring the Scottish and English valuation systems more into line to prevent anomalies occurring. We will make the valuation system more responsive to changing economic circumstances".
There is no doubt that we have been more responsive in Scotland because we have always had our revaluations after five years, except for a hiccup in 1983 when revaluation was put off because of a general election. After considerable bickering and incompetence by the Scottish Office on whether to have full revaluation, no revaluation or revaluation of non-domestic subjects only, they decided to go for revaluation.
I am happy so see the noble Lord, Lord Goold, in the Chamber. I hope he will contribute to our discussions in this respect. He was one of the people who were very worried. Indeed, he was chairman of the Tory Party in Scotland at the time of this revaluation. He received his own rates bill and I remember that his rates had increased by 33 per cent. However, 21 per cent. of that was due to the revaluation and had nothing at all to do with the local authority. The noble Lord will remember how the Secretary of State ran around. He had him coming down to London and going back to Scotland. First he put an extra threepence and then an extra fivepence on to domestic rates to ease matters and then he introduced a new rebate scheme for those whose rates had gone up by 300 per cent. They screwed £50 million out of the Treasury and spent only £29 million of it.
There is no mandate for this Bill except the fear of political consequences in Scotland. Your Lordships will remember what the Secretary of State said at the Tory Party conference in Perth. It is not good enough, he said, and we cannot do nothing because it will have appalling political consequences. That is why we have this Bill£because of politics. I think it was Mrs. Anna McCurley, the Member for Renfrew, who said that if they did not do something the Tory Party in Scotland would be reduced from 22 seats to two. At the moment they have 22 seats out of 72. Therefore, the Tory Party does not have a mandate in respect of a great general election victory in Scotland. It was facing political disaster and therefore brought in this Bill.
Your Lordships will remember what the honourable Gentleman, Mr. Ancram, was saying before that conference. He said they would have to continue with domestic rates. Then came the conference in which they said that they did not know what they would do but they would have to do something. On 26th May he said, "We are determined to find an agreed solution", but 80 per cent. of the people in Scotland are saying no to the solution, so there is no agreement. That makes a mockery of democracy.
The Tory Party in Scotland is depending on an English majority to do something in Scotland which it will not do for England and Wales. Why not, if the scheme is so good? I remember the noble Lord, Lord Boyd-Carpenter, tying us in knots trying to justify why this should be done for Scotland and then discovering, in relation to the armed forces, that to have any sort of solution we should need to declare Scotland as being overseas. We visualised Scottish regiments returning to an overseas territory—their own bases! That illustrates the stupidity of this Bill. That is the mess the Government are getting into. We do not yet have the solution to that problem. I hope that we shall be told sometime what will be done for members of the armed forces. They have votes. They are accountable. They use education, water and all the other services. We had some indication in the "glossy magazine" as to what would be done, but to my knowledge nothing has been done so far to get out of that difficulty.
Every person over the age of 18 in Scotland, including overseas students, will have to pay this community charge. The situation will be appalling. I do not know whether the noble Lord, Lord Glenarthur, noticed that recently there was a new survey of the effects of this Bill which was produced by Edinburgh University and instigated, I believe, by NALGO. It is mainly members of NALGO who operate the financial system in Scotland. They will have to deal with the registration, with the follow-up and the whole rigmarole of nonsense which is included in this Bill whereby we give power to the registrar to fine people. It is not given to anyone else. It is given to someone who is not a judge but a local government civil servant. Those are the depths to which we are reduced by this Bill.
What were the conclusions on the consequences of the proposals contained in this Green Paper—a Green Paper costing £11·60? It is shocking. The reforms, it said, will be costly and difficult to implement. They will benefit the wealthiest in society at the expense of those less well-off. No one in this House can deny that. There are noble Lords in this House who have properties in Scotland as their second homes. All they will pay is up to two community charges where at present they are paying rates of over £1,000 or maybe £2,000. We know of one case where the amount is £3,000. A crofter will pay as much as the lord in his castle. Malcolm Rifkind says in a party political broadcast in Scotland that this is fair and equitable. How can it be, when ability to pay is not considered at all?
The independent survey compares rate bills paid in 1986–87. And remember, this has not been done consequent upon revaluation. It analyses the results by household income bands and by a lot of other criteria: the number of adults in the household, the age of the head of the household, the pensioner households, the unemployed households, the city versus the rural areas. What did it reveal? Only the top income band with an average weekly wage of £558 a week will be better off. In all other income bands there will be winners and losers. But the average household will be worse off.
The biggest losers will be households with three or more adults. Young householders aged 18 to 24 will on average be £3·02 a week worse off and unemployed

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householders, on average, £3·71 a week worse off. This applies only to Scotland from 1989 to 1995. What has Scotland done to deserve this from the Government? Unless it is the fact that the voters of Scotland did not support them.
As I have said, unemployed householders will, on average, be £3·71 worse off. The average pensioner household will be £1·63 per week worse off. So the poor, the unemployed and the disabled will all be worse off. But every single noble Lord sitting in this Chamber listening to me, as well as those who have not come here to listen, will be better off. I declared how much better off I would be. But not a single Lord or Lady on the other side has declared how much better off he or she will be. There is no one here who will be worse off, yet it is said to be fair. It is very unfair indeed, as everybody knows. It panders to greed, it is selfish and, from the Government's point of view, it is a determination to try and save their vote at the coming election.
Why do you think we are dealing with this Bill so quickly? Because, of all the things that have to be done before the election, this has to be on the statute book. Otherwise, it is disaster for the Tory party in Scotland. Mind you, I do not think it will work. The Scots are a little more far-sighted than that, and they look beyond the horizon of their own wellbeing.
There were two difficulties in respect of revaluation. There was the difficulty in respect of the domestic rate, for which something was done. But we had a loud outcry about the comparison of commercial subjects in Scotland with commercial subjects in England. We had the comparisons between a shop in Edinburgh and a shop in Oxford Street. Nothing is being done about that in this Bill. In fact it freezes the anomalies which exist and limits any further change in rates to an increase in the retail price index. That freezing lasts from now until 1995. Is that fair to Scotland?
The reason for the amendment is to introduce some relative fairness. If it is good enough for Scotland, it is good enough for the whole country. It is very unfair that the poorest people in Scotland should be subjected to this kind of treatment when it does not apply in England and Wales. It means that there will be two systems, north and south. There is to be a change in 1988 in respect of housing benefit. Once that is changed, we come to another change, but only in Scotland, in respect of modification of the benefit to take account of the community charge. But, remember, even the poorest in that community will need to pay 20 per cent. of their local taxes. When you have no money, 20 per cent. is a great deal. It might as well be £20 million if you have nothing. We are then up against the fact that rebates after 1988 will be not 100 per cent. but, at the most, 80 per cent. I shall come to some other points which the noble Lord, Lord Glenarthur, believes are great victories.
Taking the general principle, there is every justification for saying that we should wait and cover the whole country at one time. There will be differences, of course, but, generally speaking, we shall be concerned with the same rates. I think it was in another place in 1985 that the Member for Bearsden said that we must be careful that in getting off one
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hook we did not put ourselves on another which would be more dangerous than the first. I am afraid that this is what has happened in the hasty action following the hysteria in Perth. We shall get on to a hook which will be seen in Scotland as far more dangerous even than the rating system.
The real trouble, never faced by the party opposite in respect of rates in Scotland, was the reduction by the Government of the percentage of relevant expenditure which they met. They have taken £1,770 million from local authorities. If they gave that back, we could do without rates for two years in Scotland. That is the real cause of the trouble.
It is no use the noble Lord, Lord Burton, shaking his head. He will support something which will be of great advantage to him. I hope he has read the document put out by the Highland region last week. It was most carefully worded. By the way, the region has a good computer. A very impressive report was produced dealing with the effects of the Bill in the Highland area. It instances which parts of the region will do best. There is, I believe, a place called St. Stephens in one of the region's cities. A leaflet I have just been handed is only small. There are about 16 or 18 additional pages. A thoroughly good job has been done with the computer which the noble Lord, Lord Buckton, told us about. I hope that his information on other things is better than on this, I think he was misleading the House on the point. The document shows that, just as anywhere else, the poor will be poorer, the rich will be richer.
I can remember, and the noble Lord, Lord Home will remember—
Lord Home of the Hirsel: Not yet.
Lord Ross of Marnock:—his last visit to the Scottish Grand Committee. I am going to jog his memory.
Lord Home of the Hirsel: Please remind me.
Lord Ross of Marnock: I shall remind the noble Lord. It was when he became Prime Minister and Member of Parliament for, I think, Perth and Kinross. For reasons best known to themselves, his constituents took him to the Second Reading of a Scottish Bill in the Scottish Grand Committee. I do not know whether it was the fact that he was there or whether he did not like what he heard, but that Bill has never been heard of again. Probably the noble Lord, Lord Polwarth, will remember the Bill to which I am referring. In Scotland we called it the "bed tax" bill, where a tax would be put on every room in a hotel, so much per night. It never saw a Committee stage. It applied only to Scotland. It was seen to be a bit of nonsense. This Bill applies only to Scotland. The noble Lord, Lord Home, is here again.
Lord Boyd-Carpenter: Hear, hear!
Lord Ross of Marnock: My Lords, admittedly it is the Report stage of this Bill. The noble Lord, Lord Home, has already had some influence on the noble Lord, Lord Glenarthur, through some of the things he has said and done. He probably saved the noble Lord from a couple of defeats in Committee by telling him

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to say that he will look at a proposal and bring it back. If the noble Lord casts his mind back to that Bill, which in many ways was similar to this, he would be well advised to tell the Minister to do with this Bill what the Government did with the "bed tax" Bill for hotels in Scotland. I beg to move.
Lord Boyd-Carpenter: My Lords, the noble Lord, Lord Ross of Marnock, enjoyed himself, as I am sure did the House, during the full 23 minutes of his speech. After all, he was able to deliver that speech with peculiar ease because it is, in my own hearing, the third time that he has delivered it during the debates on this Bill. He delivered it, not I think quite so well, on Second Reading. He delivered it almost as well in Committee; and then, learning by experience, he made it even more entertaining at this stage. However, it is perhaps not quite the way in which your Lordships like to consider legislation: to have a series of Second Reading speeches made on specific amendments, in this case on Report.
The noble Lord will recall that it was only for a few moments in his speech that he came to the point of the amendment, as distinct from his dislike of the Bill as a whole. On that latter point, I thought that for once he was uncharacteristically illogical. He said, almost in the same breath, that the Bill was one designed to assist the Government to win an election and that it was riddled with unfairness, inequalities, inequities and all the rest of it. The noble Lord cannot have it both ways. If the Government introduce a Bill to obtain popularity at an election, whenever it comes, it is at least improbable that it would be a Bill so riddled with unfairness and injustice, as the noble Lord seemed to think.
Lord Ross of Marnock: My Lords—
Lord Boyd-Carpenter: My Lords, I shall give way to the noble Lord in a moment because I hope that he will decide and tell us which option he is going to back.
Lord Ross of Marnock: My Lords, I have not been unusually illogical, as the noble Lord suggested; his hearing has been slightly defective. I was referring to the Government gaining popularity with their own declining supporters—the people at the Tory Party conference in Perth. Those are the people. They saw their party support declining. The Government are not worried about the people in the housing schemes or in the working class areas of Scotland. They do not vote for them anyway. They were after their own people. That is why the Bill is so unfair and so one-sided.
Lord Boyd-Carpenter: My Lords, with respect, the noble Lord cannot get away with that. No government, plotting in a sinister, cynical way, legislation designed to obtain wide voting support, will introduce a measure which will benefit only what the noble Lord described as a declining section of the community. That will not do. If the noble Lord will allow me to say so, it is an example of the fact that, hating the Bill as he does, he is prepared to take every point that he thinks he can against it, regardless of whether those points are consistent with one another.
I propose to return to the amendment that the noble Lord moved. It is a simple one. It would leave the Bill
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as it is, with all what he regards as the defects in it, to come into force when similar legislation is enacted in England. That is an important point, but it is a point totally distinct from the one which the noble Lord spent most of his speech in adumbrating. It is on it that your Lordships must come to a decision; it is to it that I shall make my few remarks.
The amendment does not kill the Bill. If adopted, its effect is merely to defer it and to leave everyone in Scotland knowing that the change will take place but not knowing when. Does the noble Lord think that that is a satisfactory situation from the local authorities' point of view? Does he think that it is satisfactory from the ratepayers' point of view that they will know that the system will be changed but they will not know when? The Bill as it stands tells them when. The local authorities can work and make the admittedly complicated preparations—I do not dispute for a moment that they are complex—to a known date, so that the transition will take place efficienty on that date.
Equally, the citizen will know what the position is with regard to his or her finances. The noble Lord's amendment will leave the ratepayer, faced, as he knows better than I do, in many areas in Scotland with steeply rising rates, with uncertainty as to whether the following year or the year after that similar astronomical rate rises will take place. The amendment will leave them all subject to that. He says that the whole thing should wait until the English and Welsh legislation has passed through Parliament. If he gets away with that, I wonder whether the noble Lord will find that people in Scotland are as pleased as he seems to think.
There are many people who realise that the Bill effects a great improvement overall. It deals, for example, with what has always seemed to me to be the anomaly of the rating system, in the South as well as the North—that is, that we can have two similar, adjoining houses, one occupied by an elderly widow and the other occupied by a couple with four earning sons, and they all pay the same rates, whereas under this Bill capacity to pay would be a relevant factor in assessing what they will have to pay.
Noble Lords: No!
3.45 p.m.
Lord Boyd-Carpenter: My Lords, noble Lords can say, "No"; but let us take my example (which is a common one) of similar houses occupied in one case by a widow who has suffered the misfortune of her husband dying and her children gone, paying the same rates as the household next door which has four or five earners. If noble Lords think that is fair I can only say that their idea of fairness is odd, and it does not appeal to me. The idea of leaving such people in uncertainty, as the amendment proposes, until some other legislation has passed through Parliament—apparently it is not to be put into effect—and been enacted is the worst of all propositions.
It is startling to hear from a Scottish Peer, and if he will allow me to say so a former most distinguished and—I hope that this will not damage him—most efficient Secretary of State for Scotland, and to find

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him suggesting that a benefit to Scotland should be deferred until the English can catch up.
Lord Mackie of Benshie: My Lords, I failed to follow the argument put forward by the noble Lord, Lord Boyd-Carpenter. His last remark revealed the flaw. The people of Scotland do not regard the Bill as a benefit. We believe that they are right. All the evidence taken in polls, and by people asking questions, shows that neither the local authorities nor the people of Scotland think that the Bill is anything but bad. The amendment seeks to put that to the test with the majority of the people in England and Wales. We do not see why they should not suffer along with Scotland. Instead of having the Bill imposed on Scotland alone, why did not the Government try it out on the whole of the people of Britain?
On the argument that this Government would never introduce a measure which was not of benefit before an election, the history of banana skins under them shows that they are as fallible, perhaps even more so than many governments in the past. Certainly the Bill as it now stands is riddled with inconsistencies and is enormously unfair. The old argument about the four wage earners and the council house is of course absolutely right. But the whole point that we are making is that this is the wrong solution. It is a solution borne out of desperation, as the noble Lord, Lord Ross, said.
If we are on the way to a general election I am not sure whether I should like this Bill to fall or to pass, because if the Government get it on the statute book that may well please the noble Lord, Lord Goold, and a number of the richer supporters of the Tory Party in Scotland, but it will certainly not do the Government any good among the voters of Scotland who will make up their minds on it. That is why we support this amendment. If the Bill is that good, why is it not also thrust upon the English and the Welsh? It seems to me only just that they should suffer too.
Lord Wilson of Langside: My Lords, it is of great encouragement to those of us on these Benches who are so opposed to this wretched Bill that the noble Lord, Lord Boyd-Carpenter, should pray in aid the case of the old widow compared with others because he is quite right about that. The noble Lord is one of the few Members, apart from one or two Scottish Peers on the other side, who has come to the aid of the Minister when these matters have been discussed. This Bill will help the old widows and the old-age pensioners in a similar position relative to the large families next door, all of whom are wage earning. But that is about the only good thing that there is to be said about it.
The noble Lord, Lord Boyd-Carpenter, expresses concern for the old widows and I express equal concern for the old-age pensioners who will benefit in relation to rates and to certain of these other groupings in our society. However, we on these Benches are concerned about the unfairness that will be visited upon others about whom I have heard not one word of concern throughout the debates on this Bill, and I have been through them all from Second Reading onwards. We did not even try to wring concessions on
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exceptions under Clause 7 or on rebates under Clause 24, but no doubt something is coming later today. The noble Lord, Lord Boyd-Carpenter, has opened up the debate on these issues on this amendment, which we support.
I think that every adjective which the noble Lord, Lord Ross, applied to the Bill was justified. On these Benches we do not always agree with everything that the noble Lord says. However, to a simple lawyer like myself, perhaps far more crucial than any of these adjectives—shocking, unfair and so on—is the fact that the Bill is irrelevant to the problem of local government finance.
The noble Lord, Lord Ross of Marnock, said that the Government have described this as the most radical reform in relation to local government finance this term. I do not know whether that is an accurate description of what is proposed in this Bill, but when one considers—in the context, for example, of the Layfield Report of 1976—the utter irrelevance and ineffectiveness of these proposals as a solution to the immense task of effectively reforming local government finance in all its magnitude, the Bill has no place and will contribute nothing. The problem will have to be dealt with properly in due course by other governments who are prepared to read and reflect upon the implications of the Layfield Report—which of course is not all wisdom and might not be accepted in its entirety.
However, I find it difficult, if not incredible, that the Government who produced this Bill could possibly have reflected seriously on the truly radical review carried out by the Layfield Committee at the behest of the Labour Government of 1974 and presented to Parliament in 1976. For that reason I support this amendment. It would at least spare Scotland the ignominy of this Bill in all its horror. I do not think that the English would ever accept it.
Lord Burton: My Lords, the noble Lord, Lord Ross of Marnock, said in Committee when I was speaking, "Don't tempt me". I am afraid that he has tempted me. He said that there was no one on this side who would be worse off, or that we shall all be better off. I questioned that before. Were the sums to be done now—and I have not done the sum because it is not necessary at present—I am quite convinced that I should be worse off if the Bill were in operation. I shall not explain the details; it is a long, complicated procedure. However, I am quite certain that I should be paying more to the local authority if the Bill were in operation now than under the present rating system. I therefore think that the noble Lord is not right on that subject.
The noble Lord suggested that a glossy Green Paper which he held up could have involved a local authority in surcharge. That was a very interesting point, because he also produced this purple thing brought out by the Highland region. This is a highly inaccurate political pamphlet. It is totally misleading to the electorate and I wonder whether the Highland region will be surcharged for producing it and wasting our rates. Had this Bill been in operation, I wonder whether it would have ever issued this pamphlet. It is in order to stop this kind of political literature that this Bill exists. It is to ensure that we get proper

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expenditure from our rates by making councillors properly responsible.
I have already written to the chief executive to complain about this improper use. I think that personally he would probably rather agree with me. But I understand that this pamphlet was produced at a council meeting. The council therefore had not even had time to examine it.
While on the subject of surcharge, I should like to draw attention to what I believe is an improper rebate given by the Highland regional council. If one looks at the 1976 Act one finds that the Highland region is probably quite wrong in giving a rebate to crofters—
Lord Ross of Marnock: My Lords, crofters? Before the noble Lord sits down would he like to look at the 1956 Act—
Lord Burton: The 1976 Act.
Lord Ross of Marnock:—which makes it statutory? The reduction in rates for crofters is 50 per cent. by statute.
Lord Burton: My Lords, the 1976 Act presumably overrules that.
Lord Wilson of Langside: My Lords, this is Report stage. Perhaps we could have some guidance on the number of occasions upon which noble Lords may speak.
Lord Grimond: My Lords, perhaps I might ask a question of the Government before the Minister replies. I do not want to go over what has been said many times before about the Act in general. I want to raise a point which is specifically aimed at the amendment. One of the advantages—and I agree that there may be disadvantages also—of postponing this measure until similar legislation applies in the rest of Britain would be to ensure that industries and activities in Scotland are not put at a disadvantage by the introduction of these measures before they apply in England and Wales. Presumably the Government have made some inquiries and estimates as to whether after this Bill becomes an Act, if it does become an Act, not the individuals we have heard of but industries and employment in Scotland will be better or worse off. Quite apart from its benefit to individuals if this becomes an Act, do the Government consider it will benefit Scottish employment, industries, services and the general industrial base of the country?
4 p.m.
Lord Taylor of Gryfe: My Lords, like the noble and learned Lord, Lord Wilson of Langside, I am not familiar with practices in the House at Report stage, and possibly my intervention would be best introduced following the Minister's, but I shall learn by the process whether it is wise.
If I may make some reference to the comment of the noble Lord, Lord Burton, that he would be worse off, perhaps at some stage he should check whether his computer is operating correctly since it brings out the extraordinary result that he has just reported to the House this afternoon. I was interested to note that the
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noble Lord did not deal with whether the content of the document produced by the Highland region was factual. I think he dealt with the propriety of the Highland region issuing the document, but it occurred to me that the quotations by the noble Lord, Lord Ross of Marnock, indicated that it was producing facts in the light of its experience which might influence your Lordships in looking at this legislation.
We shall come back to the case of the widow, raised by the noble Lord, Lord Boyd-Carpenter, at a later stage when we deal with ability to pay, because probably his comment about the poor widow is more appropriate to that issue. I look forward very much to his support for the idea that a local income tax might be more sensible and fair to the widow.
Lord Boyd-Carpenter: My Lords, will the noble Lord allow me? I agree with him that the subject would be much more appropriate to a later amendment. I introduced it only because the noble Lord, Lord Ross of Marnock, spent about 20 minutes making a Second Reading speech and I thought one Second Reading point from this side might marginally restore the balance.
Lord Taylor of Gryfe: My Lords, perhaps we shall return to the equalities of the present system. I agree completely with the noble Lord, Lord Boyd-Carpenter, that the present system is full of anomalies. We are in the position in which we are seriously looking at the revision of the method of financing local government because the present system is indefensible. The proposed Bill is equally indefensible in so far as it introduces substantial unfair practices.
As the noble Lord has reminded us, this amendment is concerned simply with the correctness of imposing this legislation in Scotland, while England is not affected at present. That is a very serious argument. It will freeze the massive inequalities of the present system so far as industrial rating is concerned, the inequalities not only of the rating system of retail premises in Glasgow compared with Oxford Street but also of the position of the great industries in Scotland which are being penalised by the present system.
As has been quoted in this House previously, the Moss Moran plant, the biggest industrial investment in Scotland since the war, of £400 million financed by Esso, pays £9 million per annum to the local authority in rates. If it had been situated a hundred miles south of the Border in Carlisle or Newcastle its rating bill would be £1.2 million. It is anomalies like that which compel us to feel that the change in the funding of local government finance should be built into a national system and all be done at the same time.
We are on the eve of an election, whether it be in June or in September. We have to think seriously whether there is a democratic justification for the imposition of this Bill. Public poll ratings indicate that the Conservative Party has a maximum 20 per cent. of the people of Scotland supporting it in this and other measures. This House is being invited to impose on the Scottish people, who are 80 per cent. against it, a new and radical piece of legislation which will affect every individual and every household in Scotland. That is a very serious matter.

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If there is one thing that worrries me about the future of Scotland—and I am deeply concerned about the future of Scotland and its relationship to the whole of the United Kingdom—it is that if we are not careful we shall induce a mood, an attitude, which will seek the break-up of the United Kingdom and a declaration of separation by the people of Scotland. In many parts of the world—the history of Northern Ireland is a case in point or that of the Tamil separatists—where people feel they have been subjected to unfairness by a central government there is an inevitable reaction. This piece of legislation, which does not command the support of the people of Scotland, is about to be imposed on them. Consequently there will be resentment. I think that this is politically very dangerous indeed.
If there is to be a new system introduced, why not make it a national system? Why separate Scotland in this legislation? Why not make it a national system subject to a national board and a national commitment? To impose the system on Scotland alone is to invite very dangerous consequences. This is a very important occasion this afternoon, and I appeal to the Government to recognise that if we continue along this line there could be very serious consequences. I do not think many Members of this House are sensitive to the mood of the people in Scotland and to the feeling that there is an injustice when a central government in London impose this kind of thing on them. I invite the Minister to consider whether it might not be sensible to regard this as a national plan for the restructuring of local government finance rather than to impose a totally unfair system on a people who will resent it.
Lord Glenarthur: My Lords, we seem to have embarked upon yet another Second Reading debate upon this Bill. We are now at Report stage. The Bill was thoroughly debated at Second Reading and again in Committee, and it came to us from another place. I do not believe that it would be proper for me to debate in full many of the points which have been raised again by Members of your Lordships' House.
On the subject of the amendment, we gave this a good airing in Committee, and I am bound to say that I have not heard anything, even today when the amendment has actually been addressed as such, to give me the slightest doubt that the Government are on the right course in introducing the community charge in Scotland on a faster timetable than in England and Wales.
As I explained at the Committee stage, I do not think it is particularly helpful to view the introduction of the community charge in Scotland as an experiment or to argue that, as was particularly argued in Committee, Scotland is being treated as a guinea-pig. There is no question of proceeding on some kind of trial and error basis. On the contrary, the Government's firm intention is to sweep away the domestic rating system once and for all on both sides of the Border as soon as is practicable and to replace it with a system of community charges which will provide a much fairer system of local taxation. Indeed your Lordships universally seem to agree that the present system is wrong. As I made clear earlier, my right honourable friend the Secretary of State for the
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Environment has placed beyond doubt the Government's intention to introduce legislation for England and Wales no later than the first full Session of the next Parliament, and clearly he will be anxious to make as rapid progress as possible thereafter to implement the new system south of the Border.
There is nothing at all sinister in the Government's intentions to bring in the community charge in Scotland before England and Wales. The reasons why it has been possible to set a faster timetable for Scotland are of a technical and operational nature. The changeover to the new system will be more straightforward in Scotland because, for example, there are fewer local authorities in Scotland. Moreover our forecasts suggest that there will be a narrower range of community charges than south of the Border, which will again ease the process of transition to the new system. Against this background, it seems entirely reasonable that the timetable in Scotland should be different. As my noble friend Lord Renton suggested in Committee, it would not be at all satisfactory if the Scottish people had to wait unnecessarily before getting the benefits of the new system which the Bill will introduce.
There will be enormous benefits in it. I do not dispute the fact that the experience of the 1985 revaluation, as the noble Lord, Lord Ross of Marnock, suggested, was one of the factors underlying the Government's decision to make as rapid progress as possible in Scotland towards the abolition of domestic rates. I would, however, strenuously resist the notion that the Bill is in some way a panic reaction to the revaluation. The experience of the revaluation led to increased pressure for radical reform because it brought home to the people of Scotland and to the Government just how unsatisfactory domestic rates were as a system of paying for local services. After the revaluation there could no longer be any doubt that domestic rates had become completely discredited in the public's mind, and the Government were amply justified in responding to the heightened pressure for change in Scotland by deciding to introduce the community charge as soon as possible and as soon as practicable.
My view that the amendments on this subject tabled at Committee stage had a wrecking quality did not, as I recall, go unchallenged, but I was not persuaded by what was said in their defence. I believe that these amendments too are little short of wrecking since they introduce a wholly new principle into the Bill which was not approved by the House at Second Reading—the principle that the provisions in this Bill should not be implemented before there has been similar legislation for England and Wales.
In answer to the noble Lord, Lord Grimond, the benefit to Scottish business surely will come through the freezing and indexing of rates, which will protect business from the large and unpredictable rate increases it has had to meet in recent years. As we saw when we were discussing Clause 3 at an earlier stage, there is clear evidence that rates can damage business, business expansion plans and others and that has the sort of effect which the noble Lord would not like to see on employment, just to name one aspect.
In the Government's view the timetable for abolishing domestic rates in Scotland and introducing a

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system of community charges in their place is reasonable, it is practicable, and it is entirely justified. There is simply no case for waiting for the corresponding reforms in England and Wales. I hope the noble Lord will see the force of that argument and will be able to withdraw his amendment.
Lord Ross of Marnock: My Lords, I think no one would be more surprised than the party opposite if I withdrew this amendment. I want to express my thanks to the noble Lord, Lord Boyd-Carpenter, for the praise he gave me. I do not know what for, because he did not have much praise for what I was saying today, but neither had I for what he said. We have heard about this widow on every sort of Bill we have had, but he has not answered the point. That widow, a poor pensioner widow with nothing at all, can be living beside a wealthy widow. They are not being treated equably because the poor widow will pay exactly the same as the wealthy widow. In fact there may be a poor pensioner couple living next door and that couple will pay double what the wealthy widow pays. There is no equity, there is no fairness in a poll tax.
The Government said that themselves in 1983 when they published a White Paper on the subject. They came to the conclusion thereafter that the one thing they could not have was a poll tax, which we now have. No doubt supporting the Government as he does unfailingly, I could almost hear the voice of the noble Lord, Lord Boyd-Carpenter, skilled debater that he is, doing so on that occasion too.
But now we have come round to a poll tax. Why? Everybody who has experience of Tory Party conferences in Scotland, Perth in particular, knows well why. I was not saying that the Tories are seeking popularity with the people of Scotland, because they do not have it—at the last election or at any other election. They are now down to 22 out of 72 seats. They could never form a government in Scotland. Despite the fact that they do not have that popular backing, despite the fact that they know that 80 per cent. of the people are against it, they go ahead with the Bill.
It is only fair in this general trouble in respect of rates and local government finance if the whole country is treated as one. That is the reason for the amendment and I sincerely hope that we shall stay by it.
I am sorry about the noble Lord, Lord Burton. He said he did not quite know because it was all very difficult whether he would be better or worse off. I could find out in five minutes. I know what the personal community charge is likely to be in his area and it is a matter of looking up the valuation to see what he pays in rates for his house this year and what he is likely to pay. We are talking about domestic circumstances. He now tells me that he does not know whether he will be better off.
Lord Burton: May I briefly interrupt?
Lord Ross of Marnock: I have not sat down, my Lords. The noble Lord had an opportunity to explain and he did not. We have already had complaints that there have been far too many speeches, but I shall gladly give way to the noble Lady.
Lady Saltoun of Abernethy: My Lords, as the noble Lord has given way, the noble Lord, Lord Burton, probably has a large number of employees in tied houses whose rates he pays at present as part of their contract of employment. Those employees will ask him to pay them higher wages in respect of their community charges and in many cases, their wives' community charges. That is why he may end up being quite a lot worse off.
Lord Ross of Marnock: My Lords, that was a bold effort. We are talking not about employees but purely and simply about how a person is concerned with the rates he pays for his house and the fact that he will not be paying in relation to his house but in respect of himself and those in that house who are over 18. He has no responsibility for them; only for himself. As the noble Lord says, he will find it difficult to work out, but I could find it out in about two minutes with that computer in Inverness, a look at the valuation that has been placed upon his house and what he actually pays for it. There is no secret about it. It is there for everybody to see. We are sorry about his plight. I do not think it is the computer that has broken down, I think it is simply his capacity in respect of mathematics.
We are dealing with the principle of whether the Bill should apply to Scotland alone or to the whole country. The noble Lord spoke of the uncertainty. When is it coming for England? Until it does come, there will be uncertainty in England. Would it not be better for him to have the uncertainty elsewhere, to share that uncertainty or for the whole lot to join together in respect of the Bill when it did come? I have heard no convincing argument about this. It is not wanted in Scotland. There is no mandate for it. If the English want it and to wish it on Scotland, let them wish it on themselves at the same time.
4.21 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 104; Not-Contents, 149.

DIVISION NO. 1

CONTENTS

Airedale, L.

Diamond, L.

Amherst, E.

Donaldson of Kingsbridge, L.

Ardwick, L.

Elwyn-Jones, L.

Attlee, E.

Ennals, L.

Aylestone, L.

Ewart-Biggs, B.

Bacon, B.

Ezra, L.

Banks, L.

Falkland, V.

Basnett, L.

Fisher of Rednal, B.

Birk, B.

Flowers, L.

Blackstone, B.

Gallacher, L.

Blease, L.

Galpern, L.

Blyton, L.

Glenamara, L.

Boston of Faversham, L.

Grey, E.

Brockway, L.

Grimond, L.

Bruce of Donington, L.

Hampton, L.

Carmichael of Kelvingrove, L.

Harris of Greenwich, L.

Carter, L.

Hatch of Lusby, L.

Chitnis, L.

Hooson, L.

Cledwyn of Penrhos, L.

Houghton of Sowerby, L.

David, B. [Teller.]

Hughes, L.

Davies of Penrhys, L.

Hunt, L.

Dean of Beswick, L.

Hutchinson of Lullington, L.

1379

Irvine of Lairg, L.

Ponsonby of Shulbrede, L. [Teller.]

Irving of Dartford, L.

Jacques, L.

Raglan, L.

Jeger, B.

Ritchie of Dundee, L.

Jenkins of Putney, L.

Rochester, L.

John-Mackie, L.

Ross of Marnock, L.

Kearton, L.

Seear, B.

Kennet, L.

Sefton of Garston, L.

Kilbracken, L.

Serota, B.

Kilmaraock, L.

Shackleton, L.

Kirkhill, L.

Stedman, B.

Kissin, L.

Stewart of Fulham, L.

Leatherland, L.

Stoddart of Swindon, L.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L.

Lloyd of Kilgerran, L.

Taylor of Blackburn, L.

Lockwood, B.

Taylor of Gryfe, L.

Lovell-Davis, L.

Taylor of Mansfield, L.

McIntosh of Haringey, L.

Tordoff, L.

Mackie of Benshie, L.

Turner of Camden, B.

McNair, L.

Underhill, L.

Manchester, D.

Walston, L.

Masham of Ilton, B.

Wells-Pestell, L.

Mishcon, L.

Whaddon, L.

Morton of Shuna, L.

White, B.

Mulley, L.

Wigoder, L.

Nicol, B.

Williams of Elvel, L.

Oram, L.

Willis, L.

Perry of Walton, L.

Wilson of Langside, L.

Phillips, B.

Winstanley, L.

Pitt of Hampstead, L.

Winterbottom, L.

Young of Dartington, L.

NOT-CONTENTS

Ailesbury, M.

Elton, L.

Ailsa, M.

Erroll of Hale, L.

Alexander of Tunis, E.

Faithfull, B.

Allerton, L.

Forbes, L.

Alport, L.

Fortescue, E.

Arran, E.

Fraser of Kilmorack, L.

Auckland, L.

Gisborough, L.

Bauer, L.

Glenarthur, L.

Beaverbrook, L.

Goold, L.

Beloff, L.

Granville of Eye, L.

Belstead, L.

Gray, L.

Bessborough, E.

Gray of Contin, L.

Blake, L.

Haddington, E.

Bolton, L.

Haig, E.

Boyd-Carpenter, L.

Hailsham of Saint Marylebone, L.

Brabazon of Tara, L.

Braye, B.

Halsbury, E.

Brentford, V.

Hayter, L.

Brougham and Vaux, L.

Henley, L.

Broxbourne, L.

Hesketh, L.

Burton, L.

Hives, L.

Butterworth, L.

Home of the Hirsel, L.

Caithness, E.

Hood, V.

Cameron of Lochbroom, L.

Hooper, B.

Campbell of Alloway, L.

Hunter of Newington, L.

Campbell of Croy, L.

Hylton, L.

Carnegy of Lour, B.

Hylton-Foster, B.

Carnock, L.

Ingrow, L.

Cathcart, E.

Ironside, L.

Chelmer, L.

Jessel, L.

Clifford of Chudleigh, L.

Kaberry of Adel, L.

Coleraine, L.

Killearn, L.

Cottesloe, L.

Kimball, L.

Crawford and Balcarres, E.

Kinloss, Ly.

Cullen of Ashbourne, L.

Lane-Fox, B.

Dacre of Glanton, L.

Lauderdale, E.

Davidson, V. [Teller.]

Lawrence, L.

De La Warr, E.

Layton, L.

Denham, L. [Teller.]

Lloyd-George of Dwyfor, E.

Denning, L.

Long, V.

Derwent, L.

Lucas of Chilworth, L.

Dilhorne, V.

Lurgan, L.

Dormer, L.

McFadzean, L.

Duncan-Sandys, L.

Macleod of Borve, B.

Dundee, E.

Manton, L.

Eden of Winton, L.

Mar, C.

Elliot of Harwood, B.

Margadale, L.

Elliott of Morpeth, L.

Marley, L.

1380

Marshall of Leeds, L.

Sharples, B.

Massereene and Ferrard, V.

Skelmersdale, L.

Middleton, L.

Slim, V.

Mottistone, L.

Somers, L.

Mowbray and Stourton, L.

Stockton, E.

Moyne, L.

Stodart of Leaston, L.

Munster, E.

Strange, B.

Murton of Lindisfarne, L.

Strathspey, L.

Norfolk, D.

Swinton, E.

Nugent of Guildford, L.

Terrington, L.

Pender, L.

Teviot, L.

Peyton of Yeovil, L.

Thomas of Swynnerton, L.

Polwarth, L.

Thorneycroft, L.

Porritt, L.

Torphichen, L.

Portland, D.

Trafford, L.

Rankeillour, L.

Tranmire, L.

Reigate, L.

Trumpington, B.

Rochdale, V.

Vaux of Harrowden, L.

Rodney, L.

Vickers, B.

Romney, E.

Ward of Witley, V.

Rugby, L.

Watkinson, V.

St. Davids, V.

Westbury, L.

Saltoun of Abernethy, Ly.

Whitelaw, V.

Sanderson of Bowden, L.

Windlesham, L.

Sandys, L.

Wise, L.

Sempill, Ly.

Wolfson, L.

Shannon, E.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.30 p.m.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 3:
Page 1, line 7, leave out ("1989") and insert ("1990").
The noble Lord said: My Lords, this is a relatively modest amendment seeking an extension to ensure that the Bill is implemented in 1990 instead of 1989. If the legislation were implemented and the community charge applied from 1990, with the delay of a full year, I believe that the assessors and, more importantly, the paying public, would find great benefit.
The community charge register could be prepared and published in a ghost form by the date suggested for implementation in the existing timetable, 1st April 1989. In this way, one year ahead of the application of the charge, the Bill would be available and people could know of the existence of the provisional register. This would provide a period of familiarisation and, as has been suggested, a period of gestation for the tax-paying public and for national and local government officials. It would allow the Government to consider the consequences of the legislation, including the financial outcome and the individual liability. It would also make possible a longer period in which to harmonise computer systems and to make any required corrections to the legislation, including related financial support, in good time before the implementation of the poll tax. The draft register would give the new local taxpayers adequate warning of their liability and allow them to make suitable budgeting in good time. Obviously, updating and its problems would commence at the time of publication and people would therefore have plenty of time to study the matter.
I go back to the original Bill before amendment by the Minister in the other place and to some of the reasons given before the Minister accepted the amendments of my honourable friend. It was as late as Report stage in another place that the Government

1381
amended the Bill by the Ancram amendment to dispense with the three-year traditional phasing-in period for the community charge. That phasing-in period had been conceived specifically for two purposes. The first was to allow the community charge arrangements and operational problems to be resolved progressively over the three-year period while at the same time retaining for local government an assured base for at least some of the domestic rating income. The idea of gradual introduction was specifically stated and defended right up to Report in the other place. The second purpose was to allow people who would bear the imposition of the charge for the first time an opportunity to reorganise their own personal budgeting arrangements to cope with the new demand on resources.
I was very glad that the dropping of the transitional arrangements eased the enormous administrative difficulties that were foreseen in attempting to run the two systems in tandem. That would have been a recipe for chaos. However, the unfortunate side-effect is that there is now nothing to take account of the personal budgeting problems faced by many people who will be liable to the new tax, according to the Bill as presently drafted, in April 1989. A nurse in a residential home whose accommodation charge includes £2 a week towards the rates will be asked to find another £7 to pay the community charge. That will require some rearrangement of personal finances. It also suggests the need for some sort of transitional arrangement to limit the increased payment being sought in the first year. Such a broad brush approach would provide a certain amount of rough justice. The Minister will recall, following the sudden revaluation, that a certain amount of money was put aside to meet subsequent considerable increases in rates. However, not all the money was used. Only 50 or 60 per cent. of the sum allocated by the Government was used.
I hope that the House and the Minister will agree that here is nothing wrecking in the amendment. It goes back to the original argument that the Government were putting. I attended the Committee frequently. I heard the Minister say clearly that there was a need to introduce the Bill slowly. The Minister wanted a phasing-in period of three years to run in tandem with the present system. All we ask is to be given one year longer so that a trial, ghost register can be produced and an opportunity provided to iron out many of the difficulties to which I have referred. The amendment is a modest one, and I hope that the Minister will see some point in it.
Lord Kirkhill: My Lords, I wish to associate myself with the remarks made by my noble friend Lord Carmichael of Kelvingrove. Perhaps I may ask the Minister to address his mind to one point which, although not a major one, is worthy of some consideration. CoSLA tells me that the land valuation court will have to establish new principles as a consequence of the Bill, assuming that it becomes an Act. That seems quite clear.
The timing would become quite crucial if, in reference to the principle, appeals were subsequently made to the land valuation appeals court, which I think is inevitable. It would be difficult, I judge, to draw the competing threads together to achieve a
1382
decision by, say, 1990, given that one wants to harmonise with England and Wales by about that time, as the Government keep telling us.
Lord Glenarthur: My Lords, the Government have made no secret of the fact that they understand that the timetable set out in the Bill for the abolition of domestic rates and the introduction of the community charge is tight. We spent some time at an earlier stage debating the timetable, and I put on record then the Government's view that sufficient time had been allowed for the necessary preparatory work to be done to enable the introduction of a community charge to take place on 1st April 1989, as the Bill envisages.
May I explain our views as briefly as I can. We know that local authorities are not keen to commit substantial resources to implementation until the Bill has been enacted. A fair amount of thinking and planning clearly has already taken place. For our part, we have been in consultation for some time with the Scottish Assessors' Association about the regulations to be made under Clause 2 and about the procedures for compiling and maintaining the community charges register. We have also had meetings with the representatives of other professional bodies, such as the Rating and Valuation Association to which the noble Lord, Lord Kirkhill, referred specifically, about the technical aspects of implementation.
I am aware of CoSLA's representations. The Government totally reject the proposition that the implementation of the community charge should be delayed by one year to 1990. We recognise that the timetable will be tight but we remain convinced that it will be possible to introduce the system as planned.
On a point of fact, it is important to be clear that CoSLA is not saying that implementation by 1st April 1989 cannot be achieved. My noble friend Lady Carnegy of Lour, during the Committee stage, drew attention to the fact that it is not making that claim. It is important not to over-react to those who draw attention to difficulties. The approach of the Government has been to seek to improve the Bill in order to meet those difficulties. Thus, for example, as the noble Lord, Lord Carmichael of Kelvingrove, has said, we have abolished the transitional period. At the Committee stage we were able to accept amendments providing greater flexibility in the arrangements between regions and districts for billing and collection. That is another step which will facilitate implementation. We shall also be resisting proposals which would make the system more complicated, such as the re-introduction of a property tax through the back door by modifications to the standard charge, or cumbersome and unnecessary additions to the registration process.
The noble Lord, Lord Carmichael of Kelvingrove, suggested that, in addition to being a burden on the local authorities, the concept as such would be a burden upon individuals. If I followed the noble Lord's argument correctly, it perhaps indicated that not only would more time help but that it would in some way be tantamount to financial support for individuals. The Government have never denied that, with the introduction of the community charge, some people will pay more. However, the analysis in the Green Paper explained that, with full implementation

1383
of the community charge and the associated rebate scheme, three-quarters of all households would either be better off or would lose less than £1 per week. I believe that this helps to put into perspective the effects of the change.
We acknowledge that some individuals will face a bill for the first time and that for others there may be increases greater than £1 a week. However, we must not forget that all those people affected will have access to the rebate scheme. That point was not brought out in the pamphlet circulated by the Highland Regional Council. As regards those facing an increase, the conclusion which must be drawn is that, judged against the criteria set out in the rebate scheme, it is not an unreasonable burden to ask them to face.
The other side of the coin is that within the pattern of changing burdens resulting from full implementation, the Green Paper identified particular benefits for single pensioner households, 85 per cent. of whom would gain. For other single adult households, including one-parent families, 80 per cent. would gain, more than half by over £1 a week. It seems to me that the proposals for transitional financial support for individuals, for which CoSLA seems to be pressing, are trying to achieve a slowing-down of the benefits that these particular measures would provide for such people. At the practical level, it is hard to see that a transitional arrangement of the kind envisaged would be easy to administer. It comes oddly from a body which expressed concern about the burden of administering the transitional arrangements originally proposed and which has now welcomed their abandonment to suggest that new complexities should be added to the system.
In answer to the noble Lord, Lord Kirkhill, the decision about whether particular properties are to stay in rating may, in some cases, be difficult and it may involve appeals. However, for the bulk of domestic subjects—in simple terms, houses—there will be no doubt, and I cannot believe that there are necessarily likely to be disputes. Therefore, delays in handling a few appeals will not in any way undermine the planned introduction of the system in 1989.
I believe that with continued co-operation and the common desire to see the new system work, there is no reason whatever to suppose that it will not be ready for introduction by the target date of 1st April 1989. A postponement is unnecessary. We looked carefully at this question in Committee and I do not want to take up the time of the House by covering the ground again. I hope that with the explanation that I have been able to deliver, particularly on the point which I know concerns CoSLA, the noble Lord will feel able to withdraw his amendment.
4.45 p.m.
Lord Carmichael of Kelvingrove: My Lords, I am disappointed in the Minister. I had the feeling that his heart was not behind his argument. Although I may be wrong, I had that very strong feeling. Of course, CoSLA will be able to achieve this. Local government officials are much maligned, but I have found them to be very efficient and hard working people. They will do
1384
almost anything that is given to them. On the other hand, they believe that they will be unable to achieve a 100 per cent. job, partly because of the problems which will be raised by the sudden implementation of the Bill. I will go so far as to say that the real difficulties and problems that many individuals will face, not being prepared for the sudden increase, will be quite traumatic. I mention the nurses as an example but many other groups will find that to be the case.
When I spoke of transitional support, I was referring to the figure of £50 million which was given following the last revaluation in an attempt to try to ease the position of those whose rates had been increased, I believe, by three times. It was discovered that nothing like that amount of money was used. However, a precedent was created in that help was given to those people suddenly hit with a hard increase in their rateable value.
I do not know from where the Minister obtained the figures showing that 52 per cent. of households will be better off and that old age pensioners will gain. As regards the households, the latest information from NALGO which I saw today makes it quite clear that that is a false figure. As regards old age pensioners, the effects of the tax will be less noticeable because the vast mass already receiving housing benefit will continue in the same way. However, they will be worse off than they are now. They may not be worse off after they have been paying 20 per cent. of the housing benefit but at the moment pensioners receiving supplementary or housing benefit will be worse off when the tax is introduced. In 1988 they will need to pay 20 per cent. of their charges and they will be at about the same level. They certainly will not be better off and I cannot believe that they will gain.
I believe local government to be efficient and I have a high opinion of many of those working in it. The Government appear to have selective faith as regards the ability and efficiency of local government. We have heard a great deal of criticism from them as regards the waste in local government. However, we are now in a position where the Government are praising its efficiency.
Even with all that there is a very strong possibility that the Government may find themselves in difficulty by the sheer weight of the work involved, the question of the new revaluation that will be coming up and the problem of the new land tribunals just beginning to find their feet and trying to build up a little experience in the new revaluations. I should not be at all surprised if ultimately the Government did not need to come back to ask for an extension or had to delay the matter by one of the many powers that are contained in the Bill whose effect we do not yet know. On that basis I should like the House to give an opinion on whether it believes it is possible to retain the date mentioned and not give us that very modest one year.
4.50 p.m.
On Question, Whether the said amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 96; Not-Contents, 139.

DIVISION NO. 2

CONTENTS

Amherst, E.

Leatherland, L.

Ardwick, L.

Llewelyn-Davies of Hastoe, B.

Attlee, E.

Lloyd of Kilgerran, L.

Aylestone, L.

Lockwood, B.

Bacon, B.

Longford, E.

Banks, L.

Lovell-Davis, L.

Basnett, L.

McIntosh of Haringey, L.

Birk, B.

Mackie of Benshie, L.

Blackstone, B.

McNair, L.

Blease, L.

Mishcon, L.

Blyton, L.

Morton of Shuna, L.

Boston of Faversham, L.

Mountevans, L.

Brockway, L.

Nicol, B.

Bruce of Donington, L.

Oram, L.

Carmichael of Kelvingrove, L

Perry of Walton, L.

Carter, L.

Phillips, B.

Chitnis, L.

Pitt of Hampstead, L.

Cledwyn of Penrhos, L.

Ponsonby of Shulbrede, L. [Teller.]

David, B. [Teller.]

Davies of Penrhys, L.

Raglan, L.

Diamond, L.

Rea, L.

Donaldson of Kingsbridge, L.

Ritchie of Dundee, L.

Elwyn-Jones, L.

Rochester, L.

Ewart-Biggs, B.

Ross of Marnock, L.

Ezra, L.

Seear, B.

Falkland, V.

Sefton of Garston, L.

Fisher of Rednal, B.

Serota, B.

Gallacher, L.

Stallard, L.

Galpern, L.

Stedman, B.

Gladwyn, L.

Stewart of Fulham, L.

Glenamara, L.

Stoddart of Swindon, L.

Grey, E.

Strabolgi, L.

Grimond, L.

Taylor of Gryfe, L.

Harris of Greenwich, L.

Taylor of Mansfield, L.

Hatch of Lusby, L.

Tordoff, L.

Hooson, L.

Turner of Camden, B.

Houghton of Sowerby, L.

Underhill, L.

Hughes, L.

Walston, L.

Hutchinson of Lullington, L.

Wells-Pestell, L.

Irvine of Lairg, L.

Whaddon, L.

Irving of Dartford, L.

White, B.

Jacques, L.

Wigoder, L.

Jeger, B.

Williams of Elvel, L.

Jenkins of Putney, L.

Willis, L.

John-Mackie, L.

Wilson of Langside, L.

Kilbracken, L.

Winstanley, L.

Kilmarnock, L.

Winterbottom, L.

Kirkhill, L.

Young of Dartington, L.

Kissin, L.

NOT-CONTENTS

Ailsa, M.

Chelmer, L.

Aldington, L.

Coleraine, L.

Alexander of Tunis, E.

Craigmyle, L.

Allerton, L.

Crawford and Balcarres, E.

Alport, L.

Cullen of Ashbourne, L.

Arran, E.

Davidson, V. [Teller.]

Auckland, L.

De La Warr, E.

Bauer, L.

Denham, L. [Teller.]

Beaverbrook, L.

Denning, L.

Beloff, L.

Derwent, L.

Belstead, L.

Dilhorne, V.

Blake, L.

Dormer, L.

Blyth, L.

Dundee, E.

Boyd-Carpenter, L.

Eden of Winton, L.

Brabazon of Tara, L.

Elliot of Harwood, B.

Brougham and Vaux, L.

Elliott of Morpeth, L.

Bruce-Gardyne, L.

Erroll of Hale, L.

Burton, L.

Faithfull, B.

Caccia, L.

Fanshawe of Richmond, L.

Caithness, E.

Forbes, L.

Cameron of Lochbroom, L.

Fortescue, E.

Campbell of Alloway, L.

Fraser of Kilmorack, L.

Campbell of Croy, L.

Gisborough, L.

Carnegy of Lour, B.

Glenarthur, L.

Carnock, L.

Goold, L.

Cathcart, E.

Gray, L.

1386

Gray of Contin, L.

Portland, D.

Gridley, L.

Rankeillour, L.

Haddington, E.

Reay, L.

Haig, E.

Reigate, L.

Hailsham of Saint Marylebone, L.

Rochdale, V.

Rodney, L.

Halsbury, E.

Romney, E.

Harmar-Nicholls, L.

Rugby, L.

Henley, L.

St. Davids, V.

Hesketh, L.

Saltoun of Abernethy, Ly.

Hives, L.

Sanderson of Bowden, L.

Home of the Hirsel, L.

Sandys, L.

Hood, V.

Selborne, E.

Hooper, B.

Sempill, Ly.

Hunter of Newington, L.

Shannon, E.

Ingrow, L.

Sharples, B.

Kimball, L.

Skelmersdale, L.

Kinloss, Ly.

Slim, V.

Lane-Fox, B.

Somers, L.

Layton, L.

Stockton, E.

Lloyd-George of Dwyfor, E.

Stodart of Leaston, L.

Long, V.

Strange, B.

Lurgan, L.

Strathspey, L.

McFadzean, L.

Swinton, E.

Macleod of Borve, B.

Terrington, L.

Margadale, L.

Teviot, L.

Marley. L.

Teynham. L.

Marshall of Leeds, L.

Thomas of Swynnerton, L.

Massereene and Ferrard, V.

Torphichen, L.

Middleton, L.

Trafford, L.

Mottistone, L.

Tranmire, L.

Mowbray and Stourton, L.

Trefgarne, L.

Moyne, L.

Trumpington, B.

Munster, E.

Tryon, L.

Murton of Lindisfarne, L.

Vickers, B.

Nelson of Stafford, L.

Vinson, L.

Norrie, L.

Ward of Witley, V.

Nugent of Guildford, L.

Watkinson, V.

Onslow, E.

Westbury, L.

Orr-Ewing, L.

Whitelaw, V.

Pender, L.

Windlesham, L.

Peyton of Yeovil, L.

Wise, L.

Polwarth, L.

Wolfson, L.

Porritt, L.

Young, B.

Resolved in the negative, to accordingly.
4.59 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 4:
Page 1, line 7, after ("1989") insert ("or such later date as the Secretary of State shall appoint")
The noble Lord said: My Lords, this amendment has a slightly similar flavour to that of the last amendment but it is different in that it gives the Secretary of State the power to appoint a later date. The purpose of it is that should the risk of not being ready materialise, it would be quite inappropriate if the system had to come in at a date on which the arrangements were not ready. This amendment merely gives the Secretary of State the power to put back the date should that eventuality occur. If this new system is to be brought in, it would be the desire of everybody in this House that at least it should be brought in by means that would work and be understood. It would not be the situation of chaos that arose in 1983, for example, when the present housing benefits scheme was rushed through at very high speed and without time for consultation. That resulted in sheer chaos.
The position of local authority finance officers is that not only do they have to deal with this but they also have to deal with the reassessment of the housing benefits arrangements for 1988, and therefore they will already have a fairly high level of involvement in

1387
getting new systems to work. In addition to that, under this Bill an amazing number of regulations must be produced, together with all the consultations that have to take place.
There must be consultation over the types of land and heritage which are to be classed as domestic subjects. That presumably means consultation with the Scottish Assessors' Association. The timetable for setting the level of the personal community charge has to be discussed and agreed. The classes of residence to be covered by the collective community charge have to be discussed and agreed. The information has to be contained on the community charges registers. There must be consultation on that.
There must be a timetable for the preparation of the registers. That will involve consultation with the assessors and others. There must be consultation on the timing and manner of notification of people affected by amendments to the register, as well as on what information held by local authorities will not be made available to the registration officers. Those matters, as well as the question of public access to the register, all require consultation. That is quite apart from the matter which I raised in Committee and therefore do not wish to expand on at length about the difficulty of training and acquiring computer staff and getting the computer facilities which would be suitable for exchanging information between people responsible for collecting the charge and the various housing bodies, as they are now to be called.
The list of regulations in the Bill is quite extraordinary. Presumably they all have to be discussed and dealt with. There are regulations under Clause 2(3)(b) and Clause 2(4), and there are three sets of regulations under Clause 3. There are regulations under Clauses 6, 8 and 9 and two sets under Clause 11. There are two sets under Clause 13 and there are regulations under Clauses 14 and 15. Clause 17 has two sets of regulations and Clause 20 has three sets. Clauses 24 and 29 have one set of regulations. Schedule 1 has one set of regulations. Schedule 2 has at least two sets, and there are many more. All those regulations must be drafted, discussed with and understood by the local authorities which have to operate them and be understood by the people concerned. It is not a case of this not being ready by the 1st April 1989 but of it not being ready by the time the register has to be published, because local authorities have to work out how many people will be liable to pay the community charge and what their community charge is to be. Therefore, we are not talking about a period of nearly two years but rather of 15 to possibly 17 months. For those reasons I beg to move the amendment.
Lord Grimond: My Lords, I hope that the Government will take the amendment which has just been moved very seriously. Apart from the question of the regulations, which, as the noble Lord has pointed out, will be extremely numerous and will all require consideration, my experience, which I admit is limited, is that the local authorities are still trying to find out how the Bill will work. They are discovering that the Bill is giving rise to new difficulties and unanswered questions. For instance, I received a letter only a day or two ago about the effect that the Bill will
1388
have on water rates in certain parts of Scotland. Up to now that has not been considered in this Chamber although it may have been discussed by the Government. One local authority is extremely worried about what will happen to its water rates. I do not think that local authorities are entirely clear about the implications of the standard community charge.
Without wishing to reiterate all the arguments that have been made, I merely add to the view that, with the best will in the world, it may be that the Bill will take longer to implement than has appeared necessary to the Government. It would be highly undesirable that any attempt be made to put it into operation in a half-baked state.
Lord Mackie of Benshie: My Lords, I wish to reinforce this argument and hope that the Minister will accept it. It is perfectly straightforward. If he is Secretary of State and he is ready, he can proceed with it. If a Member of some other party is Secretary of State, that person may wish to postpone implementation for somewhat longer. However, the amendment is perfectly reasonable and it is a safeguard that the Minister should accept.
Lord Glenarthur: My Lords, the noble Lord, Lord Morton of Shuna, started by saying that this amendment was slightly different. I accept that it is slightly different, but even so the arguments against it embody very much the same arguments as I made when I answered the points raised by the noble Lord, Lord Carmichael, during discussion on an earlier amendment.
It is important to remember that the Rating and Valuation Association is now taking a constructive interest in the implementation of the Bill and a helpful meeting with its representatives is likely to pave the way for further consultations with it. Dialogue with CoSLA has recently been reopened with a view to starting detailed discussions with its representatives once the Bill has been enacted.
However, most local authorities have begun to consider, at least in a preliminary way, how they would proceed to implement the Bill. I can only repeat that the timetable is tight, but it will always be tight. If we were to go down the path suggested by the noble Lord, Lord Carmichael, or to go for some point in the future (as yet unspecified) which may be made by order—which is the substance of the amendment of the noble Lord, Lord Morton of Shuna—again the timetable will fill the vacuum. As I have said, I believe that the interest being taken by the various associations and representatives of local authorities is encouraging. There is no point in throwing a lifeline to someone who is not in difficulty. That seems to me to be very much the meat of this argument.
But I should like to add one further point so far as this amendment is concerned. I appreciate that its purpose is to allow a measure of flexibility. But in this area I do not think that flexibility is necessarily helpful because it introduces a measure of uncertainty over the timing which I believe to be undesirable. It is surely preferable to select a realistic target date and then to commit ourselves to it, because everybody will then know where he is. To leave open the possibility of a postponement seems inherently much less logical. The

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other arguments are those that I enunciated earlier. I do not think that this amendment will help and I hope that the noble Lord will feel able to withdraw it.
Lord Wilson of Langside: My Lords, I find the Minister's answer very puzzling. He is suggesting that there is no point in throwing a lifeline to a chap who is not in difficulty. But if half the local authorities that will be affected by this measure are saying that if you do not throw a lifeline you may get into difficulty, would it not be prudent to accept the amendment and throw the lifeline? What harm can it do? If at the end of the day the Minister is able to say to those of us who have been critical of the time that this Bill will take, "I told you so", we shall not blame him at all.
Lady Saltoun of Abernethy: My Lords, may I remind your Lordships of Parkinson's first law, which is that work expands to fill the time available?
Lord Morton of Shuna: My Lords, I found the answer foreseeable and disappointing. It appears that the Minister has no confidence as to who might be the Secretary of State by the time 1989 comes around, because if we were to give this power to the Secretary of State he might appoint a later date. That is very encouraging for this side, but it is odd to hear the Minister putting that point of view.
It is all very well saying that you do not throw lifelines away, but if you are on a boat sailing across the Channel or anywhere else you do not throw away the lifebelts before you set out from the harbour. You leave them there. What harm will this amendment do to the situation? If the Bill can work so well, and if in 1989 Scotland has the misfortune to be governed by the same government, the Secretary of State will not need this clause at all. If it is there, it can just be ignored because he will operate on 1989. He will not need the words,
"or such later date as the Secretary of State shall appoint".
But something may go wrong with the getting or the fitting-up of the computers. I remind the noble Lord that the Inland Revenue managed to slip two years behind on its computerisation programme. It probably knows slightly more about computers—at least the noble Lord, Lord Burton, would suggest—than the Highland region. But there are difficulties and I suggest that this is an amendment which should be approved by the House.
5.13 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 94; Not-Contents, 131.

DIVISION NO. 3

CONTENTS

Airedale, L.

Birk, B.

Amherst, E.

Blackstone, B.

Ardwick, L.

Blease, L.

Attlee, E.

Blyton, L.

Aylestone, L.

Boston of Faversham, L.

Bacon, B.

Brockway, L.

Basnett, L.

Bruce of Donington, L.

1390

Carmichael of Kelvingrove, L.

McNair, L.

Carter, L.

Mishcon, L.

Chitnis, L.

Morton of Shuna, L.

Cledwyn of Penrhos, L.

Mountevans, L.

David, B.

Nicol, B.

Davies of Penrhys, L.

Oram, L.

Dean of Beswick, L.

Perry of Walton, L.

Diamond, L.

Phillips, B.

Elwyn-Jones, L.

Pitt of Hampstead, L.

Ennals, L.

Ponsonby of Shulbrede, L.

Ewart-Biggs, B.

Prys-Davies, L.

Ezra, L.

Rea, L.

Fisher of Rednal, B.

Ritchie of Dundee, L.

Foot, L.

Rochester, L.

Gallacher, L. [Teller.]

Ross of Marnock, L.

Galpern, L.

Seear, B.

Glenamara, L.

Sefton of Garston, L.

Grey, E.

Serota, B.

Grimond, L.

Stallard, L.

Hampton, L.

Stedman, B.

Hatch of Lusby, L.

Stewart of Fulham, L.

Hooson, L.

Stoddart of Swindon, L. [Teller.]

Houghton of Sowerby, L.

Hughes, L.

Strabolgi, L.

Hutchinson of Lullington, L.

Taylor of Blackburn, L.

Irvine of Lairg, L.

Taylor of Gryfe, L.

Irving of Dartford, L.

Taylor of Mansfield, L.

Jacques, L.

Tordoff, L.

Jeger, B.

Turner of Camden, B.

John-Mackie, L.

Underhill, L.

Kilbracken, L.

Walston, L.

Kilmarnock, L.

Wells-Pestell, L.

Kirkhill, L.

Whaddon, L.

Leatherland, L.

White, B.

Llewelyn-Davies of Hastoe, E

Wigoder, L.

Lloyd of Kilgerran, L.

Williams of Elvel, L.

Lockwood, B.

Willis, L.

Longford, E.

Wilson of Langside, L.

Lovell-Davis, L.

Winstanley, L.

McIntosh of Haringey, L.

Young of Dartington, L.

Mackie of Benshie, L.

NOT-CONTENTS

Ailsa, M.

Dundee, E.

Aldington, L.

Eden of Winton, L.

Alexander of Tunis, E.

Elliot of Harwood, B.

Allerton, L.

Elton, L.

Alport, L.

Erroll of Hale, L.

Auckland, L.

Faithfull, B.

Bauer, L.

Fanshawe of Richmond, L.

Beaverbrook, L.

Forbes, L.

Belhaven and Stenton, L.

Fortescue, E.

Beloff, L.

Fraser of Kilmorack, L.

Belstead, L.

Gisborough, L.

Blake, L.

Glenarthur, L.

Blyth, L.

Goold, L.

Boyd-Carpenter, L.

Gray, L.

Brabazon of Tara, L.

Greenway, L.

Brentford, V.

Gridley, L.

Broadbridge, L.

Haddington, E.

Brougham and Vaux, L.

Haig, E.

Bruce-Gardyne, L.

Hailsham of Saint Marylebone, L.

Burton, L.

Caccia, L.

Halsbury, E.

Caithness, E.

Harmar-Nicholls, L.

Cameron of Lochbroom, L.

Henley, L.

Campbell of Alloway, L.

Hesketh, L.

Campbell of Croy, L.

Hives, L.

Carnegy of Lour, B.

Home of the Hirsel, L.

Carnock, L.

Hooper, B.

Cathcart, E.

Hunter of Newington, L.

Chelmer, L.

Hylton-Foster, B.

Coleraine, L.

Killearn, L.

Cork and Orrery, E.

Kimball, L.

Craigmyle, L.

Lane-Fox, B.

Cullen of Ashbourne, L.

Layton, L.

Davidson, V. [Teller.]

Long, V.

De La Warr, E.

Lurgan, L.

Denham, L. [Teller.]

Macleod of Borve, B.

Derwent, L.

Margadale, L.

Dilhorne, V.

Marley, L.

1391

Marshall of Leeds, L.

Rugby, L.

Massereene and Ferrard, V.

St. Davids, V.

Middleton, L.

Saltoun of Abernethy, Ly.

Molson, L.

Sanderson of Bowden, L.

Mottistone, L.

Selborne, E.

Mowbray and Stourton, L.

Sempill, Ly.

Moyne, L.

Sharples, B.

Munster, E.

Skelmersdale, L.

Murton of Lindisfarne, L.

Somers, L.

Nelson of Stafford, L.

Stockton, E.

Norfolk, D.

Stodart of Leaston, L.

Norrie, L.

Strange, B.

Nugent of Guildford, L.

Strathspey, L.

Onslow, E.

Swinton, E.

Orr-Ewing, L.

Terrington, L.

Pender, L.

Thomas of Swynnerton, L.

Peyton of Yeovil, L.

Torphichen, L.

Plumb, L.

Trafford, L.

Polwarth, L.

Tranmire, L.

Porritt, L.

Trefgarne, L.

Portland, D.

Trumpington, B.

Radnor, E.

Vickers, B.

Rankeillour, L.

Vinson, L.

Reay, L.

Ward of Witley, V.

Reigate, L.

Whitelaw, V.

Rochdale, V.

Windlesham, L.

Rodney, L.

Wolfson, L.

Romney, E.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.21 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 5:
Page 1, line 7, at end insert ("provided that a majority of those entitled to vote at local authority elections in Scotland have approved this Act in a referendum").
The noble Lord said: My Lords, this amendment in my name and in the name of the noble Lord, Lord Taylor of Gryfe, provides that this Bill is not to come into force unless a majority of the electorate in Scotland have approved of it. It is an amendment which I anticipate that the Government will accept with alacrity. The noble Lord, Lord Boyd-Carpenter, has told us that the Bill is to be a great improvement. The noble Lord the Minister has told us that 52 per cent. of households will be better off under the Bill, that it will be very popular and that it will provide greater accountability and responsibility.
Perhaps all that is surprising in view of some of the other opinions which have been expressed. It is surprising that opinion polls seem to be in an entirely different direction and do not suggest that the poll tax is totally popular. I think that 20 per cent. is the figure given for those who approve of the poll tax. The poll tax is opposed by the Scottish local authorities. The local authority officials, who are the people who must make the Bill work, are opposed to it as unworkable, although the noble Lord, Lord Sanderson, was able to find one local authority official who was prepared to say that he was in favour of the Bill. That is one official out of the total number of local authority employees in Scotland and it is not a very high percentage. That is true in spite of attempts apparently made by the Tory Party in the Borders to muzzle local authority officials from giving expression to their opinions. If the scheme is so fair and so wonderful, why should the Scottish voter not be able to express his view upon it?
There has been some reference today to a recent survey which appears to put a different complexion on the issue of the effect which the Bill will have on
1392
householders from that contained in the glossy green paper to which my noble friend Lord Ross of Marnock has referred. That survey is based on the Department of Employment Family Expenditure Survey 1985 and has been done by Professor Hughes of the Department of Economics at Edinburgh University. The Department of Employment Family Expenditure Survey may be totally wrong; however, it is a survey upon which the Government presumably place some reliance.
On the basis of that survey, only the top 10 per cent. of the population will be better off under the new system. As regards household incomes, it is only if a household has an income of more than £419 a week that the household will be better off under the average when paying a community charge rather than paying rates. Everyone else will be worse off. One particular group which will be worse off will be those under 25 who will get a lower rate of benefit and a lower rate of allowances. They will therefore have to pay the 20 per cent. community charge out of a lower income because these figures have been calculated on the basis of 20 per cent. for persons receiving housing benefit. On household incomes up to £419, every household will be worse off. Those who will be the biggest losers according to the survey will be young householders up to age 25 and unemployed householders who will be on average more than £3 per week worse off.
If this system is to provide such a great advantage, why should it not be given to the electorate to see whether or not they want it? Over the past few years we have had considerable attacks on local authorities as being totally profligate in fixing their rates. The Government have rate-capped and they have done this, that and the other in order to reduce local authority expenditure on the basis that that would be popular with the electorate. I believe that there are only one or two councils and no regions which now have Conservative majorities as a result of elections over the past few years in local authorities. I believe that that shows the views of the people in Scotland just as effectively as do opinion polls. I beg to move.
Lord Boyd-Carpenter: My Lords, despite the indication by the noble Lord, Lord Morton of Shuna, that the Government will accept this amendment with alacrity, I am afraid that, if my noble friend the Minister feels alacrity about it, I do not. I realise that a Scottish lawyer never jokes; therefore, I must take the statement of the noble Lord, Lord Morton, au grand serieux. His speech simply amounted to saying that he is against the Bill. I believe that even the least perceptive of your Lordships had already had that impression during earlier debates. We are adding nothing whatever by this amendment except the idea of introducing, as the noble Lord hopes and believes, a means of delaying the Bill by holding a referendum. Constitutionally that is an expedient which is in general a very dangerous one. It is one that any opposition may ask for in respect of any government which it does not like. If it goes any distance, it undermines the whole authority of Parliament. I therefore hope that your Lordships will treat this amendment as the bad joke which it is really intended to be.
5.30 p.m.
Lord Taylor of Gryfe: My Lords, I should like to support the amendment. My name is on the amendment and I argued in favour of this proposition at a late hour at Committe stage. On that occasion we did not divide the Committee because it was late and attendance was rather thin, and as I believe in exercising democracy I felt it unwise to proceed to vote.
This amendment is about consultation. It is not about the nature of the Bill. The noble Lord, Lord Boyd-Carpenter, said that the speech of the noble Lord, Lord Morton of Shuna, was simply a speech against the Bill. At this moment we are not arguing whether the Bill is good or bad. We all have our views about that and those have been explained and will continue to be explained in the course of debate. We are arguing, however, about whether the people of Scotland should he consulted about this important constitutional change.
It will be recalled that on two recent occasions referenda were held in Scotland on two issues. One concerned the setting up of a Scottish Assembly and the noble Lord, Lord Home of the Hirsel, recalled that it was considered sufficiently important to invite the Scottish people to declare whether they were in favour of a Scottish Assembly. I do not know whether the Scottish Assembly would have cost the people much one way or the other, but certainly this Bill will cost the people of Scotland a great deal financially. Because of the complete and radical change in raising local authority finance, I should have thought there was sufficient justification for the people who are to suffer the effects of the Bill to be invited to comment as to whether they support it.
The Minister and the Government in general have said a good deal about accountability. But what is accountability about? It is a sense of responsibility of the ratepayers for the local government which they enjoy. To consult the people in the form of a referendum is an exercise in accountability. The people would be asked. There would be debates and discussions about the Bill in town halls and village halls and on television. The people would argue about it, because many people are not only concerned but confused about the Bill in the meantime. A referendum would be the appropriate opportunity for the people to learn about the Bill and its full implications.
Apart from the matters that we have already discussed there is another point I should like to mention concerning the Bill; namely, that it represents an expanding exercise in centralisation of government. That is inherent in the Bill, as can be seen in its terms for raising finance for local government. Therefore, in order to counter the argument that it is an exercise in centralisation, the people should be invited to look at the Bill which is being imposed and should consequently feel that they are involved and that the measure is not being imposed by a Westminster government.
I have already spoken this afternoon about the resentment felt by the people in Scotland about the idea that something is being imposed from Westminster that does not affect the rest of the United Kingdom but simply Scotland. As democrats we ought
1394
to be supportive of the idea of consultation with the people, and a referendum is the appropriate form. Consequently, I hope that the Minister will see the wisdom of this point and, as has been said by the noble Lord, Lord Morton of Shuna, since the Minister assumes it is a desirable measure which commands respect and support in Scotland, he may put it to the test.
Lord Hughes: My Lords, I should like to speak briefly in support of this amendment, although quite frankly it would not have been my choice. I would put it forward as a third possibility.
As the noble Lord, Lord Taylor of Gryfe, mentioned, there was an infamous occasion when a referendum was held in Scotland as to whether a piece of legislation would come into operation. I should have followed that infamous example by giving the Government the benefit not of having to find a majority of those on the electoral register but of having 40 per cent., because it was that 40 per cent. which torpedoed the assembly then and the Conservative Party was very enthusiastic about that. I doubt very much whether it would be equally enthusiastic about even 40 per cent. approval. But my first choice would be that there is an opportunity some time between now and June of next year when the electorate of Scotland will have the opportunity.
I would have suggested as a possible amendment that the first general election after the Bill reached the statute hook a majority of those elected from the 72 seats in Scotland should be in favour of the Bill coming into operation. If the Government can get 37 seats in Scotland, then they are entitled to their claim that this is what the people of Scotland want and they object to any delay in this benefit being conferred upon them. If the Government are so sure that this is what the people of Scotland want and that it is going to be a possible vote winner—although they have denied that any such vile thought has ever entered their mind—let them put it to the test.
Having said that, I doubt very much whether my suggestion would meet with even as much favour as the suggestion put forward by my noble friend.
Lord Howie of Troon: My Lords, I was a little worried by one of the remarks made by the noble Lord, Lord Boyd-Carpenter. He thought that this amendment would undermine the authority of Parliament. We in this House and elsewhere are strong in our support for the authority of Parliament, but that is taking too narrow a view of Parliament. Parliament exists not only for its authority but it is also a representative organisation, or at least the other House is. How representative we are I am not sure, but in some way we are.
When people appeal to the authority of Parliament alone there is always a danger that they might be thinking that having power in itself entitles a government to do more or less what they like. We all know the theory of the mandate and its limitations. We certainly know that on the strength of a mandate a government will do a great many things that are not in the mandate at all and will always overlook the fact that when people support a government in general

1395
terms they do not necessarily support it in particular terms. There can hardly be a voter in the entire country in any election who has ever supported the entire platform of his party. If that were so he would be a very odd fish indeed, and none of us has ever seen him, no matter how many doors we have knocked on in our unregenerate past.
If we think only of the authority of Parliament and neglect its representative nature, we underestimate the functions of Parliament. In order to be representative there must surely be some point in knowing what the people who are represented want. We can all make assumptions and apply to opinion polls or hold a finger in the air to test the wind. But to have a referen-dum actually to ask the people their views on a specific proposal, and to have to go out among the people in order to defend that proposal on its own, not wrapped up in a manifesto—to argue its merits or demerits and convince people to support it—is surely no bad thing for a politician to do. If we fear the referendum as a machinery of government what we really fear is democracy itself. I support this amendment and I hope that the House will accept it.
Lord Glenarthur: My Lords, I have to say that my feelings towards a referendum on this issue are no warmer than they were when we debated the matter in Committee. In fact, they are as icily cold as my noble friend Lord Boyd-Carpenter suggested I would feel them to he. I am opposed to the amendments on the grounds of both principle and practicability.
I cannot claim that to hold a referendum in the United Kingdom would he unprecedented. Indeed, several noble Lords have referred to referenda which have taken place in the past. We have made use of them and I should like to think that we have learned something from our experience in those cases. It is very difficult to decide how to select the issues on which it would be appropriate to hold a referendum. In this case, the argument seems to be that the abolition of domestic rates in Scotland is a matter of constitutional significance.
It is possible to find constitutional significance in just about every Bill which this House considers and the problem of selecting from an unwritten constitution those features which might be considered sufficiently major to justify seeking popular approval in a referendum is one which is virtually insurmountable. The noble Lord, Lord Hughes, is right but the suggestion he makes is even worse and would make life more difficult and prove the constitutional position to be even more complicated.
A noble Lord: It would make it difficult for the Government.
Lord Glenarthur: But it would make it difficult for the noble Lord as well or impossible for all of us. My Lords, I go further: it is dangerous for Parliament to continue to decide matters such as selecting a subject for referendum in an ad hoc fashion. Like my noble friend Lord Boyd-Carpenter, I think we must be very careful not to slide into the practice of regarding amendments in favour of a referendum as a regular
1396
Opposition tactic of opposing principles when the House is considering a Bill; and that is precisely what the amendment is proposed by the noble Lord, Lord Morton of Shuna.
If the House were to accept either of these amendments, even in principle, it would in effect be saying that despite the many hours of debate on questions of both principle and detail it was in the end still not sure and therefore was passing the issue back to the Government so that they could see what the people thought about it. In other words, the House would be making implicit comment about the political and moral authority of Parliament to make decisions in a matter of this kind. I am afraid I fundamentally disagree with the analysis of the noble Lord, Lord Howie of Troon. The amendment raises fundamental points of this kind and to accept it would take us down a very dangerous path.
There is nothing in this amendment or in Amendment No. 7 (which is grouped with it) about how referenda should be conducted. Again, previous experience should have taught us that the ground rules for holding referenda are extremely important. I refer to such matters as the framing of the question, the size of the majority required, the provision of information to voters, campaign expenditure and so on. These issues cannot be simply written off as questions of detail only, because unless they are generally agreed there is a grave risk that the referendum would be regarded by one side or another as unfair and the result challenged.
Putting these major issues of principle on one side for the moment and turning to the amendments themselves, one major omission in both amendments is that they do not deal with the question of alternatives to domestic rates. Let us suppose, for the sake of argument, that three-quarters of those who voted supported the abolition of domestic rates. Is it to be supposed that there was the same support for the community charge or that three-quarters of the voters did not want any form of local domestic taxation at all? To have a referendum simply on the question of abolition does not, if I may say so, seem very wise.
I believe that it is for Parliament to decide these issues and that to make use of a referendum would be inappropriate and unwise. I hope that the noble Lord will see the force of that argument and withdraw his amendment.
5.45 p.m.
Lord Wilson of Langside: My Lords, I have listened with great interest and very attentively, as I always do, to everything that the Minister said. However, I thought there was much wisdom in what was said by my noble friend Lord Taylor, the noble Lord, Lord Howie of Troon, and others, who spoke in favour of the amendment. I am sorry that the Minister gave it so little consideration.
I am concerned that he seems to have missed the point which my noble friend Lord Taylor of Gryfe has made on more than one occasion in our debates on this Bill. To have a referendum on this particular measure would have a special political wisdom because there is the danger of a serious political backlash growing up in Scotland. I do not know

1397
whether Ministers are aware of it but it is arising out of the circumstance that the Government have so little support in Scotland. Of course, I know that in the past England had to put up with Labour governments because of the support that came from the Celtic fringes of these islands. I know about that, but in this case the situation is reversed and there is that danger.
Do Scottish ministers appreciate that a referendum would be an act of political prudence? If we were wrong and the Scottish people cannot be held back from showing their complete enthusiasm for this absurd measure then the Minister will be able to say, "I told you so" and it will at least preserve him and his Government from the danger of this growing hostility to this measure being imposed on a people and clearly against the wishes of the great majority of them.
Baroness Carnegy of Lour: My Lords, before the noble and learned Lord sits down, I should like to put this question to him. He said that he listened carefully and attentively to the Minister. Having done so, does he consider that a simple question such as one must ask in a referendum could be suitably phrased on a subject as complicated, as complex and as many faceted as is contained in this Bill? If so, is the noble and learned Lord saying that any Bill of considerable importance to ordinary people, however complicated and many faceted, is suitable for a referendum and possibly should be decided by one?
Lord Wilson of Langside: My Lords, I am satisfied that this Bill could be the subject of a simple referendum question which the Scottish people have sufficient wisdom to answer after listening to the arguments for and against it. Entry into Europe was a much more complicated business.
I was converted to the idea of a referendum by the noble Lord, Lord Howie of Troon. When we were arguing about it at the time of the Scotland Bill I was against the idea. I took the view of the noble Lord, Lord Boyd-Carpenter, that Parliament should make up its own mind. I clearly remember the noble Lord, Lord Howie of Troon, asking why we did not trust the people. The people have great wisdom. Juries have great wisdom. When they reach the wrong decision it is usually because the judge has made something of an error in his directions to the jury.
On an issue of this kind I believe that the Scottish people can play the part of an intelligent jury if their politicians adequately present the case for and against it. I have no doubt about that. It occurred to me just before I left Scotland that at the moment there is, among all the other things about this Bill mentioned by the noble Lord, Lord Ross of Marnock, the element of a confidence trick.
This morning I received a report from my Member of Parliament. It purported to be a report of everything he had done. He said he had played a major part in the abolition of domestic rates. He did not go on to say anything about what was taking their place and it is a danger in an ordinary election campaign that matters are oversimplified. If you have a campaign on a simple, straightforward question like this, I would accept the judgment of the people quite happily.
Baroness Carnegy of Lour: My Lords, I do not wish to detain your Lordships, but having heard that the noble and learned Lord considers we should trust the people, I think the people should trust Parliament only to decide to have a referendum on a suitable matter. It is easy for the Opposition to suggest this, but in their hearts most experienced political people in your Lordships' House would find it very difficult to frame a question that would fairly allow an answer on behalf of the people of Scotland to the immensely complicated question which would be before them. It is an extremely irresponsible suggestion and I certainly shall not support it.
Lord Howie of Troon: My Lords, would the noble Baroness, Lady Carnegy, agree that the Swiss and the Californians manage to frame questions for referenda more or less every year and that there are many who vote on them, pass them and agree about them? The British could probably manage, given a little help.
Lord Morton of Shuna: My Lords, I am sorry that the idea of a referendum should meet with the noble Baroness's disapproval because it would he too complicated, when one considers that there was a devolution Bill involving a referendum which was certainly as complicated as the rates Bill. I have not looked it up but I should be interested to know, and I shall no doubt be told at some point, whether the noble Lord, Lord Boyd-Carpenter, voted in favour or against the referendum on devolution.
I am very sorry that the noble Lord has such a low opinion of the sense of humour of Scottish lawyers. I have not had time for a long acquaintance with him but I think it says something rather harsh about the present Lord Advocate and his immediate predecessor, to say nothing of the noble Lord's political friend, Mr. Ancram. I should have thought that they had on occasions betrayed a sense of humour. I hope I shall be able to assert such to the noble Lord at some time in the future.
There seems to be a lot in what my noble friend Lord Huges has said, that there is to be an election in the immediate future and it will no doubt show, whatever form of government, how Scotland views this proposal. In the circumstances, I do not propose to press this amendment.
Amendment, by leave, withdrawn.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 6:
Page 1, line 7, at end insert ("provided that all matters within the Act to be prescribed by regulations or directions are made by the Secretary of State before 1st January 1988").
The noble Lord said: My Lords, this is an amendment to ask the Government to provide within the Bill that all matters in it be prescribed by regulations or directions made by the Secretary of State before 1st January 1988. If my calculations are correct the Minister or the Government have about nine months in which to work out the regulations. I do not know how many regulations or directions the Government will need to include in the Bill before it becomes fully operational, but I have been given a list

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which is merely the mean regulations or directions, those of particular significance. It is a formidable list, amounting to 76 regulations or directions.
I agree that perhaps 15 per cent. are standard regulations which apply in almost all Bills, but a very large number of quite specific ones affect this Bill only. So we have 76 regulations of particular significance. It seems as though Parliament is being asked to pass legislation giving a blank sheet to the Government without legislation coming back here, except in the form of an order. We have always had grumbles about the amount of time we are allowed to study orders and the difficulty of being able to express ourselves and the House being able to make a decision on an order. However, a number as large as 76 is going too far. I believe eight or nine months should be long enough for the Government to produce them.
Perhaps I may make another point and I shall try not to be too long about it. I have been given an analysis of debates in another place where Ministers Michael Ancram and Ian Lang, made a number of promises about people whom they would consult during the process of writing regulations and giving directions. The list is short but I think it would be churlish, given that someone took the trouble to go through them, not to mention all the regulations and directions. I also think it is rather important to put on the record the promises which were made, because someone has gone to this trouble, which not everyone would do.
Therefore I think it would be useful if we gave a very brief account of the promises made. The first that was on the arrangements to cope with the transitional period of the Bill the local authorities should be consulted. That will not be necessary now, although there will be a transitional period; it may not be quite the same type of transitional period but there will certainly be some time.
Then the type of land and heritage classed as domestic subjects will need to be defined and there will be consultation with the Scottish Assessors' Association. On the timetable for setting the level of personal community charge, again local authorities will be consulted. On classes of residences covered by the collective community charge, this will be a matter for consultation. I imagine that that will require very great and detailed consultation, and I should certainly want to know more about it. Unfortunately, Parliament will not be fully consulted. It will merely be given an order and will need to make the best of it.
Then on information to be contained in the community charges register again there will be consultation with the Scottish Assessors' Association. I should have thought that Parliament would know how much was going to be produced by each individual and we should be able to have representation from the public and the other place, and particularly from constituents, as to what should be included in the register. On the timetable for the preparation of the register, again the Scottish Assessors' Association and other interested bodies will be consulted. As to the timing and manner of notification of persons affected by amendments to the register, again there should be
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consultation with local authorities and registration officers.
Next comes a difficult point: information held by local authorities which will not be available to the registration officers. Here there will be consultation with local authorities and other interested bodies. This strikes me as something about which Parliament should be able to have a little more information. We should have that fairly early, long before the Bill becomes operative.
As to the places for public access to the register, it was said that detailed consultation would take place. That is a point on which we would all rely on the habit in Britain of making such things public being well enough established, and I should have no great objection to that.
The Minister was kind enough to write to me when I raised a question on Clause 2 and I think it is only reasonable to give part of his reply. I was very grateful to him for writing to me. He said:
"Clearly there can be no question of the regulations being made until after the Bill has become law. The definitions of the lands and heritages to come within the scope of the regulations to be made under clause 2 are the subject of continuing consultation between the Department and representatives of the Scottish Assessors' Association".
He continued:
"While these discussions are proving extremely useful the draft regulations are not yet in a sufficiently firm state to justify issuing them in the way you suggested".
I had suggested that we should be given draft regulations. I had referred to the ones I discussed earlier. The Minister said that the draft regulations were not yet ready although in the debate on that amendment in Committee he said:
"Our intention is that the regulations under subsection (4) should be made as soon as the Bill is enacted".—[Official Report, 30/3/87; col. 436.]
Why is there the contradiction? The Minister does not yet even have the draft regulations. I am sure that he believes that the Bill will be through Parliament by the summer. How much longer after that will it be before the Bill is enacted? If even the draft regulations are not sufficiently firm, how will it be possible to have the regulations made as soon as the Bill is enacted? Is the task of defining some of the points that will be made in regulations proving too difficult?
The Minister should say a little more than that he can do nothing until the Bill is enacted. This Bill is important. It will affect the people of Scotland and the organisation and running of local government in Scotland. A bit more information should be given about the many draft regulations and directions that will be made. I await the Minister's reply with interest. I beg to move.
6 p.m.
Lord Glenarthur: My Lords, in our brief debate in Committee on a similar amendment to Clause 29 I made it clear that, while I could not accept the amendment, I recognised the genuine concerns which underlay it as regards the overall timetable for introducing the community charge system.
I am willing to repeat the assurance which I gave to the Committee that we shall endeavour to bring

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forward the necessary regulations in good time. I cannot, however, give the House an explicit and categorical assurance that all the major sets of regulations will be made before 1st January 1988.
The noble Lord will be aware that we envisage about seven main groups of regulations. I referred to that (Hansard, cols. 371–372) at an earlier stage. I can say that in determining our priorities we shall have at the forefront of our minds the paramount need to leave local authorities sufficient time to set up their own systems within the framework which the regulations will create.
It may be helpful if I explain the Government's general intentions with regard to the consultations which will take place about the exercise of the various powers of prescription contained in the Bill. Since most of the powers affect local authorities one way or another, it is our clear intention to consult CoSLA about their use. The Government are anxious to resume the normal consultations with CoSLA which were discontinued at the end of the Green Paper consultation period last summer. We hope that it may be possible to do that before too long.
Consultations will also be necessary with expert groups such as the Scottish Assessors' Association, to which the noble Lord referred, in relation to its existing duties and in relation to its members as registration officers designate. That work is already under way and will continue in the coming months. We also envisage detailed consultations with representative professional groups such as the Rating and Valuation Association and the Chartered Institute of Public Finance and Accountancy. Where appropriate, other groups will be involved in consultations. For example, representatives of the caravan site industry will have an interest in certain aspects of the regulations to be made under Clause 2. We envisage consultations with them in due course.
In all cases our general approach will be to ensure that the detailed definitions and procedural matters to be set out by prescription are framed in such a way as to safeguard the essential objectives of government policy while providing local authorities with reasonable flexibility to get on with the practical job of implementing the legislation. We are confident that that approach will be successful.
I give that further explanation and assurance against the background of the concerns which have been expressed by your Lordships on this matter and by the noble Lord, Lord Carmichael, on this amendment. As I say, I recognise those concerns and I can assure the noble Lord that the Government will do all that they can to meet them in a practical and positive way.
Lord Ross of Marnock: My Lords, I am glad that the Minister appreciates that with this amendment we are expressing our concern about the efficacy of the eventual introduction of the legislation. That will be April 1989. He will be aware of course that after the regulations are laid, local authorities will have to get on with the business of drawing up schemes and making the system work. They have a complicated register to draw up. The matter does not end there. There is the question of finance.
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Until we have some finality, which can only come as a result of the regulations with regard to land and houses, what will and will not be considered to be domestic subjects, the apportionment and the rest of it, local authorities will have no idea of what will come from their personal community charges. At the same time they will be working on what their expenditure will be. Until they have all that they cannot get together with the Government to find out what support they will receive through government grants. Of course there will only be the one—the needs grant. We have not heard a great deal about that. It will be a certain sum of money divided by the number of adults in the various areas.
All that will take a great deal of time. The sooner we have the regulations the better. I know that it is difficult. Every day that we discuss the Bill there is more work to do. The noble Lord is to introduce an amendment in relation to students in respect of whom changes will be made, but we do not know what they will be. That too must be prescribed. That is another regulation to come. We have not debated it. I do not want to deal with it today. Everything is being put off The decisions are not in the Bill. They must be put off to regulations, many of which we shall never see here; more is the pity. That is our concern. We need to be assured that everything will be done in time.
All we have heard is that the Government will do their best. It is not only the Government who must do their best. After the Government have finished, the local authorities must do their best. The local authorities need to know how much money will be given to them. Have any of the forward estimates in relation to the money to be given to local authorities included the cost, the adequacy and efficacy of the systems that they will need to employ?
My noble friend Lord Morton of Shuna, in another instance, told us what happened in relation to the Inland Revenue. It was going to introduce computerisation on a great scale for income tax between 1987 and 1989. The accounts committee was told that the period has already slipped by two years. We are talking about a measure that has to be completed during 1988. We cannot afford to allow it to slip for six months. That is why the Government were foolish not to accept the last amendment, which was a "just in case" measure.
We do not wish to see the Bill ending in chaos. My goodness me! —there will be those who will have a whale of a time anyway with the Bill. But with this amendment we would discover that we could not complete it in time, having spent hours in Committee accepting amendments which shorten the period and having given hostages to fortunes on other amendments.
I am sorry that the Government have rejected this amendment. I do not suppose that we shall be able to get any more out of the Government. However, we warn them that they are asking almost the impossible from local authorities and assessors who do not want the Bill. Being public servants they will do their best to make it work. One of the dangers is that we shall have a half-baked system full of flaws and holes. In this part of the world these will be picked up; there will be time to put matters right. But we shall be left with this

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half-baked system and the Government will have the odium of having insisted on passing the legislation in such a hurry. It is rather sad that we shall be in the hands of public servants rather than of the Government. The sooner the regulations are available, the sooner we shall find the flaws and be able to change the regulations in time to get the measure working.
Lord Carmichael of Kelvingrove: My Lords, I, too, am grateful to the Minister for the way he replied to the amendment. Like my noble friend Lord Ross of Marnock, I am disappointed that he was not able to promise rather better service from the draftsman on what will be extremely complicated amendments. As my noble friend Lord Ross of Marnock said, unless we receive the regulations very soon, we shall never see them and we shall have little scope to do anything about them. We wait in the hope that the Minister may be able to give us sight of at least some draft regulations before very long. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 7 not moved.]
6.15 p.m.
Lord Taylor of Gryfe Lord Taylor of Gryfe moved Amendment No. 8:
Page 1, line 7, at end insert ("provided that by that date the Secretary of State has established a scheme for local authority taxation based on ability to pay.").
The noble Lord said: My Lords, this amendment is fairly simple and straightforward. Clause 1 of the Bill opens with the dramatic statement—it is about the only simple statement I see in the entire Bill—that,
"With effect from 1st April 1989 domestic rates shall be abolished".
The amendment adds,
"provided that by that date the Secretary of State has established a scheme for local authority taxation based on ability to pay".
This is a basic and fundamental amendment which we discussed to some extent at the Committee stage. However, I do not apologise for returning to the theme this afternoon because I am much moved by the concern of the noble Lord, Lord Boyd-Carpenter, for the widow. I am sure that this amendment meets his case. The noble Lord pointed out the anomalies of the existing situation in which a widow living next door to a house where there are four wage earners is paying the same rateable value in the present system for local authority services. This amendment takes care of that. It allows for the widow who is disadvantaged to pay according to her income and her ability to pay. I look forward to the sympathetic support of the noble Lord, Lord Boyd-Carpenter, for this proposition.
I have always felt that for an Act to have authority and acceptability in a democratic society it must be shown to be fair. The noble Lord, Lord Ross of Marnock, has adequately demonstrated in his opening contribution this afternoon how unfair this Act will be. I have never quite understood why, when we talk about paying for national services, the health service, security, the armed forces and so on, we accept the principle of an income tax based on the ability to pay for these national services, but, when we come to look at paying for local authority services—which are
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equally important to the community and to the wellbeing of society—we devise a community charge as an alternative to the existing system. The amendment gives us the opportunity of making the required radical change in local authority financing which is fair.
In connection with regional employment and regional development, this is a gift to the South-East. People who look at the great North-South divide will realise that one important feature is the cost of housing in the South-East. Indeed, it is argued that regional disadvantages will disappear because housing is so expensive in the South-East that people will move north to Scotland; in short, that the market mechanism will work. But the man sitting in the house worth £150,000 or £200,000—which is not unusual now in the South-East—will pay exactly the same in community charge as the man living in a local authority house in Easterhouse or in the slummier parts of Scotland. To make a gift to people in the South-East by reducing the amount they will pay is a disincentive to sensible regional planning. There is no doubt that people living in expensive property in the South-East will be paying the same community charge. It is therefore a gift to them which flies in the face of all sensible regional planning.
Between the Committee stage and today, I re-read the 500 pages of the Layfield Report. Sir Frank Layfield is a very distinguished chairman. He looked at this quite objectively and made the kind of analysis that we have been attempting, somewhat inadequately, in discussions in the House. Sir Frank examined the whole question of local authority financing. On page 263 he states:
"The buoyancy in the income tax system is therefore capable of regulation and is not … a sufficient reason for rejecting the idea of a local income tax".
He goes on to indicate that it is a feasible source of local revenue and argues in favour of a local income tax in financing local authority services.
I cannot for the life of me understand why the Government resist this opportunity to make the kind of radical change that Sir Frank Layfield recommended and instead impose on us a system which is unfair and unjust. For that reason I suggest that we might look again at this matter and grasp this opportunity for change. I beg to move.
Viscount Massereene and Ferrard: My Lords, surely the noble Lord is being impractical. He appears to be suggesting a means test. I know that the noble Lord is no longer a member of the Labour Party but I should have thought that the Labour Party would object to this. One would have to have an army of bureaucrats, an army of civil servants, questioning people to find out their ability to pay. Also, a lot of people probably would not tell the truth. Some people's income varies each year. Would that mean that an army of civil servants would question those people every year to see whether their circumstances had changed? This appears to me to be highly impracticable.
Lord Boyd-Carpenter: My Lords, although the noble Lord, Lord Taylor of Gryfe, did not explicitly say so, I think that he accepted that the present rating

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system was unfair, should be abolished and should be replaced. We can start with that measure of agreement between us. Perhaps he will also accept that his proposed amendment is astonishingly vague. Although he explained that what he meant was a local income tax—I shall have a comment on that in a moment—his amendment does not propose that. Indeed, he seemed a little undecided about what it really meant. He referred to a widow and to ability to pay, as his amendment does. He went on to speak of income, to which the amendment does not refer.
As a distinguished banker and adviser to an extremely well-known merchant bank—even more well-known in the last few months than it was earlier—I am sure the noble Lord will appreciate that there is all the difference in the world between taking a test of ability to pay and income. There may be people with the same income whose ability to pay varies a great deal. To take the widows we have been discussing, one widow may be in excellent health, while next door to her there may be a widow with a similar income suffering severe disability and having therefore to obtain every sort of help, mechanical and human.
It is a great mistake to assume that ability to pay can be equated to income. They can be very different factors. The noble Lord did not seem to appreciate that. He put ability to pay in his amendment and seemed to suggest that it also included equality of income. If he does not mind my saying so, that suggests that, surprisingly for a distinguished banker, he has not really thought this through.
We come back to his admission at the end of his remarks that really it meant a local income tax. I do not propose to weary your Lordships with an argument about that because your Lordships will recall that we had a very long discussion on that at Committee stage and your Lordships decided firmly and emphatically at the end of that debate against a local income tax. I personally shared that view and cast my vote in that way.
Your Lordships will recall that one of the basic difficulties, to which no answer was given by the proponents of a local income tax, is to discover, if one is to go to raising local authority finance by local income tax, who will do the assessment and collection. Are we going to have to set up 'n every local authority area a separate mini-Inland Revenue whose job will be to assess the income, make the necessary allowances which an income tax system involves, and then decide on an income tax assessment? Or are we going to hand the whole thing over to the Inland Revenue, adding that, as each local authority's expenditure varies, the Inland Revenue will be asked to add to their labours in respect of the national taxation of people an additional factor differing in respect of every local authority area?
At one time in my official life I had a lot to do with the Inland Revenue. I could well suspect what their reply would be to such a suggestion. They are a robust department. The expressions which I suggest they would use if this was tried out on them are such that the rules of the House inhibit me from repeating them, but some of the less sensitive of your Lordships can perhaps guess what they are. Quite obviously, it would be imposing an impossible and unnecessary task on
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them. Apart from the other demerits—and they are many, though I shall not waste the time of your Lordships rehearsing them here—the fact that in every local authority area there would be need for a separate mini-tax collection system, or to impose on the Inland Revenue an additional burden of incredible complexity, surely indicates that a local income tax is out. If the noble Lord suggests that that is what his amendment really means, although it does not actually say that, that is an additional argument against it.
Lord Hughes: My Lords, I had intended to intervene earlier, and indicated this to the noble Lord, Lord Boyd-Carpenter, but at the stage when I thought of doing so the Minister was obviously anxious to get up. He made an attempt which was frustrated, so I thought it would be wrong to come in with what might be different points after the Minister had spoken, thus obliging him to say, "With the leave of the House", which he might have done, though more likely he would simply have ignored what I had said. One course would have been distasteful to him and the other to me.
I thought that the noble Lord, Lord Taylor of Gryfe, had his tongue in his cheek at the end of his remarks when he said that he could not understand why this did not commend itself to the Government. When we tie that to the remark that my noble friend Lord Ross of Marnock made at the beginning, that the principal beneficiaries of this are the wealthier people in the community and therefore it is not something which the Government object to, whereas local income tax, to which the noble Lord, Lord Taylor of Gryfe, is referring, quite obviously would hit hardest the people who are going to benefit under the present scheme, I do not think he really believed that he had much chance of persuading the Government to accept the amendment.
There is a second reason why we do not expect the Government to accept the amendment. As far as I can see, if this amendment is passed, the rest of the Bill falls. It must be the simplest wrecking amendment which has ever been attached to a Bill, and to get it in the first clause is absolutely first class. From that point of view I am most attracted to the amendment. If the noble Lord, Lord Taylor of Gryfe, should decide to divide on it I will follow him into the Lobby with enthusiasm. However, on the assumption that the Government have not lost about 50 of their supporters since the last Division, the probability is that if taken to a Division he would not succeed, so I shall go on to another tack altogether.
I indicated that I should be talking to some extent on what the noble Lord, Lord Boyd-Carpenter, had said earlier, and I thought it fair to tell him that I would be doing so. In the earlier stage his remarks would have been very pertinent indeed if Scotland had been divided almost equally between penurious widows living next door to families consisting of a husband and wife and four earning adults. We know that there are penurious widows in Scotland. We know that there are families with four earning members in addition, perhaps, to both the husband and wife earning. It is not inconceivable that some of these might live next door to each other. But since then he has modified the example. He has now assumed that the penurious

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widow—or the wealthy widow, because he did not indicate which category it was—would be living next door not to this wealthy six-membered family but to another widow. In the one case the widow is in full robust health, enjoying life in every way (until the Bill comes into operation) but next door there is a woman who needs all sorts of help in addition. So he said it would not be fair to treat these two as if income was the sole test of their ability to pay. What he ignored is that as a result of the Bill the second widow will get no help whatsoever because she will pay exactly the same amount of community charge as her healthy next door neighbour.
Those were not the remarks that I originally intended to make because I was relating them to what the noble Lord said the first time round. The assumption was—as so often is the case when one is talking about benefits to certain people—that all widows are poor. We know that is not true. I indicated to the noble Lord, Lord Boyd-Carpenter, that we have a delightful practice in Scotland—it may happen in England also for all I know—that every week generally on a Friday or Saturday in the local newspapers they publish lists of the estates which have been lodged with the sheriff clerk during the previous week. Anybody who cares to look at any particular list in any newspaper in Scotland at any time over the past year will find that the majority of those at the top of the list are widows. The lists start with those who have been left the biggest amount.
I referred at Second Reading to a little exercise that I carried out on the basis that I live in a small village with a population of fewer than 2,000. I then used copies of the valuation roll and the electoral register and spent a pleasant long time going through them. I found that, apart from this being a fair scheme, that more than 50 per cent. (I think the figure was 52 per cent.) of the people whom I was able to identify who would benefit were single people in houses who would only pay one community charge. Your Lordships will appreciate that the electoral register is more up to date than the valuation roll, so I had to identify people who figured in both at the same address.
However, what surprised me was how many of those, including owner-occupiers, even when they were one person owner-occupiers, would be paying more. When I got to two-person households, I found that the majority of them would be paying more under the community charge scheme than they are paying in present rates. I am certain that that can be duplicated—not necessarily in the cities where valuations are higher and therefore rate payments are higher—in rural areas all over Scotland where valuations and rate payments tend to be very much less.
Another matter which the noble Lord, Lord Boyd-Carpenter, raised earlier, when he was speaking against the uncertainty of delaying the operation of this, was that in the interval during this uncertainty people had to face the possibility of having to pay higher and ever higher domestic rates. He seems to have made the assumption that once the community charge has been fixed it will never be increased. But all the indications are that no matter how the
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Government attempt to control expenditure in Scotland, the community charge in no successive year will be as low as it will be in the first year, particularly if local authorities follow the Government's indication that they do not think that there will be a large measure of evasion.
I think the feeling that the percentage of people who would not register and therefore be paying a community charge is very much exaggerated. My advice to local authorities would be to take the Minister at his word and assume that for community charge purposes the percentage of collection would be the same as they presently receive from the collection of domestic rates. I am quite certain that the Minister would not advise them to do that because the effect would be that once the shortfall was discovered to be greater than that, the community charge would go up with a bump the following year. So community charge is not a basis for freezing payments for all time to people. It is just a different base from which it will rise.
I do not think this can be described as another Second Reading speech because I have confined myself to these particular points. I remind the House that it was agreed on this side and on the other side that a later amendment would be a more suitable medium to discuss this question of ability to pay. So I return to the amendment. I think it is a beautiful amendment. As I said, I hope that the noble Lord, Lord Taylor, will decide to divide on it because I cannot imagine a better opportunity for enabling the Government to get rid of this monstrous abortion of a Bill.
Lord Mackie of Benshie: My Lords, I also return to the amendment. I should first reassure the noble Viscount that people who pay income tax already reveal their income to the Inland Revenue so there is no difficulty about that at all. There is enormous difficulty about assessing who will pay the community charges reduced from 100 per cent. to 20 per cent. There will certainly need to be a tremendous amount of probing.
But in the amendment we are trying to rescue the Government or give the Government a chance to think again over what the noble Lord, Lord Hughes, described as this monstrous Bill. The purpose of the Bill is quite clearly stated: it is to abolish domestic rates in Scotland. Having abolished them—we are all agreed on that—or abandoned them in some way, then we go on to discuss what should be done. We want to enable the Government to think again. We should like to find out how they regard certain proposals which were not fully discussed on the last occasion. Much mention has been made of Layfield. His arguments are sound. They are enormously well researched and cannot be discarded just like that. The noble Lord, Lord Boyd-Carpenter, has a great terror of the Inland Revenue, but I thought that the great thing was that good Ministers made their departments do what they thought was right. A certain number of other countries, the Belgians, the Danes, the Dutch, the Italians, the French, the Luxembourgers, the Spanish and others, have all seemed to manage to do it and we should be clever enough to work out a local income tax which would be very much fairer.
My name should have been on this amendment. One of the reasons why that is so is that I now have a

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copy of an excellent document (which costs only £1) produced by a body called the Tory Reform Group. I think we should hear what the Government have to say about this piece of political thinking which is backed by a number of distinguished people. The president is the right honourable Peter Walker. One of the patrons is the noble Viscount, Lord Whitelaw, of Penrith. There are a very large number of other distinguished names from the Conservative Party on the Tory Reform Group. I read it with enormous pleasure. Indeed I wondered whether I could put my name forward from outside to belong to this group because it talks an enormous amount of sense.
I hope that the Minister has read the paper. It says:
"The purpose of this paper is to address these fundamental issues and to show that the 'community charge' is misconceived and will undermine local self-government and to put forward an alternative that will provide strong and accountable local authorities".
That is a sound premise on which to start a paper.
It goes on to look at the community charge. In case the Minister has forgotten what it says I shall tell him. It says:
"The proposed community charge for England and Wales is misconceived and will undermine local self-government. This is because it will involve substantial and excessive centralisation of power in Whitehall; isolate business from local government; fail to achieve the degree of accountability that is required; and be administratively expensive".
I trust that the Minister is not tired of hearing this excellent stuff. The document goes on to say how under the community charge this policy will be thrown completely into reverse. It says:
"The proportion of local tax borne services paid for by local taxation will fall from 51 per cent. to a mere 23 per cent.".
This point was made by the noble Lord, Lord Ross of Marnock, during the discussion.
This excellent paper goes on to say:
"The Tory Reform Group believes that it would be morally wrong to impose the full community charge on people with low incomes".
There are many such quotes and the Government have not answered the points made here. It goes on to refer to the administrative expense:
"The community charge will be administratively expensive and will add costs".
I could quote further but perhaps the Minister is becoming tired of hearing this. He should not be because it is good stuff. Indeed the objections to a local income tax are really those of principle. It is said that in practice it would be too difficult—the argument of the noble Lord, Lord Boyd-Carpenter. The paper goes on to quote the people I have already quoted who are clever enough to do so.
Lord Boyd-Carpenter: My Lords, it is not because they are clever enough to do so. It is not good enough just to say that without going into a much deeper analysis as to the central and local government tax collection systems in those countries which are totally different from our own.
Lord Mackie of Benshie: My Lords, the Layfield Report studied this point in some detail and came to a conclusion different from that of the noble Lord, who is entitled to his conclusions as well. Looking at it from outside, it appears to me that the Layfield argument is stronger.
Lord Sanderson of Bowden: My Lords, I think this has been debated before. I should very much like the noble Lord to read out the solution that the gentleman who wrote the paper for the Tory Reform Group came to. It seems to me to be a very complex answer. Would the noble Lord like to go on and read that part?
6.45 p.m.
Lord Mackie of Benshie: My Lords, I was about to do that. What does the noble Lord think I am on my feet for? He must understand these matters. I am here to put that to the Government and to find out what they will say about it. I shall tell the House exactly what the paper says. It says with great good sense that what is wrong with local government taxation under the present system is that it concentrates all payment on one source. The property tax is the one that carries all local government money-raising on its back. It says that that is what is wrong.
The paper goes on to suggest immediately that rates throughout the land should be cut in half. That would be popular even in Scotland. The noble Lord would be able to satisfy the Scottish Tories if he said that the Government would cut rates in half and would then index them. That would be a reasonable thing to do and it is a sensible idea. It is an advance perhaps even on the Liberal policy on this matter and it retains a system of easy collection which is understood by the people who pay. What they object to is not the system but the fact that they pay too much.
The paper says that the majority of the rest should be raised by a local income tax and that this should be done by the Inland Revenue. It does not suggest that this should be done locally from the town hall. It suggests also that with the computerisation of the Inland Revenue—two years behind schedule though it may be—it would be quite possible to do it without too much trouble. The paper goes on to suggest a further spread. It suggests a vehicle excise duty and a betting tax to accrue to local government. This is good thinking. For the life of me I cannot understand why the Tory Party went in a panic for the poll tax after having produced all the arguments against it.
Therefore the amendment, which the noble Lord, Lord Hughes, described as perhaps a hit of a wrecker, is very much a prober. It is an opportunity for the Government to examine the reasons once again. It is an excellent amendment and I look forward with great pleasure to hearing what the Minister has to say, mainly about the excellent arguments adduced by this beautiful pamphlet which costs only £1 and which is backed by such distinguished people as the Leader of this House.
Lord Howie of Troon: My Lords, I shall not delay the House for any length of time. I wish merely to ruminate very briefly on the two points raised by the noble Lord, Lord Boyd-Carpenter. Those noble Lords who have seen the noble Lord in action on the Front Bench opposite over many years will not believe that he fears the Civil Service or anything else on earth. Those of us who remember him when he was a Minister in various departments will know that he ruled those departments with a rod of iron. The civil

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servants did what they were duty bound to do. They also did it because if they did not do so they risked his ire and the lash of his tongue.
Lord Boyd-Carpenter: My Lords, I do not want to interrupt the noble Lord when he is being so embarrassingly courteous but perhaps he will bear in mind that if what he says is even partially true it was because I always secured that the requests I made of my civil servants were reasonable and not impossible.
Lord Howie of Troon: You see what I mean, my Lords! The noble Lord had every intention of interrupting me. He indicated this by saying that he did not want to do it. I shall carry on where I left off.
Nobody on this side of the House who has endured his tongue, as many of us have on occasion, would expect a civil servant to revolt against him. He raised an argument which had something in it but which was wildly exaggerated although probably exaggerated in a political context. Enough of that.
The other point he raised and about which we should think more carefully was his assertion that a local income tax would be complicated. He is correct there. I am being embarrassingly polite again. Local income tax would be complicated, just as any income tax is complicated. The poll tax in this measure is complicated and the rates are complicated. The noble Lord is correct. But I do not believe he is right in suggesting that it would be so hideously complicated that it could not be contemplated. It does not require a shadow Inland Revenue in every county or great city throughout the country. Has the noble Lord thought that there is an analogy here with the allowance system with which the Inland Revenue is already very experienced and which is itself a complicated matter?
Everyone's income tax form embodies a statement of income and claims for allowances against this, that or the other. A local income tax would be another kind of allowance. The difference is that, whereas other allowances are taken off one's income tax, this one would be added on. It would complicate the matter without doubt but it would not do so beyond the possibility that the Inland Revenue could deal with it ably, efficiently, resolutely and quite speedily.
Lord Ross of Marnock: My Lords, I think that there is a lot more in this than has been given credit. We are getting rid of domestic rates after one and a half centuries, but the philosophy behind the idea of domestic rating was ability to pay. Before the war—indeed, probably earlier than that—people tended to live in a house that did not flaunt but pretty well represented their wealth, the kind of house that they were able to afford, one that showed that they were a little better off than others; and they tended to live in particular places and parts of towns. Therefore, ability to pay was a consideration originally and lasted for a long time. Everybody knows that a small town can be divided up. One can say people are pretty wealthy there and here is where the poor live. The house on which one paid rates or rent was that indication. I say this because to what one is prepared to pay in rent theoretically the rates would be added in Scotland. That is simple but true.
1412
There has of course been an overloading by governments since that time in the form of all sorts of national services which they have come to support in one way or another, occasionally placing new burdens on local authorities. I note that yet another Bill is being sponsored by a Member of this House, who has taken it from somebody in another place, which puts further expenditures on local authorities. There is Bill after Bill, about the mentally ill, the physically ill or whatever new things that we want to do, and the burden is placed upon the local authorities. Thus there is increasing justification for the groans of ratepayers that we should by some means get back to the original purpose namely, that basic to what one pays is the ability to pay.
That takes one inevitably to some form of local income tax. When the noble Lord, Lord Boyd-Carpenter, was speaking, I wrote down the words "Tory Reform Group". If the noble Lord, Lord Mackie of Benshie, wants to join he had better hurry up, because I think they are all about to be expelled from the Tory Party or placed under a vow of silence not even to mention it in Scotland. In fact I think the noble Lord, Lord Goold, already has had a word to say about the relationship to Scotland. I shall not embarrass him by repeating what he said. The noble Lord, Lord Mackie of Benshie, had better hurry up and get in, because these people might be out in no time.
The noble Lord, Lord Boyd-Carpenter, in his usual way said, oh, this complicated business—who will do this and who will do that? When he—and we did not have Secretaries of State in those days—was Minister of Pensions and National Insurance, I remember the same kind of argument.
Lord Boyd-Carpenter: Indeed.
Lord Ross of Marnock: The noble Lord was very distinguished in that office. I can remember some very complicated legislation that he put through. The world was waiting for it. The graduated pension scheme—does he remember that one? I wonder what happened to that. That was going to save us from all the trials and tribulations about the pension fund and such-like. I remember the noble Lord taking that through. I believe that it was Douglas Houghton and myself on the other side, and I remember all the arguments.
When it comes down to it, if Ministers make up their minds, civil servants will do it. I think that the only mistake that the noble Lord made was when he asked what the Inland Revenue would think about it. It is a case not of what the Inland Revenue thinks about something but of what Treasury Ministers think. If they make up their mind, even as he was told to make up his mind about graduated pensions, the civil servants will carry it through.
As I said before, the Treasury does not want to let slip from its hands any power to squeeze more money out of taxpayers. It has no desire to hand this over to the local authorities. I am sorry about the nightmares of the noble Viscount, Lord Massereene and Ferrard. Instead of gillies roaming the Highlands, it is bureaucrats asking questions about income and the like. I do not think that it will come.

1413
Let us remember that we have had two White Papers from the Government since 1979. There is one matter which appeared very high on their list and which people supported: 49 per cent. of people, I think, wanted local income tax. What was the Government's reply?—that it was impractical. But, they said that when the Inland Revenue was computerised, which would not be until 1990, it would become more of a practical possibility. But we are getting no nearer it. I do not therefore accept all the points raised by the noble Lord, Lord Boyd-Carpenter.
The noble Lord, Lord Hughes, thought that the Bill was a quick way of ending our trials and tribulations. I do not know whether it is the right thing to do. One of the troubles about the Bill is that it is becoming a political football. The previous system lasted for 150 years. How long will this last? How long did the graduated pension scheme last?
Lord Boyd-Carpenter: My Lords, if the noble Lord is going to ask that question, I can answer it.
Lord Ross of Marnock: I am trying to finish in a couple of minutes.
Lord Boyd-Carpenter: If the noble Lord is going to ask the question—
Lord Ross of Marnock: Rhetorical questions are not meant to be answered. Sedentary interventions are not expected in this House. Manners are supposed to be very much better here. The noble Lord made quite a considerable speech. I want to curtail my speeches; this is about the second.
Noble Lords: Oh!
Lord Ross of Marnock: What chance have I when there are interventions all round the place encouraging me to speak on?
Lord Boyd-Carpenter: My Lords, the noble Lord challenged me.
Lord Glenarthur: My Lords—
Lord Ross of Marnock: I wish to finish very quickly, and I believe that we may finish with a Division.
Lord Boyd-Carpenter: My Lords, on a point of order, is it not in accordance with the customs of this House that when one noble Lord challenges another he has to give way as a matter of manners?
Lord Ross of Marnock: My Lords, I am not giving way, and I said that. I want to finish my speech and to finish it within one minute.
The basis of our original system was ability to pay. The proposed system is getting away from ability to pay. The amendment seeks to take us back to ability to pay. The sooner we get there, the better.
Lord Boyd-Carpenter: My Lords, before the noble Lord sits down, if I may reply to his question, is he aware that pensions under the graduated pension scheme are still in payment? If the noble Lord looks at
1414
his own pension, I have no doubt that he will find quite a gratifying element of that in it. Perhaps he will withdraw that particular jibe.
7 p.m.
Lord Ross of Marnock: My Lords, I do not accept that. I said that it was already being paid and it is still being paid. I did not object. It is not being collected.
Lord Glenarthur: My Lords, the noble Lord, Lord Hughes, began his remarks by saying that in his opinion this amendment was a wrecking amendment. I agree with him. Basically, it is precisely that. In Committee we discussed at some length the proposition that domestic rates should be replaced by local income tax. As my noble friend Lord Boyd-Carpenter said, the opinion of the Committee was tested on that proposition. As the noble Lord, Lord Ross of Marnock, is so keen to speed up the proceedings, I am reluctant to follow others over the old ground. However, I understand from the last remarks of the noble Lord that he was a late convert, at least to some extent, to local income tax. I thought that that was a policy which his party did not eschew. The noble Lord indicates that despite remarks which I shall study, he is not a convert to what the noble Lord, Lord Taylor of Gryfe, feels will be beneficial.
The amendment now before us is somewhat wider in scope than that discussed in Committee in that it addresses itself solely to the principle of ability to pay in local taxation. Accordingly, I intend to concentrate my remarks on that principle. Indeed, it was one which was addressed by my noble friend Lord Boyd-Carpenter.
Implicit in the amendment is the notion that a taxation system cannot be regarded as fair unless it is based clearly on the ability to pay principle. I do not accept that. As I said in Committee, there is no reason why payment for services should be based on income on all points on the scale. I took the example of payments for gas and electricity, which are not determined as a percentage of income. There is nothing inherently unjust in a system of flat rate contributions towards the cost of local services, particularly when there is an associated rebate scheme for those on low incomes who would otherwise have great difficulty in making contributions in full.
I believe that in this matter there is a danger of becoming unduly preoccupied with what is generally termed the "redistributive" principle of taxation, or, if noble Lords would prefer it, the ability to pay principle. I make this point because there is another principle of taxation which, in the context of local government, has just as respectable an ancestry as the ability to pay principle. I am referring here to the "beneficial principle"—the idea that all those who derive benefit from local services should contribute something towards their cost. When expressed in these terms, I believe that the beneficial principle embodies the concept of fairness just as much as the ability to pay principle, albeit fairness of a different kind.
In introducing the community charge, we are not turning our backs entirely on the ability to pay principle because of our recognition that a rebate

1415
scheme is needed for those on low incomes. As the noble Lord, Lord Hughes, forecast, we shall return to the matter of rebates in more detail when we reach Clause 24 of the Bill. But, as I have suggested, there is nothing inherently wrong or unfair in desiring a system of local domestic taxation which also has regard to the principle that all those who benefit from local services should pay something towards their cost.
The noble Lord, Lord Mackie of Benshie, not surprisingly raised the matter of the Tory Reform Group. He quoted from the list of patrons which appears at the bottom of the first page of the report. I am glad that he reads good literature, but I also hope that he will recognise that the editor's note makes the position perfectly plain. He will see that it reads:
"The Tory Reform Group's published statements are attributable to their authors and are the responsibility of the officers elected by the membership of the group".
They are not representing party policy. Indeed, the Scottish Tory Reform Group—the noble Lord may not be aware that there is a Scottish Tory Reform Group—supported the Government and repudiated the document to which the noble Lord refers. I believe that this is all a bit of a red herring. I do not think that the noble Lord could seriously claim that a discussion document which is produced by a group who, as my noble friend Lord Sanderson has suggested, are perfectly entitled to bring forward views of this kind, necessarily represents every aspect that the government would agree is right at the end of the day. They are perfectly entitled to do it. The noble Lord wishes to intervene.
Lord Mackie of Benshie: My Lords, surely the noble Lord would agree that whatever discussions took place within the caucus of the Tory party in parliamentary government, these matters should be discussed openly in Parliament. I must say that up until now no attempt has been made in Parliament, at least in this House, to discuss the ideas put forward in the paper.
Lord Glenarthur: My Lords, the paper does not represent a Bill which is before your Lordships. It is a collection of ideas which have been produced by a group who are perfectly entitled to produce it; just as those who are patrons of an organisation are perfectly entitled to be patrons of the organisation. The noble Lord can read further the comments made about the decay of local government. If the noble Lord reads page 2 and shows that to the noble Lord, Lord Ross of Marnock, there might be a common understanding between them as to what has led us in part to the existing situation.
I believe that with the community charge we are producing a much better balance between the two principles to which I referred earlier: the ability to pay principle and the redistributive principle. The balance will be better than under the present domestic rating system and it will also be better than under a local income tax system.
I do not intend to repeat the many arguments which I made on the question of cost, practicability accountability and the effect on individuals. They were rehearsed at length in Committee. The Government have made their position clear on this matter on a
1416
number of occasions, both in this House and in another place. We have now given the matter a further comprehensive airing. I hope that the noble Lord, Lord Taylor of Gryfe, will be satisfied with the fact that we have done so, and that he will now feel able to withdraw his amendment.
Lord Taylor of Gryfe: My Lords, I should like to reply to one or two of the points made during this very interesting and somewhat lengthy discussion. The criticism offered by the noble Viscount, Lord Massereene and Ferrard, was dealt with by the noble Lord, Lord Mackie of Benshie. Of course all forms of income tax are a form of means tax; there is no doubt about that. It is related to one's ability to pay. I make no apology for that form of assessment of ability to pay. It was suggested by the noble Viscount, and by the noble Lord, Lord Boyd-Carpenter, that the amendment was somewhat vague and did not deal with some of the detail of application which would be inevitable if it was carried.
The same kind of criticism was offered in connection with an earlier amendment—that it did not spell out the kind of question to be answered. But that is not the purpose of an amendment to a Bill of this kind. We are saying that this is a concept that we would apply. It is a basic and different concept from that of the Government. It is a totally different concept from the existing unsatisfactory form of collection of local rates.
If there are doubts as to whether we have thought out the detail, I have already mentioned that there are 500 pages of the Layfield Report. That report certainly thought out in great detail some of the complications that have been raised here and provided the necessary answers. At the end of the day it came to the conclusion that it was desirable to have a local income tax. It also dealt with the question raised by the noble Lord, Lord Boyd-Carpenter, and the difficulties and resistance, if I may say so, of the Inland Revenue to some of the suggestions in the report. I had a recent meeting with Sir Frank Layfield in connection with this matter and with a view to updating his views. He said that the computerisation of the Inland Revenue since the Layfield Report made it all the easier to apply the local income tax idea.
I do not want your Lordships to feel that Sir Frank Layfield was necessarily supporting my argument. I was not asking him for a political judgment but about the technicalities of implementing the proposals contained in the Layfield Report. As he said, all that has since happened in computerisation has made the system all the more easy to operate.
I noticed that the noble Lord, Lord Boyd-Carpenter, was concerned about the cost of collection and the additional burden that would be imposed on the Inland Revenue. I say in all seriousness to the noble Lord that the cost of collection with this scheme will be much heavier than any additional burden that the Inland Revenue would carry in computerising. This scheme is an extremely difficult method of collection. At least it can be said of the present rating system that one is taxing something that is not mobile. The tax is on property. If a community charge is imposed on individuals who move around, change addresses, and so on, the cost of collection will be considerable. I

1417
suggest that if the noble Lord is concerned about the additional burden and additional cost, he should consider that aspect.
In case he thinks that our judgment in this matter is superficial and has not been fully thought out, let me offer him a quotation from just one of the professional organisations that have given a great deal of thought to the question; namely, the National Union of Ratepayers' Associations. I said in an earlier debate that the National Union of Ratepayers' Associations was not exactly the Militant Tendency. I suspect that it would have traditional loyalties more to the Government than to this side of the House. However, it was good enough to point out that the 1974 Conservative Party manifesto stated that domestic rates were unfair, and that it went on to declare that under a Conservative government domestic rates would be replaced by a system that was more related to ability to pay. The Conservative Party manifesto of 1974, issued by the Central Office, stated quite unequivocally that rates were unfair because they were not related to the ability to pay.
That is even more significant than the Tory Reform Group north or south of the Border. Consequently, the National Union of Ratepayers' Associations, influenced as it is by such considered judgments, comes down in favour of a local income tax. The noble Lord, Lord Ellenborough, who sat on the Conservative Benches during an earlier discussion of this matter and who is president of that distinguished body, said quite clearly that he had to agree with the concept that was put from this side of the House. So it is not a vague, airy-fairy idea. It has been endorsed by the professionals and their association and it is supported by the Layfield report, which represents the most serious consideration that has been given to the matter in recent years.
The amendment is not a wrecking amendment. It supports the principle of the Bill, the first sentence of which confirms that it seeks the abolition of domestic rates. So shall we. However, the question is: what will replace them? I am inclined to recommend to the house that the policy that is contained in the amendment should be acceptable in those terms and I suggest that the House should divide.
7.14 p.m.
On Question, Whether the said amendment (No. 8) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 100.

DIVISION NO. 4

CONTENTS

Airedale, L.

Cledwyn of Penrhos, L.

Bacon, B.

David, B. [Teller.]

Banks, L.

Diamond, L.

Barnett. L.

Elwyn-Jones, L.

Birk, B.

Ennals, L.

Blackstone, B.

Gallacher, L.

Blease, L.

Grey, E.

Boston of Faversham, L.

Grimond, L.

Bottomley, L.

Hampton, L.

Brockway, L.

Hatch of Lusby, L.

Carmichael of Kelvingrove, L.

Houghton of Sowerby, L.

Carter, L.

Howie of Troon, L.

1418

Hughes, L.

Prys-Davies, L.

Irvine of Lairg, L.

Ritchie of Dundee, L.

Irving of Dartford, L.

Ross of Marnock, L.

Jacques, L.

Seear, B.

Jeger, B.

Serota, B.

Kirkhill, L.

Stedman, B.

Lloyd of Kilgerran, L.

Stewart of Fulham, L.

Lockwood, B.

Stoddart of Swindon, L.

Mackie of Benshie, L.

Taylor of Blackburn, L.

McNair, L.

Taylor of Gryfe, L. [Teller.]

Meston, L.

Taylor of Mansfield, L.

Milner of Leeds, L.

Turner of Camden, B.

Mishcon, L.

Underhill, L.

Morton of Shuna, L.

Whaddon, L.

Mountevans, L.

White, B.

Nicol, B.

Williams of Elvel, L.

Perry of Walton, L.

Wilson of Langside, L.

Phillips, B.

Winstanley, L.

Pitt of Hampstead, L.

Young of Dartington, L.

NOT-CONTENTS

Ashbourne, L.

Lauderdale, E.

Astor of Hever, L.

Layton, L.

Bauer, L.

Lindsey and Abingdon, E.

Beaverbrook, L.

Long, V.

Belhaven and Stenton, L.

Lurgan, L.

Beloff, L.

McFadzean, L.

Belstead, L.

Margadale, L.

Bessborough, E.

Marley, L.

Blake, L.

Mersey, V.

Boyd-Carpenter, L.

Middleton, L.

Brabazon of Tara, L.

Molson, L.

Braye, B.

Mottistone, L.

Brougham and Vaux, L.

Moyne, L.

Broxbourne, L.

Munster, E.

Burton, L.

Murton of Lindisfarne, L.

Butterworth, L.

Norrie, L.

Caccia, L.

Nugent of Guildford, L.

Cameron of Lochbroom, L.

Orr-Ewing, L.

Campbell of Croy, L.

Pender, L.

Carnegy of Lour, B.

Perth, E.

Carnock, L.

Portland, D.

Cathcart, E.

Radnor, E.

Colville of Culross, V.

Rankeillour, L.

Colwyn, L.

Reay, L.

Cork and Orrery, E.

Renwick, L.

Craigavon, V.

Rochdale, V.

Crathorne, L.

Romney, E.

Davidson, V. [Teller.]

Saltoun of Abernethy, Ly.

Denham, L. [Teller.]

Sanderson of Bowden, L.

Denning, L.

Selborne, E.

Derwent, L.

Sharples, B.

Dundee, E.

Skelmersdale, L.

Eden of Winton, L.

Stodart of Leaston, L.

Elliot of Harwood, B.

Strange, B.

Elton, L.

Strathclyde, L.

Ferrier, L.

Strathcona and Mount Royal, L.

Forbes, L.

Glenarthur, L.

Torphichen, L.

Goold, L.

Trafford, L.

Gray, L.

Trefgarne, L.

Greenway, L.

Trumpington, B.

Gridley, L.

Tryon, L.

Grimston of Westbury, L.

Vaux of Harrowden, L.

Haig, E.

Vickers, B.

Henley, L.

Ward of Witley, V.

Hesketh, L.

Whitelaw, V.

Hives, L.

Windlesham, L.

Hooper, B.

Wolfson, L.

Hylton-Foster, B.

Young, B.

Kimball, L.

Ypres, E.

Lane-Fox, B.

Resolved in the negative, and amendment disagreeg to accordingly.
7.22 p.m.
Clause 2 [Valuation roll not to include domestic subjects]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 9:
Page 1, line 8, leave out subsections (1) and (2) and insert—
("(1) Domestic subjects shall be entered in the evaluation roll without values in respect of the year 1990–91 and subsequent years")
The noble Lord said: My Lords, I make no apology for returning to a theme that I raised specifically in Committee and at various times when intervening on other amendments in Committee. The effect of this amendment would be to retain entries of domestic subjects in the valuation roll at nil values but as from the introduction of the community charge on 1st April 1990.
As the Minister will recall from my earlier interventions, the idea of the amendment is that a complete inventory of all properties, domestic and non-domestic, will still be required. Does the Minister believe that an inventory of all properties within an area will still be required? From what I have understood of the debate so far, the Minister is quite happy for there to be a register of all properties but he is not willing to make it statutory. From the remarks that the Minister has made and from my examination of the various statements that have been made, the assumption is that there will be a register of all properties in the area.
As I said in Committee, I do not understand—I may be conservative with a small "c"—how there can be an entire city where no one knows which houses are in which street and where no register exists to show easily where a particular house is located or to indicate who the occupants of the house are or whether, as at present, there are owners and occupiers, although in sonic cases the owners and occupiers are one and the same person. I find it difficult to imagine that such a register should not exist.
That is increasingly the case when one looks further into the Bill. For instance, the Minister has tabled a long series of amendments to Clause 5. Amendments Nos. 69 and 70 are particularly long. I should have thought that those amendments would rely on there being some kind of register, so that the register which is to be maintained in the archives of Scotland can easily be checked. If there is a record in the Scottish archives of a particular address and a particular street, it would surely be helpful, to look at the existing register to see whether that house or property still exists. However, it seems that the Minister is so keen to get the idea across that rates on property shall be abolished that he almost wishes to abolish the houses themselves, or at least the recognition that the houses or properties exist, so that his case will be reinforced.
I repeat my earlier remark as I think that the Minister was otherwise engaged when I made it. Is the Minister's ideal solution that local authorities maintain a list of properties for their own use or perhaps for the use of others? It has been widely quoted that lawyers, estate agents and house-hunters will require something to give them guidance. During the Committee stage of the Bill it was assumed that
1420
some kind of register would be maintained by the local authority.
The amendment asks the Minister to make a register of all housing in an area statutory. The reason that a register should be statutory is that even now, although it has been established for a long time, the assessor frequently has to make additional requests to tenants and owners to fill in the assessment forms. That is necessary even with the statutory powers that he has. If he did not have those statutory powers it would be almost impossible to guarantee that any list of properties in an area was anything like complete. Therefore, it seems to me that if local authorities did that without statutory powers they would need to pay the entire cost themselves, whereas if it were done with statutory powers one would assume that something would be included in the rate support grant to enable them to do that.
I accept that I may have a bee in my bonnet about this matter. However, during the recent Recess I spoke to a great many people involved in the property field, such as lawyers, estate agents and various people concerned with housing, including people looking for houses. In order to see what their reaction would be, I advanced the idea of there not being any list of housing property showing the owners of that property. It is a small consolation that I no longer believe that this matter is a bee in my bonnet, because I discovered that what I thought was an obsession was shared by almost everyone with whom I spoke. Does the Minister not believe that local authorities will require to keep a list? If he does, why does he not accept that they must be given the statutory power to demand the return of the forms that they send out? I beg to move.
Lord Mackie of Benshie: My Lords, I shall not detain the House but I should like to support this sensible move. I think that the Minister should support it. He has gone back to the idea of a poll tax. If he would like to go back to the Domesday Book he will find that even then records were kept.
7.30 p.m.
Lord Glenarthur: My Lords, I have considered again the point raised in Committee by the noble Lord, Lord Carmichael of Kelvingrove, as to whether domestic subjects should be kept on the valuation roll after 1st April 1989, but at nil value. The first and most obvious argument against doing so is of course that it would be very odd to keep property on a statutory document which was termed a valuation roll, but without ascribing any values to that property. That is the first point.
There is, I think, an element of contradiction in such a course of action and I suspect that there would be a degree of public confusion as a result. But I acknowledge that that point does not meet the nub of the argument put forward by the noble Lord, Lord Carmichael, in support of his amendment. This was in effect that even after the abolition of domestic rates there would still be a need for an up-to-date and comprehensive register of all property in an area, covering domestic as well as non-domestic property.
As he explained, property will move from the domestic to the non-domestic sector and vice versa.

1421
There will also be a need for community charge registration officers to be able to ascertain the whereabouts of residents. But it seems to me to be quite unnecessary to maintain the statutory requirement that domestic subjects be entered in the valuation roll in order to facilitate the administration of local taxation once the new system is up and running.
As my noble friend Lord Dundee suggested in Committee, it is surely preferable to free assessors from the statutory requirements regarding the preparation and maintenance of the valuation roll so far as domestic subjects are concerned and instead to allow local authorities to keep a record of property in their area in such form as they think fit, if they do think fit—which is the answer to the question of the noble Lord, Lord Carmichael—rather than the form which would otherwise be imposed under the valuation Acts.
I appreciate that the noble Lord has brought back this amendment in a constructive way, but I am hound to say that it would not in practice have the desirable effect which he claims for it. It would be preferable to leave local authorities to maintain a non-statutory property record in the manner which they think best. They would be by far the best judges of the manner and of what is best. I accordingly hope that the noble Lord will not press his amendment.
Lord Carmichael of Kelvingrove: My Lords, again I am disappointed that the Minister has replied as he has. I should just like to emphasise again the importance of the statutory powers if a local authority is to have a register. But I do not see why it should be a valuation register—the Minister called it a valuation register—as it could be a register of properties in the area. But having statutory powers would be one way of being able to guarantee finding out exactly where properties are and who is occupying them. But I realise that I have probably gone as far as I can on this point and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Dundee: My Lords, your Lordships may consider that this is a convenient moment at which to break in order to return to the subject in an hour's time at 8.35 p.m. I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Access to Personal Files Bill
Crown Proceedings (Armed Forces) Bill
Motor Cycle Noise Bill
Prescription (Scotland) Bill
Protection of Animals (Penalties) Bill
Brought from the Commons; read a first time, and to be printed.

Irish Sailors and Soldiers Land Trust Bill [H.L.]
7.35 p.m.
Baroness Young: My Lords, I beg to move that the Bill be now read a second time.
The purpose of this short Bill is simple. It is, first, to give effect to proposals allowing for the disposal of surplus funds now held by the Irish Sailors and Soldiers Land Trust, together with any surpluses which accumulate in the future. Secondly, the Bill allows for the eventual winding-up of the trust on the direction of the Secretary of State and for its dissolution by statutory instrument.
It may be helpful if I set out briefly the historical background to this Bill. During the First World War, Lord Ypres, formerly Sir John French, and himself an Irishman, travelled through Ireland calling on Irishmen to volunteer for the British armed forces. In doing so he gave a pledge that those who volunteered would he provided with housing after the war had ended. As noble Lords may know, over 130,000 Irishmen did in fact volunteer. They fought With conspicuous gallantry in many of the major actions of the war. Irish soldiers won 30 Victoria Crosses and 49,000 Irishmen lost their lives. Though many years have now passed. I do not think it would be out of place to pay tribute again today to the bravery of those men.
When the Great War ended, the whole of Ireland was still part of the United Kingdom. As Lord Ypres had promised, the Government built cottages for Irish ex-servicemen throughout the island. After the Irish Free State had been established in 1922, the governments in Westminster, Belfast and Dublin agreed that responsibility for providing and maintaining the housing for ex-servicemen should be devolved upon a body to be known as the Irish Sailors and Soldiers Land Trust. They also agreed that the trust should be a non-political body with members appointed by the United Kingdom Government of the day and the Government of the Irish Free State. The latter Government made over to the trust the stock of houses already built or still under construction in the Irish Free State. The Government of Northern Ireland did likewise with houses in Northern Ireland. The United Kingdom Government provided the trust with an endowment in the form of a grant of money.
The trust was formally established under a United Kingdom statute—the Irish Free State (Consequential Provisions) Act 1922, Section 3. That Act also made various provisions to allow for the partition of Ireland. The trust's establishment was made subject to ratification by the legislature of the Irish Free State and also by the Parliament of Northern Ireland. This was duly completed and the trust came into operation on 1st January 1924. The Government of the Republic of Ireland (as the sucessor to the Irish Free State Government) and the Government of Northern Ireland were thus party to the establishment of the trust and have been fully consulted about the terms of the arrangements now proposed.
The legislation setting up the trust made no provision for it to use its funds for purposes other than those stipulated. Nor did it make any provision for the

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trust to be wound up. It is easy enough to understand why those drafting the legislation just after the Great War did not spell out the fact that time would inevitably make the trust redundant. But for these reasons the present Bill has become necessary. We need to make special provision for the trust's funds and to provide for its eventual dissolution.
Over the years the trust has continued to provide and maintain accommodation for the ex-service beneficiaries and their widows at very low or, in the Republic, no rent. In recent years, where the sitting tenants have been prepared to buy, the trust has been selling houses to them for a small sum. Where houses have fallen vacant upon the departure or death of sitting tenants or their widows, the trust has disposed of houses on the open market. The trust's stock of houses has now been reduced to 21 in the Irish Republic and 92 in Northern Ireland. As a result of this policy, the trust has accumulated considerable surplus funds which are held in United Kingdom government stocks and Treasury bills. The total disposable amount of surplus funds now stands at approximately £4·5 million.
In 1983 the trustees put forward detailed proposals for the future of the trust and the handling of the surplus funds. These provided the basis for discussions between the Government and the trustees. They also took very full account of views expressed by a number of ex-service charities. I think it fair to claim that the Bill as it now stands commands the support of all those who were involved in the process of consultation. To avoid the risk of any misunderstanding, it may be helpful if I remind noble Lords that the trust was set up only to provide housing for the veterans of the First World War or their dependants and for no other purpose. The veterans of other wars therefore cannot benefit from it.
I now turn to the details of the Bill. The primary problem is to determine how to make use of the surplus moneys which have accumulated and those which are likely to accumulate in the future. The Bill proposes that the outstanding surplus and any future surpluses should be divided up and returned to the original contributors in proportion to their original donations, whether in money or in kind. Accordingly, 68 per cent. of any surplus moneys should be returned to the United Kingdom and 32 per cent. to the Republic of Ireland. Of the existing surplus of £4·5 million, £3·06 million would therefore be returned to the United Kingdom and £1·44 million to the Republic of Ireland. I am not in a position to say at this stage what further surpluses may arise. However, they will be on a comparatively small scale.
Your Lordships will no doubt be interested in the purposes to which the two Governments intend to put this money. I cannot speak for the Government of the Republic of Ireland but I believe that they intend to use the bulk of any money they may receive to help finance cross-border or Anglo-Irish projects.
As far as the United Kingdom's share is concerned, the position is set out in the Bill. We propose that three-fifths of the United Kingdom's share—£1.836 million—should be paid into the United Kingdom and Northern Ireland Consolidated Funds and that the
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remaining two-fifths—£1·224 million—should be paid to a distributory agency appointed by the Secretary of State. The proposal that two-fifths should be paid to the distributory agency has been agreed between Her Majesty's Government and representatives both of the trust itself and the Royal British Legion as the principal ex-service charity. It reflects what we believe to be a fair balance between the interests of the Government, who provided the source of the trust's surpluses, and those of former members of the armed services and their dependants. The same division betwen the Republic of Ireland and the United Kingdom and between Her Majesty's Government and the distributory agency will apply to subsequent surpluses as they arise.
As Clause 2 of the Bill makes clear, the distributory agency would have the duty of administering the moneys it received and of applying them for the benefit of people resident in Northern Ireland or the Republic of Ireland who are former members of Her Majesty's armed forces, their widows or widowers or their children. The distributory agency would therefore continue to exercise functions broadly consistent with the original aims of the trust.
The Secretary of State has it in mind to appoint the Royal British Legion as distributory agency should the Bill be passed. The legion is the principal charity catering for the interests of ex-servicemen and operates in both Northern Ireland and in the Republic. The Royal British Legion would, however, be subject to directions from the Secretary of State which would be binding on its administration of the funds. A principal feature of the directions would be the establishment of an advisory committee to help the distributory agency in its work. The composition of this committee is now under discussion. We envisage that it would include a representative cross-section of charitable organisations dedicated to serving the interests of former members of the armed services.
Subject to those directions it will be for the distributory agency to decide how to dispose of any money which it may receive. It might use the money itself or pass it on to other ex-service charities for uses consistent with the Bill. The Government have no preconceived ideas about whether the money should be made available to individuals or to projects or activities benefiting eligible ex-service persons or their dependants as a group. We are already involved in discussions with the Royal British Legion about the form of an initial set of directions.
So much for the distribution of surpluses. The Bill also provides for the eventual winding-up of the trust's affairs at the direction of the Secretary of State. I should like to take this opportunity to reassure existing tenants of the trust that their present interests are and will continue to be fully safeguarded. Should the trust be wound up while there continue to be houses in occupation by trust tenants, the responsibilities of the trust would be transferred to other bodies together with funding to ensure their proper discharge. But this is in the future. Full details of when and how the trust might eventually be wound up would be for discussion when the trustees advised that the appropriate time had come. It is too early to say when this time might be.

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In concluding I should like to express the gratitude of Her Majesty's Government for the invaluable work which the trustees have performed over the last sixty or more years. I know that one of their trustees, the noble Lord, Lord Killanin, is down to speak later in this debate. He is the nominee of the Taoiseach to the trust. The selfless dedication and hard work of the trustees have been the key to its successful operation. In particular, I should like to pay a tribute to Sir Edmund Compton, who retired on 17th May 1986 from the post of chairman of the trust. His involvement with the trust went back over 40 years. I am sure that his fellow trustees would not demur if I were to say that he deserves great credit for the efficient and sensitive way in which it has discharged its functions.
I have not spoken at greater length because this Bill is itself short and simple. I have no hesitation in commending it to your Lordships.
Moved, That the Bill be now read a second time.—(Baroness Young.)
7.48 p.m.
Lord Prys-Davies: My Lords, we are grateful to the noble Baroness for her explanation of the Bill and for giving us this brief but interesting history of the trust to which it relates. It is indeed a unique trust. The Minister went out of her way to underline the fact that its specific purpose is the provision of homes in the North and South of Ireland for Irishmen who served in the First World War. It honoured the pledge given by Field Marshal Sir John French. She also pointed out that the 1922 Act, which established the trust and which is therefore a trust instrument, contains no provision for the disposal of its surplus funds or for its eventual dissolution. Indeed, the need to extend the powers of the trustees has been before Parliament in 1952 and again in 1967. However, this Bill is very different from the earlier amending legislation because it provides for the distribution of the surplus funds and it also provides for the eventual winding up of the trust.
I trust that the noble Lord, Lord Killanin, who is one of the trustees, will forgive me when I say that most of us have very little information about the affairs of' this unique trust. That is not meant as a criticism of the trust, and indeed I join with the Minister in paying tribute to the contribution of the trustees over the years. However, I think that the fact remains that we do not know a great deal about the trust. I do not know how many people are currently receiving benefit under its terms. Until this evening when I was listening to the noble Baroness, I did not know how many houses still remained in the ownership of the trust. I should be interested to know whether there has been a study of the requirements of the Irish veterans of the 1914–18 war. For example, are there any Irish veterans of the First World War among the 128 ex-servicemen who are today on the waiting list of the Housing Executive for Northern Ireland? Are there any Irish First World War veterans in receipt of a war pension payable from the DHSS offices in Blackpool who are not in receipt of help from the trust? Those are some of the questions which come to mind when reading the background to the trust.
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When we come to read the balance sheet and the income and expenditure account for the trust for the years ending March 1985 and March 1986, we see that the accounts imply very clearly that by now the trustees are faced with practical difficulties in carrying out the terms of the trust instrument. No doubt that is because the number of veterans are dwindling.
The accounts for the year ending March 1986 show a balance of £6.85 million, of which £6.36 million is in listed investments or on deposit with local authorities. The accounts show the excess of income over expenditure during the year 1985–86 to be £588,000 which is a lot of money. Had the trust been a charity subject to the jurisdiction of the Charity Commissioners for England and Wales, I have little doubt that the trustees would have been under a duty imposed by law to take steps to enable the assets to be more effectively used for charitable purposes, having regard to the spirit of the gift and the circumstances of today. Therefore, it appears to me that the main question presented by the Bill is whether the scheme it embodies is a satisfactory way of resolving the real difficulties faced by the trustees.
We will have the benefit of listening to the noble Lord, Lord Killanin. But the noble Baroness, Lady Young, has already assured the House that the scheme is welcomed not only by the trustees but by all the organisations with a special interest in ex-servicemen who have been consulted. That is reassuring because it could be argued—and I have to make the point—that the objects of the trust should at this stage be widened or extended so as to include the provision of homes for Irish men and women who served in the armed forces during the Second World War and that the decision to distribute the trust funds—and we are talking about a substantial sum—may be premature. That is a matter on which people may have conflicting views.
I noticed that during the debates in 1952 and 1967 it was suggested by some Members of both Houses of Parliament that the main purpose of the trust should be so widened. However, the extension was considered by the Government of the day to be inappropriate. I merely record that point. I am not aware of any objection to the Bill. Given the support to which the noble Baroness, Lady Young, has drawn our attention, I am content not to pursue that point.
We have heard that an essential part of the scheme is that 68 per cent. of the surplus money should be paid to the United Kingdom Government, and the remaining 32 per cent. should be paid to the Government of the Republic. This suggestion has been agreed by the two governments and we are in no position to question that division.
I should like to move to another essential part of the scheme; namely, that two-fifths of the United Kingdom share of the surplus money will be paid direct to a distributory agency and applied for the benefit of ex-servicemen resident in the north or south of Ireland. We have been told that the first instalment will amount to no less than £ 1.224 million. As I have said, that is quite a lot of money. As the Treasury could claim the United Kingdom's entire share of the surplus funds, we welcome very much the decision to pay a two-fifths portion of the share to the distributory agency.

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The Bill gives the distributory agency very wide discretion in discharging its functions subject only to directions to be given by the Secretary of State. I am not sure whether the noble Baroness can tell us any more about the directions which the Secretary of State is likely, or unlikely, to issue to the agency, at least during the initial stages. Are such directions likely to spell out the general principles which will determine how the money is to be applied by the agency? Will such directions require the agency to submit periodical reports to the Secretary of State?
We are pleased that it is intended that the Royal British Legion will be appointed to be the distributory agency. I am sure that there is no need for me to pay any tribute to the Royal British Legion. Given its splendid record of service to ex-servicemen and women and also the bank of experience which it has built up over many years, there will be general support for, and confidence in this appointment.
The Minister explained that the agency will set about its work with the support of an advisory committee whose members will be drawn from other organisations which have a special interest in the welfare of ex-servicemen and women. It is not clear to me why the Bill contains no reference to such an advisory committee. I hope that your Lordships will bear with me if I ask a few uncomplicated questions concerning the representation on this advisory committee. If, in Northern Ireland, there is based an association such as the Royal British Legion of Scotland, with which the noble Earl, Lord Haig, has connections, which has special interests in the welfare of ex-servicemen and women, will it be a candidate for representation on the committee? Is that a matter which may be considered by the Secretary of State? Will the members be appointed by the Secretary of State or will the interested organisations to be named by the Secretary of State be responsible for the appointments to the committee? Is it intended that the nominating bodies will be equally represented on the committee? If so, then clearly the Royal British Legion could be in a minority. In that event, can the Minister say whether the advisory committee itself will be entitled to make representations to the Secretary of State if it is in disagreement with any decisions made by the agency?
Although it has been the basis of wide consultation, I understand that the scheme embodied in the Act has not been advertised. However, we have been given the assurance that it has been well supported. Can the Minister go further and also assure us that the Department is not aware of any opposition to the principles of the scheme embodied in the Bill? Can she also say whether or not it is intended to give publicity to the scheme if the Bill is enacted?
If the noble Baroness is in a position to answer those few questions, it would be helpful. However, let me make it clear that on all the information available to us we believe that this is a Bill which can and should be supported by your Lordships' House.
7.58 p.m.
Lord Denning: My Lords, I speak on behalf of that ageing and diminishing group, the veterans of the First
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World War. Indeed, I should like to say that I remember Sir John French. Even before that war, he came to our little village and I saw him on manoeuvres. I speak also for another older veteran; namely my brother who fought at Ypres, as Lord Ypres did afterwards. General Denning served in Ireland in 1922 in times of troubles and he was later Commander-in-Chief in Northern Ireland. In a way we speak from knowledge.
It is true that the trust as originally framed was very narrow. The two governments put up £1·5 million for this special purpose. It is given in Section 3 of the 1922 Act which reads:
"For the purpose of providing in Ireland cottages, with or without plots or gardens, for the accommodation of men who served in any of His Majesty's naval, military or air forces in the late war".
That is the trust. It is very limited. It is only for the men who served in that late war. It is for the provision of cottages for those men and, presumably, their wives. That was the sole purpose of the scheme.
As I read the facts, over 4,000 cottages or homes were provided for those men who fought in the war. Indeed, it was at no rent in the Irish Free State and very little rent in Northern Ireland. What has happened of course is that the men have died and the cottages have become vacant and sold. Indeed, there are now only 20 or so in the Republic of Ireland and 100 or so in Northern Ireland. Out of the 4,000 that is all there are left.
Meanwhile, as those houses became empty they were sold, and the money—now some millions of pounds—has accumulated over the years in this trust. What is to be done with that money? As the noble Lord, Lord Prys-Davies, said, being a charity, for charitable purposes, in law it strictly ought to be applied under a scheme—a cy-pres scheme—for charitable purposes as nearly as possible to the original intention. That cannot be done.
What has been arranged, fortunately with the agreement of all concerned, is a division of these surplus funds with 68 per cent. coming to England and 32 per cent. going to the Republic of Ireland. What is to be done with that 68 per cent.? Three-fifths of it will go to the Government and two-fifths will be applied by the distributory agency. I should like to say how pleased I am to see that the distributory agency is to be the Royal British Legion which was founded immediately after the First War and with which my brother and I are closely connected. The Royal British Legion is to he the distributory agency and its duty is given in Clause 2(2) of the Bill. It is to apply the moneys,
"for the benefit of persons resident in Northern Ireland or the Republic of Ireland who are former members of Her Majesty's armed forces, their widows or widowers or their children."
It is no longer confined to veterans of the First World War. This application will apply to any members of Her Majesty's armed forces, their wives, widowers, widows and their children. It is a much wider trust than originally formed and is not confined to homes or houses but for the benefit of all the people stated.
The distributory agency will consult with all the service charities. I remember the British Legion when I was the pensions appeal judge. The British Legion took up all the cases of the wives, widows, and so on,

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and how well it did that. I am sure that everyone can be confident that the British Legion, in consultation with the other service charities, will distribute this money exceedingly well and in accordance with the trust.
Therefore, this money is being put to good purpose in what could have been a difficult situation which has been resolved by the agreement of all concerned. I should like, on behalf of all those ex-servicemen and on behalf of the British Legion, to thank the Government and all concerned for this very wise solution of a difficult problem. I greatly welcome the Bill.
8.6 p.m.
Earl Haig: My Lords, I too welcome this Bill and thank my noble friend the Minister for her explanation. As she said, this Bill ensures the disposal of surplus funds in the Irish Sailors and Soldiers Land Trust. It proposes that 32 per cent. of the whole be distributed through an agency for the benefit of Irish ex-servicemen and women, their families and dependants.
As most of the property and housing made available under the terms of the trust for the First War generation is now redundant a financial surplus has accrued. The main principle behind the Bill is that the bulk of the money will not be allowed to lie idle at a time when it is badly needed to help ex-service people now, while they are still alive.
The length of qualifying service has been defined in a flexible way to include all former members of Her Majesty's forces; and I know that its wording has the full support of the Royal British Legion which I believe will act as the distributory agency. On behalf of the Legion, I thank the noble Lord, Lord Prys-Davies, and the noble and learned Lord, Lord Denning, for their kind words about the work of the British Legion.
The word "distributor" has a healthy, moving, non-stagnating sound which I hope implies that it will bring benefit in the immediate future to all who suffer as a result of their service. The Irish Sailors and Soldiers Land Trust was set up at a time when promises were made by my godfather, the first Lord Ypres, to accommodate in Ireland the Irish ex-servicemen who had fought in the First War among an overall figure of some 3 million British casualties who had been either wounded, gassed, lost limbs, blinded or ruined in health for their country.
Members of the public realised the debt that they owed to these men—that there were gaps to fill between what was available from the two government sources and what had to be provided by voluntary effort. The Government still have their share in the responsibility for caring for the victims of war at a time of another less numerous generation but among whom there are still sad cases needing help. I hope that many of these cases will be looked after as a result of this Bill.
I do not know the situation in Ireland and I look forward to the speech of the noble Lord, Lord Killanin. However, if it compares, as it may well do, with conditions in Scotland, there is much hardship to alleviate. In Scotland we find that the Poppy Appeal is not covering the cost of benevolence, particularly in Glasgow and the West where there is severe
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unemployment and because benevolence is becoming expensive.
The amount of money in this Irish trust is not large and if it is to be distributed through several ex-service charities, such as the naval, army and RAF benevolent funds, the income from it could be somewhat meagre. I should hope that it can be spent in reasonable amounts at a time, not in penny packets, so that worthwhile projects may receive support. Legion authorities will know of many cases where modern orthopaedic equipment, wheelchairs and beds for men in permanent care are needed.
The noble Baroness has indicated that projects as well as individuals may be catered for from the point of view of grants. The practice of accumulating large capital sums given to benefit men and women in great distress after the First War now, when so many of them have passed on, must be wrong and particularly so when there will be an increase in the numbers of the over-65-year-old ex-servicemen from the Second War between now and the year 2000. So let the money be made available to charities for spending now without bureaucratic delay.
With regard to the eventual liquidation of the trust, it is sensible that under the terms of the Bill powers are provided for the trust to wind itself up on receipt of a directive given by the Secretary of State for Foreign Affairs with the agreement of the Irish Government. For the foreseeable future, the distributing authority should be able to use the money as it thinks fit for the benefit of those who are in distress. In this way, the money donated by the people of Ireland and the United Kingdom at the time of the foundation of the trust will go on being used for the benefit of those who suffered in the service of their country.
I should add thanks on behalf of my noble friend Lord Cathcart and myself to the noble Baroness and to the British and Irish Governments for their generous attitude and for understanding the continuing needs and the continuing requirement to fulfil the original intentions of the trust. By making these provisions they will earn the thanks of all those who help in ex-service charity work, but more significantly the thanks of those who still suffer pain as the aftermath of war.
8.12 p.m.
Lord Killanin: My Lords, I have suddenly realised that it is 52 years since I took my seat in your Lordships' Chamber and 50 years since I made a maiden speech. It was about Ireland, about the ports, and it was very contentious. I spoke again in 1947 and 1948 at the time of the Ireland Act and that was very contentious, very acrimonious. But today we are discussing something with which all parties on all sides are, I hope, in complete agreement and which will not be contentious.
I speak with a certain amount of feeling, because my father was killed commanding the Irish Guards in 1914 the first time he went into action and I inherited from an uncle. I served as a volunteer during the last war in His Majesty's forces and it so happened that in 1947 Mr. Costello, who was then the Taoiseach, asked me to be the Irish nominee on the Sailors and Soldiers Land Trust, so I have had 40 years' service on the land trust.

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The noble Lord, Lord Prys-Davies, asked me to elaborate a little more on the work of the land trust. It is one of those organisations on which it is very difficult to elaborate. When I first went there we had a large number of houses, a very long waiting list and there were a lot of people pulling to get to the top of the waiting list for houses. There were people with whom we had problems. Under the Bill if it is enacted in the future children are to be looked after, but we had to evict children. Widows could remain in the houses but children could not. It was very difficult.
On this occasion I should also like to pay a tremendous tribute to Sir Edmund Compton who was appointed chairman the year before I was nominated as a trustee. As all your Lordships know, he was the Comptroller and Auditor-General. He had a very distinguished career in the Treasury. He was also the first what is commonly called ombudsman. But the way in which he presided over our trust meetings with the five trustees was remarkable. He kept them together, he understood all the problems which faced us and he did it with great humanity. I feel that for what we have done we owe him a great debt of gratitude.
It must have been some 20 years ago that talking to him we said, "It is coming to an end". With all due deference to the noble and learned Lord, Lord Denning, there were a certain number of widows. Some of the First World War veterans managed to marry very young girls and therefore we had a plethora of widows. Many of them are still in the 22 houses, I think, or 21. One is an illegal tenant with whom we always have trouble, and again pressure was brought to bear. We as trustees thought of various ways to do what should be done. We were rather worried when we saw this large sum of money being accumulated and we could do nothing with it. We built in the Republic, or purchased, single room accommodation for older people who could not look after themselves. We tried our best to move with the times but slowly this vast amount of money was collected.
I should like to congratulate the noble Baroness and Her Majesty's Government on the very good agreements which they have come to between the two Governments and I hope they will be implemented. As I was nominated by the Taoiseach, I always felt I had a right to consult the various Taoiseachs of the time and I suppose 15 or 20 years ago I dealt with four governments and two Taoiseachs. They were of the view that the money should be spent and they obviously have to have enabling legislation in Ireland on absolutely apolitical matters.
Yesterday I saw the new Taoiseach and took a note. Mr. Haughey promised me, as indeed did Dr. Fitzgerald whom I had seen previously, that first of all the money would not be snapped up and put into the Treasury. It would be spent wisely. He even suggested that he would consult me as to how it should be spent. I told him that I was not very keen on that. I would probably want, as in my Olympic days, to go ex-directory because the telephone would be ringing to such an extent. I have no doubt at all from speaking to him—and I wrote it down—that the money will not be snapped up centrally. It will be used for social,
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cultural, recreational and other purposes. It will be used for the best but it will not be used politically or to go into the central Treasury, whatever the finances of the country may require.
It is very rare that I am able to speak in this House. The noble Baroness was succinct in her description of the history of the trust and I, like the noble Lord, Lord Prys-Davies, feel that there is not very much I can add, except that we met three or four times a year. We had various pressure groups on us at all times and the worst thing, as I know from my Olympic life, is that if you have too much money everybody wants it. The Olympic Games were far better off when we did not have as much money as we have now.
I am deviating a little from the point. On one of the rare occasions when I speak in your Lordships' House I should like to say how much we appreciate the sensible approach and also the fact that the British Legion, which is active in the Republic, will be the authority for those who are less fortunate and who have served in the forces since then.
With that, I should like to commend the Bill. I used to be a journalist. If I were a journalist now, I should be writing about the forthcoming election, because I was a Lobby correspondent as well as being a Member of your Lordships' House. I only hope that in the course of politics the implementation of this Bill is not delayed and it goes through in an uncontentious manner and in the spirit in which the two Governments have discussed it over the years. I should therefore like in every way to support the Minister's proposal and this Bill.
8.18 p.m.
Baroness Young: My Lords, I am most grateful to all noble Lords who have taken part in the short debate this evening. I am particularly grateful for the support that the Bill has received from all parts of the House. The noble Lord, Lord Prys-Davies, asked a number of questions, and I was glad that we had had an opportunity to discuss the Bill before we came to the Second Reading and to have some idea of the points about which he was concerned. I shall try to answer all of them.
We are all very grateful to hear from the noble and learned Lord, Lord Denning, that he has yet another side to his life, that of a First World War veteran. I think it is a remarkable achievement that he can speak in this debate today, and we pay tribute both to him and to his brother. I was particularly grateful for the remarks of my noble friend Lord Haig and for the very real support which he has given.
I am sure that we were all enormously interested to hear from the noble Lord, Lord Killanin. I hope that he will speak in your Lordships' House more often. I was delighted to hear of the Irish Prime Minister's intentions. I think that that is the first time that we have had any idea of what the Taoiseach was thinking. That is valuable to us. It indicates once again that no matter what the subject under discussion in your Lordships' House there is always an expert to speak upon it.
I shall now try to answer some of the questions asked by the noble Lord, Lord Prys-Davies. He asked whether the trust's purpose should be widened. The

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trust itself does not wish to extend its purpose. It is not a question of establishing a new trust but of finding a way to benefit former members of the armed services. We think that the course envisaged is the best one. He also asked about the nature of the directions of the distributory agency. I am of course grateful for his endorsement of the choice of the Royal British Legion. The directions will provide for periodic reports. We shall place a copy of the directions in the Library. They are not included in the Bill so as to keep it short and simple.
The membership of the advisory committee will represent all branches of the services. They will of course outnumber the representatives of the Royal British Legion but they will be only advisory. The membership will be named in the directions. We hope that there will be no insuperable disagreement over that. The directions will also include a provision to enable the Royal British Legion to give the widest possible publicity to the availability of the funds. I am sure that is what lay behind the noble Lord's question. It is of course an important point.
The noble Lord also asked whether there were any persons receiving pensions who do not benefit from the trust. There may be persons who are not benefiting from the trust, but I am not aware of any demand for housing, which is of course the trust's only purpose.
I have already said to my noble friend Lord Haig how grateful we are to him for confirming the Royal British Legion's willingness to take on the role of distributory agency and for his endorsement of the terms of the Bill. I have of course noted what he said about the continuing need and the number and nature of ex-servicemen's requirements. Those are points that I am sure we all appreciate. We have great confidence in the legion's ability to choose wisely those projects which it feels will be most beneficial. There is no intention to impose any bureaucratic delays on the distribution of the money. We want to keep the directions as simple as is practicable.
In conclusion, I once again thank all those who have taken part in this debate on a short but important Bill which will greatly benefit a number of people. I think all of us in your Lordships' House and outside need to be reminded of the sacrifices that they made. We are grateful for what they have done in the past. I am glad that in moving the Second Reading of this Bill we can make arrangements which will help ex-servicemen.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Register of Sasines (Scotland) Bill
8.23 p.m.
Lord Morton of Shuna: My Lords, I beg to move that the Bill be now read a second time.
The purpose of the Bill is to allow the Register of Sasines to be produced in a new format instead of in bound volumes as is at present required. As I understand it, it is a measure which has the support of the Government, the management of the registers of Scotland, the trade union side, the Law Society of Scotland and of this side of the House. We should all be grateful to Mr. Michael Martin, the Member of
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Parliament for Glasgow, Springburn who steered the Bill through another place.
The Register of Sasines was set up in 1617 and there have since been various Acts of Parliament to change the method of recording deeds. The Bill is designed to further the same aim. The immediate aim is to switch the production of entries to microfiche, but if future technology seems to offer a better service in other formats, that could be introduced by statutory instrument. That is the purpose behind giving the Secretary of State power to make regulations prescribing the method of operation of the register. It will make the register more efficient. In those circumstances, I commend the Bill to your Lordships' House. I beg to move.
Moved, That the Bill be now read a second time—(Lord Morton of Shuna.)
Lord Cameron of Lochbroom: My Lords, I am pleased to have an opportunity to declare the Government's support for the Bill, and in doing so to thank the noble Lord for introducing it in this House and his friend Mr. Martin for introducing it in another place. As the noble Lord said, the purpose of the Bill is to allow welcome improvements to be made to the methods of registration and storage applicable to the Register of Sasines. It offers benefits to users and producers of the register. As he clearly demonstrated, legislative reform is required to improve the property registration process.
The Bill, as the noble Lord said, will allow continued reform and refinement in the future through the power that is given to the Secretary of State to make regulations. It will allow us to move forward in the future as modern office technology develops. I therefore also commend the Bill to your Lordships.
Lord Morton of Shuna: My Lords, in the absence of any opposition, I think that it would be superfluous to say anything other than that I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
Baroness Hooper: My Lords, I beg to move that the House do now adjourn during pleasure until 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.27 until 8.35 p.m.]

Abolition of Domestic Rates Etc. (Scotland) Bill
Consideration of amendments on Report resumed on Clause 2.
[Amendments Nos. 10 and 11 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendment No. 12:
Page 1, line 9, after ("the") insert ("financial").
The noble Earl said: My Lords, it may be for the convenience of the House if in speaking to Amendment No. 12, which is concerned with the financial year of a local authority, in Part I. of the Bill,

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I deal also with the other similar amendments, Nos. 13, 21 to 23, 48, 50, 51, 55 to 58, 62 and 63 and with other amendments involving changes to definitions in the Bill, concerning Part I, Clause 26, and Schedules 5 and 6, involving Amendments Nos. 24 to 38, 40, 42, 60, 71 to 73, 189 to 199, 207, 208 and 209. This might seem to result in a rather formidable looking group of amendments, but really there is nothing difficult or forbidding about them. They are, for the most part, concerned with definitions in the Bill and where these should appear.
The amendments fall into four sets. First, there are the amendments concerned with references in Part I of the Bill—which includes Schedule 1—to the expression "year". Your Lordships will recall that this point arose at our Committee stage. Clause 6(1) provides that "year" is to mean the financial year of a local authority. However, in view of the proposals in Amendments Nos. 73 and 190 to 199 to relocate in Clause 26 the definitions in Clause 6(1) and (2), the appropriate references in Part I of the Bill to "year" in relation to a local authority are now being changed to references to "financial year", which is the approach already taken for the other parts of the Bill.
In relation to Amendment No. 190 by my noble friend Lord Gray, I would say that the Government consider that it is strictly unnecessary to define "financial year" in relation to a local authority, since this is already clear from the context of the Bill itself. However, I recognise that the amendment is helpful, and am therefore willing to accept it.
I would remind your Lordships that in this context Section 96(5) of the Local Government (Scotland) Act 1973 already provides that financial year means a period of 12 months ending on 31st March.
Lord Ross of Marnock: My Lords, the lights in the Chamber have dimmed. That is the problem with accepting an amendment!
The Earl of Dundee: My Lords, that will teach me not to do so again!
I turn now to the second set of amendments within this group. This set is concerned with where in the Bill words and expressions used in the Bill should be defined. At present Clause 6 contains definitions for the purposes of Part I of the Bill, because, as was explained during Committee stage, Part I of the Bill is intended to form part of the Valuation Acts, and the Government had taken the view that it was appropriate for that part to have its own definition clause.
However, some of your Lordships, including the noble Lord, Lord Gray, and the noble Lord, Lord Morton of Shuna, found it confusing and considered it unnecessary to have two definition clauses in the Bill. We have considered carefully what the noble Lords had to say on this, and, in an attempt to meet the concerns expressed, Amendment No. 73 proposes the removal from the Bill of subsections (1) and (2) of Clause 6, while Amendments Nos. 191 to 199 insert into Clause 26 those definitions currently in Clause 6 which are not also found in Clause 26. This includes the definitions of rates in the 1956 and 1966 Acts. I note that the noble Lord, Lord Morton of Shuna, has tabled amendments to similar effect.
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As a consequence of moving all the definitions into Clause 26, a revised definition of Valuation Acts has had to be included, to ensure that the Bill itself will be included within the term, Valuation Acts, rather than only Part I as had previously been the case in Clause 6. The Bill itself is only included as part of the Valuation Acts in so far as it relates to matters of valuation—in effect, again Part I of the Bill.
We have also considered the views expressed at Committee stage when we removed the definition of "net annual value" from the Bill. The terms of that definition were incorrect, but several of your Lordships were concerned about the consequences of the term remaining undefined. We have come to the view that it would be advisable to have a definition of net annual value and rateable value in the Bill and thus Amendments Nos. 191 and 193 provide for this.
These definitions are by reference to Section 6 of the Valuation and Rating (Scotland) Act 1956 as it will be amended by Schedules 1 and 6 to the Bill. This will be appropriate for all of the provisions of the Bill except Clause 5, which, as your Lordships will realise, is concerned with values and matters of valuation prior to 1st April 1989. In Clause 5 the gross annual, net annual and rateable values referred to will require to be calculated according to Section 6 of the 1956 Act as it will be in force immediately before the domestic valuation and rating systems are abolished. Amendment No. 71 achieves this.
The third set set of amendments relates to Schedules 1, 5 and 6 and are consequential on the changes which I have just been describing. At Committee stage, the noble Baroness, Lady Phillips, indicated that in view of the general definition of rate for all enactments which the Bill was providing for, it was unnecessary to have the non-domestic rate under Clause 3 and the non-domestic water and sewerage rates under Schedule 5 specifically defined in other legislation where reference is made to them.
In addition, the definition of Valuation Acts in the 1956, 1966, 1973 and 1975 Acts is brought into line with that now proposed for Clause 26 of the Bill. All these changes are contained in Amendments Nos. 24 to 37, 189, 208 and 209.
Finally, there are two other amendments which, for convenience, have been included within this group. First, Amendment No. 38 is concerned with Part III of Schedule 1 to the Bill and liability to the non-domestic water rate. Under paragraph 33(4) of Schedule 32 to the Local Government, Planning and Land Act 1980, industrial and business premises situated in enterprise zones are exempt from rates but are liable to pay the domestic water rate. The amendment provides that they will in future be liable for the non-domestic water rate. In other words, the basic principle of liability remains the same. The premises will otherwise however continue to be exempt from rates and thus will be exempt from non-domestic rate and the non-domestic sewerage rate.
Secondly, Amendment No. 207 relates to Schedule 6 to the Bill and Section 7 of the Local Government (Financial Provisions) (Scotland) Act 1963. At present, Schedule 6 provides for the repeal of the whole of Section 7. However, under subsection (4) of Section 7, assessors are required to send to the

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Secretary of State and to local authorities estimates of rateable valuation relating to a year of revaluation.
Subsection (4) of Section 7 is therefore very relevant for the purposes of Clause 3(4) and the calculation of maximum non-domestic rates in years of revaluation. Section 7(4) of the 1963 Act should therefore, as the amendment proposes, continue to be kept in force. With that full explanation of the various sets of amendments involved in this group, I commend the amendments to your Lordships as representing an improvement to, and a tightening of, the Bill's provisions. I beg to move.
8.45 p.m.
Lord Gray: My Lords, I must first thank my noble friend Lord Dundee and through him my noble friend the Minister for the 16 amendments which insert the word "financial" before the word "year". I suppose the lights went out at the shock of hearing the Government accept 16 amendments simultaneously from a Back Bencher, albeit such comparatively insignificant drafting ones. This series of amendments fully meets the point I made at Committee stage. It makes the effective sections and paragraphs absolutely clear as to what is meant by "year" and in consequence makes the Bill more readable.
I turn now to Amendment No. 73 which, as my noble friend Lord Dundee has explained, abolishes Clause 6 and, when taken together with other amendments, adopts the course which I and other noble Lords suggested at Committee stage leaving the Bill with only one interpretation clause rather than two and a better Bill for that. I am grateful that the Government have taken this course and acknowledge that the point made in Committee, by myself at least, has been fully met.
Finally, I should like to turn to Amendment No. 190 which stands in my name. It is the sole survivor of a series which I drafted but managed to stop getting on to the Marshalled List at the last moment when I learned of the Government's equivalent series of amendments to Clause 26. My noble friend Lord Dundee has kindly and generously said that the Government will accept this amendment on the grounds that it is helpful rather than necessary. Perhaps I should explain exactly the reason for it. I wish to make it quite clear that "financial year" means the financial year of a local authority and not the national governmental financial year which might otherwise have been assumed. With that welcome for what the Government have done and my thanks to them for meeting the points I made at Committee stage, I am happy to support all the amendments.
Lord Morton of Shuna: My Lords, it is always pleasant to see the Government accept suggestions coming from other places. Both the noble Lord, Lord Gray, and myself made the proposition that it was ridiculous to have two definition clauses quite apart from having other definitions spattered about like stray currants at various places in the Bill. It is better to have one definition, and I welcome the change.
I confess that I have some difficulty in understanding why we have to refer throughout the Bill to "financial year". If the Government had
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accepted my Amendment No. 198, which defines the word "year" in the Bill as meaning the financial year of the local authority, it would have saved the word "financial" coming into about 10 amendments. It may be that the noble Earl, Lord Dundee, who has had to deal with such simple, clear and easy amendments to this Bill both at Committee stage and since, will be able to point to another occasion when "year" as used in the Bill does not mean the financial year of a local authority. If so, I congratulate him because I have been unable to find it.
The amendment makes the Bill slightly more comprehensible. To that extent I congratulate the Government. It is an unusual situation that Amendment No. 196 stands in the name of the noble Lord the Minister and myself. It is obviously therefore a non-contentious amendment and I am perfectly prepared to accept the Government amendments and withdraw those in the grouping that are in my name.
On Question, amendment agreed to.
The Earl of Dundee The Earl of Dundee moved Amendment No. 13:
Page 1, line 9, after ("subsequent") insert ("financial")
The noble Earl said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 14 not moved.]
Lord Campbell of Croy Lord Campbell of Croy moved Amendment No. 15:
Page 2, line 4, at end insert—
("(aa)(i) any caravan which is the only or main residence of the occupier thereof with any buildings ground pertinents heritable facilities and services, whether or not part or parts of a caravan site, used in connection with the occupation of such caravan but excluding any leisure caravan and any caravan pitch entered in the valuation roll in terms of section 3 of the Rating (Caravan Sites) Act 1976;
(ii) for the purposes of this part of this Act the words "dwelling house" shall include a caravan and the buildings ground pertinents heritable facilities and services used in connection with the occupation of such caravan and the words "caravan", "caravan site" and "caravan pitch" shall have the meanings respectively assigned to them by section 6 of the Rating (Caravan Sites) Act 1976.")
The noble Lord said: My Lords, I believe it is intended that Amendment No. 18 might be discussed with this amendment. I would point out that although it is on the same subject of caravans it deals with a quite separate matter, but I am perfectly content if those who tabled Amendment No. 18 are willing to allow it to be discussed with Amendment No. 15.
On 30th March (at col. 447 of Hansard) during the Committee stage of the Bill I raised the subject of caravans as a matter of concern to the tourist industry. I gave notice that I would table an amendment at Report stage if a way had not by then been found to meet the point in question. It is a matter of writing clearly into the Bill what is intended by Parliament because the assessors in Scotland are independent of government. They make their own decisions on the interpretation of statutes. In that they are different from their counterparts in England and Wales.
The substance of the matter is the way in which a caravan park is to be assessed when the residential caravans have been removed from the valuation roll. Amendment No. 18 starts by referring to static leisure

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caravans. I make it clear that that is not the kind of caravan that my amendment deals with.
I drew attention at the Committee stage to an earlier episode when, after there had been a lapse in not writing something clearly into the Rating (Caravan Sites) Act 1976, it had been necessary later in 1984 to bring in remedial legislation because the assessors had taken their own interpretation which was quite different from what Parliament had intended. I had hoped that lessons had been learned from that episode. Since the Committee stage my noble friend Lord Glenarthur has written to me, as he said he would if he could. His letter reached me only at the end of last week so I have had little time to consider it further with him. It brought out a misunderstanding of the intention and the effect of my amendment. My amendment deals solely with residential caravans not leisure or static caravans. For example, if a site had 50 residential caravans on it occupied as residences all the year round, the caravans would be subject to the community charge. Those caravans may be accompanied by items which go to make a residential caravan park such as access roads, lighting and washing facilities. Such items should not be a rating charge against the site operator. That is the present position. All rates for residential caravan parks are levied against the individual caravan occupiers. There is no charge to rates against the site operator. The only entry in the valuation roll is for residential caravans.
My noble friend Lord Glenarthur has indicated that he wishes to keep the position as it is, that he does not wish to change that situation. My amendment does exactly that. It is necessary I believe because I argued at Committee stage that the Bill should make clear what is required to be done by the assessors. They need to have it made clear in the Bill. As my noble friend's letter appears to bring in the leisure and static caravans, clearly a misunderstanding of the point I have been raising about residential caravans has arisen. I hope that my noble friend will be able to look further at this because we are not in any way at issue on the substance of what requires to be done.
It is a technical matter of great concern to the tourist industry in Scotland. It needs to be set out clearly because the assessors need to have this written into the Bill. They cannot be directed later when the Bill has been enacted. They must know what is intended. I beg to move.
Lord Carmichael of Kelvingrove: My Lords, since this Amendment, No. 15, is being taken with the amendment in my name, Amendment No. 18, perhaps I should say a brief word on the differences. When the noble Lord, Lord Campbell of Croy, spoke about the importance of this amendment to the tourist industry I became slightly more confused because he was talking about static caravans used as the main or sole home of a resident, whereas I should have thought that the tourist industry was much more concerned with mobile caravans.
Lord Campbell of Croy: My Lords, I am grateful to the noble Lord for giving way. I have tried not to repeat everything I said at Committee stage. The whole point is what is the effect on the holiday
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caravans after the residential caravans have been taken out?
Lord Carmichael of Kelvingrove: My Lords, I see the point now. This reinforces what I said on an earlier amendment which to some extent was helped by the Minister's letter I quoted earlier. He said that he would be able, as soon as the Bill was enacted, to put down the regulations. By covering these points and the distinctions between the two types of caravan sites, my amendment (which is much the same as the one I moved at Committee stage) was merely to try to have the definition put more clearly into the Bill. With the assurance the Minister gave me and the courtesy he showed by sending me the letter which I dealt with more fully on an earlier amendment, I shall be happy not to move my amendment.
9 p.m.
Lord Glenarthur: My Lords, the amendment in the name of my noble friend Lord Campbell of Croy, requires us to consider the treatment under the Bill of what are generally termed "residential caravans". I find the amendment somewhat difficult to respond to because in some respects it is unnecessary, in so far as what it seeks to achieve is already covered by other provisions in the Bill. In other respects, however, it goes further than I believe is appropriate.
At the outset, I should explain that I have great difficulty in reconciling the two paragraphs of my noble friend's amendment. Whereas the first explicitly excludes static leisure caravans from its scope, the second paragraph seems to be seeking to bring within the scope of the term "dwelling house" all types of caravans. This is certainly the effect of seeking to define caravans by reference to Section 6 of the 1976 Act.
But, as I understand it, the amendment's first objective is clearly to secure the exclusion from rating of caravans which are at present described as "residential" caravans, and to which certainly on the second page of my letter I referred when I replied to my noble friend. I can give him the assurance that the Bill as it stands will achieve this. Such caravans can be distinguished from leisure or holiday caravans because they are licensed for occupation throughout the year.
Residential caravans are valued by assessors in just the same way as ordinary dwellinghouses and as such will come out of rating under the provisions of Clause 2(3)(a) without the need for any further or more specific provision. This will be so whether or not the caravan is used as someone's sole or main residence, so again the parallel with ordinary dwellinghouses holds good. The amendment does not achieve this comparability of treatment, because it seeks to define a residential caravan by reference to whether it is the only or main residence of the occupier.
I come now to the question of the pitches on which residential caravans are stationed, because I accept that that is also a source of some anxiety. It is a well established principle that a building or structure cannot be divorced in valuation terms from the site on which it is built or erected, and in practice this means that when residential caravans are removed from the valuation roll, the pitches on which they stand will be

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removed automatically at the same time, and again there is no need for the Bill to secure this result.
The amendment does however seek to go further because it seeks to bring into the category of domestic subjects,
"Any buildings, ground, pertinents, heritable facilities and services, whether or not part or parts of a caravan site, used in connection with the occupation of such caravans".
In other words, it seeks to exclude from rating not just the caravan pitches, but also other buildings facilities and services which are, to use a broad term, associated with the residential caravan. It is in this area that I believe the amendment goes too far. To take one obvious point first, the words,
"whether or not part or parts of a caravan site",
seem to me to bring within the scope of the amendment property which has nothing to do with the caravan site other than the fact that it is used in connection with the occupation of such caravans. The local newsagent's might be one example and there are others. But even if one puts that point on one side, I do believe that it would be going too far to exclude from rating the "infrastructure" of a caravan site which is used by the occupiers of residential caravans. It is, of course, the operator of the site and not the occupier of the caravan who is regarded as being liable to pay rates in respect of these services at the moment, and both now and in the future he will be able to recover contributions towards his rates bill for the services which he provides. I do not believe that this situation in unfair to the caravan occupier. The services which he enjoys on the site are additional to those provided by local authorities for all their local population such as education, roads, police and so on. He is, in fact, in exactly the same position as the occupier of a service flat. who will continue to pay for the services and facilities provided under an arrangement which is quite separate from that which leads to liability to domestic rates at present or the community charge in the future.
As I explained at the outset of my remarks, this amendment is to some extent unnecessary, and I hope that my noble friend will see the force of that. I hope also that he will understand that it would go further than we think would be desirable. I trust that my explanation of our policy on residential caravans has been helpful. I am the first to accept that this is a complex matter and I felt it would be worth while to take a few minutes to explain precisely what we have in mind. I hope that that has satisfied my noble friend.
Lord Kirkhill: My Lords, I did not quite understand what the Minister was saying. I do not blame the Minister for his explanation but I should like him to expand it somewhat. I do not understand his analogy of a newsagent who might be off-site. Will he develop that point? It seemed to be a palpable nonsense, if I may say so.
Lord Gray: My Lords, I think that there is no meeting of minds between my noble friends Lord Campbell of Croy and Lord Glenarthur on this point. I had understood the amendment, whether or not it is drafted correctly, to intend to import into the Bill the actual definition of domestic subject which is contained within Clause 2 of the Bill.
Lord Glenarthur: My Lords, I hope that we are not arguing at cross purposes. I sincerely hope that I am not arguing at cross purposes with my noble friend Lord Campbell of Croy. I do not believe I am with the noble Lord, Lork Kirkhill.
With the leave of the House, perhaps I may develop a little the argument paraded just now by the noble Lord, Lord Kirkhill. My noble friend Lord Campbell seemed to be arguing that the rates payable on site facilities will be recoverable by the site operator only for holiday caravan occupiers. That is not the case as I understand it. The site owners can make charges to the residential caravan occupiers and the holiday caravan occupiers to cover the cost, including rates, of the site facilities which both classes use. As for the connection with newsagents, the words which are used in the amendment relate to,
"part or parts of a caravan site".
It is conceivable that close to or on the periphery of a caravan site might be a newsagent, a local launderette or something like that. By bringing them in, we should be going way beyond the scope of what I believe my noble friend is intending to do. Perhaps I have misunderstood the point.
Lord Kirkhill: My Lords, I am sure I have as well. My point, which I am sure I explained badly, was this. I did not think the amendment went as far as that. I thought the Minister took the amendment further than the amendment went.
Lord Glenarthur: My Lords, with the leave of the House once more, all I can say is that the amendment gives that appearance to me. When we looked at it, that is what we thought it would achieve. It would be for others to establish whether it went that far. I hope that my noble friend will be satisfied that that is one of the considerations that we had to take into account when we looked at the amendment.
Lord Ross of Marnock: My Lords, I am grateful for the noble Lord's speech. I had in mind a caravan park at Maidens which has a shop, cafés and so on. Those are on the grounds and, because they were not there before the caravan park, are definitely related to the caravan park.
I heard the noble Lord, Lord Campbell, say that he thanked the Minister for the letter he sent him. I heard my noble friend Lord Carmichael saying that he thanked the Minister for a letter. I am sure that the noble Lord, Lord Kirkhill, and I, had we received these letters, would have been more enlightened about the Government's policy and intentions. If the Minister is writing letters to anyone in future, I hope that he will let other people have the advantage of seeing them as well.
Lord Glenarthur: My Lords, with the leave of the House once more, if I failed to copy letters, I can only apologise. I wrote several letters over that period. sincerely apologise if the noble Lord and his colleagues were not aware of our intentions. It was certainly far from my intention to try to confuse them or deprive them of information. I will ensure that any other letters written are copied to leading spokesmen on all

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sides of your Lordships' House, and I apologise unreservedly in this case.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for considering this so carefully and answering in some detail. I have no apologies for raising this because, as all Members of the House will know, self-catering is a very important part of the Scottish tourist industry in which there is great potential, and it is still expanding.
When my noble friend was making his first reply before the noble Lord, Lord Kirkhill, made his very apposite intervention, he said—and this agreed entirely with what I have said—that the infrastructure that went with the residential caravans was rated, and those rates were paid by the residential occupier. When our words are read tomorrow, it will be seen that we are not disagreeing in that respect.
In the terminology of the tourist industry, there is the site operator, and the site operator now pays none of those rating charges. The industry wants to be certain that when the residential caravans are taken out of the system, the infrastructure, where the rates are also paid by the residential occupiers, goes with the residential caravans and the site operator is not left with having to pay the equivalent of rating on the still existing infrastructure which had gone with the residential caravans. There is, therefore, a difference in what my noble friend said, because it is the site operator rather than the occupier who will find that he is either assessed or not assessed, depending on how the assessors in Scotland deal with the Act when they are eventually faced by it.
My noble friend said that the amendment is not necessary. I think I made clear that I felt it was necessary only because we have to elucidate what is intended to the assessors in Scotland. I agree that in England and Wales it would not have been necessary. In the United Kingdom Bill to which I referred, which became the 1976 Act, the district valuers in England and Wales were told what to do by the Government and followed the intention of Parliament. The assessors in Scotland did not. They went their own way, and there was no way of stopping that until another Act was passed. I agree that it may not be thought to be absolutely necessary except to give clear guidance to the assessors when the Bill has been enacted.
Those who have studied the amendment will recognise that it has been drafted by experts in parliamentary drafting. It is therefore somewhat difficult for a layman such as myself to follow. However, I understand what the intention is: it is usually given away by a deficiency in commas in various parts of the amendment. That deficiency shows that it has been drafted by experts and has references to other statutes. I am sure that those who did the drafting for me will study carefully what my noble friend the Minister has said and take into account his views on the fact that it might be going too far. I hope that the assurance my noble friend has given extends to making sure that the Bill is completely clear for the benefit of the assessors what course should be taken when the amendment is carried out.
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I do not think that I can say any more—I do not wish to add to the technicalities in the debate. I think that this matter needs to be made perfectly clear. If my noble friend thinks at this stage of the Bill that any changes might he necessary, I hope that on Third Reading he will not hesitate to make some alterations. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Wilson of Langside Lord Wilson of Langside moved Amendment No. 16:
Page 2, line 4, at end insert—
("( ) shall include properties held for the purpose of their preservation for the benefit of the nation, open to the public and maintained and furnished as domestic subjects, and").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 16 which stands in my name and in the name of the noble Lord, Lord Mackie of Benshie. The effect of the amendment is to take off the valuation rolls properties of the National Trust and other analogous organisations and thus exempt them from rates. The amendment is much in the form of that proposed by my noble friend Lord Taylor of Gryfe at the Committee stage. The matter was then dealt with quite fully by a number of your Lordships who took part in the discussion which followed.
The Minister indicated that he appreciated the fact that for an organisation such as the National Trust a potential burden might be placed upon it which required looking at again, and he undertook to do that. I have looked at the amendments which are proposed on behalf of the Government and in presenting the amendment tonight I am concerned to ask the Minister to inform the House of the outcome of the further consideration which he undertook to give this matter. I beg to move.
9.15 p.m.
Lord Glenarthur: My Lords, I have considered very carefully indeed the points which were made when we debated this subject in Committee. I made clear on that occasion that I very much recognised the anxieties of the National Trust for Scotland on this matter, and I acknowledge that that recognition is shared by a number of noble Lords who spoke in Committee and who have contributed to our discussion today. But having said that, I must advise the House that in the light of my consideration I am still no happier with the amendment that I was earlier.
I think that we must first of all accept that if an amendment along these lines were to be made, it would affect many properties other than those in the hands of the National Trust for Scotland. The National Trust is by no means the only body to maintain places of exhibition which are maintained and furnished as dwelling houses; indeed my inquiries suggest that there are nearly twice as many in the hands of bodies and individuals other than the National Trust. So we should be clear that we are not just talking about National Trust properties.
The basic argument in favour of the amendment is that without it the provisions of the Bill for part residential subjects would somehow change the presumption about the way in which National Trust and similar properties should be valued. The argument appears to be that properties which are

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treated as domestic subjects at present would somehow inevitably become non-domestic subjects, with only minor elements such as residential flats being excluded from domestic rating through the part residential mechanism. This is not the intention of the provisions in the Bill and there is no reason to suppose that they will have this effect. The judgment about whether a subject is domestic or non-domestic will in future be based on exactly the same criteria as at present. It will be up to the assessor to justify any proposal he makes for a change in the basis of valuation and the rateable occupier of the property will have the opportunity to challenge that under the appeal system, just as at present. There is no indication at present that, just because a property is in the ownership of the National Trust, there is any kind of automatic presumption that it should be non-domestic. Indeed, it is my understanding that the majority of such National Trust properties are at present valued as domestic even where substantial parts of them are open to the public for considerable periods of time. My first objection to the amendment is therefore that it is unjustified and unnecessary.
The National Trust has argued that an anomaly could arise, in so far as a house which is accepted by it and which has been valued on a domestic basis when it is in private hands, whether it is open to the public or not, may on its transfer to the trust become liable to rates as a non-domestic subject. From what I have already said I hope that it will be clear that I do not accept the underlying presumption that property owned by the trust will be regarded as non-domestic. I do not therefore consider that there will be an anomaly of the kind which the trust suggests and I therefore cannot agree that its argument on this score justifies the amendment.
The National Trust for Scotland has referred to the possibility of creating an anomaly. I can assure the House that if we accepted this amendment it would very definitely be creating real anomalies, because the amendment does in fact discriminate in favour of certain kinds of places of exhibition. I am referring here to the use of the words in the amendment:
"maintained and furnished as domestic subjects".
Let me say straightaway that I do not like the term "domestic subjects" because it has the effect of giving the amendment a circular quality. "Dwelling houses" would surely be more appropriate. But that is not my main point, which is that it would surely be extremely odd to take places of exhibition out of rating only if they were maintained and furnished as dwelling houses.
Perhaps I may give your Lordships an example. In Scotland there are a number of places of exhibition consisting of restored croft houses or black houses which have been furnished and equipped as near as possible to their original state so that the visitor can see exactly the conditions in which the crofters lived. As I understand it such properties are valued and rated at present as non-domestic subjects because they are museums, and I expect that they would come within the scope of the amendment. But what of the museum which is also a restored croft house but which is laid out in perhaps the more traditional way with exhibits arranged not to provide a replica of the original interior but displayed in glass cases and such? I do not
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think that such a place would come within the scope of the amendment, but it would be grossly unfair to assist one kind of museum and not another.
Were I to develop this argument further, I should say that we also run the risk of being unfair to industrial museums, because again in Scotland there are museums which provide working exhibits of industrial plant and machinery. The amendment does not cover industrial museums at all, so again it would create anomalies.
As I made clear at the outset of my remarks, I appreciate the concerns of the National Trust for Scotland in this matter but I am convinced that it would be quite wrong to accept this amendment. It is not simply the fact that it has a circular quality through its use of the term "domestic subjects", because that is a relatively minor point. My principal objections are, first, that it is unnecessary because the concerns that it sets out to remove are unfounded, and, secondly, that the classification of domestic subjects of all property of the type described in the amendment with its consequent removal from rating would create unfairness and anomalies which could not be justified.
With that explanation I hope that the noble and learned Lord will understand the difficulties that would arise and that he will not feel that it is necessary to press this amendment.
Lord Mackie of Benshie: My Lords, before the Minister sits down perhaps I may ask a simple question. Has he any suggestions to make which would overcome the undoubted difficulty in which the trust would be placed by many of the subjects? I can think of one in particular, which is the Laidhay Museum in Caithness, where the croft house is fitted up as he said and classed as a museum. What remission of rates or rating can it hope for?
Lord Glenarthur: My Lords, with the leave of the House, let me say that I certainly should not like to embark on a study of any individual case from the Dispatch Box to decide how the organisation should seek to alleviate any problems which might arise in regard to particular property. I hope that in answering the point made by the noble and learned Lord, Lord Wilson of Langside, I have stressed the difficulties that would accrue if we were to follow the route that he suggests. If the noble Lord has a particular case in mind and brings it to my attention explicitly and in detail, I shall certainly be very happy to look into it, but I think that that is too narrow and too particular an example for me to respond to without thought.
Lord Ross of Marnock: My Lords, can the Minister tell us how the National Trust houses and the other places that he mentioned will be dealt with under the new system?
Lord Glenarthur: My Lords, I am not sure that I quite understand the noble Lord's point. Is he asking me to go into detail about every aspect of National Trust property or is he asking a question in relation to any specific area? I am not quite sure of the burden of his question.
Lord Ross of Marnock: My Lords, I am dealing with properties that are held for the purpose of their preservation for the benefit of the nation. In future how will they be dealt with as regards rating and in relation to all the new personal charges, selective standard charges and so on that are causing concern and worry? How will they be dealt with? At what point do the worries of these people arise and are they right to be worried, or is there some misconception in their minds that they will be subject to burdens of rates or charges that they do not have at the present time?
Lord Glenarthur: My Lords, with the leave of the House, I point out that as I understand it the National Trust for Scotland has 55 properties which are maintained and furnished as dwelling houses. They are divided into three broad categories. First, there are those unsuitable for residential use—for example, a Glasgow tenement. There are 11 of those. Then there are those which are wholly or partly used for residential purposes, for example, the House of the Binns with which the noble Lord will be familiar. There is a total of 15 of those.
Lord Ross of Marnock: My Lords, I do not know it.
Lord Glenarthur: My Lords, I thought that the noble Lord would have been familiar with it but he certainly knows someone who is familiar with it. Then there are those which are the subject of short or long-term lets—for example Malleny House, Balerno—and which are not open to the public. There are 29 of those in total.
Lord Ross of Marnock: My Lords, there is Culzean and Brodick Castle.
Lord Glenarthur: My Lords, the noble Lord is making comments. Does he wish to intervene?
Lord Ross of Marnock: My Lords, I was merely adding Culzean and Brodick Castle to the list.
Lord Glenarthur: My Lords, I could give many examples myself but in the interests of time I was keeping it to one example of each.
The property in the third category—that is, property which is not open to the public—would presumably not fall within the scope of the amendment before us. That suggests that a total of 26 National Trust properties might benefit from the amendment. A survey of the Scottish Museums and Galleries Guide suggests that there are a further 47 museums in Scotland which fall within categories 1 and 2 above and which are liable to benefit from the amendment.
I refer the noble Lord, Lord Ross of Marnock, to the point I made earlier when I said that the basic argument in favour of the amendment was that without it the provisions of the Bill for part-residential subjects would somehow change the presumption about the way in which National Trust and similar properties should be valued. I cannot repeat all that. If the noble Lord studies what I have said, he will understand precisely how the mechanism works.
Lord Ross of Marnock: My Lords, I shall not.
Lord Glenarthur: My Lords, I hope that if the noble Lord studies what I have said he will understand it. If he would like to hear it again, I shall repeat it; but I hope that what I have said has set in context the mechanism and the details of what kind of properties would be affected.
Lord Mackie of Benshie: My Lords, I wish to ask for clarification. As I understand it, non-residential parts of National Trust and other properties will now be subject to non-domestic rates with no remission of any kind.
Lord Glenarthur: Yes, my Lords. With the leave of the House—and I am not sure how many times I can return to the Box and ask for your Lordships' leave—a number of properties are commercial in their nature and some of them no doubt fall into the category of the examples that I have just given. Some will fall within the category of non-domestic rating. Therefore, I fail to see what else I can add to the remarks that I have already delivered.
Baroness Carnegy of Lour: My Lords, before the noble and learned Lord, Lord Wilson, decides what to do with his amendment, it is important to remember that the categories of houses furnished as houses but which in effect are museums of the type that my noble friend has just described, are very much dependent on local government services. If they were totally exempt from rates other payers of the community charge would be paying extra for them. Where would those museums be which are furnished as houses and which are open to the public without the roads that lead to them, without the road signs erected by the roads authority (which is the regional island council) to show the way to them, without the recreation and tourism departments of the districts which advertise those properties, without the education departments which send school parties round them and which pay to do so, without the fire services which make arrangements for their safety, without police advice on safety, without rubbish collection, without, in the case of some houses, coastal protection, which is a regional function, without sewerage facilities, and so on?
Those are all local government services and it would seem wrong that, because a house was furnished as a house as opposed to being furnished as any other sort of museum, it should be totally exempt from a contribution to the funding of local authorities, and that that should be picked up by other payers of the community charge. It seems to me that this amendment is not aiming in the right direction of assisting the National Trust.
9.30 p.m.
Lord Wilson of Langside: My Lords, I am most grateful to the Minister for his careful explanation. I am very conscious, and was very conscious even before the noble Baroness spoke, that the drafting of the amendment raises questions. Perhaps I made a mistake in putting it in this form, and I apologise to the Minister for that. It may be that I should have taken time and considered with others the possibility of meeting the kind of points which I was fully conscious of right at the beginning.

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The Minister said, very fairly, that he would consider the possibility of some action to relieve the burden on the trust. He has done that, for which I am grateful to him, and I accept his criticisms of the drafting. I shall look at the amendment again and if there is time before Third Reading, in consultation with those interested in the National Trust and others on these Benches, I shall try to get something which is more likely to meet the needs and the concerns expressed by the National Trust itself. In these circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 17:
Page 2, line 5, leave out paragraph (b) and insert—
("(b) any lands and heritages consisting of or any combination of a garden, yard, garage (having a floor area not exceeding 25 square metres), outhouse or pertinent close to but discontiguous or otherwise separate from one or more dwelling houses but occupied along with, used wholly in connection with, and only for the private purposes of such dwelling house or dwelling houses.").
The noble Lord said: My Lords, this is a very small but important amendment. We had debates earlier in Committee about paragraph (b), which reads:
"such class or classes, or such parts of any class or classes, of other lands and heritages as may be prescribed".
We have made an effort to try to understand this paragraph, which my noble friend Lord Morton of Shuna, among others, has suggested is almost unintelligible. A certain form of words has been offered to me which I offer to the Minister. It tries to define rather more clearly and precisely what is meant than do the present words.
I feel that the Minister is being left with enormous powers which are too vague and obscure. I hope that following our earlier discussions the Minister will have looked at the point and is prepared to make the position clearer, rather than merely saying that something may be prescribed. I hope that the Minister will have thought over the matter and will be able to help us a little more. My Lords, I beg to move.
Lord Glenarthur: My Lords, it might be going a little far to describe this amendment as a curate's egg. Parts of it are indeed quite unacceptable. The rest, while by no means excellent, at least shows some understanding of what we are trying to achieve.
The power in paragraph (b) of Clause 2(3) is to be available to add to the category of domestic subjects such classes or parts of classes of lands and heritages as may be prescribed. The intention is that it be used to cover two broad types of property. First, there are private lock-up garages and comparable small buildings which at present have separate entries in the valuation roll because, by virtue of their situation, they cannot be valued along with dwellinghouses as a single unit. They do not fall within the description of subjects in paragraph (a) of the subsection, but it would clearly be unfair if they were left within rating when garages valued with dwellinghouses as a single unit will, by virtue of paragraph (a), come out of rating.
Secondly, there is property such as student halls of residence and nurses' homes, which is likely to provide
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a sole or main residence for most, if not all, of the residents. They do not fall within the scope of paragraph (a) either. However, it would be unsatisfactory to leave them in rating, given the liability of their residence to a community charge, because there would in effect then be double taxation.
The amendment seeks to deal with the first type of property only. For that reason alone I could not accept it. More fundamentally the amendment shows the difficulties inherent in the approach of referring to specific types of property. It mentions garages, yards and gardens. But what about storage sheds or car ports? How could one defend car ports being left in rating when garages are to come out?
I must say that the latter part of the amendment showed some promise, if that is the right word, in that it tries to secure a link between the property in terms of occupation, use and purpose. Possibly the tests it lays down are too restrictive. But in general terms it reflects the approach which we are considering in consultation at present with the Scottish Assessors' Association. I hope that the explanation of our intentions, and of the problems associated with listing exclusively in the clause the types of property involved, will demonstrate the need for and the advisability of leaving these matters to prescription.
I have to stress than I am firmly opposed to any attempt to replace the regulation-making power in paragraph (b) in Clause 2(3) with specific definitions or criteria. It is difficult enough—as the noble Lord has perhaps discovered for himself—to draw up definitions which look right on paper. It is harder still to guarantee that they will operate fairly and reasonably in practice. A regulation-making power seems to me essential in principle to ensure flexibility for resolving difficulties which may arise in practice.
Perhaps in the light of what I have said the noble Lord will agree that it would be best if he withdrew his amendment.
Lord Mackie of Benshie: My Lords, before the Minister sits down, may I ask him whether, if paragraph (b) is left as it is, that would enable him if he were sympathetic to the National Trust to prescribe National Trust properties which he felt were deserving of aid?
Lord Glenarthur: No, my Lords, I do not think so. If the noble Lord were to suggest that, I should have to ask him to expand a little on the reasons which he believes underlie the assumptions which he makes that possibly paragraph (b) could be used in that way. I do not know whether he feels that this is the right moment to do so. However, I do not think that it would be and the matters of principle to which I referred earlier so far as the extension on the National Trust and connected matters are concerned would still apply whether or not paragraph (b) was a suitable vehicle in the way in which suggested. I shall certainly look at that matter. But I fear that I shall probably have to disappoint him.
Lord Carmichael of Kelvingrove: My Lords, I am grateful to the Minister for his explanation. Without it, I do not know how anyone would he able to make a reasonable stab at what the paragraph means,

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although I was grateful for his praise when he said that the amendment, which I did not invent myself but which I was prompted to put down, was getting close to the mark. I do not know how such a complex subject can be dealt with without giving specific examples. I accept the fact that perhaps my amendment, which talks about actual floor areas, is going a bit far. On the other hand, I think the Minister was going a bit far when he spoke of car ports away from the house. The mind boggles. I have never heard of a car port which is not attached to a house or at least to a wall adjoining it. I thought that a car port, by definition, was something which used one wall of a house as a principal support. However, having listened to the explanation of the Minister, I beg leave to withdraw the amendment.
Amendment by leave, withdrawn.
[Amendment No. 18 not moved.]
Lord Wilson of Langside Lord Wilson of Langside moved Amendment No. 19:
Page 2, line 7, at end insert ("premises used as Womens Aid Refuges and").
The noble and learned Lord said: My Lords, the object of this amendment is to ensure that Women's Aid Refuges will be rated as non-domestic premises. In this case I make no apology for repeating the amendment which was presented in Committee and to which the Government eventually responded with considerably sympathy. I had great expectations that there may be something in the government amendments which would cover the case. Perhaps I oversimplify some of the complexities in the Bill, but I believe that the obvious thing to do in common justice is to rate these refuges for women—who are the victims of the violence of their husbands and who flee their homes and are given refuge in these establishments—as non-domestic premises. These are premises to which the unfortunate women are driven sometimes accompanied by their children, and their stay may be anything from one or two nights to a considerably longer period. However, from what I have read and heard my impression is that it is usually for a fairly short period.
The common sense of the situation should be that while resident in their family home with their husbands and children these unfortunate women should he responsible for their personal community charge, or poll tax, however you care to describe the wretched thing. Equally, once they are free of the refuges and have either returned to their husband and the marriage has been restored to more or less normality or they have established a home of their own with their children they will become responsible for the personal community charge or poll tax. I believe that is a sensible approach but perhaps in the context of this Bill it is too sensible to be acceptable to the Government.
Certainly the matter was explored fairly fully at Committee stage and my impression was that the Government were fully alert to the needs of the situation and would either accept an amendment of the kind which has been put down tonight or would
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suggest another solution which would deal adequately with the position of these unfortunate women. Although we read a great deal about them I suppose over the years their numbers are relatively few. I beg to move.
9.45 p.m.
Lord Glenarthur: My Lords, I listened carefully to the explanation which the noble and learned Lord gave. I have to say to him that in accordance with the undertaking which my noble friend Lord Dundee gave when we discussed this matter in Committee we have had further consultations with Scottish Women's Aid on the best treatment for women's refuges under the new system. However, against the background of the system as a whole I do not think that the most appropriate solution would be for all such refuges to remain in rating as this amendment would provide for. That would mean that all those who were solely or mainly resident in the refuges would be exempt from personal community charge liability for the period during which they were so resident. This would have the curious effect of differentiating between the inhabitants of refuges who were not solely or mainly resident there—and who would normally be registered for the personal community charge at their home address—and those who were solely or mainly resident in the refuge who would be exempt. I do not therefore consider that this solution would be a sound basis for the treatment of women's refuges. I should also mention that a further unintended effect of the proposition would be that in many cases women's refuges would be the only ordinary dwellinghouses which remained on the valuation roll. That could, I think, lead to the very difficulties of confidentiality about which so much concern was understandably expressed in Committee.
After full consideration therefore we have reached the view that the most equitable treatment of women's refuges would be that they should be subject to liability for the collective community charge. Scottish Women's Aid has made clear to us the desire that, whatever the solution ultimately adopted, there should be consistency of treatment for all refuges. We think that that is a reasonable request. The pattern of residence of people in such refuges is very variable and while in many cases registration officers might decide that they should be subject to the collective community charge, it would be preferable, for the avoidance of doubt and possible administrative complexity for women's aid themselves, for them to be prescribed as liable for the collective community charge under Clause 11(2) of the Bill. That will mean that the charge payable will be determined by the multiplier set by the registration officer to reflect the typical occupancy rate of the premises by people whose sole or main residence is there. In many cases this might be a relatively low figure if most of the residents are not in fact solely or mainly resident in the refuge but are only staying there for a matter of days before returning home or going on to other accommodation. While the setting of the multiplier will not, I accept, be straightforward in every case the factors which the registration officer will take into account will of course be prescribed and further central guidance may be issued in the light of experience of the working of the system.

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The advantage of collective community charge treatment is that it avoids any distinction in tax liability between those who are solely or mainly resident in a refuge and those who are not. Those who are solely or mainly resident will be required to pay the landlord a contribution relating to the period of their stay or the same amount as the personal community charge which will, as I have said, normally be paid by those who are not solely or mainly resident in the refuge but continue to be registered at their home address.
Finally, I should say a word about the question of confidentiality of the addresses of refuges. I fully accept the point made by Scottish Women's Aid that under normal circumstances a refuge which was liable for the collective community charge would be identifiable as such from the presence of the multiplier in the public register. I propose, however, that in the case of women's refuges the multiplier should not appear in the public register. This will be achieved by prescribing women's refuges under Clause 20(2)(a)(iii) as a class of premises whose multiplier does not appear on the public register. This power of prescription was added to the Bill as a result of an amendment brought forward in Committee by my noble friend Lord Strathclyde.
I understand the point that the noble and learned Lord has made. As I said, we have discussed this with Scottish Women's Aid and I think that the solution I have described is the best and fairest possible in the circumstances for women's refuges. Therefore, in the light of that further explanation and particularly the clear understanding which I have given to ensure the confidentiality of the addresses of refuges—which I believe is the point which really underlay the concern of your Lordships in Committee—I hope that the noble Lord will feel able to withdraw his amendment.
Lord Taylor of Gryfe: My Lords, I am sure we are grateful to the Minister for honouring an obligation to the House. He has given further consideration to the matter and has discussed it with Scottish Women's Aid. We appreciate his assurance with regard to the matter of confidentiality. That is important, but rather more important is the treatment, the subject of the amendment. While the Minister told us he had spoken to Scottish Women's Aid I presume that the proposition before the House tonight was put to its representatives. I hope that they could understand it more readily than I.
I wonder whether the Minister, with the permission of the House, could tell us the reaction of Scottish Women' Aid to the proposition which he has now submitted. I must say I thought it unsatisfactory. Anyone who has seen these refuges would feel that a special case could be made. These are dreadful situations in which women arrive with their children at all hours of the night, frequently pursued by husbands or lovers. They are subject to a great deal of brutality and ill-treatment and I should have thought that we might be able to go further than the Minister has gone tonight.
I should appreciate it if the Minister would tell me exactly what was the reaction of Scottish Women's Aid to the proposition he has put to us tonight.
Lord Glenarthur: My Lords, with the leave of the House, I should say that the clear preference of Scottish Women's Aid remains for refuges to be left in rating. But we discussed it and this solution which it prefers, and which the noble and learned Lord prefers, would not be without its problems. It would result in the exemption of certain women from personal community charge liability for the period during which they are solely or mainly resident in a refuge.
There seems to be no overwhelming reason in favour of the amendment. I can understand that it is perfectly possible to develop a theme of support for those whom the noble Lord so rightly describes as being extremely unfortunate. I can understand their point of view, but, basically, we think that their concerns are misplaced and that they are wrong to feel that they should remain in rating. We believe that the collective community charge will be the best way of preserving the confidentiality mentioned by the noble Lord, Lord Taylor of Gryfe, who suggested that these unfortunate people might be pursued by others who wished to deal with them in one form or another. That is, of course, a very unsatisfactory way to proceed. I would have thought that the method we are proposing—the multiplier not appearing in the register—relieves to a very great extent the concerns that have been expressed while leaving those concerned subject to the collective community charge.
Lord Mackie of Benshie: My Lords, I apologise for troubling the Minister. Perhaps he can tell us what would happen if a husband—and I understand that the husband is responsible as the head of the house—six months through the period beats up his wife and she leaves, but he is responsible for her community charge during the six months that she had been with him. She then moves into a hostel and stays there for two months and a collective charge, a collective sum, is recovered from her by the hostel. Then, for a further four months, she has a refuge, a home to which she removes her children. Surely that will give rise to unbelievable complexities. The husband, as head of the house, is responsible for the personal charge while she is with him. She is then in a hostel for two months and a collective charge is made. She then moves into a home of her own with her children. It will he enormously difficult.
Lord Glenarthur: My Lords, with the leave of the House again, I do not think that I can return to the Box many more times without trespassing on your Lordships' patience. There is a limit to the number of times that I can return on Report. It is possible to dream up more or less any scenario which could point to complexity. I dare say it is especially easy to do so in a Bill of this type.
The point about the woman who leaves her husband because she has been bashed up, or whatever, and who goes to a refuge relates to the husband's liability to pay. That is the noble Lord's first point. Joint and several liability will not apply when the couple no longer live together. The first point, which is the precursor to the noble Lord's later points, causes the whole proposition to fall. I accept that it is possible to dream up a scenario which is beyond the realms of probability, without looking at the matter in great detail to see

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whether an occurrence leads to the circumstances which the noble Lord suggests. In this case, joint and several liability will not apply when the couple no longer live together and so the first part of the noble Lord's premise falls.
Lord Wilson of Langside: My Lords, the Minister intrigued me by suggesting, in response to the point made by my noble friend Lord Mackie of Benshie, that it is possible to dream up all kinds of complex scenarios. The complexity of the social lives of the wives and families who resort to these refuges is not a dream; it is, for them, the reality, or as my noble friend Lord Taylor of Gryfe has said, a nightmare. That is the reality. I am profoundly disappointed by the Minister's response to the amendment.
When the matter was first raised there was a great deal of sympathetic response from this side of the House. I also remember the noble Lord, Lord Sanderson, urging the Minister to treat the matter as a special case. That seems to be the utmost common sense. It is a special and terrible kind of case.
My recollection is that in Committee the noble Earl, Lord Dundee, responded with a reading of his bureaucratic brief and showed an utter heartlessness which disturbed even a relatively easygoing person such as myself. I cannot help feeling that the Minister has returned to that approach. He is treating the matter as a little problem to be dealt with by some elaborate bureaucratic mechanism. If I understood him aright, he suggested that the amendment presented him with a problem. We all knew that. I knew that. I could see the difficulties. Governments are there to help solve people's problems. The Minister and the Scottish Office have a problem sorting out this tiny little aspect of the matter. It is tiny to us in this House, but it is of enormous importance to many unfortunate women. Their problem is far greater than anything which the Scottish Office has to deal with. I should have thought that the Government would sort it out on a sensible basis.
I shall consult Scottish Women's Aid further to find out what it feels. In the circumstances, the matter will have to come back at a later stage. I am tempted to put the amendment to the vote just to show the complete contempt I feel for the Government's attitude and approach to this problem and their apparent lack of sensitivity. However, I shall not do so. I do not suppose that I should get much support from the other side of the House. I therefore beg leave to withdraw the amendment but I shall bring it back later.
Amendment, by leave, withdrawn.
[Amendment No. 20 not moved.]
10 p.m.
Schedule 1 [Valuation and rating]:
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 21 to 38:
Page 26, line 8, after second ("the") insert ("financial")
Page 26, line 16, after second ("the") insert ("financial")
Page 26, line 24, after second ("a") insert ("financial")
Page 27, leave out lines 22 to 28 and insert—
(" "rate" means the non-domestic rate and, for the purposes of Part V of this Act, includes the non-domestic water rate and the non-domestic sewerage rate;")
Page 27, line 40, leave out from ("rate") to the end of line 44 and insert ("or the non-domestic sewerage rate;")
Page 27, line 44, at end insert—
("19A. In section 43(1) of the 1956 Act (which defines terms used in the Act), for the definition of "the Valuation Acts" there shall be substituted—
" "the Valuation Acts" means the Lands Valuation (Scotland) Act 1854, the Acts amending that Act and any other enactment relating to valuation;" ")
Page 28, line 1, leave out from second ("rate") to end of line 14
Page 28, line 27, after ("Act") insert ("—(a)")
Page 28, line 31, at end insert ("; and
(b) in the definition of "Valuation Acts"—

(i) the word "and" shall be omitted, and

(ii) at the end there shall be inserted the words "and any other enactment relating to valuation" ")

Page 29, line 1, at end insert—
("25A. For subsection (8) of section 116 of the 1973 Act (which relates to valuation areas and authorities and the appointment of assessors, etc.) there shall be substituted—
"(8) In this section the expression "the Valuation Acts" means the Lands Valuation (Scotland) Act 1854, the Acts amending that Act and any other enactment relating to valuation.".")
Page 29, leave out lines 21 to 25
Page 30, leave out from beginning of line 1 to ("in") in line 5
Page 30, line 5, leave out from ("Acts" ") to end of line 6 and insert ("for the words "any other Act relating to valuation and includes this Act" there shall be substituted "and any other enactment relating to valuation" ")
Page 30, line 9, leave out from ("substitute") to second ("the") in line 10 and insert ("rates,")
Page 30, line 14, leave out from ("levying") to first ("the") in line 15 and insert ("rates,")
Page 30, line 25, leave out from ("1987;") to end of line 33
Page 30, leave out lines 38 to 53
Page 30, line 53, at end insert—
("The Local Government Planning and Land Act 1980.
37A. In paragraph 33(4) of Schedule 32 to the Local Government Planning and Land Act 1980 (which relates to lands and heritages exempt from rates), for the word "domestic" where it second appears there shall be substituted "the non-domestic" ").
The noble Earl said: My Lords, with the leave of the House, I beg to move en bloc Amendments Nos. 21 to 38 which have already been spoken to.
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, I should point out that there is an error in Amendment No. 34 which may not have been drawn to the attention of the House. In Amendment No. 34 the word "community" should read the word "the", as I understand it.
Lord Glenarthur: My Lords, can the noble Lord on the Woolsack repeat that? I missed the word.
The Deputy Speaker The Deputy Speaker: My Lords, Amendment No. 34 says:
"leave out from ('substitute') to second ('community').".
The word should be "the" and not "community".
On Question, amendments agreed to.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 39:
Page 31, line 1, leave out paragraph 40.
The noble Lord said: My Lords, we now come to something really important. I was brought up with the Gaiety Theatre and every Friday night inevitably there was a comedian whose war cry was, "Should a blind man pay for the stair-head gas?". The subject of this

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amendment is the stair-head gas. The common closes of Glasgow are lit and the light extinguished by the leerie. I wish to know what this paragraph is doing here. Is it essential that this matter should be dealt with? We dealt with it fairly recently in the Civic Government (Scotland) Act 1982. It seems only yesterday that we dealt with this subject.
It is a matter with which the Secretary of State and the Treasury are not concerned. They leave the decisions to the local authority. Have they really thought about this? Is this a matter with which they can trust the local authority so that we shall not have to bring in the noble Lord, Lord Boyd-Carpenter, and his legions of bureaucrats from the Treasury to tell the Secretary of State what to do? In fact the Secretary of State is going to leave it to the local authority to decide who pays, how much and to whom they will remit the whole or part of the charge. Why is the paragraph there? I beg to move.
Lord Glenarthur: My Lords, this amendment takes us into the realm of what are sometimes termed secondary uses of rateable values—in other words, instances where rateable values are used for purposes other than the assessment of rates.
Subsection (9) of Section 90 of the Civic Government (Scotland) Act 1982 deals with the basis on which local authorities can recover the costs of providing or maintaining lighting in common stairs. In its present form, the subsection enables expenses to be apportioned among the owners who have a right of access by the common stair on the basis of rateable values. So if, for example, the total rateable value of all the flats on a stair was £4,000, the owner of a flat with a rateable value of £400 could be made liable for one-tenth of the local authority's expenses. This method of apportionment will no longer be appropriate when entries for dwelling houses and other domestic subjects are removed from the valuation roll, and so paragraph 40 of Schedule 1 substitutes a new subsection (9) which would allow a local authority to recover such proportion of the expense as it may determine.
The amendment merely represents a necessary piece of tidying up following the abolition of domestic rates. I might just add that the approach we are taking in the amendment will bring Section 90 into line with subsection (4) of Section 87 of the same Act which deals with the situation where local authorities seek to recover the cost of necessary repairs to common property. That subsection does not provide for a method of apportioning the costs but rather leaves the method to be determined by the authority. So in no way are we entering unmapped territory in making this amendment to the Civic Government (Scotland) Act.
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I hope that with that further explanation the noble Lord is a little more enlightened and will feel able to withdraw his amendment.
Lord Ross of Marnock: My Lords, that is certainly a very illuminating reply and I am a little more enlightened. Certainly I am not in the dark. I could have guessed what the answer was going to be but I was fascinated with the fact that the Government were prepared to leave this apportionment not to prescription or anything else but to trust the local authority to do the right thing by the people concerned. I am still concerned about the words:
"the council may remit any sum or part of any sum due to them under this subsection".
Does that mean that at long last the council may decide that a blind man need not pay for the gas or electricity on the stair-head?
Lord Glenarthur: My Lords, with the leave of the House, the noble Lord is raising a matter which, while it is an extremely interesting point, probably goes rather wider than anything I should comment on without thinking about the remark that he has just made. As I remember from my DHSS days, we get into very difficult territory when we start talking about all sorts of matters to do with blind people. I should not like to respond off the cuff to the noble Lord without considering his remarks unless I am able to provide any precedents, which I fear from experience earlier in the Bill might prove to be difficult for me.
If I refer the noble Lord to subsection (9) of Section 90 of the Civic Government (Scotland) Act 1982 he will see that it refers to district or islands councils which have under subsections which are referred to
"provided or maintained lighting or lit or extinguished lights shall lot entitled to recover from the owner the proportion of the expense thereby incurred by the council which the rateable value of the lands or premises owned by him which have right of access by the common property bears to the total rateable value of all the lands and premises which have a right of access by the common property but may remit any sum or any part of any sum due to them under this subsection as they think fit".
So from what must be one of the longest sentences in any Act of Parliament, I can only assume it can be remitted if they think it is fit to remit it, and that might apply in the case of a blind man.
Lord Ross of Marnock: My Lords, by the leave of the House, I thank the Minister for repeating a second time what he said the first time. He probably said it a little better, but the fact is that at the start he did not have a clue as to what I was talking about. Maybe I have more knowledge of what stair-heads are like than he has, having been brought up with one.
Amendment, by leave, withdrawn.

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Clause 3 [Non-domestic rates]:
The Earl of Dundee The Earl of Dundee moved Amendment No. 40:
Page 2, line 29, after ("the") insert ("financial").
On Question, amendment agreed to.
Lord Taylor of Gryfe Lord Taylor of Gryfe moved Amendment No. 41:
Page 2, line 29, leave out ("and each subsequent year").
The noble Lord said: My Lords, at this late hour I return to the subject on which we had some discussion at Committee stage. Since then I have had so much support for the argument of the day that I feel encouraged to reintroduce the principle which we discussed on that occasion. What we are dealing with now is the question of ability to pay, which we discussed earlier in relation to domestic ratepayers. In this case we are talking about ability to pay on the part of small businesses.
I am encouraged to introduce this amendment because of surveys of small businesses which I have undertaken in the interval between Committee stage and tonight. I have been encouraged and supported in this by two organisations. First, the Forum for Private Business. That is the organisation devoted to the promotion of free enterprise—a cause which I thought would have commended itself to the Minister and to the Government. The other organisation is the National Association of Small Traders. Both organisations have over 4,000 members in Scotland. Just as we suggested in an earlier discussion on a referendum, I suggest to the Minister that in this case he should listen to the people—people I suspect who are traditional supporters of the Conservative Party. Any organisation committed to promoting free enterprise and small traders is not normally a supporter of parties on this side of the House.
We are seeking to introduce the ability to pay in this area. I should have thought that a Scottish Minister had two responsibilities. He has a responsibility to ensure that Scottish business was in no way disadvantaged by any legislation that may be introduced. There is no doubt that Scottish business feels disadvantaged, despite the principle of harmonisation in rating which will take place on the subsequent revaluation of English properties. I should have thought too that the interests of small businesses was an area in which the Government had some responsibility for stimulating or at least protecting.
Yet here we have a survey in which 95 per cent. of the businesses employ fewer than 50 people and 70 per cent. of them employ fewer than 10. Who are these people? They are small traders who provide a useful community service in the towns and villages of Scotland. They find that the percentage of profits which they now have to devote to the payment of rates represents 25 per cent. of their pre-tax profits, compared with the large companies and PLCs in general where the rates represent between 1 and 5 per cent. of pre-tax profits. There is no doubt that the existing provisions and the provisions under which this will be based in a national harmonisation scheme will do little to alleviate the position of small traders and the small businessman.
I make a special plea tonight to seek the Minister's assurance that some improvement or some alleviation might be considered in these cases. In support I should like to quote a letter that I received from the CBI in Scotland which simply says:
"Whilst the government's proposals would lead to radical reform of the financing of local government, they do not tackle the fundamental problem of the burden of taxation currently paid by business through local rates under the present system".
This is the view of business. It is the view of the CBI which represents large business; but it is the view of the people whom I have surveyed in the small business community.
They believe that this will do nothing to assist them, and ability to pay would suggest a much more equitable basis for the allocation of the burden. Ability to pay would be based on some percentage of the net profit. We would work on ability to pay in the same way as we work on ability to pay in the domestic field. This a complicated and difficult matter so do not ask me to spell out the detail of how it could be done. I am prepared to do so but it would take a little more time. All I ask is that the Minister give further consideration to this important principle. I beg to move.
10.15 p.m.
Lord Sanderson of Bowden: My Lords, I am not quite sure what the noble Lord, Lord Taylor, is getting at but harmonisation is a matter about which I am concerned. It is so important and fundamental for the future. I refer not necessarily to the implementation in Scotland but to the implementation of the whole scene for the United Kingdom. I must come back to what my noble friend Lord Glenarthur said at col. 499 of the Official Report of 31st March. He said:
"Some legislation will … be required, but the difficulty is that much valuation practice is not at present statutory and thus amenable to instant alteration".
He went on to say that discussions were taking place between assessors and valuers north and south of the Border,
"to make significant progress towards more common valuation practices in time for 1990".
Much the most important sentence referred to the need to,
"identify the outstanding differences thereafter that might need to be cleared up by legislation".
I honestly believe that there will have to be legislation if we are going to knock their heads together north and south of the Border so far as assessing is concerned. We are keen in Scotland that we should have a unified non-domestic rate across the country, and not one just for England and Wales on their own or Scotland on its own. This hits at the root of one of the major complaints about the commercial side of the whole affair. If we are to have harmonisation as a reality we must impress upon the Minister the importance of his officials starting to look now at how it is going to be done.
The noble Lord, Lord Morton of Shuna, knows more about this than me. The case law in Scotland is great on this subject as it is south of the Border. Those are two different systems. We must impress on the Minister at this stage of the Bill that unless we see real

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progress and legislation on the front of the assessors and valuers being dealt with at a fairly early stage and indications that this will happen, I have little hope of seeing this other than as a dream. It has to be a reality. If it is not to be a reality not only small traders in Scotland but large firms will turn around and say, "You have not achieved what you set out to achieve". We must convince the industrial communities, small and large, north of the Border, that this is our ultimate aim and that we mean to get on with it. Legislation, if it is necessary, should be looked at soon so that it can be implemented as fast as possible when we have a Bill for England and Wales as well on the statute book.
Lord Carmichael of Kelvingrove: My Lords, Amendment No. 47 has been grouped with Amendments Nos. 41 and 44. Perhaps I may say a few words in support of the general tenor of the amendments.
The noble Lord, Lord Sanderson of Bowden, is absolutely correct in saying that we shall require legislation. It is rather sad that this Bill, which was triggered largely because of the revaluation of non-domestic properties, has not done that job. The amendment in my name and those of some of my noble friends goes a little further in giving flexibility to local authorities to be able to introduce non-domestic rate rebate schemes targeted to specific categories of ratepayer. It is perhaps rather a big subject to be introduced into the Bill almost as an afterthought. If the noble Lord the Minister could find a way of putting into effect without legislation the idea proposed by the noble Lords, Lord Sanderson of Bowden and Lord Taylor of Gryfe, and by the amendments, I am sure that we should all be delighted. However, it appears to me, as the noble Lord said earlier, that when we get to the stage of harmonisation there will need to be distinct legislation, particularly binding Scotland, England and Wales and giving some sort of rationality to the three rating systems.
Lord Gray: My Lords, I wish to raise a drafting point. Perhaps my noble friend the Minister would take note of it.
Regardless of any indirect intention of Amendment No. 41, I believe that it draws our attention to words that might well be misinterpreted. I invite my noble friend to consider whether Clause 3(1) as drafted would not allow the interpretation that the rate determined for 1989–90 is the rate to be levied not only in that year but in subsequent years.
Lord Glenarthur: My Lords, my noble friend Lord Gray is gaining something of a reputation for producing drafting points. All I can say is that I will consider that. I should not like to be taken further on it. On a quick re-reading of the subsection, I do not think that it imparts that meaning to me. My noble friend has made the point, and I will consider whether there is anything in what he said.
The amendments in the name of the noble Lord, Lord Taylor of Gryfe, take us back to our discussions in Committee on the question of the local business profit tax. I accept that the amendments do not refer
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explicitly to such a tax, but a tax of such a nature is clearly implied. If one is to have a local non-domestic tax based on the principle of the ability to pay, one must have regard to the means of the taxpayer. Inevitably, questions of profit have to enter into the discussion.
When we were in Committee, I placed on record the Government's firm view that a local business profits tax was unworkable. First, there is the problem of how to measure profit. There is also the bigger problem of how to decide to which local authority the tax should be paid. This is especially problematical in the case of organisations like building societies and insurance companies which have branches throughout the country. It would be nonsense if the headquarters of such concerns were regarded as the only profit centre, even assuming that the headquarters were in Scotland at all. There are insuperable problems of measuring the profit of one particular branch in a town to ensure that the local authority concerned gets a fair contribution.
I can see the attractions of a local business profits tax for a private trader. We have a great many forms of business enterprises. It is necessary for the Government—as indeed for your Lordships—to have regard to that fact when we consider the whole issue. The attractions of a local business profits tax are purely superficial. The concept does not in any way stand up to hard analysis, I believe.
I hope that the noble Lord, Lord Taylor of Gryfe, will accept that the Government have studied the matter and that my negative reaction to his argument is firmly based on a careful analysis of the problems involved. We are firmly convinced that the procedures set out in Clause 3 are in the best interests of all non-domestic ratepayers. I hope that in time, and after further reflection, this point will be accepted.
My noble friend Lord Sanderson raised the question of the possibility of legislation and quoted from remarks that I had made in Committee. I stand by what I said. I think my noble friend will accept that very much the first step—and it is an essential first step—lies in the harmonisation of the valuation systems north and south of the Border. That must be a prerequisite before we reach the point of legislation. I very much take on board the remarks of my noble friend. I hope that he will accept from me that that harmonisation is the prerequisite. After we have reached that point we shall be able to proceed. As I have said, work is already going on to try to achieve the process.
Lord Morton of Shuna: My Lords, will the Minister consider the point of the noble Lord, Lord Sanderson of Bowden? I believe that it was that one cannot achieve harmonisation without prior legislation. I believe that that is a point on which I and the noble Lord would agree.
Lord Sanderson of Bowden: My Lords, with the leave of the House, I am no lawyer but I happen to believe that if case law is built up on either side of the Border it will take more than just getting together to arrive at a common harmonised programme. The noble Lord, Lord Morton of Shuna, is nodding his

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head. Therefore I think that it should be looked at in the light of the fact that we shall probably need legislation, and we must be looking at that alongside all the efforts which are being made which do not need legislation.
Lord Glenarthur: My Lords, I accept that and I think that the two can run concurrently. Whether one is in advance of the other at any particular point is something which can be considered as the matter is taken forward. However, we do not disagree with my noble friend that in the end the need will be to achieve precisely the kind of harmonisation which he seeks. I do not think that we are at odds on that point at all, and nor are we at odds with the noble Lord, Lord Morton of Shuna.
I come now to Amendment No. 47 which raises the possibility of a non-domestic rate rebate scheme in place of the arrangements in Clause 3 for the index-linking of maximum non-domestic rates. The point should be put on the record that there is already a system of mandatory rate relief for charities and of discretionary rate relief for recreational bodies and the like. But a rate rebate scheme would take us far beyond the existing arrangements, and I have to say that to be worth the name the scheme would have to have regard to the resources of the non-domestic ratepayer at any particular point in time. Leaving on one side the complexity of the administration of such a scheme—though that I fear would be considerable—the basic difficulty is the same as that with a local business tax based on ability to pay. It would be an essential aspect of a rebate scheme to measure these resources, and I can see no easy way of deciding how resources are to be measured and what kind of resources should be taken into account. Should one, for example, have regard only to revenue or should capital also be taken into account?
I do not think that it is sensible to be thinking in terms of a non-domestic rate rebate scheme. In the Government's view, the mechanisms provided under Clause 3 provide a much more straightforward way of dealing with the difficulties faced by non-domestic ratepayers. They will meet a real need by providing from year to year a guarantee of stability and predictability in non-domestic rate burdens and I think that the House should support them.
I hope that with that further explanation the noble Lord will not feel it necessary to press his amendment.
Lord Ross of Marnock: My Lords, surely the Minister realises that we already have a rebate scheme for non-domestic rates. It is now in its second year. It was introduced at the time of revaluation when £50 million was made available by the Treasury and a formula was drawn up whereby people would receive a rebate in respect of the increase in their valuation. That applied for the first year; it is now in its second year and it is still being applied. Will the Minister look at that matter, because it sponsored our suggestion in Amendment No. 47? It is there and it may have to be continued.
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Let us not forget that there already exists, and there is being continued, a 40 per cent. derating rebate for industrial rates. So we are not breaking new ground in that respect. The fact is that we do not know where we are going with this new system. We do not know the problems that will arise. It may well be that we shall have to resort to such measures in order to achieve fairness.
I appreciate the point made by the Minister about the rebates that we give to non-domestic rates—unless of course that charge is met directly by the Government, as happens with industrial rating and with non-domestic rating at the present time, the difficulties of which arise from revaluation. It may well be that we may want that, but we do not want to do it at the expense of the personal community charge. I understand that every time one changes the position, even a 1 per cent. reduction in non-domestic rating means an increase in the personal community charge by 4 per cent.
That is why when we discussed this matter earlier the point was well made that one should not start to make calculations about the personal community charge at the present time and think that they will last for ever. I am perfectly sure that by the time we come to the introduction of the personal community charge in 1989–90 we shall need to do the calculations again with considerable care and will still find that the facts are way beyond the figures that have been quoted, such as £250 for Strathclyde, £200 for Aberdeen, and so on. They will be very much greater than that. We shall once more need to do our sums in relation to the incidence of the personal community charge against the present rating system. Because we are entering such an unlit region, it may well be that we shall be glad to have something of this kind on the statute book to which we can resort.
10.30 p.m.
Lord Taylor of Gryfe: My Lords, this has been an extremely interesting discussion at a late hour. I am indebted to the noble Lord, Lord Sanderson of Bowden, for expressing so forcibly the necessity for starting soon on harmonisation, if there is to be harmonisation. It is a very complex business.
I sat for a number of years on the local valuation appeals court in Glasgow which covered the west of Scotland. We had to make judgments on the assessor's valuation and it was a long and wearisome process—longer and more wearisome than is our proceeding now. We sat for days looking at cases of variations in valuation and had time to make sensible judgments. The calculation was made on the basis of what the property would fetch given the conditions of a free market. On that kind of mythical concept we had to decide on the valuation. It took a bit of doing.
It was bad enough doing it for the Glasgow district, but we are now talking about the harmonisation of valuations throughout the whole of the United Kingdom. I certainly echo the remarks of the noble Lord, Lord Sanderson, about the complexity of this matter and how time-consuming it can be. Once more we are indebted to the noble Lord, Lord Ross of Marnock, for his experience in this field and for reminding the House that the rebate system already works in a number of cases.

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I recall that in the court to which I referred there was an appeal from DCL which argued that it was entitled to industrial derating on the barrels of whisky that were kept in store because the mere fact that a chap went along once a year and knocked on the barrel to ascertain that the whisky was still there constituted an industrial process and consequently industrial derating was claimed on that industrial process. So we are talking about a complex and difficult area. It will be an immense job to harmonise it for the United Kingdom, and I am not sure that the Government realise the full complexity of the job that they have taken in hand. Of course there is one escape for the Government. If the system of ability to pay is adopted, it abolishes the necessity for harmonisation of property values. That may commend itself to the Minister at some stage.
I agree that the Minister has a point in saying that it would be difficult to operate. The assessment of profit would be extremely difficult with the variety of businesses that exist in the country. However, taxation in relation to profit is not novel. It has been imposed on a variety of businesses from time to time; so it is not a totally original concept. However, in view of what the Minister has said and as we aired this matter at an earlier stage, I do not propose to press the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Dundee The Earl of Dundee moved Amendment No. 42:
Page 2, line 29, after ("subsequent") insert ("financial")
The noble Earl said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
Lord Wilson of Langside Lord Wilson of Langside moved Amendment No. 43:
Page 2, line 39, at end insert ("provided that there shall be excluded from the lands and heritages referred to in this subsection such lands and heritages as are occupied by a club, society or other organisation for the purposes of amateur sport or physical recreation").
The noble and learned Lord said: My Lords, this amendment seeks to exempt from the payment of non-domestic rates,
"lands and heritages… occupied by a club, society or other organisation for the purposes of amateur sport or physical recreation".
This question has been examined at some length, both in the other place and in your Lordships' House. The various arguments and concerns of those engaged in running or organising such clubs and of their members are familiar to your Lordships and to the Minister. Accordingly, I shall not elaborate upon them at this late hour. However, my impression is that for a long period the Government have expressed anxiety and concern to find a solution to the problem. The search has gone on, and it is time that we found a solution. I await with interest the Minister's view on the situation as it stands at present. I beg to move.
Lord Glenarthur: My Lords, the amendment which the noble and learned Lord has proposed is unnecessary and undesirable. It is not necessary because local authorities already have discretion to provide rating
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relief to non-profitmaking sports clubs. The amendment that I moved at Committee stage has removed any financial disincentive to a local authority granting such relief. In these circumstances I cannot believe that any rating authority will fail to give relief to all clubs which deserve it.
As well as this approach to tackling the problem of sports club rates, we also have longer term plans to resolve it. Many comparisons have been made between the rate burdens of clubs in Scotland and England. The differences arise largely because the valuation systems are not the same. The Government have set up a committee, which includes representatives of the Scottish assessors, to look at how valuation practices in England and Scotland can be harmonised. Rating of sports clubs is essentially a valuation problem which should be tackled through the valuation system.
I said that this amendment was undesirable. It illustrates the severe problems that arise in trying to prescribe centrally something that is best left to local discretion. As well as the many deserving amateur sports clubs, this amendment would potentially take many other premises out of rating. It would take sports club bars out of rating and thus provide unfair competition for the licensed trade. It would take out of rating clubs set up for the purpose of sport whose activities are almost entirely social. The provision is not restricted to non-profit making organisations and might apply to many commercial organisations providing facilities for use by amateurs.
I sympathise with noble Lords for the problems they have had to wrestle with in framing this amendment and the earlier amendment that they proposed in Committee. But the difficulties that they have had in so doing are precisely those which the Government have encountered in considering the action that we were going to take in the first place, and these difficulties led us to the conclusion that this is a matter best left to local discretion.
The noble and learned Lord says that we have examined it. We have done more than examine it. We have taken a major step to assist local authorities in exercising that discretion which is rightly best left to them. I hope that the noble and learned Lord will accept the benefit that will accrue from that amendment and will feel able to withdraw this one.
Lord Wilson of Langside: My Lords, I am grateful to the Minister for his explanation and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 44 to 47 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendment No. 48:
Page 2, line 42, after ("each") insert ("financial").
The noble Earl said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
[Amendment No. 49 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 50 and 51:
Page 2, line 44, after ("the") insert ("financial").
Page 3, line 4, after first ("the") insert ("financial").
The noble Earl said: My Lords, I beg to move Amendments Nos. 50 and 51.
On Question, amendments agreed to.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 52:
Page 3, line 9, leave out ("retail") and insert ("local services").
The noble Lord said: My Lords, very briefly, I should like to move Amendment No. 52. This has to do with the formula that is being created for the non-domestic rates. What it means is that the non-domestic base rate will be the rate in the year before abolition, and if a local authority has to increase the rate thereafter it is limited to a sum equal to the retail price index.
The suggestion has been made—and I make it very earnestly—that the retail price index has little to do with local government services. I have had this paper delivered to my home:
"Rates in Strathclyde. Who pays rates? Where the money comes from. Where the money goes. Net cost of services."
Employee costs are 55 per cent., which is more than half the cost of the local government services. Nobody is going to tell me that the make-up of the retail price index is weighted to the extent of 55 per cent. related to salaries.
What will be the inflation rate increase this year? One thing we do know is that the teachers are, on average, having the second part of their 16 per cent. increase. The noble Viscount the Leader of the House will remember that the Government made a decision the other day about the police. They will get more than the inflation rate, as will others. These increases must be properly matched with the increase allowed in non-domestic rates. We have to consider the education of the future workforce and the training costs of local authorities. They are concerned about the fire and police services.
I ask your Lordships to remember what I said before. If you go wrong by 1 per cent. in what you allow in respect of the non-domestic ratepayers, it means that the personal community charges go up by 4 per cent. It is no use screaming about local authorities and the rates. If the local authorities are hidebound for a formula it will create difficulties.
That is why we suggest that instead of using the retail price index, which I believe is being changed yet again, we ought to have something better related. Some have suggested earnings. I have suggested a local authority price index which has a properly based proportion in relation to employee costs, property costs, interest rates and the like. That in short is the reason and purpose for the amendment. I beg to move.
10.45 p.m.
Lord Glenarthur: My Lords, we discussed this matter quite thoroughly in Committee. However, I noted that whereas the opinion of the Committee was taken on the suitablility of a prices index appropriate to local authority costs, we are now being asked to consider specifically a local services index, the average earnings index and the local government inflation estimates when we consider the group that was agreed, with Amendments Nos. 52, 53, 54 and 64 as well.
The main reason for using a general index such as the RPI to determine increases in maximum non-
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domestic rates is that it would break the link between rates and local authority spending so that non-domestic ratepayers would then be able to rely on local authority rates moving in line with costs generally. That is the fundamental objective of Clause 3 of the Bill. If we were to substitute any of the indices covered by the amendments, we would not be able to give non-domestic ratepayers the same degree of protection that they would otherwise get under Clause 3. To that extent I cannot accept the amendments even in principle.
If I may turn for a moment to the matter of local authorities' salary and wage costs, which the noble Lord, Lord Ross, specifically mentioned, I said in Committee that I followed the process of reasoning that because such costs formed a high proportion of overall local authority costs it was appropriate that wage and salary increases should be reflected in increases in maximum non-domestic rates. Although I followed the reasoning, I did not accept it because we might then slide into the situation of leaving non-domestic ratepayers having to meet a share of excessive increases in staff costs through the automatic operation of the index. I have to say that I am not impressed by the counterargument that for most local authority staff, pay increases are determined nationally rather than by each authority on its own. I think that that point applies at whatever level pay is settled.
I should also comment on the specific suggestions which were made that the RPI should be replaced in the clause by a local services index or the local government inflation estimate for Scotland. There is at present a local authority cost index which is drawn up by the Scottish Office in consultation with CoSLA. However, the arrangements for preparation and production are entirely informal with the result that it does not have the same status as the RPI which is subject to external monitoring and scrutiny through the Retail Price Index Advisory Committee.
As I have tried to make clear to the House, I remain unpersuaded by the arguments which have been put forward in favour of the indices referred to in these amendments. The use of the RPI is central to the objects of Clause 3. I know that noble Lords opposite feel strongly on this issue. But I hope that they will realise the force of the arguments which I have put forward and will not press their amendments.
Lord Ross of Marnock: My Lords, I do not think that there is any force in the arguments put forward by the Government. What we should be talking about are the costs of the services of the local authority. Those costs have no relation at all to the retail price index, which is outmoded and outdated.
We have had experience in the past of what is allowed by the Government as an inflation rate in respect of the costs of local authorities. It is beyond even the local authority index and I hope that the Government will think again about this matter. It is all very well protecting non-domestic ratepayers. However, what they do not pay has to be paid by the individual. Once we have rebates and the people who do not register and cannot be traced, there will be fewer of them. It means that those who will be paying the community charge will be paying far more than

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they think they will be paying at the present time.
If somebody is made an exception, somebody else has to pay, because the cost of the services does not go down. We have a monster that we shall not recognise in 10 years' time with this personal community charge. I hope that the Government and especially the Leader of the House, will appreciate this fact. The noble Viscount has considerable responsibility for this matter. It is a hasty decision and an ill-considered tax which might look all right for a year but, given the passing of the years, I assure noble Lords opposite that it will be very difficult to justify in terms of equity and fairness, as well as in terms of simple justice to the local authorities and those who they serve.
I shall withdraw the amendment because I think we need to look at it again. We always have Third Reading. I have plenty of time. I am not going anywhere in the month of June. I am not even going to the polls when they take place. I have decided not to vote Conservative this time. In the meantime, I withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 53 and 54 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 55 and 56:
Page 3, line 12, after ("the") insert ("financial")
Page 3, line 12, at end insert ("financial").
On Question, amendments agreed to.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 57:
Page 3, line 14, at end insert ("+ ASP")
The noble Lord said: My Lords, in speaking to this amendment I speak also to Amendment No. 59. I thought I had better have a go at this formula business—I hate it. I am surprised to see such things in legislation because they do not make any great sense. You see a formula and you try to find out what "A" is, what "S" is, what "I" is, and so on. I gather that it is something which is favoured by draftsmen nowadays. It certainly does not make great sense to those who try to read it.
One of the points missed out in relation to non-domestic rates is that there may be developments especially for non-domestic ratepayers, and there is a section of them. This is one of the difficulties that may well arise. There will be a static non-development occurring in respect of things that non-domestic ratepayers may want; for example, a conference centre, an exhibition centre or something to suit business or industry and which is not to the benefit of the general ratepayer. If we are to be limited to the base rate plus only the inflation rate, which is itself inadequate, it means we are taking no notice of possible developments which are desirable from the non-domestic ratepayers' point of view, and non-domestic ratepayers make demands. I suggest that one of the considerations to be taken into account by the Government when they come to decide what will be the maximum allowed under the formula for the non-domestic rate charge are possible future developments.
In so far as concerns ASP, I thought of other initials that may represent the additional special provision. I thought at one time of calling it "additional special services", so that we could have "M" multiplied by
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"I" multiplied by "R" plus ASS, but I thought I had better leave that aside, and ASP with the sting in the tail may be just as satisfactory. Possible projected developments which are desirable and wanted must be taken into account. Such information may come out in the discussions which are to take place with the local authorities concerning non-domestic ratepayers, but they may be developments which could not be justified in respect of the personal services for those who are going to pay personal community charges. That is the reason for Amendment No. 57. The definition of ASP comes in Amendment No. 59. I beg to move.
Lord Glenarthur: My Lords, my main difficulty with the amendments is that they make an assumption about the financing of local services which in practice I do not believe to be justified. If we were to accept the amendments, we would be introducing into rating law for the first time the term "additional service provision", and while I do see the general point which the noble Lord, Lord Ross of Marnock is making, the basic problem underlying his amendments is one of apportioning the cost of local authority services between the non-domestic and the domestic sectors.
It would, quite simply, be extremely difficult to identify any additional services provided for non-domestic ratepayers or to identify from local authorities' budget or out-turn figures a sum which could then in any fair and reasonable way be added to the maximum non-domestic rate as calculated on the basis of the formula currently in subsection (4) of Clause 3. Local authorities provide services for the local community generally, and it seems to me that if we were to try to distinguish between expenditure on different classes of recipients of these services, we should be creating immense problems for central government, let alone local authorities.
This brings me to another reason for opposing the amendments. In view of the difficulties there would be in ascribing a figure to ASP, we would, in accepting the amendments, be jeopardising the basic principle of Clause 3, which is that maximum non-domestic rates for each local authority should be determined according to precise formulae so as to ensure predictability and certainty in non-domestic rate burdens from year to year. To introduce ASP into the formula would, I believe, lead to a considerable loss of precision.
I hope that in the light of that explanation the noble Lord will feel able to withdraw his amendment.
Lord Ross of Marnock: My Lords, I did not fully understand or completely follow the argument of the Minister. I accept that the responsibility is mine as I was preoccupied at the time. I am sure I did not miss very much and that he was turning down the amendment. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Dundee The Earl of Dundee moved Amendment No. 58:
Page 3, line 17, after ("preceding") insert ("financial").
On Question, amendment agreed to.
[Amendment No. 59 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendment No. 60:
Page 3, line 21, after first ("the") insert ("financial").
On Question, amendment agreed to.
[Amendment No. 61 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendments Nos. 62 and 63:
Page 3, line 26, after second ("the") insert ("financial").
Page 3, line 34, after ("the") insert ("financial").
On Question, amendments agreed to.
[Amendments Nos. 64 to 66 not moved.]
Clause 5 [Statutory and other references to rateable values etc.]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 67:
Page 5, line 24, at beginning insert ("subject to subsection (3A) below").
The noble Lord said: My Lords, the amendments in this group are technical and they have the common purpose of clarifying certain of the provisions in Clause 5. Their broad purpose is to ensure that for the purposes of subsection (3) of that clause proper account is taken of material changes in circumstances which affect the value of the property concerned. I beg to move.
Lord Morton of Shuna: My Lords, this batch of amendments—and I hope we are speaking to Amendments Nos. 67, 68, 69 and 70—illustrates the difficulty that is being caused because according to these amendments at some time in the future—say in the year 2010—the assessor will have to go back to the system that has been abolished. He will have to assess what would be the net or gross annual value of various house properties—domestic subjects—apportion them between the ones in the same tenement or adjoining properties, or whatever, and adopt exactly the same procedure.
I would suggest that the Government should look at this again, if only on the ground of the method of appeal, because what we are concerned with is sharing the common cost of repairs. If we are talking about something of the order of £500 being shared among five or six properties, it is ridiculous to suggest that this whole procedure, which is basically the present valuation appeal procedure, should require to be gone through for something which will only matter in paying a bill which, for each property, may be something in the order of tens or perhaps low hundreds of pounds. It seems to me a quite excessive procedure for dealing with this sort of activity, because as the noble Lord opposite may well appreciate, appeals to the valuation appeal committee and then to the valuation court are not cheap. If the assessor makes a certificate with which somebody disagrees in this situation (somebody is always bound to disagree with it), that is the only way an answer can be given. Surely there is some cheaper way of dealing with resolving the issue.
Lord Glenarthur: My Lords, In the interests of time, I did not go into a lengthy explanation of how these amendments fitted together. I certainly hear what the noble Lord says about the difficulties of appeal, and I shall, if I may, study his remarks. If I can help him in any way between now and the next stage of the Bill, I shall certainly do that.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 68 to 70:
Page 5, line 26, at beginning insert ("subject to subsection (3B) below").
Page 5, line 29, at end insert—
("(3A) Where, before or after 1st April 1989, there is a material change of circumstances, within the meaning of section 37(1) of the 1975 Act—

(a) in relation to any such property as is mentioned in subsection (3)(a) above; and

(b) in respect of which no alteration has been made to the valuation roll in force immediately before that date,

references in that subsection to the gross annual, net annual or rateable value of that property which appears in the roll in force immediately before that date shall be construed as references to the gross annual, net annual or rateable value which would have so appeared had that roll been altered to take account of that material change of circumstances.
(3B) Where there is a material change of circumstances, within the meaning of section 37(1) of the 1975 Act, in relation to any such property as is mentioned in subsection (3)(b) above, references in that subsection to the gross annual, net annual or rateable value of that property which would have appeared in respect of it in the roll in force immediately before 1st April 1989 shall be construed as references to the gross annual, net annual or rateable value which would have so appeared had that material change of circumstances been taken into account.")
Page 5, line 36, leave out paragraph (b) and insert—
("(b) what would have appeared in that roll as the gross annual value, net annual value or rateable value of any such property as is mentioned in subsection (3) above had that roll been altered to take account of any material change of circumstances, within the meaning of section 37(1) of the 1975 Act, occurring before or after that date.")
On Question, amendments agreed to.
The Earl of Dundee The Earl of Dundee moved Amendment No. 71:
Page 6, line 12, at end insert—
("(8) For the purposes of this section "gross annual value", "net annual value" and "rateable value" shall continue to be construed in accordance with the provisions of section 6 of the 1956 Act as those provisions have effect immediately before 1st April 1989.")
On Question, amendment agreed to.
Clause 6 [Interpretation of Part I and minor and consequential amendments]:
[Amendment No. 72 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendment No. 73:
Page 6, leave out from beginning of line 13 to end of line 8 on page 7.
On Question, amendment agreed to.
Lord Denham: My Lords, I beg to move that consideration on Report be now adjourned.
Moved accordingly and, on Question, Motion agreed to.
House adjourned at three minutes past eleven o'clock.

  CROWN SUPPLIERS: REPORT
  CROWN SUPPLIERS: REPORT
  SEAL RESEARCH
  SEAL RESEARCH
  CHANNEL TUNNEL SAFETY AUTHORITY: REPORTING OF ADVICE
  CHANNEL TUNNEL SAFETY AUTHORITY: REPORTING OF ADVICE